What happened 

Shares of Carnival Corporation (NYSE:CCL) plunged another 17.5% in late trading Monday and has fallen as much as 17.1% on Tuesday as management took emergency measures to make sure the company can survive the COVID-19 crisis. At 11:10 a.m. EDT shares are still down 10.4% for the day. 

So what

Management said early Monday that it has drawn down most of its $3 billion credit facility. That could leave it with few options to raise additional cash if the cruise business is shut down for an extended period of time. 

Cruise ship sitting in a harbor.

Image source: Getty Images.

There was also an announcement that management expects a financial loss this fiscal year, but can't quantify how big the loss will be at this time. That sounds like a vague statement, but it's concerning that no one in the industry can see the bottom of this crisis right now. 

The fear over how COVID-19 will impact business hasn't subsided and, in fact, seems to be getting worse. 

Now what

It's hard to see how this gets better for the cruise business, as cruises are a consumer discretionary item that people can quickly give up in times of crisis or an economic downturn. We know that March and April are going to be terrible, but this drop in demand may last for a while. In the meantime, fixed costs are racking up. In 2019, Carnival had $17.5 billion in operating expenses, a lot of which can't be reduced even if ships are in port. And now with around $13 billion of debt, the company could sink before it ever has a chance to recover.