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Royal Caribbean stock surges after COVID-19 vaccine tests are more than 90% effective


If you own Royal Caribbean stock, today is a great start to your portfolio for the week.

Royal Caribbean, and the entire travel sector, saw enormous gains in pre-market trading that has continued through the day thanks to positive news about COVID-19 vaccine trials.

Pharmaceutical giant Pfizer said early data from its coronavirus vaccine shows it is more than 90% effective, which is better than expected results.

Royal Caribbean's stock was trading at around 25% higher than its opening price, and thee momentum started with pre-market trading nearly as soon as Pfizer made its announcement.

Not only did the news buoy Royal Caribbean's stock, but other cruise lines saw similar gains as well.  In fact, travel industry stocks across the board have seen large gains on Monday.

Vaccine test results

Pfizer says the interim analysis looked at the first 94 confirmed cases of COVID-19 among the more than 43,000 volunteers who got either two doses of the vaccine or a placebo.

It found that fewer than 10% of infections were in participants who had been given the vaccine. More than 90% of the cases were in people who had been given a placebo.

The vaccine is being developed with German partner BioNTech had an efficacy rate higher than 90% at seven days after the second dose, which means protection is achieved 28 days after a person begins vaccination. 

The vaccine requires two doses. 

The reason why the 90% mark is such good news is because the US Food and Drug Administration (FDA) said it expected at least 50% efficacy from any coronavirus vaccine.

In a press release, Pfizer said it plans to seek emergency use authorization from the FDA soon after volunteers have been monitored for two months after getting their second dose of vaccine, as requested by the FDA.

Pfizer said it anticipated reaching that marker by the third week of November.

Next steps for the vaccine

Phase 3 of Pfizer's vaccine trial has 43,538 people enrolled since July 27.  As of Sunday, 38,955 of the volunteers have received a second dose of the vaccine.

42% of international trial sites and 30% of US trial sites involve volunteers of racially and ethnically diverse backgrounds.

The final goal of the trial is to reach 164 confirmed cases of coronavirus infection.

Pfizer's approach relies on a new technology called messenger RNA, or mRNA, to produce an immune response in the vaccine.

The mRNA vaccine approach uses genetic material called mRNA to trick cells into producing bits of protein that look like pieces of the virus. The immune system learns to recognize and attack those bits and, in theory, would react fast to any actual infection.

It is not clear yet if this vaccine will become a yearly or season shot, as it is not clear if the vaccine will provide long-term protection.

Royal Caribbean not counting on vaccine yet

While the vaccine may prove to be a major weapon in the arsenal for combating COVID-19, Royal Caribbean's plans to restart cruises do not hinge on the vaccine quite yet.

Royal Caribbean Group Chairman and CEO Richard Fain expects tests to have a greater impact on cruises than the vaccine in the short term.

"The advances are so significant that I believe in the near term we will see more benefit from testing than we will from vaccines in the near term."

Fain thinks the impact of a vaccine will take time, and in the meantime, new and better testing will make a quicker difference.

"Vaccines are the ultimate weapon against this virus and their development has been nothing short of amazing. But I do think it's likely that a vaccine will be available before the end of the year. But getting enough for widespread distribution is going to take probably until sometime in the spring."

"On the other hand, faster, cheaper and widespread testing will be much more impactful, much sooner. Widespread testing enables contact tracing, and it's the one two punch of testing and contact tracing that is so effective in limiting the community spread of the disease."

Royal Caribbean Group reports $1.3 billion loss in third quarter


Royal Caribbean Group reported a $1.3 billion loss for the third quarter of 2020 as part of its financial results, and also provided a business update.

The cruise company is still in the midst of a global shutdown due to the health crisis. While limited cruise operations outside of the U.S. have been able to restart with its TUI cruises and Hapag Lloyd brands, the company is still dealing with being mostly shutdown.

Royal Caribbean highlighted the fact Quantum of the Seas will be able to restart operations in Singapore in December after receiving approval to sail from the Singaporean Government.

These initial cruises will most likely take place with reduced guest occupancy, modified itineraries and enhanced health protocols developed in collaboration with governments and health authorities.

In addition to the financial results, Royal Caribbean Group provided a business update to investors.

Healthy Sail Panel recommendations

Royal Caribbean's blue ribbon panel of health experts submitted 74 recommendations for how cruise ships could safely operate.

On September 21, 2020, the HSP submitted its recommendations to the Centers for Disease Control and Prevention (CDC) in response to a CDC request for public comment that will be used to inform future public health guidance and preventative measures relating to travel on cruise ships. 

"The work of the Healthy Sail Panel has been thorough and comprehensive. We are grateful for its enormous dedication and passion, which has resulted in what has quickly become the seminal document in this arena. We are also grateful for the time the CDC and their observers have spent on this important topic with the Healthy Sail Panel," said Richard D. Fain, Chairman and CEO. "We understand the importance of getting this right and are preparing to put these plans to the test with a gradual and methodical return to service in the near future."

Cash on hand

In order to remain operational throughout the shutdown, Royal Caribbean Group made additional moves to bolster its financial situation.

Since the last earnings call, Royal Caribbean Group has taken further actions to enhance its liquidity, preserve cash and obtain additional financing. 

  • $700M increase in liquidity through a 12-month commitment for a senior guaranteed 364-day facility
  • Approximate $1.15 billion increase in liquidity through a combination of a convertible bond issuance and a common stock public offering

The current cash burn is on average in the range of approximately $250 million to $290 million per month during a prolonged suspension of operations. This range includes all interest expenses, ongoing ship operating expenses, administrative expenses, hedging costs, expected necessary capital expenditures (net of committed financings in the case of newbuilds) and excludes cash refunds of customer deposits, commissions, debt obligations and cash inflows from new and existing bookings. 

Cash burn will increase once cruises are able to start up again as a result of:

  • Bringing ships out of their various levels of layup
  • Returning the crew to the vessels
  • Taking the necessary steps to ensure compliance with the recommended protocols
  • Restarts sales and marketing activities

Jason T. Liberty, executive vice president and CFO said, "We are optimistic that with the gradual resumption of cruise operations, our cash flow from operations will sequentially improve, driven by an increase in the inflow of customer deposits."

As of September 30, 2020, the Company had liquidity of approximately $3.7 billion, including $3.0 billion in cash and cash equivalents and a $0.7 billion commitment from the 364-day facility, compared to $4.1 billion as of June 30, 2020.

The total cash spend for the third quarter was approximately $1.1 billion, mainly driven by ship operating expenses. 

Odyssey of the Seas

For those wondering about the fate of Royal Caribbean's next new cruise ship, Odyssey of the Seas is very much on the radar.

Royal Caribbean Group has allocated funds for delivery of Odyssey of the Seas during the first quarter of 2021.

2021 Bookings

Booking activity for the first half of 2021 is aligned with the Company's anticipated staggered resumption of cruises.

The cumulative booked position for sailings in the second half of 2021 is within historical ranges with prices that are down slightly year-over-year when including the negative yield impact of bookings made with future cruise credits ("FCCs") and about flat when excluding them. 

Since Royal Caribbean Group's last business update, more than 65% of the 2021 bookings are new and the rest are due to the redemption of FCCs and the Lift & Shift program. 

As of September 30, 2020, the Company had $1.8 billion in customer deposits of which approximately 50% are FCCs and $180 million correspond to fourth quarter 2020 sailings.

Approximately 50% of the guests booked on cancelled sailings have requested cash refunds.

The big questions for Royal Caribbean's earnings call this week


Royal Caribbean Group will release its third quarter financial results later this week, which could shed light on a number of ongoing questions.

Between the financial results and the subsequent call with Wall Street investors, the public gets a certain level of insight into what the cruise line company is thinking, as well as what story the numbers tell.

The shutdown of the cruise industry has left so many concerns and questions about the short-term and long-term state of cruises. Earnings calls earlier this year have helped answer some of these issues.

While we will not know exactly all topics to be covered, here are the top issues cruise fans are curious about (and Wall Street too).

Any restart hints

There is no doubt the third quarter was another bad loss for Royal Caribbean Group, but anyone that is buying the cruise stock is fixated on the long-term gains the company has the potential to deliver.

To that point, the sooner Royal Caribbean can start cruising again, the sooner revenue can start flowing back in again.

Both investors and cruise fans are equally eager to know when cruise ships will be able to start sailing again.

While Royal Caribbean may not have a definitive answer, their conjecture and attitude may provide a glimpse of how they see cruises restarting.

New protocols

Assuming Royal Caribbean Group does not have all the answers on a firm restart plan, the next best thing to assuage investors is a plan for cruises to be able to restart in a safe manner.

While the Healthy Sail Panel has provided key recommendations on what it says cruise lines should do, Royal Caribbean has not specified exactly which of its Royal Promise rules are intended for Singapore sailings versus the entire fleet.

The new rules have an additional effect on the psyche of the public prior to cruises starting, by adding confidence that the operations are indeed safe. Similar to how airlines and local businesses added new protocols to keep guests safe, the cruise lines are looking to demonstrate the lengths at which they will go to in order to keep everyone healthy.

Ship status

If the cruise industry shutdown continues, will Royal Caribbean put any cruise ships into cold lay-up or even sell any of them?

While Royal Caribbean International has not seen any of its ships sold, Pullmantur Cruises (a Royal Caribbean Group partial subsidiary) did sell its fleet due to financial insolvency.  Moreover, rival Carnival Corporation has sold a number of vessels in order to cut costs.

Royal Caribbean Group Chairman and CEO Richard Fain said in July there are no plans to sell ships, but it is a consideration.

New cost-cutting measures

Big losses are to be expected, but they are not sustainable.  To that point, it is possible more cuts could be announced in order to reduce the company's monthly cash burn.

The longer the shutdown continues, the more likely Royal Caribbean is to try to save cash and reduce its expenditures.

Royal Caribbean Group recently said they have a monthly cash burn of $200-290 million, but any way they can bring that number down is going to help in the long term.

Financial analysts seem to think Royal Caribbean Group has enough liquidity (cash) to deal with a prolonged cruise suspension, however, the road back to recovery is going to be a long one.

On the plus side, Royal Caribbean Group announced a couple financing transactions in the past week aimed at improving its balance sheet.

Royal Caribbean is using an abundance of caution in how it conducts its business. At the end of its 2019 fiscal year, it had cash and cash equivalents of $243.74 million. By the time the second quarter this year ended, this figure surged to $4.15 billion. Gross debt over this timeframe jumped from $11.04 billion to $18.83 billion, though net debt rose more modestly, climbing from $10.79 billion to $14.68 billion. With so much cash on hand already at quarter-end, it’s clear management is planning for an extended period of pain.

2021 bookings update

The silver lining to the entire cruise shutdown has been bookings for 2021 cruises (and beyond) have been pretty solid.

Essentially, a lot of people opted to defer their cruise vacations to next year instead of outright canceling plans, and the question is if this trend is holding up.

Wall Street has been skeptical of any cruise line's ability to lure customers back once cruises resume, so positive feedback on how 2021 (and beyond) is looking would put a lot of concerns at ease.

Royal Caribbean Group schedules conference call for business update & third quarter


Royal Caribbean Group announced it has scheduled a conference call with investors to discuss its third quarter results and provide a business update.

The call is scheduled for 10am Eastern Daylight Time on Thursday, October 29, 2020.

The call will be available on-line at the company's investor relations website,

To listen to the call by phone, please dial (877) 663-9606 in the US and Canada.  International phone calls should be made to (706) 758-4628. 

Royal Caribbean stock rises this week on other cruise lines resuming cruises


It was another positive week for Royal Caribbean (NYSE: RCL) stockholders, as shares of the stock finished the week 4% higher.

Photo by Volnei M.

Royal Caribbean's stock closed at $71.95 at the conclusion of trading on Friday, and followed other cruise line stocks upward trend for the week.

Optimism about cruises restarting

The primary reason why Royal Caribbean, and other cruise line, stocks went up this week was based mostly in Carnival's announcement that two of its brands would restart cruises in Europe soon.

Costa and its Carnival Corporation sibling AIDA Cruises plan to resume sailing in phases – Costa starting Sept. 6 and the German AIDA Cruises on Nov. 1.

Both lines will implement a number of new health policies to get going, following the success of other cruise lines in Europe, including MSC.

Carnival Corporation's announcement on Thursday sent all cruise line stocks higher on optimism that the cruise industry might be on its way to recovery after months of zero cruises at all.

The cruise industry has been decimated by the industry-wide shutdown caused by the current health crisis that have resulted in billions of dollars in losses for Royal Caribbean.

The success of any cruise line restarting operations has a wide impact on the industry, as it will open the doors for others to resume cruises.

Royal Caribbean International has not announced any plans of its own to resume operations in Europe (or anywhere), but Royal Caribbean Group partial-subsidary TUI Cruises has been sailing for a few weeks in Germany.

New fast and easy COVID-19 test drives Royal Caribbean stock up


Royal Caribbean Group stockholders have seen a nice bump this week in the cruise giant stock price, thanks in part to good news of a new COVID-19 test.

Abbott Laboratories announced on Thursday a "fast, $5, 15-minute, easy-to-use COVID-19 test" that has resulted in a two-day rally for cruise line stocks.

Royal Caribbean Group ($RCL) closed on Friday up 5.30%, at a closing price of $70.13. Share prices have been rocketing up since Thursday morning's announcement.

Fast and cheap testing

On Wednesday, the FDA issued an emergency use authorization (EUA) to Abbott for its BinaxNow COVID-19 Ag Card. 

The test costs $5, involves just a nasal swab, and results can be delivered in 15 minutes without any special equipment.

In addition to being cheap and fast, it is easy to use since the BinaxNow COVID-19 Ag Card works in concert with NAVICA, a new application for iPhone and Android devices that gives people with negative tests an encrypted digital health pass.

Theoretically, a cruise line like Royal Caribbean could insist guests take the test before admitted on a cruise by using the app.

According to Abbott, around 2.9% of patients taking the test receive a false negative when they're actually infected. About 1.5% of people who are not infected will receive a false positive. 

Abbott is manufacturing BinaxNow COVID-19 Ag Cards at scale in two new U.S. facilities. The company will begin shipping the test cards in September and expects to deliver at a rate of 50 million tests per month by October. 

Testing part of the strategy

While full details have not yet been released, Royal Caribbean has said COVID-19 testing is likely to occur.

Royal Caribbean International CEO Michael Bayley recently commented that testing is going to be one aspect of the protocols to expect onboard.

"Testing is part of the thinking that we have not yet reached a point in our protocols where we're ready to publish and release for for discussion," Mr. Bailey started, "But it's very likely that testing will occur."

The winning combination

Taking into account Abbott's testing, along with a slew of new vaccine news, Wall Street seems to think the dual-pronged approach that addresses developing a vaccine as well as preventing infection is a good sign for the cruise lines.

A pair of new vaccine candidates from VBI Vaccines was also announced on Thursday, joining a field of other vaccines in various stages of testing.

In short, the more news about promising and effective testing and vaccines, the more positivity the market is showing cruise lines might get back to business sooner than later.

Note: Matt Hochberg has no position in any of the stocks mentioned, nor does he own any cruise line stock.

Wall Street thinks Royal Caribbean will not return to pre-Covid levels until 2024-2026


While what is in store for Royal Caribbean's short term and long term future are anyone's guess, Wall Street analysts have no problem weighing on how they see things progressing.

Bears of Wall Street is a group of traders and financial analysts who recently wrote it may not be until 2024-2026 before Royal Caribbean Group can return to 2019 levels of business.

Royal Caribbean Group recently said they have a monthly cash burn of $200-290 million, and the financial group thinks Royal Caribbean has enough liquidity (cash) to deal with a prolonged cruise suspension.  That being said, the road back to recovery is going to be a long one.

Given the financial strains of trying to remain in business, the Bears of Wall Street estimates Royal Caribbean Group will be able to return to pre-COVID levels of business sometime around 2024-2026.

Royal Caribbean Group has $4.15 billion in cash reserves, and its net debt position is $15.46 billion. The good news is that the company faces only $0.3 billion and $1.3 billion in debt maturities in 2020 and 2021, respectively, which gives it enough breathing room not to worry about the liquidity crunch. At the same time, Royal Caribbean says that the company already has $11.3 billion in committed credit facilities to fund its expenses, so liquidity is not going to be a problem.

"We continue to take substantial actions to bolster our financial position," said Jason T. Liberty, executive vice president and CFO. "We have accessed the capital market in an opportunistic manner and continue to aggressively manage our spend. We are prepared to navigate a volatile period while making decisions that position the Company well for the recovery."

In concluding, Bears of Wall Street does not believe in short selling Royal Caribbean's stock for a few reasons:

  1. Royal Caribbean doesn’t have any major debt maturities in the upcoming years.
  2. They have the possibility to raise enough liquidity to stay afloat for a long time.
  3. The Federal Reserve will continue to push the stock market higher.

"For that reason, we have no position in the company and believe that there are better long and short opportunities on the market right now."

Note: Matt Hochberg has no position in any of the stocks mentioned, nor does he own any cruise line stock.

Royal Caribbean Group announces new $700 million loan


Royal Caribbean Group announced on Wednesday it has gotten a loan facility from Morgan Stanley for $700 million.

If Royal Caribbean elects to use the loan, it will bear interest at Libor plus 3.75%, and will mature in 364 days. The purpose of the loan is to help pay for "general purpose corporate purchases".

The Company has the ability to increase the capacity of the facility by an additional $300 million from time to time subject to the receipt of additional or increased commitments and the issuance of guarantees from additional subsidiaries of the Company. 

Prior to taking this loan, Royal Caribbean Group reported on Monday that it had $4.1 billion in liquidity, has debt maturities of $300 million in 2020 and $1.3 billion in 2021, and estimated a monthly cash burn rate of $250 million to $290 million.

Royal Caribbean said it is considering ways to further reduce its average monthly cash burn under a further prolonged out-of-service scenario and during re-start of operations.

Perella Weinberg Partners LP served as financial advisor and Skadden Arps, Slate, Meagher & Flom LLP served as legal advisor to the company in connection with the term loan facility.

Royal Caribbean talks selling older ships, timeline on cruise return and more


Royal Caribbean Group executives talked about some of the hottest cruise topics being discussed these days during a conference call with Wall Street investors.

This routine meeting focuses on the financial outlook for the company, but it also provides tremendous insight into what we can expect from a guest standpoint.

During the hour-long call, the Royal Caribbean Group answered questions and commented on a variety of topics of interest to cruisers.

Selling older ships?

The big question cruisers have asked over the last few weeks is if Royal Caribbean has any plans to sell ships, and that exact question was asked by an investor.

Royal Caribbean Group Chief Financial Officer Jason Liberty spoke on evaluating plans to sell ships in the future, but nothing planned for now.

Mr. Liberty said Royal Caribbean typically sells one to two ships per year, but nothing to report today.

"This time we are evaluating opportunities to to sell ships or to take other actions with ships."

"If we don't think we have a good plan for that ship, for it to be generating sizable returns or it's difficult to make it a strategic fit to our brand by modernizing and so forth, we have looked to to to sell the ships."

"We're valuating all all options, but of course, we've put a lot of money into these ships. These ships do exceptionally well, and so it's a difficult decision to depart with ship because they generate so much cash."

New ships and projects delayed or cancelled

One interesting anecdote came at the beginning of the call, when Royal Caribbean Group Chairman and CEO Richard Fain gave an update on its big-money expenditures to indicate these are being pushed back.

In order to reduce expenses and improve cash conservation goals, spending on new projects has been hitting the brakes, according to Royal Caribbean Chairman and CEO Richard Fain.

"On top of all these efforts, most of our capital projects have been delayed or canceled because we don't know how long it will take to get beyond this epidemic."

"These are painful, but these are necessary decisions, I have to say that these five months have been the longest five months any of us can remember now since the crisis began."

No rush to start cruising immediately

While many cruise fans are very eager for cruises to resume, Royal Caribbean Group executives were insistent that they while they are equally eager to resume operations, they will only do so when it is safe to do so.

Mr. Fain emphasized the important of getting it right before cruises start up again.

"But it's fair to say that there is still a lot of uncertainty against this backdrop. We will not rush to return to service until we are confident that we have figured out the changes that we must make to offer our guests and crew strong health and safety protocols with the enjoyable experience that they rightly expect."

"We believe that our health is healthy. Return to service program will help get us there."

"Humbled and surprised" at 2021 bookings

Ever since the cruise shutdown began in March, Royal Caribbean has seen a tremendous amount of loyalty from its repeat customers.  

Once again, this quarter saw substantial bookings being made by past cruisers, which have largely buoyed the company's bottom line.

Mr. Fain started off the call with the surprising trend continuing, "We have been both humbled and surprised with the amount of bookings we're seeing for 2021, with literally no marketing efforts, and frankly, very little good news."

"The tone of our bookings, especially as we get into the second half of 2021, has been encouraging."

Since Royal Caribbean's last earnings call, Mr. Liberty noted bookings have averaged more than double the levels seen during the first eight weeks of the global cruise suspension.

He also noted good or bad news has an effect on bookings.

"The cadence of demand has generally been determined by the news cycle, we've received higher levels of bookings prior to the news regarding a surge of COVID-19 cases, and a decline thereafter."

"Bookings have been softer for the first quarter, but quite strong for the summer and back half of 2021."

China or Australia cruises could start first

While cruises from North America are stuck in limbo due to government regulations, the possibility of cruises resuming elsewhere first was broached during the call.

Royal Caribbean has no firm plans yet, but there is a possibility cruises could start up in places like China or Australia first, and even later this year.

Royal Caribbean International CEO Michael Bayley noted that while cruise operations are suspended until November, Australia and China are the exceptions.

"It may well be possible that we'll resume operations in China and potentially Australia before the end of October."

"But it's uncertain, and I not make any statements that that's going to happen, but there's some possibility.

Timeline for working with the CDC

The major obstacle for Royal Caribbean to resuming cruises where most of its customers are located is getting cruises back in North America, and questions were asked about when that might occur.

Specifically, analysts wanted to get a sense of how Royal Caribbean's Healthy Sail Panel recommendations arrival by the end of this month will coincide with the CDC's request for public comment on cruises restarting.

Mr. Bayley gave his view on the general timeline, "So the timing kind of starts to come together with with all of the public comment concluding towards the end of September, our work concluding towards the end of August. We think that that is some good opportunity in terms of how that comes together."

"I think it's important to to note that, as we know, there's just a huge amount of uncertainty with with how this will play out, and obviously, one of the biggest dynamics is, what's occurring with COVID itself."

Royal Caribbean reports $1.6 billion loss in second quarter of 2020


Royal Caribbean Group reported its second quarter 2020 financial results on Monday with a $1.6 billion loss for the quarter.

The Company reported US GAAP Net Loss for the second quarter of 2020 of $1.6 billion or $7.83 per share compared to US GAAP Net Income of $472.8 million or $2.25 per share during the same time last year.

The 2020 results include a non-cash asset impairment loss of $156.5 million.  

The Company reported Adjusted Net Loss of $1.3 billion or $6.13 per share for the second quarter of 2020 compared to Adjusted Net Income of $532.7 million or $2.54 per share in the prior year.  The Net Loss for the quarter is a result of the impact of the COVID-19 pandemic on the business.

State of Royal Caribbean's business

In addition to the quarterly results, Royal Caribbean group provided a business update on what initiatives and changes it is doing during this shutdown.

Royal Caribbean Group Chairman and CEO touted its work with the Healthy Sail Panel to be ready to start up operations when the time is right.

"The COVID-19 pandemic is posing an unprecedented challenge to our industry and society. Our teams are working tirelessly to return to service soonest and doing so by developing new health and safety protocols to protect the well-being of our guests, crew and destinations we visit." 

"In the meantime, we are using this time to refine our operations to be as efficient as we can while providing the great experiences that so many people are eagerly awaiting."

Cash flow update

With the cruise lines shutdown and another quarterly loss, many investors are curious about the cash flow situation.

Royal Caribbean Group has prioritized its liquidity, "working to ensure it is well positioned for recovery." As of June 30, 2020, the Company had liquidity of approximately $4.1 billion all in the form of cash and cash equivalents.

Since the last earnings call, Royal Caribbean Group has

  • The issuance of $1.0 billion of priority guaranteed notes and $1.15 billion of convertible notes;
  • The issuance of GBP 300 million of commercial paper in the UK providing over $370 million of additional liquidity;
  • Completed a $0.9 billion 12-month debt amortization holiday from all export-credit backed facilities;
  • Amended over $11 billion of commercial bank and export credit facilities to provide covenant waivers through the fourth quarter of 2021; and
  • Further reduced operating expenses due to the fleet layup measures and actions to decrease sales, marketing and administrative expenses.

Of interest to cruise fans, Royal Caribbean has $11.3 billion of committed credit facilities that are available to fund ship deliveries originally planned through 2025.

Royal Caribbean's estimated monthly cash burn is about $250 million to $290 million per month during a prolonged suspension of operations. 

This range includes all interest expenses, including the increases driven by the latest capital raises. It also includes ongoing ship operating expenses, administrative expenses, hedging costs, expected necessary capital expenditures (net of committed financings in the case of newbuilds) and excludes cash refunds of customer deposits, commissions, debt obligations and cash inflows from new and existing bookings.

The Company is considering ways to further reduce its average monthly cash burn under a further prolonged out-of-service scenario and during re-start of operations.

2021 Cruise bookings

While 2020 bookings have been significantly hit by the cruise shutdown, 2021 looks much better.

Royal Caribbean Group indicated 2021 cruise bookings are trending well and is within historical ranges.

The Lift & Shift program, along with Future Cruise Credit offers have proven popular with guests, with 40% of 2021 bookings coming from these options.

For the booking period since our last business update, approximately 60% of the 2021 bookings are new reservations.

Pricing for 2021 bookings is relatively flat year-over-year when including the negative yield impact of bookings made with future cruise credits; it is slightly up year-over-year when excluding them.

As of June 30, 2020, the Company had $1.8 billion in customer deposits of which approximately $300 million correspond to fourth quarter 2020 sailings. Approximately 48% of the guests booked on cancelled sailings have requested cash refunds.