Please ensure Javascript is enabled for purposes of website accessibility

Carnival Starts Selling Its Ships to Reduce Costs

By Rhian Hunt – Jun 18, 2020 at 6:36PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Six vessels will be sold off first, with more to follow.

Still battling the economic riptides and shoals of the COVID-19 pandemic, Carnival (CCL -23.25%) is currently in the process of selling six of its cruise ships and intends to divest itself of more, according to an update today. The troubled cruise line is attempting to cut costs as sailing dates get postponed and bookings fail to rebound quickly to pre-coronavirus levels.

Maintaining cruise ships in operation is a costly matter, with expenses running at around $1 billion per month when the whole fleet is operational versus $250 million monthly when docked and shut down. Currently, about 60% of Carnival's fleet is paused, with the remainder still on the ocean, though the situation is somewhat improved from mid-May when 100,000 cruise line employees were trapped at sea. 

Cruise ship off Santorini.

Image source: Getty Images.

With many of its ships operational but earning no money, Carnival said today it decided to accelerate the sale of a half-dozen vessels it had intended to sell in any case. It claims it already has a buyer lined up, stating, "The company already has preliminary agreements for the disposal of 6 ships which are expected to leave the fleet in the next 90 days and is currently working toward additional agreements."

How much profit Carnival can expect to reap from this sale is conjectural, since the vessels aren't new. A modern cruise ship can cost anywhere from $500 million to $1 billion new. The company also says its next four ships on order, originally slated for autumn delivery, will likely be delayed due to the coronavirus fallout.

Carnival also said it "expects future capacity to be moderated by the phased reentry of its ships" and "the removal of capacity from its fleet."

Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool recommends Carnival. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Carnival Corporation Stock Quote
Carnival Corporation
CCL
$7.03 (-23.25%) $-2.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
104%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.