What happened

Shares of major cruise-line operators plunged again on Friday, as companies and investors officially found out they wouldn't be eligible for recovery funds. Shares of Carnival Corp. (NYSE:CCL) fell as much as 21% and at the time of writing, 3:40 p.m. EDT, shares are down 18.2%. Norwegian Cruise Line Holdings (NASDAQ:NCLH) fell 23.4% midday and is now down 23.3%. Royal Caribbean Cruises (NYSE:RCL) dropped as much as 19.2% and is now down 14.8%.

So what

The big news is that language in the stimulus package that passed Congress today explicitly excludes these cruise lines from relief. None of the three companies are incorporated in the U.S. -- Carnival is incorporated in Panama, Royal Caribbean in Liberia, and Norwegian Cruise Line in Bermuda -- and that's a sticking point for qualifying for relief.

Cruise ship sailing on open water

Image source: Getty Images.

With government assistance currently not on the table, companies have tried to improve liquidity as much as possible. Carnival drew down $2.8 billion from its credit facility and Royal Caribbean secured a $2.2 billion credit facility earlier this week. They're trying to hoard enough cash on the balance sheet so that they can get through this COVID-19 pandemic.

The problem for cruise lines goes much further than just paying for operating expenses like labor and maintenance to keep ships afloat while they're in port. These operators were in expansion mode; they had billions of dollars in commitments for new ships, on top of upcoming debt maturities that may be tough to pay back if credit markets freeze up or operations don't open soon. I highlighted Carnival's challenge paying the bills that are already coming due in 2020, and its future looks bleak without some sort of bailout.

Now what

Given the massive expense that goes into running cruise ships, it's hard to see how these operators will come out of 2020 without massive losses at best, and at worst having to restructure their businesses. There's still hope for some sort of bailout package, with President Trump mentioning cruise lines specifically this week, but given that they're incorporated abroad, it's far from certain that they'll get any help.

As the COVID-19 pandemic spreads, particularly in the U.S., it's getting harder and harder to see these companies return to normal operations anytime soon. Even when operations do resume, it's likely that consumer demand will be low, given the confined space on ships and the early COVID-19 outbreaks already reported in the cruise industry. I wouldn't be buying the dip today, and I don't think the future looks very bright for cruise stocks.