Carnival boss 'cautiously optimistic' entire fleet will return to operations this year

The company raised $19bn in debt and equity since the onset of the pandemic

FILE - In this March 9, 2020 photo, the Carnival Liberty leaves Port Canaveral, Fla. Carnival Cruise Line said Monday, Jan. 25, 2021, is cancelling and delaying more U.S. sailings as it continues to suffer from the pandemic’s fallout. (Joe Burbank/Orlando Sentinel via AP, File)
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The chief executive of Carnival Corporation, the world's biggest cruise ship operator, said he remains "cautiously optimistic" that the company will be able to get its entire fleet back on the waters by the end of the year.

The company, which had to suspend sailings in March last year, has largely been unable to sail since and does not know when it will be able to recommence operations, chief executive Arnold Donald told the Bloomberg Year Ahead conference on Tuesday evening.

Carnival not only needs approval from the US Centres for Disease Control to recommence sailing, but also clearance from the destinations to which its cruises sail, Mr Donald said.

"We’re not going to be able to start at once. We'll stagger our starts – a few ships at a time. We’ll be slower coming back, but we will come back, depending on when it’s in the best interests of public health to sail here in the US and elsewhere in the world," Mr Donald said.

"We're cautiously optimistic, hopeful, that we can have nearly all of the fleet back sailing by the end of the year."

Carnival Corporation has a fleet of 87 ships operating under the Carnival, Princess Cruises, Cunard and P&O Cruises brands, among others.

The suspension of services has hit the company’s finances hard, though. It lost $2.2 billion in the last quarter of 2020 alone, adding to an $8bn loss in the first nine months of the year.

Earlier this month, Carnival said it expects to burn through cash at a rate of about $600 million a month during the first quarter of this year.

"To have a business with no revenue for an extended period of time and a significant burn rate – because, obviously we have to keep our ships operational … it’s been very challenging. On the other hand, the company has proven its resilience. Our people have been fantastic," Mr Donald said.

Since the onset of the pandemic, Carnival has also raised more than $19bn of capital through debt and equity funding. Saudi Arabia’s Public Investment Fund took part and was the company's second-biggest shareholder as of the end of the third quarter of 2020, with a stake of just over 7 per cent.

The fundraising gives the company enough liquidity to make it through 2021 without earning any revenue, Mr Donald said.

"That gives us time. And we’ve already publicly stated we have additional capacity for debt," he said. "Obviously, as we move forwards, we will pay attention to the balance sheet and if we determine it makes sense we can do additional equity raise if we need to. So we have some flexibility, which gives us confidence we can weather the storm."

Once cruises recommence, they will do so with advanced health protocols and mandatory Covid-19 testing for passengers, Mr Donald said.

"Even with the advent of vaccines, even with the acceleration of low-cost, rapid [and] more accurate testing, even with the advancement of treatments, Covid is still out there," he said.

Initially, the company will probably limit the number of passengers, Mr Donald said.

"But the ships are vast … the most important thing is not how many people but in those situations where you can have a congregation of people, is there adequate room for distancing?

"There will probably be some limitation … but maybe not as much as people think. Our ships initially will start slow but chances are we will be back to relatively full occupancy, just with different practices," Mr Donald said.

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