US cruiseship giant Carnival Corp has revealed what may be the biggest ever quarterly loss in shipping history — as it lines up more vessel disposals.
The huge shipowner has seen its business laid waste by the coronavirus pandemic that has idled its fleet for most of its second quarter running to 31 May.
The net loss was $4.4bn in that period, or $6.07 per share, against a $451m profit a year ago. The 2020 result includes $2bn of non-cash impairment charges.
Revenue was just $700m, compared to $4.8bn in the prior year, with mid-March seeing the end of its current cruising operations as the world went into lockdown.
"The company is unable to definitively predict when it will return to normal operations," Carnival said.
And it is still not making any financial forecasts, although it was able to say it expects a loss in the second half of 2020.
"The longer the pause in guest operations continues the greater the impact on the company's liquidity and financial position," the cruise giant added.
The stock was down about 5.5% at $18.03 in pre-trading in New York on Thursday.
More liquidity to be added
Carnival ended the period with $7.6bn of available liquidity. It expects this to rise through debt refinancing.
In addition, the company has $8.8bn of committed export credit facilities that are available to fund ship deliveries originally planned through to 2023.
Carnival has $2.9bn in customer deposits in the bank, including $475m related to cruises during the second half of 2020.
More ships leaving the sector?
As part of its "capacity optimisation strategy", the company intends to accelerate the removal of ships that had been marked for sale in coming years.
The company has preliminary agreements in place for the disposal of six vessels that should exit the fleet within three months.
Carnival working on more sales as well, the company added.
One of these disposals is the 75,200-gt Costa Victoria (built 1996), as TradeWinds reported on Wednesday.
Te ship is reportedly not going for scrap, but its days as a globe-trotting cruiseship appear to be over.
Genova Trasporti Marittimi, an entity belonging to Italy’s San Giorgio del Porto Shipyard, is said to be the buyer.
Market sources said they believe the ship will in future be used as floating accommodation for workers and contractors at San Giorgio’s shipyard in the French port of Marseilles.
The sale into an accommodation role highlights the complete lack of interest in secondhand cruiseships during the pandemic.
Big price drop
TradeWinds reported the company may have had to accept $75m less than the $100m it was marketed at last year.
Carnival has 106 ships on the water, and an orderbook of 16 units. More than 20 date from the 1990s.
VesselsValue estimates the existing fleet as worth $51.8bn, including newbuilds.
Keeping its ships idled will cost Carnival an estimated $650m in the second half of 2020, it said on Thursday.
This cash-burn figure includes ongoing ship operating and administrative expenses, committed capital expenditures and interest payments.
Carnival expects to refinance about $2.4bn of debt maturities coming due over the next 12 months, half of which matures in the second half of 2020.
The group has already completed offerings of $6.6bn in notes and shares to shore up the balance sheet.
The company has fully drawn down its $3bn revolver and qualified for US state help of $700m.
The early settling of outstanding derivatives meant it banked another $220m.
In addition, a debt holiday will defer $300m of principal repayments due in May 2021 over the following four years.
