Taylor Dolven

Carnival CEO: Enough cash to endure 12 more cruise-less months

Carnival Corp. has enough cash to survive a cruise-less 2021, CEO Arnold Donald told investors Jan. 11. The company reported a net loss of $2.2 billion during the final quarter of 2020 but ended the year with $9.5 billion in liquidity, enough to endure at least 12 more months without cruises, Donald said. To tighten supply, the company has divested of 15 ships from its pre-pandemic fleet of 105, and plans to bid farewell to four more in the coming weeks. “I’m glad to put 2020 behind us,” Donald said. “It proved to be a true testament to the resilience of our company.” The company has returned 30 of its ships to U.S. waters since the U.S. Centers for Disease Control and Prevention lifted its months-long no-sail order in October, replacing it with requirements cruise companies need to meet in order to resume passenger cruises. Carnival Corp. had removed all of its ships from U.S. waters — and CDC oversight — in June. Ships in U.S. waters are required to test crewmembers for COVID-19 weekly and report results to the CDC. Donald said the company is still awaiting guidelines from the public health agency about when and how it will operate test cruises, one of the next requirements. Last year Carnival Corp. cruise lines Costa Cruises and AIDA resumed passenger operations in Europe; both canceled sailings late last year as COVID-19 cases spiked and countries went back into lockdown. Donald said he hopes all of Carnival Corp.’s ships will be operating by the end of 2021. While details regarding cruising’s resumption are still unknown, Donald said demand from past cruisers remains strong. Cumulative advanced bookings for the second half of 2021 are within the historical range, according to the company, and the cumulative advanced bookings for the first half of 2022 are ahead of 2019. “Whether we start sailing in April or March or June or whenever, the real value in this business extends for many years,” Donald said. “Eventually we will all be back to the great days of growth in our industry, earnings growth and cash generation. A matter of a couple of months here and there are not determining the future value of the industry.”

Carnival’s plan to resume US cruises on Dec. 1 remains on track after ruling

MIAMI — Carnival Corp. is still on track to resume cruises in the U.S. on Dec. 1 after a favorable ruling from a federal judge Oct. 21. The company, on probation since 2017 after pleading guilty to dumping oil into the ocean for several years, will have to attest to the environmental protection status of each of the company’s cruise ships 30 days before they reenter U.S. waters to restart cruises, according to the order from U.S. District Judge for the Southern District of Florida Patricia Seitz. Carnival Corp. successfully fended off a stricter order proposed by the judge at a hearing on Oct. 23 that would have required ships to get her approval 60 days before reentering U.S. waters — which would have essentially derailed its plans to restart cruises from PortMiami and Port Canaveral on Dec. 1. For ships returning to U.S. waters before Dec. 31, the company can file its certification up to seven days after returning, Wednesday’s order said. In June, Carnival Corp. removed all of its ships from U.S. waters, partly due to a disagreement with the U.S. Centers for Disease Control and Prevention about how to best mitigate COVID-19 spread on board. The CDC banned cruises in mid-March amid COVID-19 outbreaks on multiple cruise ships, and their current ban remains in effect until Oct. 31. Now, as the company brings ships back, CEO Arnold Donald will have to notify the court of the status of each ship’s pollution prevention equipment, spare parts, staffing, voyage planning software, and vetting of shore-side waste vendors, creating an extra hurdle for Carnival Corp. ships to resume cruises. If any of the items are incomplete, Donald will have to provide a plan and timeline for addressing the outstanding problem. At a hearing last week, Seitz said those five items had been consistent problems for the company over its three years of probation, causing multiple violations of national and international environmental laws. Based on the company’s certification of the status of these items, Seitz said she would determine whether the ships could reenter U.S. waters or not. The Oct. 21 order does not require the company to get her approval, but says she can order further review if necessary. “I have tried to make sure we are balancing constantly the interests of the community and the environment in which the company operates and the needs of the defendant,” she said during the Friday hearing. Roger Frizzell, a spokesperson for the company, said it will be complying with the order going forward. “We continue to make strong progress on our efforts tied to compliance and environmental protection across the company,” he said in an email. “This will be one more action that supports our goal for continuous improvement in these two critically important areas.” Carnival Corp. has been on probation since April 2017 after pleading guilty to environmental crimes — dumping oily waste into the ocean for a period of eight years from its Princess Cruises ships — and paying a $40 million fine. In June 2019, the company pleaded guilty again to violating probation, paid a $20 million fine and agreed to more strict oversight during its remaining years on probation.

‘A bump in the road’: Cruise CEOs confident cruises will resume in US in 2020

Cruise CEOs say they are confident their companies will rebound after the worst seven months in the industry’s history. At the annual SeaTrade Cruise conference, held virtually this year, the leaders of Carnival Corp., Royal Caribbean Group, Norwegian Cruise Line Holdings and MSC Cruises expressed optimism about the state of the industry. The executives said they anticipate a cruising comeback in the U.S. soon and again urged U.S. health authorities to give them an opportunity to prove cruising can be done safely during the COVID-19 pandemic. “This is a bump in the road,” said Frank del Rio, CEO of Norwegian Cruise Line Holdings. “We will not cruise until we believe it’s 100 percent safe to cruise. It’s coming soon. Whether it’s Dec. 22 or Jan. 3, I think we’re in the ballpark. If a couple of things go our way, we could be sailing again soon.” SeaTrade originally planned to hold the conference at the Miami Beach Convention Center in April, but had to reschedule for a virtual conference this week. The CEOs said they are optimistic cruises will resume in the U.S., the industry’s most lucrative market, this year thanks to a solid base of unwavering cruise fans and a commitment from the companies to test all passengers before boarding. They did not say what kind of tests will be used or when passengers will be tested. A panel of health experts hired by Royal Caribbean Group and Norwegian Cruise Line Holdings previously recommended companies test passengers between five days and 24 hours before boarding. Cruise companies hope testing will create a controlled environment, limiting the risk of the virus getting on board. Even so, as the virus continues to spread on land, it will likely spread at sea, said Carnival Corp. CEO Arnold Donald. Companies are working to beef up medical centers and procedures to isolate people so that those who fall ill can be treated. “There’s no perfect system to prevent it,” said Donald. “We’ve spent an enormous amount of time on what happens if there’s a case on board.” Royal Caribbean Group CEO Richard Fain said the company would likely start with what he called “test cruises” and then build up slowly to short cruises. “I do think that’s going to start this year,” he said. Carnival Corp. and MSC Cruises resumed cruises in Italy in September, available only to Italians. Donald and MSC Cruises CEO Pierfrancesco Vago said they are receiving high satisfaction feedback from customers so far. “We have a huge base of previous cruise goers,” Donald said. “I don’t think the industry is going to be faced with a long-term challenge here.” The display of confidence comes less than a week after the White House blocked the CDC from banning cruises until February 2021, as it had planned to do. Instead, the agency’s no-sail order extended just until Oct. 31, paving the way for cruises to resume as soon as November without another extension. Carnival Cruise Line has canceled all U.S. cruises through December, except for cruises leaving from PortMiami and Port Canaveral, which are on track to start on Nov. 1. Norwegian Cruise Line Holdings canceled all cruises until December. Royal Caribbean Group is still selling cruises for November. Virgin Voyages and Disney Cruise Line are selling December cruises. Del Rio said it will take his company at least 60 days to bring a ship from laid-up status to ready to operate passenger cruises. Donald has previously said it will take Carnival Corp. 30 days. The industry first shut down on March 13 amid COVID-19 outbreaks on several ships. Since then, the CDC has repeatedly extended its ban on cruising in U.S. waters as companies have struggled to prevent outbreaks among crew after repatriating all passengers. At least 111 passengers and crew have died from COVID-19, and the virus has affected at least 87 ships — 34 percent of the global fleet — according to an investigation by the Miami Herald. Since March, cruise companies have endured record financial losses and layoffs. People in the U.S. whose work supports the industry, like longshoremen and travel agents, have had their hours cut or their jobs eliminated entirely. Initially, those workers received unemployment assistance from the state and federal government. Now, those who are unemployed in Florida are getting a maximum of $275 per week after the state cut federal assistance and another relief bill remains stalled in Congress. Cruise companies, which are incorporated abroad and flag their ships abroad, were not eligible for direct federal aid, but they have been able to borrow at reduced rates with aid to the Federal Reserve. Throughout the fall and summer, border restrictions and expensive travel mandates caused a months-long delay in repatriating thousands of crew members, whom companies stopped paying after halting passenger cruises. Some crew members are still at sea without pay waiting to be sent home. Workers continue to contract COVID-19 on laid-up ships. Industry executives had planned to meet with Vice President Pence on Oct. 2 to discuss plans to resume cruises, but the White House canceled the meeting after President Donald Trump and several others in the administration tested positive for COVID-19. Donald did not say when the meeting will be rescheduled. “We’re collaborating with everyone, there’s constant dialogue with various parties,” he said. “We’re cautiously optimistic.”

Cruise industry offers ideas to allow resumed sailings

Cruise companies are stepping up their pressure on U.S. health authorities to allow them to cruise again amid the COVID-19 pandemic. On Sept. 21, Royal Caribbean Group and Norwegian Cruise Line Holdings submitted health and safety protocols to the U.S. Centers for Disease Control and Prevention as part of the agency’s request for public comments about how to safely resume cruises. The protocols include testing all passengers and crew for COVID-19 before boarding, requiring masks and expanding medical capabilities on cruise ships. The cruise industry’s lobbying group, Cruise Lines International Association, sent a separate, less-specific list of recommendations to the CDC on Sept. 21, vowing that all cruise companies will require testing before boarding, masks and social distancing; improve ventilation and medical capabilities; and limit shore excursions. Sept. 21 was the final day to submit public comments to the CDC about cruising during the COVID-19 pandemic. The CDC has banned cruises in the U.S. until Oct. 1, and most cruise lines have said they will not resume cruises until at least Oct. 31. “We’ve learned a lot in six months,” said Royal Caribbean Group Chairman Richard Fain. “Our job was to find a way going forward to learn from the past, and not to repeat it.” Norwegian Cruise Line Holdings CEO Frank Del Rio said it was “absolutely” safe to resume cruises again, citing the announced protocols. “There is not one silver bullet,” he said. “It’s layer on top of layer on top of layer … We’re going to test it, make adjustments along the way.” A spokesperson for the CDC said the agency has not requested plans to resume passenger cruises from the companies. “Currently, CDC does not have enough information to say when it will be safe for cruise ships to resume passenger operations,” the spokesperson said in an email. “CDC will continue to work with cruise lines to ensure that all necessary public health procedures are in place before cruise lines begin sailing with passengers.” Carnival Corporation CEO Arnold Donald said it typically takes 30 days to get a laid-up ship running again. The 74 recommended protocols submitted to the CDC on Sept. 21 by Royal Caribbean Group and Norwegian Cruise Line Holdings were hashed out by a panel of experts, including several that used to work for the CDC. The panel said it is impossible to eliminate the risk of COVID-19 spread at sea, but with their recommendations, that risk can be minimized. The panel did not determine an infection threshold on land that would make it safe to resume cruises but instead focused on what companies can do to bolster health and safety on ships. “Getting down to zero risk is not likely,” said former Utah Gov. Mike Leavitt, who chaired the Royal Caribbean Group and Norwegian Cruise Line Holdings panel. “Therefore we have to have the component of mitigating spread and ability to respond.” Some of the recommendations include: • All passengers should be tested for COVID-19 between five days and 24 hours prior to boarding • Crew should be tested in their home countries before leaving to join a ship and then again at the end of a seven-day on board quarantine period, ideally using PCR tests. • Both passengers and crew should have their temperatures taken daily. • Cruise companies should visit only ports that agree to evacuate and repatriate sick people on board. • All ship heating and air-conditioning systems should be upgraded to MERV 13 filters, similar to those used by hospitals. • Ships should lower doctor-to-passenger ratios on board. • Crew should live in single cabins whenever possible and be allowed limited shore leave. • Passengers who don’t attest that they agree to protocols not be allowed to cruise. A protocol that was floated in March as cruise companies scrambled to try to avert a shutdown was barring passengers over 70 years old, who are particularly vulnerable to the effects of COVID-19. That was scrapped by the panel. Passengers who are at higher risk will instead be advised to consult with their doctors before cruising. Carnival Corporation, the largest cruise company in the world, endorsed the CLIA proposals, which include testing; that’s already being conducted on its Costa Cruises ships in Italy. “This has been probably the most difficult period in our industry’s 50 year history,” said CEO Donald. “We are on a path with the industry to resume cruise operations in the U.S. using the knowledge from our advisors and in full cooperation with the authorities.” Preventing COVID-19 spread on cruise ships is exceptionally difficult, health experts say. At least 110 passengers and crewmembers have died from COVID-19, at least 38 in Florida, according to a Miami Herald investigation, and at least 86 ships have been affected — approximately one-third of the global cruise fleet. Cruise companies have struggled to contain COVID-19 outbreaks among crew members on their ships during the industry’s pause. On several occasions, even after months of isolation at sea, crew members tested positive upon returning to their home countries. CDC data obtained by the Miami Herald via a Freedom of Information Act request shows at least seven ships in U.S. waters during the month of August reported COVID-19 or COVID-like illnesses to the CDC that month. Carnival Corporation and Virgin Voyages pulled their ships out of U.S. waters in June and are no longer reporting illnesses to the agency. Norwegian Cruise Line Holdings is reporting from just three of its ships.

‘Enough is enough’: Commissioners and execs urge CDC to let cruising resume

MIAMI — Five months after South Florida became a hotbed for COVID-19 cruise outbreaks, Miami-Dade commissioners and cruise executives are urging the U.S. Centers for Disease Control and Prevention to give the cruise industry the OK to restart sailings as soon as possible. At a Sept. 10 virtual tourism and ports committee meeting, Commissioner Rebeca Sosa scolded the federal health agency charged with the country’s public health response to COVID-19, saying it has been too slow to communicate with the industry and must work quickly to get cruising up and running again. The deadly virus continues to claim thousands of American lives every week. “The problem is it’s not fair that the CDC is not paying attention and communicating with the cruise industry,” Sosa said, citing the time between when cruise companies submitted plans to the agency regarding how to mitigate COVID-19 spread among crew in mid-April and the finalizing of those plans in late July. “We cannot wait another 14 weeks.” The meeting, which included packaged videos promoting the cruise industry and live shots with cruise CEOs, did not touch on safety concerns. Commissioners didn’t ask executives for details about how to avoid the disease spread and complications that left hundreds of passengers at sea for weeks and the Coast Guard overwhelmed by medevac requests. The CDC first banned cruises in the U.S. in mid-March amid COVID-19 outbreaks on several ships. The following six months have been marred by disagreements between the industry and the agency. During the ban on cruising, companies have suffered record financial losses and had to lay off large numbers of staff. Thousands of people who support the industry, including longshoremen, shuttle drivers, industry vendors and travel agents, remain out of work. The CDC has banned cruises in the U.S. until at least Oct. 1; most companies have said they will not resume cruises in the U.S. until at least Oct 31. Sosa and Norwegian Cruise Line Holdings CEO Frank Del Rio said cruise ships are no more dangerous than hotels or airplanes. That claim has been refuted by the CDC, which has repeatedly noted the unique challenge in preventing COVID-19 spread at sea. “A cruise is a hotel in the middle of the ocean that the doors and windows open all the time, and we have an incredible amount of wind coming in and out making it a safer place,” said Sosa. Said Del Rio, “It’s unconscionable what’s happened to the cruise industry. We’ve been quiet for too long.” Two cruise companies with U.S. headquarters in Miami started cruises again in Italy this month: Carnival Corp., with its Costa Cruises brand, and MSC Cruises. The cruises are only available for Italian passengers and all passengers and crew are undergoing COVID-19 rapid antigen tests before boarding. Carnival Corp. CEO Arnold Donald said he expects the company’s AIDA brand to begin cruises in Germany soon. Del Rio said Norwegian Cruise Line Holdings will be submitting its health protocol proposal, created in conjunction with Royal Caribbean Group, to the CDC within the next 10 days. “We’ve got to get to work,” he said. “Enough is enough. It’s been more than six months. We’ve learned a lot.” At odds with CDC In its most recent no-sail order, the CDC said it spent 38,000 man-hours working to manage the COVID-19 crisis on cruise ships as of July 10. After the CDC first warned the public to avoid cruise travel because of the increased risk of COVID-19 spread on March 8, cruise companies continued to operate. Nervous passengers boarded cruises after the CDC warning because companies were not offering refunds. Companies did not screen disembarking passengers at PortMiami, in some cases after learning about previous passengers who had tested positive. On March 13, the industry announced it was canceling all U.S. cruises. The CDC issued its industry-wide no-sail order the next day. In March and April, several ships still carrying passengers became trapped at sea with nowhere to dock and eventually found refuge in Florida ports where dozens of passengers and crew were evacuated; some died on board before the ships arrived, others died in South Florida hospitals. At least 110 passengers and crew members have died from COVID-19, at least 38 in Florida, according to a Miami Herald investigation, and at least 86 ships have been affected, or approximately one-third of the global cruise fleet. In April, seven cruise companies submitted plans to the CDC detailing how they would protect crew from the virus while the ships were out of service. The CDC said the plans largely failed to meet the agency’s requirements to prevent the spread of COVID-19 and staffed two people to work with each company on redrafting the plans. Norwegian Cruise Line continued to house crew in shared cabins with shared bathrooms until July, according to the agency, and took more than two weeks to sign the required form confirming it has a complete and accurate plan. Most companies needed two revisions to their plans before they were deemed complete; one needed seven, the agency said. In the interim, the CDC said cruise companies would be allowed to repatriate crew members through the U.S. using private transportation if their executives signed an agreement with the agency assuming responsibility for following all health protocols, like requiring traveling crew to wear masks. Royal Caribbean told its crew that the CDC had banned all crew repatriation, delaying sending them home. After the Herald reported the company knew the CDC was allowing for repatriation on private transportation, the company reversed and signed the required agreements. In June, the CDC unveiled a grading system for cruise ships based on their level of infection. Ships with complete plans for preventing COVID-19 spread and no COVID-19 cases within 28 days can repatriate crew using public transportation. The only cruise company to have a complete plan at that time was Bahamas Paradise Cruise Line. Crew continue to contract COVID-19 aboard laid-up ships, according to CDC data obtained by the Miami Herald via a Freedom of Information Act request. At least seven ships in U.S. waters during the month of August reported COVID-19 or COVID-like illnesses to the CDC that month. Carnival Corp. pulled its ships out of U.S. waters before the grading system debuted, in part because it disagreed with the agency’s requirement that asymptomatic crew members remain in their cabins as much as possible. Virgin Voyages pulled its ship out the following week. Disney Cruise Line and Norwegian Cruise Line have now pulled most of their ships out of U.S. waters. Ships outside U.S. waters are no longer required to report illnesses to the CDC. Hundreds of crew members are still stuck on cruise ships without pay, waiting to be repatriated. A spokesperson for Carnival Corp. said it still had 400 crew to repatriate at the start of this week, after sending home 80,000. A spokesperson for MSC Cruises said it still has around 700 waiting to go home, after repatriating more than 17,800. A spokesperson for Royal Caribbean Group said as of July 17 the company still had 2,815 people to repatriate and did not provide an update. Spokespeople for Norwegian Cruise Line Holdings did not respond to a request for comment.
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