Carnival Corporation has confirmed it will dispose of 13 ships across its brands as well as delaying the deliveries of new ships.
The cruise giant said the move to reduce its fleet size was in response to an expectation that “future capacity [will] be moderated by the phased re-entry of its ships. The 13 ships represent a 9% reduction in current capacity.
The news comes just days after it was confirmed P&O Cruises had sold one of its oldest vessels, Oceana.
Carnival Corp said it had agreements for the disposal of five ships and preliminary agreements for an additional three ships, all of which are expected to leave the fleet in the next 90 days.
It said these agreements were in addition to the sale of four ships which were announced prior to the current financial year.
On future deliveries, the company said it expects only five of the nine ships originally scheduled for delivery in the 2020 and 2021 to be delivered before the end of the 2021 financial year. It also expects ships that were scheduled to launch in 2022 and 2023 to move to later delivery dates.
Arnold Donald, Carnival Corporation’s president and chief executive, said the decision meant his brands would emerge “leaner” and “more efficient”.
He said: “We have been transitioning the fleet into a prolonged pause and right sizing our shoreside operations. We have already reduced operating costs by over $7 billion on an annualized basis and reduced capital expenditures also by more than $5 billion over the next 18 months. We have secured over $10 billion of additional liquidity to sustain another full year with additional flexibility remaining. We have aggressively shed assets while actively deferring new ship deliveries. We are working hard to resume operations while serving the best interests of public health with our way forward informed through consultation with medical experts and scientists from around the world.
“We will emerge a leaner, more efficient company to optimize cash generation, pay down debt and position us to return to investment grade credit over time providing strong returns to our shareholders.”
Carnival Corporation today said it had raised $10 billion through a series of financial transactions since March, adding that it had “taken significant actions to preserve cash and secure additional financing to maximise its liquidity.
It has also confirmed $8.8 billion of credit facilities to fund ship deliveries originally planned through to 2023.
In a trading update, Carnival Corporation claimed demand remained for 2021 sailings, despite “substantially reduced marketing and selling spend”. It said almost 60% of bookings in the first three weeks of June were new business bookings, with the remaining amount coming from guests using their Future Cruise Credits from a previously cancelled cruise.
Chief financial officer and chief accounting officer David Bernstein said: “Quickly recognising the financial situation, we took swift action to improve our liquidity by reducing expenses and leveraging our strong balance sheet to complete several capital transactions”.
Highlighting the cost of pausing its global operations, Carnival Corporation side its monthly average cash burn rate for the second half of 2020 would be an estimated amount of approximately $650 million, adding that it was looking at ways to reduce that figure.