Carnival Expects to Burn $650 Million a Month While Cruise Operations Are Paused

Carnival Corp., the world’s largest cruise company, gave no clarity about when it will cruise again in a company filing released to investors on Thursday.

During the company’s second quarter, which ended on May 31, it saw a net loss of $4.4 billion, or $6.07 earnings per share, preliminary results show. It is accelerating plans to offload six vessels in the next 90 days, ones it had previously planned to sell in the coming years.

Its estimated cash burn rate for the second half of 2020 is $650 million per month. On the last day of the quarter, it had $2.9 billion in customer deposits, which includes $475 million for cruises scheduled to depart in the second half of 2020. It reports having $7.6 billion in available liquidity.

Whether any cruises will sail in the remainder of this year remains an open question. Notably, Thursday’s guidance did not mention the Aug. 1 date that Carnival Cruise Line has previously named as when it will phase eight of its ships back into service. (Carnival Corp. owns nine brands, of which Carnival Cruise Line is one.)

The company reported it is “is unable to definitively predict when it will return to normal operations,” but that any initial resumption will happen “after collaboration with both government and health authorities, in a phased manner, with specific ships and brands returning to service over time to provide its guests with enjoyable vacation experiences.”

Since mid-March, when the cruise industry first went on pause, lines have pushed back their restart date three, four, even five times. Carnival Cruise Line’s advertised Aug. 1 restart may be technically feasible — as it comes after the CDC’s current No Sail order is set to expire — but even CEO Arnold Donald cast doubt on that in an interview with The Telegraph on June 8.

Competitor line Norwegian Cruise Line pushed its restart date into October this week. Carnival-owned brand AIDA has ruled out North American cruising altogether in 2020, while another one of the company’s brands, Cunard, has pushed its restart into late November. Some smaller river cruises in Europe and the U.S. — the latter exempt from the CDC’s order due to their limited capacity — are restarting imminently.

On top of that, the company is still working towards repatriating 21,000 remaining crew from its ships, a bureaucratic tangle that has become not only a headache but a borderline human rights issue for the cruise industry, as reporting from The Guardian and the Miami Herald has shown. Carnival’s release said it was taking care of crew’s physical and mental health with “single occupancy cabin accommodations, many with a window or balcony” and “access to fresh air and other areas of the ship, movies and internet, and available counseling.”

There still isn’t any clarity around how, precisely, cruise lines like Carnival will prevent Covid-19 from spreading once cruising resumes, though all major lines are said to be working in conjunction with the CDC and other authorities. Carnival said in its filing such protocols “may include areas such as medical care, screening, testing, mitigation and sanitization addressing arrival and departure at cruise terminals, the boarding and disembarkation process, onboard experiences and shore excursions.”

Carnival shares were down roughly as much as 5 percent in Thursday’s trading.