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Royal Caribbean Cancels Cruises Amid Coronavirus Concerns

By Rich Smith - Feb 4, 2020 at 10:07AM

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Cancellations will reduce 2020 earnings by about 2%.

The Chinese coronavirus, designated 2019-nCoV, is taking the world by storm -- and rocking Royal Caribbean (RCL -3.42%) stock this morning.

According to an informational website operated by Johns Hopkins University, total confirmed cases of Coronavirus worldwide hit 20,701 today, with 20,492 cases reported in China, where the virus is said to have originated. To date, 427 infected patients have died, and 727 patients, once diagnosed with the disease, are said to have recovered.  

Collage of a microbe, word coronavirus, and Chinese flag

Image source: Getty Images.

Responding to the crisis, cruise operator Royal Caribbean has canceled eight cruises sailing out of Chinese ports over the next month, reports Reuters this morning. These cancellations are additions to the three cancellations already announced earlier in February.  

Royal Caribbean management warned that it expects these cancellations, plus other measures it is taking to mitigate the effects of the contagion, to reduce its earnings by about $0.25 per share in fiscal year 2020. Measures said to be causing the charges include screening passengers holding Chinese and Hong Kong passports, as well as other nationals exhibiting flu-like symptoms, before allowing them on board its ships -- and denying passage outright to anyone who has visited China or Hong Kong over the past 15 days. (Coronavirus is believed to have a maximum incubation period of 14 days.) 

By reducing the number of paying passengers, Royal Caribbean will necessarily be reducing its revenues, and its profits.

Royal Caribbean stock has declined 13.8% from its high hit on January 17 through Monday's closing share price of $116.45. The stock is recovering a bit today, up around 3% as of 11:05 a.m. EST.

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