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CDC Extends 'No Sail' Order Only For Another Month, In A Ray Of Hope For Cruise Companies

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CDC Extends 'No Sail' Order Only For Another Month, In A Ray Of Hope For Cruise Companies

The United States Centers for Disease Control and Prevention late Wednesday extended its "No Sail" order till the end of October, prohibiting cruise ships with 250-plus passenger capacity to operate on U.S. waters.

What Happened: The official CDC declaration followed an Axios report that President Donald Trump's administration overruled the agency in a meeting earlier this week on extending the ban to mid-February.

The White House only agreed to extend the cruise sail ban until October-end. According to Axios, the move may be politically motivated, as the cruise industry has a major presence in Florida, a crucial swing state in the upcoming presidential election.

Cruise ships have remained docked since the pandemic took hold earlier this year under past CDC orders.

The April-September surveillance data recorded 41 deaths in addition to approximately 3,689 potential COVID-19 cases on cruises. The CDC noted that this data is not exhaustive and the figures could have been underestimated.

Why Does It Matter: The limited order would at least provide a temporary sigh of relief to cruise ship operators like Norwegian Cruise Line Holdings Ltd (NYSE: NCLH), Carnival Corp (NYSE: CCL), and Royal Caribbean Cruises Ltd (NYSE: RCL), whose revenues remain battered by the coronavirus-related restrictions.

The cruise companies' stocks surged late last week in anticipation of CDC's No Sail order expiring on Sept. 30, but several analysts warned against trusting the bounce, CNBC reported.

Chantico Global CEO Gina Sanchez told CNBC that investors need to ask questions like whether the demand next year can be expected to be strong enough to offset the large amount of debt these companies have taken during the pandemic, or whether they can survive until "all of the bookings come to fruition."

BofA analyst Andrew Didora last week said that the cruise ship tourism business should pick up pace in 2021. Didora said he expected Norwegian and Royal Caribbean to be operating at 85% capacity by the end of next year.

Price Action: At the end of Wednesday’s trading session, NCLH stock quoted 3.3% higher at $17.11, RCL shares surged 0.5% at $64.73, and CCL stock closed at $15.18 per share, with a 0.73% gain.

 

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