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Wall Street: Cruises wont restart until late 2021 or early 2022

In:
22Jan2021
By: 
Matt Hochberg

If you are looking for a "glass is half empty prediction" on when cruises might restart, here is a doozy.

One Wall Street analyst shared his thoughts on the likelihood of cruises restarting and it is not a good outlook for cruise fans.

Truist Securities analyst Patrick Scholes wrote in a note that cruises likely will not resume from U.S. ports until the second half of 2021 under the best of circumstances, and possibly not until early 2022.

Mr. Scholes wrote the note on Friday indicating a changing look at the prospects of cruises restarting, "The sentiment for 2021 has now changed to ‘It’s possible 2021 will not be a return to (revenue) sailings in North America, or at least not before'".

He added that while cruise bookings are exceeding cancellations, “we now see July as the best case for restart,” though the fourth quarter is more likely.

"Consensus expectations are for a return to revenue sailings in 2Q21 with [an] acceleration into 3Q21, which we do not see as realistic," Scholes wrote, adding that the stocks have "so far shrugged off unabated delays in restarting."

Royal Caribbean recently cancelled March and April cruises for nearly all of its sailings, and Norwegian and Carnival have both matched as well.

Cruise industry insider Stewart Chiron recently took to Twitter with his own predictions based on the recently announced cancellations.

"Several cruise lines will be announcing further cancelations of all April sailings. May sailings, at this point, are probably toast as well," Chiron stated in his tweet. "Test sailings of 3-5 nights will occur. All 7-night sailings, heading into summer are tentative at best right now."

The single biggest question is when cruise lines might be able to get started with testing out their new procedures.

Carnival recently tip-toed around the idea that the CDC is holding up the cruise lines from moving forward with restart plans.

Carnival Corp. CEO Arnold Donald said Carnival is in phase one of the Conditional Sail Order, and said, "additional guidelines for future phases have not yet been issued by CDC."

Mr. Scholes wrote in his note, "there is concern amongst travel executives who believe that the recent CDC phased return to cruise is really a de facto no-sail order."

Read moreTop 14 things the CDC requires cruise ships do on test sailings

"The concern is that the CDC’s hurdles are so high that it will make it extremely difficult for the cruise lines to sail with paid customers."

The good news is demand remains strong in the form of bookings, and he expects the pent-up demand for travel to boost cruises whenever they have the opportunity to restart.