To the surprise of very few investors and industry observers at this point, Carnival (CCL 0.72%)(CUK 0.58%) reports that it will post a net loss for its current fiscal 2020.
In an update for investors published on Monday, the troubled cruise ship operator said that was due to the cessation of its operations because of the outbreak of the SARS-CoV-2 coronavirus and resulting COVID-19 disease. Like many businesses throughout the world, Carnival temporarily halted its operations in the face of the pandemic. This will result in the anticipated net loss; the company did not provide an estimate for this shortfall.
In the press release announcing it, Carnival sought to reassure investors by saying that it is "taking additional actions to improve its liquidity, including capital expenditure and expense reductions, and pursuing additional financing."
Image source: Carnival.
One of those actions is a draw-down of $3 billion from a multi-currency revolving credit facility the company and a clutch of its subsidiaries entered into last August. This, however, means it has now drawn fully from the facility. The funds will be utilized for "working capital, general corporate or other purposes," according to Carnival.
The company is a major player in the cruise ship business. It controls a host of brands in the sector, including Princess, Cunard, and Holland America Line in addition to its eponymous brand. All are struggling significantly due to the near-cessation of global travel activity.
Both share classes of Carnival stock have been plummeting, more so than many top stocks. On Monday, Carnival/CCL dropped by 17% on the day, while Carnival/CUK declined by almost 22%.
