The Covid-19 crisis will accelerate Carnival Corporation’s ship disposals and ‘stretch’ out its current schedule of building new vessels.
Arnold Donald told a Future of Travel Week session that changes to the nine-brand corporation’s fleet would have no significant impact on its UK brands P&O and Cunard.
Carnival has told investors of its plans to ‘right-size’ its fleet in financial updates since the pandemic hit, including the confirmation of the sale of two ships last week.
“We are not sailing guests right now so the ships are not earning but they are an expense,” he explained. “The less efficient ships were generating positive cashflow, so that’s why they were still sailing [pre-Covid]. But over time we would’ve exited those ships.
“In this timeframe, they’re not generating any cash, it’s just a huge cash drain, and even when they come back they’re the least efficient ships – so it makes sense. And we’re not going to be able to be suddenly able to hit a light switch and have al the ships sailing at once again. It’s going to take time, destinations are going to come online and back on stream in a staggered way – so it’s a prudent decision to right-size the fleet for what’s coming and to not incur unnecessary expense now by holding onto ships now that you know you’re going to be exiting later anyway. We’ve just accelerated the process.
When asked, he clarified: “In the UK I don’t believe there’s any significant impact for the P&O or Cunard brands.”
Donald said Carnival “didn’t have a choice” about delaying some new-build ships, because shipyards were impacted by Covid.
“[The delivery of new ships] got naturally stretched to an extent,” said Donald – who noted every cruise line’s new builds would be affected. “For the rest we are just working with the [ship]yards,” he explained, adding that the stretching will “help with the staggered [re]start” of operations.
He said this way “you don’t have a lot of ships sitting around not being able to sail”, adding: “That will help.”
“Eventually, we will probably take a pause – which we probably would have anyway – and that will allow things to catch up”.
He said there could be one ship delivered between 2024 and 2025, but explained how that was less than the corporation’s usual building programme. “Usually, with the nine brands, we might have had four or five,” he said. “It’s sad but it’s life. We have a wonderful experience for people and we still have new ships coming, and lots of them, which are even better than the ones that resonate so well with our guests – so those experiences will come back. We just have to weather the storm.”
