Will Cruise Lines Go Bankrupt?
Will Cruise Lines Go Bankrupt?
Will cruise lines go bankrupt? There isn’t a day that goes by where I don’t get this question.
And let me say from the outset that I have no insider knowledge on the subject.
We interact with cruise line executives daily, but mums the word when it comes to their internal financial discussions.
However, just because we don’t have insider knowledge, that doesn’t preclude us from having a cogent opinion.
Let’s Consider the Carnival Cruise Line
Carnival is the largest company in the cruise industry. It operates nine different brands with more than 100 ships in service.
A few of the brands that you might be familiar with are Carnival (of course), Princess Cruises, Holland America Line, Cunard, Seabourn, and others.
Now, just like every other cruise line in the world, Carnival is completely shut down and is currently experiencing significant losses. However, take a peek at this commentary from the folks at Morningstar:
“In order to ensure it sails through the COVID-19 crisis, Carnival has improved its liquidity recently; first, it drew down its $3 billion credit facility; second, it issued $500 million in equity; third, it secured $5.75 billion in loans; and finally, it eliminated its dividend ($1.4 billion). Furthermore, it has $8.7 billion of committed financing to pay for ship deliveries. And as a result of fewer sailings, we expect costs to be significantly reduced in 2020. Ships going into a prolonged layup (most of the fleet) have fixed costs that are set to run around $1 million per month. Thus, the $9 billion in cash recently accessed, as well as customer deposits, should be sufficient to cover near-term expenses, even if all 100-plus ships went into a prolonged layup for the next 12 months (which we don’t anticipate).”
As I am not presently one who adopts a worldview of total doom and gloom, it seems reasonable to me that this mess is over long before 12 months is up. Furthermore, it was just January when the team and I booked 90 cruises for the month. We know that 80,000,000 baby boomers are chomping at the bit to get back out there traveling.
Even further, I am so convinced that the cruise industry will survive through this, I went out and bought quite a few shares of Carnival stock. And, I fully intend to purchase shares of Royal Caribbean and Norwegian Cruise Lines.
Note: this is not financial advice. I happen to have some “mad money” sitting on the sidelines and I’m willing to take the long view on the cruise lines. For these reasons, I am not one who thinks that the cruise lines are going bankrupt. Again, that’s just my opinion.
Let’s Talk About Travel Insurance
Let’s play devil’s advocate and assume that a cruise line that you’ve booked does indeed file for bankruptcy and cancels your cruise. Now what?
Well, if you bought travel insurance from the right company, you’re fully covered. Here’s the language in a policy from Allianz regarding travel supplier defaults:
Your tour operator, airline, or cruise line ceases all operations due to its financial condition, with or without filing for bankruptcy. The following conditions apply:
- Your policy was purchased within 14 days of the date of the first trip payment or deposit;
- The cessation of operations occurs more than seven days after your policy’s Coverage Effective Date;
- Your policy was not purchased directly through the tour operator, airline, or cruise line ceasing operations, or an affiliate of that entity; and
- The tour operator, airline, or cruise line was included in our list of covered suppliers on your policy’s Coverage Effective Date.
As you can see in the list of covered suppliers, all of the cruise lines are currently on the list. So, if you book a cruise with your favorite cruise line, and they are on the list, then you would receive 100% of your money back from the travel insurance company.
Today’s Risk-Free Bookings
Still not convinced? Well, how this?
Virtually every travel brand in the world is offering you a risk-free booking. If you book a cruise or land journey today, and you feel uncomfortable traveling prior to your journey, you simply cash in your risk-free certificate and rebook for up to two-years down the road.
So, as one might say, “what have you got to lose?”
With all of the layers of protection offered to travelers today, it really does make sense to seriously consider taking advantage of the offers in today’s market.
Sure, you may not want to consider travel in the coming months, but late-fall, winter, and 2021 are just waiting for you.
Where can we help you travel?
For more information, please call Roaming Boomers Travel Services at (480) 550-1235 or use our convenient online information request (click here) and we’ll reach out to you.
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