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Coronavirus

American biotech coronavirus vaccine shows positive results in early human trials

In:
Category: 
18May2020

An American biotech company announced its coronavirus vaccine resulted in positive interim clinical data in its first human safety tests.

Moderna published the results of its vaccine candidate against novel coronavirus (SARS-CoV-2), from the Phase 1 study led by the National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health (NIH).

These results have not been published in a scientific journal and are only a first step toward showing the experimental vaccine is safe and effective.

The results show an increased level of antibodies in the 8 patients given various dose levels that matched the levels of antibodies blood samples from people who have recovered from COVID-19.

The vaccine, known as mRNA-1273, was generally safe and well tolerated. The only side effect was in one patient where there was redness around the injection site.   

"With today’s positive interim Phase 1 data and the positive data in the mouse challenge model, the Moderna team continues to focus on moving as fast as safely possible to start our pivotal Phase 3 study in July and, if successful, file a BLA," said Stéphane Bancel, Chief Executive Officer at Moderna. "We are investing to scale up manufacturing so we can maximize the number of doses we can produce to help protect as many people as we can from SARS-CoV-2."

Countries and private companies around the world are in a race to create a working vaccine, and the U.S. is aiming to have hundreds of millions of doses of a vaccine broadly available by the end of the year.

The cruise industry has been especially hard hit by COVID-19, and the result has been ships not sailing since March and tremendous financial losses.

A vaccine is widely seen as a key step to restoring consumer confidence that going on a cruise, as well as various other aspects of daily life, is safe. Meanwhile, over 75% of cruise fans are willing to return to a cruise even without a vaccine.

Royal Caribbean currently has cancelled all sailings until at least June 12.

How to postpone your Royal Caribbean cruise until later due to coronavirus

In:
Category: 
18May2020

While it looks like the majority of repeat cruisers are willing to hop on their Royal Caribbean cruise as soon as they resume, you might be feeling a little hesitant and want to push back your vacation plans.

If you want to postpone your cruise vacation and give yourself more time to see how things around the world progress, here are the two easy ways to delay that cruise.

Cancel and get a Future Cruise Credit

If there is a silver lining to the current situation, it is that it has never been easier to cancel a cruise.

Royal Caribbean has come up with very flexible terms, with the option to cancel and get a 100% Future Cruise Credit up to 48 hours before your ship is scheduled to sail.

Known as the "Cruise with Confidence" program, Royal Caribbean will allow anyone to cancel their cruise up to 2 days before departure date and get a credit good for 12 months or more..

Once you have the credit, you can then apply it towards a future sailing. The Cruise with Confidence program applies to existing bookings and new ones made by August 1, 2020.

It is important to note that the vast majority of guests have reported long waits to get a Future Cruise Credit. Waiting 30 days is not uncommon, and closer to the norm.

Why get a FCC: If you are unsure when you want to rebook, or need flexibility in what you are going to rebook, this is the option for you.

Lift & Shift

More recently, Royal Caribbean introduced the concept of Lift & Shift, where you can push your existing reservation ahead by one year.

This is a simpler method for delaying a vacation by a year, provided you are able to meet all of these requirements for your 2021 cruise:

  • Same itinerary type
  • Same sailing length
  • Same stateroom category
  • New booking within the same 4-week period of their original cruise date same-time-next-year

You do not need to book the same ship or even class of ships.

Not only will this make the booking easier to move, but Royal Caribbean will protect your original price and promotional offering.  So the price you paid for that 2020 cruise will be exactly what you pay for 2021.

To be eligible, guests must move their booking on or before August 1, 2020.

Why Lift & Shift: If you take vacations around the same time every year, and want to punt on 2020, this is a very easy way to move it and keep your pricing intact.

Why you might want to wait to cancel

If these two options sound appealing, there is one more thing to consider: what happens if Royal Caribbean cancels on you.

In the event Royal Caribbean cancels your cruise, they have offered more lucrative terms to guests, including 125% Future Cruise Credits and/or 125% for onboard purchases previously made. 

Moreover, if you cancel and/or Lift & Shift, you no longer qualify for whatever the cruise line offers if they later cancel your original sailing.

Waiting for Royal Caribbean to cancel is a gamble, since they may not actually cancel the cruise you booked. Not to mention any related travel expenses (airfare, hotels, etc) are your responsibility to book and manage their cancellations.

Be sure to pay attention to when programs like Lift & Shift or the Cruise with Confidence program expire, as these are temporary options Royal Caribbean is offering, with no guarantee they will be extended.

More helpful posts

Here are a few other additional articles I think are helpful for those dealing with cruising during the COVID-19 pandemic.

Many cruisers willing to go back on cruise ships before COVID-19 vaccine exists

In:
Category: 
18May2020

The majority of Royal Caribbean fans say they will go on a cruise before there is a vaccine available that would protect from from COVID-19.

In a poll of likely Royal Caribbean cruisers, 75% of those surveyed said they would go on a cruise without a proven vaccine in place.

Only 7% responded they would not, and a further 17% were unsure what they would do.

More than 250 likely cruisers answered this survey. The majority hailed from the United States, but there were respondents from other regions of the world as well, including Australia and Europe.

With many states beginning to lift restrictions aimed at enforcing social distancing, the question of life returning to "normal" in all aspects raises concerns across the board.

Cruisers want to cruise

You may not find it surprising that most cruise fans that visit a Royal Caribbean fan site would be willing to cruise, but this demographic is going to be critical to any cruise line once sailings resume again.

When Royal Caribbean starts sailing again, many analysts and travel experts expect some level of trepidation to return to sailing. As a result, cruise loyalists will be the cruise line's bread and butter for filling rooms and getting revenue flowing again.

Many of the people that responded to the poll felt strongly about the return of cruising and their desire to get back onboard.

Perhaps more surprising in the poll comments was not that many were willing to cruise again without a vaccine, but that these same people were less interested in sailing if going on a cruise meant wearing a mask.

"Frankly I'm not worried about Covid-19, but what does worry me is the onboard experience. I won't go on a cruise if a face mask is required onboard, that doesn't sound like vacation."
 

"Not concerned about a vaccine, my deciding factor will be what the "new" onboard experience is."

Those that responded they would not go on a cruise shared concern not over what they are doing to protect themselves, but what others are not doing.

"I don't get it, who wants to be sick if you don't have to be? Since so many people fail to grasp what they do affects others, I am going to need a vaccine. A vaccine will ease their burden of stupidity, so someone can disregarding my personal space by taking a selfie, but I can have piece of mind."
 

"The odds of a single contact involving the virus are small, assuming independent events and random exposure.  However, the probability of being exposed to the virus after several hundred contacts approaches certainty.  Just do the math, and you will see.  So we will all be exposed at some point.  I won't cruise until my wife and I feel it is safe -- that we can mitigate the risk, or have access to effective treatment, or have access to a vaccine.  This is still a virus the kills healthy people without underlying conditions."

Your thoughts

Will you go on a cruise before there is a COVID-19 vaccine? Would special rules or regulations that require social distancing and/or masks onboard turn you off from cruising again? Share your thoughts and concerns in the comments.

Italy planning to reopen borders in June

In:
Category: 
17May2020

If you are looking for a good sign of things return back to normal, Italy announced it will start allowing some tourists back on June 3, 2020.

Italian Prime Minister Giuseppe Conte presented a plan to open both its regional and international borders on June 3, with the government eliminating a 14-day quarantine for anyone arriving from abroad.

Italy was especially hard hit with the global health crisis, and represents an epicenter of European cruising. Italy has had the most deaths from the disease after the United States and Great Britain.

Bars and restaurants in Italy will reopen on Monday, and people will no longer have to justify travel within their own region and will be able to meet friends as well as family.

Gyms, swimming pools and sports centres will reopen on May 25, while theatres and cinemas can reopen from June 15.

Cruises in and around Italy

Prior to the outbreak, Royal Caribbean had quite a variety of sailings planned to, from, and around Italy.

Explorer of the Seas and Jewel of the Seas are/were scheduled to sail out of Rome (Civitavecchia).

Explorer of the Seas was to offer cruises to the Greek Isles, Western Mediterranean and even a Holy Land cruise. Jewel of the Seas was to offer a 12-night holy land cruise.

Rhapsody of the Seas was scheduled to sail out of Venice, and offer 6-, 7-, and 8-night cruises to Greece, Croatia and the Greek isles.

In addition, a number of other Royal Caribbean ships had stops scheduled in Italy.

Five important facts from Royal Caribbean's business update yesterday

In:
Category: 
09May2020

Royal Caribbean provided an operating update on Friday that gave a fairly positive outlook on its business operations, despite a major impact by global cruise suspension.

While the information was mostly provided for the context of financial disclosures, cruise fans can glean some important tidbits from the announcement.

New ships will be delayed

The most striking announcement was new cruise ship construction is certainly going to be delayed.

Royal Caribbean said that impacted shipyard operations, "will result in delivery delays of ships previously planned for delivery in 2020 and 2021."

While none of Royal Caribbean's ships were named specifically, Odyssey of the Seas is/was scheduled for delivery at the end of 2020 and Wonder of the Seas in 2021.

Booking levels for 2021 have not taken a major hit (yet)

Perhaps the most surprising statistic of the disclosure was executives suggested a growth recovery as early as 2021.

Although still early in the booking cycle, the booked position for 2021 is within historical ranges when compared to same time last year with 2021 prices up mid-single digits compared to 2020.

While there are "elevated cancellations for 2020", it appears the public has not yet made such stark decisions for vacations next year.

Royal Caribbean is going through around $150 million per month

With no real revenue coming in since cruises were cancelled in mid-March, Royal Caribbean said its average ongoing ship operating expenses and administrative expenses is approximately $150 million to $170 million per month during the suspension of operations.  

Royal Caribbean is doing its best to mitigate costs during this time, and may seek to further reduce this average monthly requirement under a prolonged non-revenue scenario.

More than 5,000 employees have been cut

Many companies have been forced to lay off workers in order to deal with reduced demand and income, and Royal Caribbean is no exception.

Royal Caribbean Cruises Ltd reduced workforce by approximately 26 percent of more than 5,000 shoreside employees in the United States.

The reduction was made through a combination of permanent layoffs and 90-day furloughs with paid benefits.

More people want credits instead of refunds

A good sign for Royal Caribbean is the fact approximately 55% of its guests who had a cruise cancelled opted for a 125% future cruise credit in lieu of a 100% refund.

Royal Caribbean provides an update at Coronavirus impact on its business

In:
Category: 
08May2020

Royal Caribbean issued an update on Friday on how the COVID-19 pandemic has impacted its business.

The cruise line has not offered any cruises since it announced a voluntary suspension of its global cruise operations from March 13, that will last through at least June 11, 2020. More cancelled cruises are possible, as continued disruptions to travel and port operations in various regions may result in further suspensions. 

Royal Caribbean also said it is working towards, "developing a comprehensive and multi-faceted program" that addresses the public health challenges posed by COVID-19. These efforts will include among other things, enhanced screening, upgraded cleaning and disinfection protocols and plans for social distancing.  

The Company will continue to work with the Centers for Disease Control and Prevention, global public health authorities and national and local governments to enhance measures to protect the health, safety and security of guests, crew and the communities visited when we are out of service and once operations resume.

Cruise Bookings Situation

It should come as no surprise to hear that the COVID-19 outbreak has taken a hit on the cruise line's bookings.

Prior to the pandemic, Royal Caribbean began the year in a strong booked position and at higher prices compared to the previous year. But since the virus, booking volumes for the remainder of 2020 are meaningfully lower than the same time last year at prices that are down low-single digits.

Due to the suspension in sailings, booking trends reflect elevated cancellations for 2020 and more typical levels for 2021 and beyond. 

Although still early in the booking cycle, the booked position for 2021 is within historical ranges when compared to same time last year with 2021 prices up mid-single digits compared to 2020.

As of March 31, 2020, the Company had $2.4 billion in customer deposits.  This includes approximately $0.8 billion of future cruise credits related to previously announced voyage cancellations through June 11, 2020.

Liquidity Situation

"Since late January, we have undertaken several proactive measures to mitigate the financial and operational impacts of COVID-19." said Jason T. Liberty, executive vice president and CFO.  "Our focus is on bolstering liquidity through significant cost cutting, capital spend reductions, and other cash conservation measures.  In addition, the Company is considering additional financing sources.  We continue to evaluate all options available to us to further enhance liquidity."

As of April 30, 2020, the Company had liquidity of approximately $2.3 billion all in the form of cash and cash equivalents.  On May 4, 2020 the company increased the 364-day senior secured credit facility and drew $150 million, further enhancing the Company's liquidity profile.

In order to cut costs, Royal Caribbean has taken the following actions:

Reduced Operating Expenses

The Company has taken significant actions to reduce operating expenses during the suspension of its global cruise operations:

  • Significantly reduced ship operating expenses, including crew payroll, food, fuel, insurance and port charges
  • The Company's ships are currently transitioning into various levels of layup with several ships in the fleet transitioning into cold layup, further reducing operating expenses
  • Eliminated or significantly reduced marketing and selling expenses for the remainder of 2020
  • Reduced workforce by approximately 26 percent of more than 5,000 shoreside employees in the US
  • Suspended travel for shoreside employees and instituted hiring freeze across the organization.

The Company estimates that its average ongoing ship operating expenses and administrative expenses is approximately $150 million to $170 million per month during the suspension of operations.  The Company may seek to further reduce this average monthly requirement under a prolonged non-revenue scenario.

Reduced Capital Expenditures

Since the last earnings call, the Company has identified approximately $3.0 billion and $1.4 billion of capital expenditure reductions or deferrals in 2020 and 2021, respectively. The 2020 reductions and deferrals are comprised of:

  • $1.2 billion, of non-newbuild, discretionary capital expenditures and
  • $1.8 billion in reduced spend or deferred installment payments for newbuild related payments which the Company is currently finalizing.

The Company believes COVID-19 has impacted shipyard operations and will result in delivery delays of ships previously planned for delivery in 2020 and 2021.

Debt Maturities, New Financings and Other Liquidity Actions 

Since the last earnings call, the Company has taken several additional actions to further improve its liquidity position and manage cash flow:

  • Increased the capacity under its revolving credit facilities by $0.6 billion, and fully drew on both facilities
  • Entered into a $2.35 billion 364-day senior secured credit facility with an option to extend (secured by 28 ships with a net book value of approximately $12 billion as of March 31, 2020) 
  • Obtained a $0.8 billion, 12-month debt amortization and financial covenant holiday from certain export-credit backed facilities
  • Amended its non-export-credit backed bank facilities to incorporate a 12-month financial covenant holiday
  • Agreed with its lenders that it will not pay dividends or engage in stock repurchases.

As of May 5, 2020, expected debt maturities for the remainder of 2020 and 2021 are $0.4 billion and $0.9 billion, respectively. 

The Company estimates its cash burn to be, on average, in the range of approximately $250 million to $275 million per month during a suspension of operations.  This range includes ongoing ship operating expenses, administrative expenses, and debt service expense, hedging costs, expected necessary capital expenditures (net of committed financings in the case of newbuilds) and excludes cash refunds of customer deposits as well as cash inflows from new and existing bookings.  The Company is considering ways to further reduce the average monthly requirement under a prolonged out-of-service scenario and during start-up of operations.

The Company continues to identify and evaluate further actions to improve its liquidity.  These include and are not limited to: further reductions in capital expenditures, operating expenses and administrative costs and additional financings.

On March 10, 2020, the Company withdrew its first quarter and full-year 2020 guidance.  The magnitude, duration and speed of COVID-19 remains uncertain.  As a consequence, we cannot estimate the impact of COVID-19 on our business, financial condition or near or longer-term financial or operational results with reasonable certainty, but we expect to incur a net loss on both a US GAAP and adjusted basis for the first quarter ended March 31, 2020 and the 2020 fiscal year; the extent of which will depend on the timing and extent of our return to service.

Royal Caribbean extends cruise suspension by cancelling all cruises through June 11 due to Coronavirus pandemic

In:
Category: 
16Apr2020

Royal Caribbean announced today it has extended its global voluntary suspension of sailings through June 11, 2020 due to the COVID-19 pandemic.

As a result of this new extension of cancelled sailings, Royal Caribbean expects to return to service on June 12, 2020.

This is the third time Royal Caribbean has cancelled sailings due to the health crisis, with the first set of cancelled sailings through April 10, then they cancelled all cruises through May 11.

Royal Caribbean had already cancelled all Canada, New England, and Alaska sailings through June 30, due to Canada closing all of its cruise ports.

There is a slight change to the policy on Future Cruise Credits for guests who had cancelled sailings between May 12 - June 11, 2020. They can choose between a 100% refund or 125% Future Cruise Credit. Future cruise credits must be redeemed by January 1, 2021 and sail by April 30, 2022. In addition, the deadline to request to change a future cruise credit to a refund deadline is December 31, 2020. 

Guests who had cancelled sailings between March 14 - May 11 must redeem their future cruise credits and sail by December 31, 2021.  They may request a future cruise credit to be changed to refund by December 31, 2021.

Any pre-purchased amenities and packages, such as internet, beverage, dining or RoyalUp upgrades, will be automatically refunded. Royal Caribbean Travel Protection will also be refunded.

Guests can opt-in to convert all Cruise Planner purchases into an Onboard Credit valued at 125% of the total amount paid. This offer is available to choose before it expires on May 4, 2020.

The announcement comes a day after Royal Caribbean reduced its U.S. workforce by 26%, and less than a week after the U.S. Centers for Disease Control and Prevention issued an extended “no-sail” order for cruise ships operating out of U.S. ports. The “no-sail” order could remain in effect through late July.

Competitor Carnival Cruise Line announced earlier this week it would cancel all of its worldwide sailings through June 30.

Helpful resources

Expect a possible decision on more Royal Caribbean cruise cancellations this week

In:
Category: 
15Apr2020

Royal Caribbean has advised travel agents that a decision on more cruise cancellations could come in the next day or two.

Royal Caribbean Senior Vice President of Sales and Trade Support & Service Vicki Freed spoke to travel advisors in a weekly webcast and started off the call with an update on the impact of future sailings being affected by the recent 100 day 'No Sail Order' by the CDC.

Freed indicated that while Royal Caribbean "is still evaluating" what the 'No Sail Order' means to the cruise line, she said, "we are going to come out with a statement on our suspensions in the next day or so."

Later in the call, a question was asked about the possibility of Royal Caribbean offering cruises later this summer in Europe (and a similar question was asked about Alaska), and Freed answered, "We do hope to be cruising in August out of Barcelona, and that's why when we announce suspensions, we are only announcing at 30 days in advance.

"Things can change rather quickly with this coronavirus, so our goal is to be cruising in Europe, but again, we all have to take it day by day."

Royal Caribbean has already cancelled all of its sailings from March 14 through May 11, in addition to all Canada, New England, and Alaska sailings cancelled through June 30.

Carnival Cruises has already announced it will cancel its sailings through the end of June.

Royal Caribbean laysoff or furloughs 26% of its employees

In:
Category: 
15Apr2020

Royal Caribbean has reduced its workforce by 26% through a combination of permanent layoffs and 90-day furloughs with paid benefits.

The Miami Herald reported the workforce reduction, as confirmed by Royal Caribbean chief communications officer Rob Zeiger.

The layoffs and furloughs are a result of the COVID-19 pandemic that has greatly impacted the entire cruise industry. Royal Caribbean has been under a voluntary global shutdown since mid-March that extends through mid-April, although that could certainly be extended as well.

The CDC has issued a 100-day no-sail order, and Carnival Cruise Line has already cancelled sailings through the end of June.

Royal Caribbean has stated it is "studying" the new CDC regulation before making any changes.

Royal Caribbean amends loans on Anthem and Spectrum of the Seas due to coronavirus pandemic

In:
10Apr2020

In light of the global health crisis, Royal Caribbean Cruises Ltd. has altered the loans it took out to finance Anthem of the Seas and Spectrum of the Seas in order to take advantage of a 12-month debt holiday.

The deal was made between Royal Caribbean Cruises Ltd and Euler Hermes Aktiengesellschaft on April 8, and it essentially means Royal Caribbean to skip a few payments without accruing additional interest. Moreover, it provides the cruise line with $200 million of incremental liquidity through April 2021.

The deferral period is between April 1, 2020 and March 31, 2021. The deferred money will be repayable in eight equal semi-annual installments between April 2021 and October 2024.

In addition, Royal Caribbean amended the export-credit backed loan facility incurred to finance Celebrity Reflection in order to incorporate the benefits of the Debt Holiday. Across these three facilities, the Debt Holiday initiative will generate $200 million of incremental liquidity through April 2021.

Royal Caribbean is also looking into taking advantage of the debt holiday initiative across the remainder of their Hermes-backed facilities.

The loan amendment has a few stipulations, including Royal Caribbean Cruises Ltd. may not take certain actions including:

  • Payment of dividends
  • Repurchase of stock
  • Issuance of debt or equity other than for liquidity

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