A second shareholder has filed suit against Norwegian Cruise Line over its handling of the coronavirus outbreak.
Abraham Atachbarian Tuesday accused the company, chief executive Frank Del Rio and finance chief Mark Kempa of purposefully misleading investors by talking up the company's resiliency in the face of Covid-19 as sales staff were instructed to downplay the severity of the virus.
"Although [Norwegian] knew that COVID-19 would have a devasting impact on their business ... they made false and misleading statements about their prospects for 2020, and the impact of COVID-19 on their business," the complaint, filed in Miami federal court, read.
Atachbarian's lawsuit seeks class action status to cover investors who bought Norwegian shares between 20 February and 11 March.
He said Del Rio sold 4,000 shares of his company for a total of $207,000 on 20 February, the same day the company reported fourth quarter earnings and told investors it was maintaining higher year-over-year bookings while taking preventative measures around the coronavirus outbreak.
Similar to the lawsuit filed last month by fellow shareholder Eric Douglas, Atachbarian cites scripts and memos sent to sales staff leaked to the Miami New Times and the Washington Post.
In those documents, employees were told Covid-19 was an "overhyped pandemic scare" and were instructed to tell potential cruisegoers that the respiratory illness cannot live in warm climates, a hypothesis the World Health Organization has said is untrue.
The organization said as of Wednesday, there were more than 823,000 confirmed cases of Covid-19 globally, a growth of nearly 73,000 from the day prior. The death toll is over 40,500.
The Miami New Times and Washington Post stories came out 11 and 12 March. On 13 March US Senators Richard Blumenthal of Connecticut and Edward Markey of Massachusetts sent a letter to Norwegian demanding the company stop soft pedaling Covid-19.
Cruise gets sick
The cruise industry has been hit particularly hard by the coronavirus outbreak, with the "Big Three" cruise majors — Norwegian, along with Carnival Corp and Royal Caribbean — suspending operations while losing tens of billions in equity value in recent weeks.
Both Norwegian and Carnival Corp subsidiary Princess Cruise Line have been the subject of lawsuits over their handling of Covid-19 and several cruise companies have had to deal with outbreaks aboard their ships.
Each of the Big Three have had to raise money to stay afloat, with Norwegian borrowing $1.55bn, $675m of it backed by one of its ships. It also lowered its full-year 2020 earnings per share guidance $0.75 to between $5.40 and $5.60 in announcing its fourth quarter results, over virus concerns.
UBS analyst Robin Farley said at the time that the money should be enough to cover its bills, assuming a 60% revenue decline, rollbacks of discretionary capital expenditures and delays to three-quarters of its progress payments.
This week, Infinity Research analyst Assia Georgieva told TradeWinds that it would take some time for consumers to regain trust in the sector and that she was looking at pricing into 2022, but was unsure if that was "realistic or realisable".
In early trading Thursday, Norwegian shares fell $0.48, or 4.9%, to $9.07. Shares started the year at $58.83, and its 52-week high is $59.78.
Norwegian did not return requests for comment.
