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Carnival Expects to Drop 13 Ships, 9% of Capacity

By Howard Smith – Updated Jul 10, 2020 at 1:32PM

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Other vessels are being redeployed, causing cancellations into the spring of 2021.

In a business update today, Carnival Corporation (CCL -3.51%) offered both good news and bad news. The cruise operator said that even with very little marketing spending, demand for its 2021 sailings has been strong, with almost 60% of 2021 bookings being new bookings. The company has been offering incentives and flexibility for customers with existing bookings that have been affected by the suspension of operations due to the COVID-19 pandemic. 

But the company continues to burn through cash, and it detailed its plans to dispose of 13 ships. Carnival said it expects "future capacity to be moderated by the phased reentry of its ships, the removal of capacity from its fleet and delays in new ship deliveries." 

cruise ship sailing at sunset

Image source: Getty Images.

Including a previously announced sale, the company said a total of 13 ships, or 9% of its current capacity, will be sold within 90 days. It has also deferred delivery of previously ordered new ships. Carnival president and CEO Arnold Donald said, "We have been transitioning the fleet into a prolonged pause and right sizing our shoreside operations." He said operating costs have been reduced ty $7 billion per year, and capital spending cut by $5 billion over the next 18 months. 

Some positive news in addition to 2021 bookings is the resumption of sailing at the company's German brand, AIDA Cruises. Three of AIDA's ships will be sailing in August, with enhanced safety protocols. Carnival said it has worked with medical experts on the new safety and health measures. Rivals Norwegian Cruise Line Holdings (NCLH -3.57%) and Royal Caribbean (RCL -4.65%) have jointly formed a panel of experts for guidance on resuming operations, as well. 

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

Stocks Mentioned

Carnival & Plc Stock Quote
Carnival & Plc
$9.34 (-3.51%) $0.34
Royal Caribbean Cruises Stock Quote
Royal Caribbean Cruises
$56.66 (-4.65%) $-2.76
Norwegian Cruise Line Holdings Stock Quote
Norwegian Cruise Line Holdings
$15.63 (-3.57%) $0.58

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