Pullmantur Cruceros' three cruiseships may be headed for the scrapyard while the Spanish owner faces insolvency amid the Covid-19 downturn, according to a prominent Miami cruise lawyer.
The company, owned by Royal Caribbean Cruises and Cruise Investment Holdings, on Monday said it was filing for reorganisation under Spanish insolvency laws.
"Despite the great progress the company made to achieve a turnaround in 2019 and its huge engagement and best efforts of its dedicated employees, the headwinds caused by the pandemic are too strong for Pullmantur to overcome without a reorganisation," the company's board of directors said Monday in a statement on its website.
Miami cruise lawyer Jim Walker heard from Pullmantur's crew, however, that workers were stripping the interiors to 2,733-berth Sovereign (built 1987) and 2,733-berth Monarch (built 1991) while docked in Naples, Italy, over the weekend.
"The crewmembers in question stated to me that they found the fact that the ships were being disassembled ... to be consistent with steps taken in the past before ships were sent to the break-yards," he told TradeWinds Tuesday.
Just a rumour but...
Pullmantur has not confirmed any plans to scrap the ships, Walker said, reiterating what he wrote on his Cruise Law News blog on Monday.
"To be clear, the article states: 'There are rumours that all of the Pullmantur ships will be going to scrap. There is nothing substantiated at this point'", he said.
Pullmantur's crew, however, saw workers remove electronics, navigation equipment, stage lights, consoles, computer equipment and artwork store them in thousands of pallets, Walker said.
Royal Caribbean would not say what it plans to do with the three ships, but Royal Caribbean chief financial officer Jason Liberty said that ost Pullmantur employees have been furloughed and most crewmembers are being sent home.
"Following an exploration of available options, this was deemed the only viable path forward for the joint venture," he wrote in a letter to employees.
The Monarch and the Horizon have been for sale for $125m and $65m respectively long before the pandemic, according to reliable sources, but their dismantling indicates that they will get scrapped, he said.
Pullmantur's 1,828-berth Horizon (built 1990) is currently off of the coast of Mumbai where it disembarked Indian crew members from both Pullmantur and Royal Caribbean brand Azamara.
The three ships hold a combined market value of $142m and are worth $23.3m total in scrap, according to VesselsValue.
Not much demand for old ships
"In my assessment, there does not appear to be much of a demand for 30-year-old ships at this time when there is a pandemic raging, other companies seem to be getting rid of and selling their ships, and the future of cruising is in question", Walker told TradeWinds.
Royal Caribbean and Cruise Investment will therefore probably send them to scrapyards in Alang, India, rather than pay cold-storage costs, he said.
"I would place very little weight into the executives comments that the brand will come out of 'reorganization'", he said.
"My hunch is that we will see the ships in Alang."
