Carnival Corp's Princess Cruises and Torstein Hagen-controlled Viking Cruises have suspended operations as the coronavirus epidemic delivers a historic wallop to the industry.
Princes Cruises said Wednesday that it would halt operations for two months after passengers on two of its ships — Diamond Princess and Grand Princess — were quarantined due to virus outbreaks.
Princess Cruises has been hit particularly hard by Covid-19 because the brand with 17 ships has had to deal with essentially two back-to-back ship quarantines.
That followed a decision early in the day by Viking, the privately operator of both ocean and river cruiseships, said it will suspend business through April after discovering a Covid-19-exposed passenger and quarantining 28 guests.
New York-listed Carnival, Princess Cruises' parent and the world's largest owner of cruiseships, did not immediately return calls asking if it planned to suspend operations at its other eight brands.
"In proactive response to the unpredictable circumstances evolving from the global spread of Covid-19 and in an abundance of caution Princess Cruises announced that it will voluntarily pause global operations of its 18 cruise ships for two months (60 days), impacting voyages departing March 12 to May 10," Arnold Donald-led Carnival said.
More cruise line suspensions expected
Other cruise providers will probably suspend their operations as a result of virus-related headwinds, UBS analyst Robin Farley said.
"We wouldn’t be surprised to see other cruise lines follow Princess decision to suspend operations for 60 days," she wrote in a clients' note.
"Between the lower occupancy from the ban on European travelers to the U.S. (where Caribbean cruises start) and the industry’s proposal to temporarily ban passengers over age 70, in addition to passengers making use of generous cruise deferral policies, near term occupancy is likely to be low for all cruise lines.
Huge Losses
The pandemic has hit the cruise industry very hard, causing travel bans, voyage cancellations and major financial losses across the entire industry.
Carnival's shares are down 15% just minutes after Wall Steet's opening bell to $18.48. That's down from $51.90 on 21 January.
Richard Fain-led Royal Caribbean Cuise's stock has dropped 24% to $33.58, down from $129.68 on 21 January.
Frank Del Rio-led Norwegian Cruise Line Holdings' equity has also been hammered, falling 21% to $11.92, down from $57.95 on 21 January.
Carnival has also lowered its 2020 earnings per share (EPS) guidance by $0.55 to $0.65.
Royal Caribbean on Wednesday retracted its previous loss guidance of $0.25, given the uncertainty around Covid-19. It also extended its credit by $550m.
Norwegian lowered its 2020 EPS guidance by $0.75 and has taken out $675m more in credit.
The total estimated loss to market capitalisation would be $555m, including Royal Caribbean's retracted outlook.
Viking has suspended its river and cruise operations until 1 May after finding out a passenger was exposed to coronavirus and quarantining 28 other guests.
Chairman Torstein Hagen announced the decision in a letter and video sent to currently booked guests.
"In recent days we have had an experience where a river cruise guest in Southeast Asia was exposed to Covid-19 while in transit on an international airline," he said.
"While this guest is not exhibiting symptoms, she has been placed in quarantine. Separately, the remaining 28 guests will also be quarantined."
Further, travel has become "exceedingly complicated" with the closure of major ports such as Venice, Monte Carlo and Bergen and shuttering of attractions such as the Vatican and other museums.
Beyond this, some countries are imposing restrictions on public gatherings and visitors, he said.
"I am writing today because the situation has now become such that operating as a travel company involves significant risks of quarantines or medical detentions, which could diminish the travel experiences for which our guests have been planning," he said.
"As a private company with strong finances, we do not have to worry about quarterly profit expectations – and that flexibility allows us the ability to do what is best for our guests and our employees, as we have always done."
67 ships
The Switzerland- and US-based operator of seven oceangoing vessels under Viking Ocean Cruises and more than 60 longships under Viking River Cruises has temporarily suspended voyages embarking from 12 March 12 to 30 April 2020.
"This is a decision we made with a heavy heart, but with present circumstances what they are, we are unable to deliver the high-quality Viking experience for which we are known," Hagen said.
Guests who have booked voyages within this time frame will be offered the choice of a future cruise voucher valued at 125% of money paid to Viking or a refund equal to the amount paid.
Guests will have two years to book a voyage on any river, ocean or expedition cruise using the voucher.
"We will stand by our guests, employees and partners in these challenging times and hope that they in turn will stand by us," Hagen said.
