Despite not having carried a single US passenger since late March, the cruise industry still remains afloat – by burning cash at historic levels.
Preliminary earnings reports for the final quarter of 2020 show that Carnival Corporation lost $ 2.2 billion, or about $ 500 million per month, in the fourth quarter. And there is no end in sight to the government-imposed limbo as Carnival and the rest of the cruise industry await further instructions from the Centers for Disease Control and Prevention.
The agency issued a no-sail order back in March 2020 that prevented ships from leaving US ports. In October – when the Covid-19 case numbers were much lower than today – the CDC lifted the order and allowed cruise lines to prepare “test trips” to measure the effectiveness of new security measures.
But companies are still waiting to set sail. When asked about next steps with the agency, Carnival President and CEO Arnold Donald declined during this week’s call for earnings, saying the plan to get back to sailing was a “work in progress”.
“The additional guidelines for future phases have not yet been issued by CDC. We have calls weekly or as often as we need so that remains to be seen, “said Donald. “What I can tell you is that we are on track to do whatever we have to do, very timely, to ultimately be able to resume cruises.”
Wait for instructions
It was a decidedly different tone than his last win call back in October when he suggested his ships could be in the water by the end of 2020. As the pandemic in the US worsened, that prediction apparently failed to materialize. And unlike airlines, which saw a small increase in revenue from vacation travel, cruises cannot legally resume operations yet.
“The CDC said in the order that they will post additional technical instructions and orders, the guidance needed to carry them out,” said a spokesman for the Cruise Lines International Association, the industry’s trading group. “They haven’t done that yet.”
The current hang-up? Port agreements.
These agreements set out a plan of where a ship will next go when a suspected case of Covid-19 is discovered on board, the hospital and medical capacity of a port is assessed, and the necessary safety precautions are taken to minimize contact with uninfected people. The CDC is currently setting these guidelines.
“We haven’t heard from the CDC what they expect, what this port agreement would look like and what elements need to be included in this port agreement,” said the CLIA spokesman.
According to a spokesman for the CDC, cruise ships are still in the test and laboratory capacity building phase: “Nobody has cleared this gate yet.” With regard to the agreements with the port and the local health authorities, a decision could be made “probably in the next few weeks”.
“The health and wellbeing of the cruiser passenger is a priority for both parties,” the spokesman said.
Cruises resumed elsewhere
The CDC edicts are only part of the equation. A global company like Carnival is concerned not only with the CDC’s recommendations, but also with regulations in the rest of the world. The company’s Costa and Aida brands are already represented in Europe with limited capacity.
“We want the freedom to operate,” said Donald.
Currently, Carnival is promoting its bookings in the second half of 2021, calling them “within historical range”. In the first half of 2022, bookings hit the “high end of the historical ranges,” especially bundled packages the company emphasizes. Carnival traditionally does not share these booking numbers.