Carnival to remove 13 ships from its fleet
Carnival Corporation, the world's largest cruise liner company, is about to remove 13 ships from its fleet because of demolition and selling deals as it tries to reduce maintenance costs.
Carnival and many of its peers in the cruise industry stopped sailing in March due to traveling worldwide restrictions aimed at mitigating the spread of the virus.
The firm has signed deals to dispose of nine ships that had previously been scheduled to be sold in the coming years.
“We expect to reduce ship deliveries through the end of fiscal 2021 from nine as originally planned down to five; two this fiscal year and three next, deferring over $3 billion of capital expenditures into fiscal 2022 and beyond. So reduced our cash burn and have a more efficient fleet once we do resumed cruising, we have aggressively shared less efficient ships. A total of 13 ships are expected to leave the fleet, representing a nearly 9% reduction in our current capacity,” Carnival’s President and Chief Executive Officer Arnold Donald said.
The company has worked hard to improve its liquidity, raising more than $10 billion in new funding and partnering with over 20 lenders and over 40 separate deals to extend debt maturity and secure covenant exemptions.
“Additional cash conservation efforts, combined with future liquidity measures, will enable us to sustain ourselves beyond 12 months into late next year, even in a zero-revenue scenario. Concerning cash conservation, our workforce reductions, while painful, were necessary to make it through to the other side of the impact of this global pandemic,” Donald added.
As explained, the average monthly cash burn rate for the company was $650 million a month, with $250 million being spent on ongoing operating and administrative expenses for ships.
The company is reorganizing its workforce, so it does not plan to return to the same personnel standards as before the pandemic until it returns to full-scale operations.
As far as crew repatriation is concerned, Carnival said it had repatriated 77,000 crew members so far, and that it expects to repatriate more than 80,000 in total by the end of this month.
Carnival noted that it was working with world-renowned epidemiologists and medical experts to improve its current security procedures to strengthen steps on board its ships and that the spread of viruses giving guests a glimpse.
Maritime Business World