With business at a standstill and revenue dry, companies are dipping into cash reserves to cover costs. Few seem to be hurting worse than cruises are.
The Cruise Ratings
Bank of America analysts Andrew Didora and Geoffrey d’Halluin maintained:
- A Neutral rating on Carnival Corp CCL but raised their price target from $10 to $13;
- A Neutral rating on Norwegian Cruise Line Holdings Ltd NCLH with a $13 target; and
- An Underperform rating on Royal Caribbean Cruises Ltd RCL with a $20 target.
Carnival: 9 Months
Carnival recently suggested it requires $1 billion in liquidity per month to cover operating expenditures, customer refunds, debt obligations and other necessities. At this rate, with debt and equity offerings completed in April, Didora's suspect that Carnival can sustain itself through the end of 2020.
“We believe CCL could be able to reduce its monthly cash burn predominantly given potential delays in ship investments and potential debt maturities holidays, which could extend its liquidity into 2021,” they wrote in a note.
Norwegian: 18 Months
Norwegian Cruise Line is paying between $70 million and $110 million each month for debt obligations, opex and capex. The analysts also anticipate about $67 million per month in refund payouts for the rest of the year.
The company recently raised $2.4 billion in capital, which bolstered its liquidity position to about $3.8 billion, according to Bank of America estimates. This “is enough to get through at least 4Q21 in a worst case of no future cash sales,” they wrote.
Royal Caribbean: 11 Months
According to Didora's estimates, Royal Caribbean has about $3.45 billion in liquidity but is burning about $330 million in cash per month. At that rate, the company can last through the first quarter of 2021 with suspended operations.
“For RCL to extend its liquidity into late 2021 to further de-risk its liquidity profile, we estimate it would need to raise an incremental $1.5-2.0B in capital,” the analysts wrote.
At time of publication, Royal Caribbean traded down 1.4% around $34.66, Carnival down marginally around $12.20, and Norwegian down 2.1% around $10.53.
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