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What will happen if Royal Caribbean goes bankrupt.


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Doubt RCCI will go bankrupt for several reasons. The main being that the government will bail out, to a certain extent, at least Carnival and Royal. Cruising is good for the economy and a favorite among the older more well-off traveler. While millennial's mostly prefer to "gram" experiences, those with  actual sense want a vacation that provides a good time and value.

In the infinitesimal case of RCCi filing bankruptcy they may choose to do a few combined bon voyage cruises to appease those with FCC or current bookings.......or yes you will lose the money.  This is an unprecedented time, who knows how many businesses will have to restructure.

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Royal currently has enough money to operate for quite some time.  They have just uncreased their line of credit by $500 million.  The US government will be there to help if it came to that

As well they many ships that if they had to they could sell a ship or two.  If everyone booking was to be refunded, then it may cause a major cash flow issue for all the cruise lines.  They are not currently operating so the expenses for the ships are drastically lower at the moment as well.

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3 hours ago, whenismynextcruise said:

Is a bail out from "the government a reality here? These are not US based companies right? Most of the cruise companies register thier ships at forerign ports. At least that is how it seems to me. I fully admit that I could be wrong here. I am sure one of the experts here can speak to the details.

 

It's complicated.  Just like the big automakers being multinational corporations is complicated.  While the asset value of a ship maybe carry a flag of convenience there are domestic taxation for certain aspects of the business just like with any American company that does business internationally.  

One thing to consider are the spin off jobs and supply chain of the cruise industry.  When the big automakers were bailed out it wasn't just because they were American companies, the fear was the impact to the supply chain that feeds the automakers.  That is what would hit so many Americans.  

Just like our own president is proud to pay no tax and calls that being "smart" many American companies work the tax code to their benefit to minimize tax burden.  All American companies do this, the bigger ones have more opportunity to do it better.

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The smaller cruise lines will be more exposed to bankruptcy compared to the big players like Royal and Carnival.  

Just to answer the OP's question, customers who have FCC/monies paid to Royal will most likely SOL.  Other creditors will have priority.  There are some travel insurance plans that will cover those type of loss.  Some credit cards may even cover that.  The premium ones may just credit you out of "goodwill". 

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I really don't think bankruptcy of Royal, Carnival or Disney is likely.  If it does happen (to them or someone else) the customers would be at the end of the line of creditors, and would have a very weak "legal" claim to a refund.

However, the company would probably reorganize out of bankruptcy or be sold.  Either way, the court, and creditors, would probably see value in keeping the customer base happy and would honor your tickets and other purchases.  

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4 hours ago, JimnKathy said:

I just bought some RCL stock at $28 a share...Coronavirus is just a short-term blip creating a terrific price point for long-term investors to build a position.

Interesting.  I have been contemplating doing the same thing.  I have faith in the company and the industry to make it back.  Just trying to figure where the bottom might be.  

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55 minutes ago, jeffmw said:

RCL will not go bankrupt. This isn't a lengthy enough issue and the cruise industry is booming. They'll cut some costs to get through this and be fine. 

I think many people would be shocked at how close to the line many large corporations operate. The assumption is that because they have millions (or even billions) in assets they are well off and secure. (I used to be one of those people who made this assumption). That is not always the case. A lot of time more assets just mean more debt and overhead and just like the average American with their nice house and nice cars (and all their debt) missing a couple paychecks could break them. I don't know if that is the case with RC (and I hope it isn't) but its always a possibility.

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2 hours ago, ChessE4 said:

Roger,  I am close to pulling the trigger on that.

My GOD I can not believe how cheap it is now 😳🤯........after watching it for a few days I am going to have to do the same!  You KNOW that it is going to start to go through the roof after this whole mess is over! 

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16 hours ago, bhageerah said:

My GOD I can not believe how cheap it is now 😳🤯........after watching it for a few days I am going to have to do the same!  You KNOW that it is going to start to go through the roof after this whole mess is over! 

I am thinking if they get back to cruising by April 15th then the stock will rebound, but I am no expert if you read some of my other posts!! LOL

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16 hours ago, bhageerah said:

My GOD I can not believe how cheap it is now 😳🤯........after watching it for a few days I am going to have to do the same!  You KNOW that it is going to start to go through the roof after this whole mess is over! 

It's only going to continue to drop until they start cruising again. JMHO

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I just requested the full refund for our 4/6 cruise instead of the 125% credit. The possibility of bankruptcy and defaulting on the credits is more of a concern to me than the value of the extra 25%. I know most people here are saying, "no big deal, they'll be fine, buy stock now" but I realize that this is a website and message board by and for Royal Caribbean fans who have a vested interest in the outcome that probably colors their perception.  Better safe than sorry for us but I hope they bounce back and it works out for all that were impacted.

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On 3/17/2020 at 9:37 AM, JimnKathy said:

I just bought some RCL stock at $28 a share...Coronavirus is just a short-term blip creating a terrific price point for long-term investors to build a position.

I bought a bit higher, but and have lost some $ but I bought some air stock after 911 and did OK.  My lesson learned is that I waited too long back then after the rebound and lost some profit in the long term.  I have a fair amount of confidence in RCL because of both their history and their clientele....

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