Some of the major stories around the coronavirus outbreak have centered on cruise ships, and the industry is facing a public relations disaster. The likes of Royal Caribbean need to make sure they can withstand the worst so they can come out on the other side.
Royal Caribbean Cruises Ltd on Tuesday withdrew its first-quarter and full-year forecast, and increased its credit capacity by $550 million to boost liquidity amid concerns around the rapid spreading of coronavirus.
Cruise operators are among the worst hit by the epidemic, which originated in mainland China and has killed more than 3,800 people, as travel restrictions and fears of the virus spreading have led to cancellations of trips.
Royal Caribbean said it would cut spending, operating expenses and take other actions to improve liquidity by at least another $1.7 billion in 2020.
“These are extraordinary times and we are taking these steps to manage the company prudently and conservatively,” Chief Executive Officer Richard Fain said.
Shares of the company, which have lost nearly 64% of the their value so this year, were up about 6% before the bell.
Grand Princess, the ocean liner owned by rival Carnival Corp , was docked off its destination on Monday and its passengers are quarantined for two weeks after 21 people aboard it were tested positive for coronavirus, which causes the respiratory disease known as COVID-19.
More than 113,000 infections in over 100 countries have been reported, with vast majority in mainland China. A U.S. health official asked Americans earlier this week to avoid cruises altogether during the crisis.
Earlier in the day, leading U.S. airlines American and Delta suspended 2020 financial guidance and took drastic further measures to combat the impact of the epidemic.
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Photo credit: Royal Caribbean International's Harmony Of The Seas and Adventure of the Seas. Parent company Royal Caribbean Cruises is trying to shore up its finances. Prayitno / Thank you for (12 millions +) view / Flickr