Even as the coronavirus pandemic brings the cruise industry to a global standstill, customers are already booking for 2021, Carnival CEO Arnold Donald told CNBC on Tuesday.
The coronavirus pandemic has roiled the travel industry across the globe, but perhaps no sector has been hit like the cruise industry. Passengers have fallen ill and died as cruise ships became outbreak sites. In response, ports have denied vessels entry, travelers have canceled trips and most cruise companies in the world have suspended operations.
Carnival Corp., the largest cruise company in the world, has been at the center of several high-profile onboard outbreaks. Its Diamond Princess was quarantined at a Japanese port in one of the first major outbreaks outside of China, where the virus emerged in December.
Donald said the cruise industry will bounce back along with the rest of the travel industry.
“It’s been devastating temporarily. … Travel is going to return, travel and leisure, and when it does, we’ll return with it. Social gathering at some point will return, and when it does, people will want to cruise,” Donald said on CNBC’s “Closing Bell.” “We’ve had substantial bookings. Bookings for 2021 are strong.”
It remains unclear, however, when ships will be allowed to sail again. Last week, the Centers for Disease Control and Prevention extended the U.S. “No Sail Order” originally issued on March 14 for up to 100 days. Donald said Tuesday that Carnival, which is incorporated in Panama, has “voluntarily” extended its pause of operation.
“If unrestricted cruise ship passenger operations were permitted to resume, infected and exposed cruise ship cases would place healthcare workers at substantial increased risk,” the CDC said in extending the order.
With Carnival’s fleet of more than 100 ships out of operation for the foreseeable future, the company is scrambling for cash along with others in the travel industry. Carnival has completely tapped its $3 billion revolving credit facility and said earlier this month that it was raising about $6 billion by issuing a mix of debt and equity.
It could be difficult for Carnival to attract additional financing moving forward as credit rating agencies S&P and Moody’s continue to review the company for downgrade, potentially to junk status. However, shares of the company soared after the Saudi sovereign wealth fund disclosed an 8.2% stake in Carnival last week.
“We have found a way to secure financing. It was costly,” Donald said Tuesday. “It was expensive, but our job is to make sure the company can survive even if there is an extended pause.”
Donald added that the company, which is not included in the U.S. government’s coronavirus stimulus package, continues to seek additional financing from “Germany, the U.K., Italy and elsewhere.” Regardless of additional financing, Donald said the company has enough liquidity to last at least through the year with no revenue.
Shares of Carnival finished the day up more than 8%. However, shares are down more than 75% since Jan. 1.
Of the big three cruise companies, Carnival is best suited to weather a sustained downturn without any revenue, according to UBS Securities analyst Robin Farley. The company could survive for as long as 15 months without making any money, she wrote in a note earlier this month.