Carnival Cruise Line (CCL 2.30%) has become the first of the three major cruise lines to offer concrete plans as to when it will begin sailing from North American ports again. Those plans are, of course, still subject to the Centers for Disease Control allowing the cruise line to follow through, but Carnival has what seem to be realistic expectations.
This may provide a glimmer of hope for investors. It may also open the door for Royal Caribbean (RCL 2.00%) and Norwegian Cruise Line (NCLH 0.81%) to plan their own gradual returns. This is not a comprehensive reopening for Carnival. Instead, it's a small-scale plan involving eight ships operating out of three ports.
Carnival has a plan to resume some cruising. Image source: Carnival.
What is Carnival doing?
The company has officially canceled all cruises through the end of July. It plans to offer cruises on eight ships leaving from Miami, Port Canaveral, and Galveston beginning Aug. 1. It plans to reopen some other ports (and perhaps increase the ships sailing from the three mentioned above) as of Aug. 31, according to a press release.
On Aug. 1, Carnival plans to stage the following ships in each port:
- Galveston: Carnival Dream, Carnival Freedom, and Carnival Vista
- Miami: Carnival Horizon, Carnival Magic, and Carnival Sensation
- Port Canaveral: Carnival Breeze and Carnival Elation
Carnival also has a number of extended cancellations:
- All Carnival Spirit Alaskan cruises from Seattle will be canceled, as well as the Carnival Spirit Vancouver-Honolulu cruise on Sept. 25 and the Honolulu-Brisbane transpacific cruise on Oct. 6.
- All Carnival Splendor cruises in Australia from June 19 to Aug. 31 will be canceled.
"We are committed to supporting all public health efforts to manage the COVID-19 situation. We are taking a measured approach, focusing our return to service on a select number of homeports where we have more significant operations that are easily accessible by car for the majority of our guests," the cruise line said in a press release.
Carnival also made it clear that it plans to coordinate its efforts with the U.S. government. That has to happen as it needs CDC approval before it can actually sail.
What does this mean for investors?
This is a tiny ray of light for Carnival investors. It likely also will lead to Royal Caribbean and Norwegian Cruise Line making similar plans.
Opening a small fraction of its cruise ships for business is a start. Carnival has 28 ships under its self-named brand. It also owns all or part of 100 ships in total across a variety of other cruise lines, including Cunard, Princess, and Holland America.
Opening, however, even in a small way, is an important part of the company's recovery. People going on cruises and not getting sick will convince other people to book cruises (even if they are well into the future).
All three cruise lines need to move with caution. A ship that gets infected would be a disastrous setback. Carnival, Royal Caribbean, and Norwegian all need to satisfy the CDC. That likely means temperature checks, medical evaluations, and containment procedures if someone gets sick on board.
These are baby steps on a long journey. These stocks remain very risky and a setback could mean one, two, or all three companies end up in a strategic Chapter 11 bankruptcy. If you invest, be prepared for that risk and be ready for a long voyage back to normal operations.
