Initial test sailings in Italy have boosted the cruise company's confidence. The U.S. will no doubt be watching Carnival's next sailings in Germany with interest.
Cruising this year will be the “right thing to do,” according to Carnival’s CEO, in order to get people back to work and give people a chance to experience vacations of a lifetime.
The cruise line was also a trailblazer in Europe when it came to health screening compared to other sectors, Arnold Donald said during a third-quarter results earnings call on Thursday.
“What we’re doing in Europe is not happening anywhere else,” he said. “Hotels aren’t doing universal testing of guests before they walk in. Airlines aren’t doing universal testing. The moving parts aren’t doing that.”
Carnival tested the waters in September with Costa sailings in Italy. AIDA Cruises will sail in Germany next week. Carnival Chief Financial Officer David Bernstein said he was pleased with the feedback that those guests were pleased. The feedback was so good, Donald added, that he still saw no reason why U.S. operations cannot resume before the end of the year, based on the success of its coronavirus safety measures.
The U.S. Centers for Disease Control and Prevention’s extended no-sail order on the cruise industry is currently set to lapse at the end of this month, but Donald repeated several times during the call he was optimistic and saw no reason for the CDC to extend it another month.
“We’ve got multiple testing regiments,” he said. “There are more tools in the toolbox now. We’ve demonstrated an ability to execute universal testing, and we have every reason it’s the right thing to do.”
His statement came as a pilot Covid-testing scheme, CommonPass, involving four countries and two major carriers is about to launch.
Stretch and Pause
Carnival posted a third-quarter net loss of $2.86 billion, compared to a $1.78 billion profit in the same period last year. Looking ahead to 2021, Donald described Carnival as leaner and more efficient. It was also well positioned in the travel sector as it wasn’t reliant on business travel.
As of August 31, it had $8.2 billion in cash and cash equivalents.
Although it has just taken delivery of a new ship, Enchanted Princess, Donald said Carnival has “stretched out new-build capital” so has just one new ship on order for 2024, and another for 2025. It also plans to sell 18 of its least efficient ships.
He wouldn’t be drawn on what demand looked like exactly in the U.S. next year, but said that initially a small number of sailings would take place to test protocols. And with a diverse brand portfolio, it would be able to start them up again independently.
No Such Thing As Bad Publicity
Despite a freeze on sales and marketing activities, Donald said that its new-to-cruise bookings for 2021 were stronger than the year before, with 45 percent of total bookings made for that year so far coming from the demographic, which was higher than the norm.
Bernstein also noted that 60 percent of bookings made in the first three weeks of September were new bookings — and not customers using vouchers.
Further ahead, Carnival has a “backlog of repeat customers” ready to fill its ships, which will target drive-to markets and shorter cruises, Donald said.
“There’s pent-up demand, and people are anxious to cruise. There’ll be a staggered restart, and demand won’t be a big issue in the short term,” Bernstein added.
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Photo credit: AIDA Cruises, which is part of Carnival, will restart sailings in Germany next week. Carnival