Royal Caribbean Cruises believes it is spending at least a quarter of a billion dollars per month just to keep its business afloat while collecting no revenue amid a fleet-wide lay up.
The Richard Fain-led owner of 62 ships estimates a monthly cash burn of $250m to $275m after implementing cost-cutting measures that include putting some ships in cold lay-up and laying off a quarter of its 5,000 US shoreside employees.
"These are unprecedented times for all of us. Travel restrictions and stay-at-home orders are important to slowing the spread of the virus, but they have severely impacted our operations," chief executive Fain said in a company update.
Decisive action
"We are taking decisive actions to prioritise the safety of our guests and crew while protecting our fleet and bolstering liquidity."
The company, which is offering 125% future cruise credits until April 2022 amid a fleet suspension continuing throughout June, has also lowered capital spending by $4.4bn until 2021.
It has $2.4bn in bookings up until 11 June and is taking further reservations through 2022, alongside about $2.3bn in liquidity.
"The company continues to identify and evaluate further actions to improve its liquidity," Royal Caribbean said.
"These include and are not limited to: further reductions in capital expenditures, operating expenses and administrative costs and additional financings."
The company expects to incur a loss for 2020 but cannot estimate to what extent, given it is unknown how long the pandemic will continue to impact the cruise industry and global economy.
In comparison, Arnold Donald-led Carnival Corp estimates spending $1bn per month on keeping its 104 ships laid up.
Frank Del Rio-led Norwegian Cruise Line Holdings is laying out up to $110m per month to keep its 28 ships idle during the pandemic, according to company estimates.
The "Big Three" cruise majors have seen modest gains on Wall Street through early afternoon on Friday.
Carnival's shares were up 2.4% to $13.85, while Royal Caribbean stock edged up 3.1% to $39.20. Norwegian's shares gained 3.3% to $12.40.
