CruiseDisposal of six ships part of cruise line's capacity-optimisation strategy to resume operations

Carnival Corp. cuts fleet to reduce costs

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Carnival Corp. cuts fleet to reduce costs

Carnival Corp. will accelerate a plan to remove cruise ships from its fleets as a result of the coronavirus pandemic.

The company said in its Q2 earnings release that ships it had intended to sell in the coming years will be taken out of service in the 2020 fiscal year. There are plans in place to dispose of six ships that are expected to be removed from the fleet within 90 days, with more to come, Carnival Corp. said.

The company revealed no specifics. The oldest ships for the company’s largest brand, Carnival Cruise Line, are the eight Fantasy-class vessels that were built in the 1990s.

Removing ships from the fleet is part of Carnival Corp.’s capacity-optimisation strategy for its return to operations. When it gets the OK to sail again, ships will be deployed in a phased manner based on specific ships and brands, from “a select number of easily accessible homeports.”

Carnival Corp. is also expecting delays in new ship deliveries.

As far as bookings, Carnival Corp. has introduced a number of incentives and flexibility to increase traveler confidence.

As of 31 May, about half of guests whose original sailings were canceled have asked for cash refunds, Carnival Corp. said.

Even with “substantially reduced marketing and selling spend,” Carnival Corp. is seeing demand for new bookings for 2021. In the second half of April through May, around two-thirds of 2021 bookings were new, with the remaining coming from guests using future cruise credits.

Also as of May 31, Carnival had US$2.6 billion in deposits on the books. Of that, US$121 million was for third-quarter sailings, and US$353 million was for fourth-quarter sailings.

“The company expects any decline in the customer deposits balance in the second half of 2020, all of which is expected to occur in the third quarter, to be significantly less than the decline in the second quarter of 2020,” Carnival Corp. said.

Carnival Corp. reported a net loss of US$2.4 billion in the second quarter. Revenue was US$700 million, down from US$4.8 billion in last year’s second quarter.

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