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Carnival Corp. to sell 13 ships, resume cruises in Germany amid COVID-19 pandemic

Taylor Dolven, Miami Herald on

Published in Business News

MIAMI -- After record-breaking second quarter losses, Carnival Corporation will begin cruising again during the COVID-19 pandemic in August and shed 13 of its ships by the end of the year.

The company previously reported a loss of $4.37 billion, or $6.07 a share, during the second quarter -- its largest quarterly loss ever -- as cruises remain banned in the U.S. through at least late July.

While U.S. health authorizes remain focused on curbing COVID-19 outbreaks among crews on cruise ships in U.S. waters, the cities of Hamburg, Kiel and Rostock, Germany, have given the industry the go-ahead to start cruises again next month. Carnival Corp.'s AIDA Cruises brand will begin cruises from those ports at less than 50% capacity starting Aug. 5, CEO Arnold Donald announced on an earnings call Friday. The passengers will stay on the ships during the entire cruise.

The company has already received around 1,000 bookings for the cruises, which went on sale Thursday.

"There's a lot of pent up demand," he said. The company is eyeing Italy as a possible spot to start cruises next.

Outside of the AIDA 14-ship fleet, 53 of the company's ships are anchored with just a skeleton crew on board, and the 35 others are expected to reach that status in the next month. Still, the company is burning through around $650 million per month on operations and capital commitments.

 

In an effort to lower its cash-burn rate, Carnival is offloading 13 of its ships this year -- nine more than previously planned. So far the company has sold Costa Victoria from its Costa Cruises line and Oceana from P&O Cruises. The company is also slowing down its fleet growth; only five of the nine ships the company planned to add to the fleet in 2020 and 2021 are now scheduled to be delivered by the end of fiscal year 2021. The company has secured $10 billion in new capital, Donald said, enough to last "into late next year" even in a zero-revenue scenario.

Since the cruise industry halted operations worldwide in March, companies have been slow to repatriate all of their crew members as ships continue to experience COVID-19 outbreaks and some countries require companies to provide testing and quarantine facilities for returning crew. Around 3,000 of Carnival Corp.'s 80,000 crew members are still awaiting repatriation, Donald said.

Cruise bookings for 2021 remain in historical ranges, Donald said, meaning the COVID-19 pandemic has not shaken confidence in cruising as much as the Costa Concordia sinking in 2012 and the Carnival Triumph "poop cruise" in 2013.

"None of (our brands) or others have gone to the low levels we experienced at that time," said Donald.

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