Royal Caribbean (RCL -0.53%) this week took a big step toward shoring up its finances in the wake of a historic drop in ticket sales and passenger volumes. The cruise giant said on Monday it has secured a new $2.2 billion credit arrangement that it has since drawn down fully. The move puts the company's cash and equivalents at over $3.6 billion as of late March, management said in a press release.
"This is a period of unprecedented disruption for the cruise industry," CFO Jason Liberty said. "We continue to take decisive actions to protect the company's financial and liquidity positions."
Royal Caribbean had enjoyed robust demand growth in the quarters leading up to the COVID-19 health crisis. Management was expecting a record 2020 as recently as early February.
But the company recently took its entire fleet offline to help with containment efforts related to the coronavirus outbreak. Management has said it is expecting to return its ships to service by mid-April, and this new loan provides financial flexibility to weather that temporary halt in sales. The new loan must be paid back in roughly one year but Royal Caribbean can extend the due date another year, if needed.