Carnival Corp. Posts $2.2 Billion 4th Quarter Loss, Has $9.5 Million in Cash

Costa Smeralda
Carnival Corporation's Arnold Donald said in the line's fourth quarter 2020 earnings release that a total of 19 less efficient ships have left (15 thus far) or are leaving the fleet. One of the company's newer ships, Costa Smeralda, is shown above. (Photo by Costa Cruises)

Carnival Corporation on Monday reported a U.S. GAAP net loss of $2.2 billion and adjusted net loss of $1.9 billion for the fourth quarter 2020, ending November 30, 2020. Liquidity-wise, the world's largest cruise company ended the quarter with $9.5 billion in cash and cash equivalents. The cash burn rate of $500 million in the fourth quarter 2020 was slightly better than expected due to the timing of capital expenditures.

In addition, the company said it had accelerated the removal of 19 less efficient ships, 15 that have already left the fleet. In total, the 19 ships represent approximately 13 percent of pre-pause capacity and only three percent of operating income in 2019, the company's last normal operational year. As for new-builds, Carnival Corp. recently took delivery of two ships and expects only one more ship to be delivered in fiscal 2021; that compares to five ships that were originally scheduled for delivery in fiscal 2021.

Cumulative advanced bookings for the first half of 2022 are ahead of 2019, despite minimal advertising or marketing. "The booking trends that we have consistently experienced throughout this period affirm the strong fundamental demand for our brands which will facilitate our staggered resumption and support the long-term growth of our company," said Arnold Donald, the company's president and CEO, in a press statement.  

Due to the pause in guest cruise operations in 2020, the company's future booking trends will be compared to 2019. That said, at December 20, 2020, cumulative advanced bookings for the second half of 2021 are within the the company's historical range.

Approximately 60 percent of bookings taken during the quarter ended November 30, 2020 for fiscal year 2021 were new bookings as opposed to FCCs re-bookings, despite minimal advertising or marketing.

Donald emphasized that "2020 has proven to be a true testament to the resilience of our company. We took aggressive actions to implement and optimize a complete pause in our guest cruise operations across all brands globally, and developed protocols to begin our staggered resumption, first in Italy for our Costa brand, then followed by Germany for our AIDA brand.

"We are now working diligently towards resuming operations in Asia, Australia, the U.K. and the U.S. over the course of 2021," he said. 

With the aggressive actions taken thus far, managing the balance sheet and reducing capacity, Donald added that "we are well positioned to capitalize on pent up demand and to emerge a leaner, more efficient company."  

David Bernstein, chief financial officer, Carnival Corporation, said the line ended the year with $9.5 billion in cash and has the liquidity in place to sustain itself through 2021, "even in a zero-revenue environment."

Due to the pause in guest operations, the company has taken significant actions to preserve cash and secure additional financing to increase its liquidity. Since March, the company has raised $19 billion through a series of transactions, and that's expected to continue, as needed, during 2021. 

The company's press statement said: "Currently, the company is unable to predict when the entire fleet will return to normal operations, and as a result, unable to provide an earnings forecast. The pause in guest operations continues to have a material negative impact on all aspects of the company's business, including the company's liquidity, financial position and results of operations. The company expects a net loss on both a U.S. GAAP and adjusted basis for the first quarter and full year ending November 30, 2021."

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