A Spanish unit of Royal Caribbean Cruises (NYSE:RCL) has filed for bankruptcy because "the headwinds caused by the pandemic are too strong."
The Pullmantur Cruceros joint venture with Cruises Investment Holding filed for bankruptcy protection under Spanish insolvency laws with an eye toward reorganizing. Royal Caribbean owns 49% of the company while Cruises Investment owns the 51% majority.
Pullmantur operates three cruise ships, which are minimally staffed at the moment for maintenance, and has canceled all cruises through Nov. 15.
Royal Caribbean still expects to begin sailing again in August, and has offered Pullmantur passengers the option of sailing on its own cruise ships, including Royal Caribbean International and Celebrity Cruises.
In a statement on the bankruptcy filing, Pullmantur's board of directors said the pandemic made the action necessary and noted, "Despite the great progress the Company made to achieve a turnaround in 2019 and its huge engagement and best efforts of its dedicated employees, the headwinds caused by the pandemic are too strong for Pullmantur to overcome without a reorganization."
Royal Caribbean said all of its assets related to the Spanish cruise ship operator were included in the $1.1 billion non-cash impairment charge it reported in the first quarter.