Norwegian Cruise Line CEO ‘Astonished’ People Are Still Booking Cruises


After Norwegian Cruise Line reported dismal second-quarter earnings—with revenue plunging 99% from a year ago—CEO Frank Del Rio said that he was “astonished” that people are still booking cruises, while also expressing optimism the company has enough liquidity to weather a prolonged period of no sailing.


Norwegian on Thursday reported a net loss of $715 million in the second quarter, with revenue plunging to less than $17 million, down from $1.7 billion a year ago.

Since its last earnings report, the company has extended its suspension of voyages three times, most recently doing so earlier this week until at least November, along with other major cruise operators in the Cruise Lines International Association. 

With that latest delay, that means major cruise operators like Norwegian, Royal Caribbean Cruises and Carnival will not have set sail for over six months, resulting in massive financial losses.

Despite Norwegian reporting a monthly cash burn rate of around $160 million amid the coronavirus pandemic, CEO Frank Del Rio admitted on the latest earnings call that he was “astonished how well bookings are coming in, given the fact the industry is suspended.” 

While Norwegian’s earnings numbers are bleak, Del Rio was optimistic that the cruise industry’s “very loyal customer base” would translate to “a lot of pent-up demand,” as the company has already reported $1.2 billion of advanced ticket sales as of June 30, 2020. 

What’s more, Norwegian raised a total of $1.5 billion in July to bolster liquidity and cover financial losses, “which we believe positions us to withstand a scenario of prolonged voyage suspensions,” Del Rio said.

Crucial quote

“If you had told me that we were going to be facing this set of circumstances, and your question is, ‘Frank, would you be taking any bookings?’ I would have laughed at you. I’ll say, ‘Of course, not, who would book? It’s crazy,’” Del Rio said in response to a question about forward bookings on Thursday. “But people are booking. People are confident that we’re going to come back. People do want to cruise. They miss it. . . . And so this is temporary. The question is how temporary is ‘temporary.’”

Surprising fact

Of Norwegian’s $1.2 billion in advanced ticket sales, $800,000 comes from future cruise credits, which customers received instead of refunds for cancelled cruises. Across Norwegian Cruise Line, Royal Caribbean Cruises and Carnival, over 50% of guests are repeat cruisers, Del Rio pointed out during his company’s earnings call. “We’re going to lean on them heavily . . . they want to cruise again,” he said. “Depending on when you think the restart is, there’s going to be 15 million, 20 million people who were not allowed to cruise this year.”

What to watch for

Despite the company’s optimism that it can weather a no-revenue environment amid the pandemic, Norwegian did admit that coronavirus has had a “significant impact” on its financial position. If the temporary suspension of sailing is further extended (beyond October 31), that would likely lead to a further negative impact, Norwegian said in its earnings release. “It will take some time” for business to get back to normal, Del Rio said.

Key background

While cruise stocks have rebounded somewhat since their March lows amid optimism about reopening the economy, shares of Norwegian, Royal Caribbean and Carnival are all still down between 60% and 75% so far this year. All three major operators have reported record financial losses as the industry remains paralyzed by the coronavirus pandemic for the foreseeable future. 

Further reading

Most Cruises Are Now Canceled Until At Least November (Forbes)

Cruise Lines, Facing Record Losses, Extend Suspension Of Sailing Until September (Forbes)

Another Rocky Cruise: First Alaskan Line To Resume Sailing Already Cut Short By Covid-19 (Forbes)

Why A Private Equity Firm Backed By Bernard Arnault Is Putting $400 Million Into Norwegian Cruise Line (Forbes)

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