Cruise & Ferry Review - Spring/Summer 2021

1 3 “This shows that our guests were very satisfied with their experience and their feedback suggests that they felt very safe, comfortable and relaxed throughout their cruise. This, combined with the fact many said they had enjoyed their cruise, makes us very proud as we strive to exceed guest expectations in everything we do.” To resume sailing in the USA, Carnival Corporation must follow the Framework for Conditional Sailing Order set out by the US Centers for Disease Control and Prevention (CDC). The company has already completed the first phase, which involved demonstrating adherence to testing, quarantine and social distancing requirements, and establishing laboratory capacity for testing. “Now we need to run test sailings with volunteers and if these are successful, we can apply for a conditional sailing certificate 60 days before we start our planned voyages,” says Donald. “We’re still awaiting more information from the CDC before we can move to this stage.” Another major priority for Donald and his team was to find a way to conserve cash and raise capital. In 2019, Carnival Corporation generated $20.8 billion in revenue, an increase from $18.9 billion the previous year. However, with almost all cruise activities paused in 2020, revenue dropped 74 per cent to $5.6 billion and the company recorded net losses of $10.2 billion. Between March and the end of August, the company recorded an average monthly cash burn rate of $770 million, but this had reduced to $500 million per month after limited cruise operations resumed in Europe in the fourth financial quarter. “Our main priority has been to find ways to weather the financial storm to ensure that we survive long enough to come out the other side,” says Donald. “Most of our brands have had no revenue for a year, but we must still remunerate employees, keep ships running while they’re laid up, and continue paying other expenses. Consequently, we’ve come up with numerous ways to raise a lot of capital. It’s been challenging, but we now have the liquidity in place to sustain ourselves throughout 2021, even if we’re unable to resume operations and bring in revenue.” One of Carnival Corporation’s cash conservation strategies was to sell a total of 19 ships from across the Carnival Cruise Line, Costa Cruises, Holland America Line, Princess Cruises, P&O Australia and P&O Cruises fleets. Some were bought by other operators and investors, while the rest have been scrapped. “We were planning to retire these ships over time anyway because they were older and less efficient than many of our other vessels and, despite representing 13 per cent of our overall capacity, they only accounted for three per cent of our operating income,” says Donald. “As they were already laid up and no longer generating any revenue, we decided to accelerate their exit from the fleet.” Selling these ships will improve Carnival Corporation’s fuel and operating costs by one and two per cent respectively. In addition, the sales are being offset by several new vessels that joined various brands in 2020. They included Princess Cruises’ Enchanted Princess in September, P&O Cruises’ Iona in October, and Carnival Cruise Line’s Mardi Gras and Costa Cruises’ Costa Firenze, both in December. Holland America Line is also scheduled to take delivery of the new Rotterdam in summer 2021. “These new vessels – and several others that are still under construction or on order – are much more efficient and have advanced green technologies to help us achieve our environmental sustainability goals,” says Donald. “Mardi Gras and Iona are powered by LNG. All four newbuilds have also provided each brand with an ideal opportunity to elevate their signature cruise experience with various innovative onboard features, such as the Bolt roller coaster on Mardi Gras and the Sky Dome on Iona.” Carnival Corporation has also taken advantage of the unprecedented pause in operations to identify new opportunities for optimising the way the corporation and its nine brands work. “We regularly evaluate our processes so we can continually improve them but being forced to scale back various areas of our businesses has allowed us to consider new AIDA Cruises implemented strict new health and safety protocols enabling AIDAblu to welcome European guests back onboard in October 2020 KEYNOTE “ We now have the liquidity in place to sustain ourselves throughout 2021”