For the third time in three quarters, Royal Caribbean (NYSE:RCL) posted losses exceeding $1 billion Thursday, and also said it is burning through cash at a rate of $250 million to $290 million a month.
However, despite the seemingly dire results for a business that has been shut down for six months, shares of the cruise ship operator were rising today as the company suggested calmer seas were ahead.
Waiting for the storm to pass
Royal Caribbean said passenger ticket revenue was just $3.2 million this quarter compared to the $2.3 billion it generated a year ago, but with a business that has been dry-docked globally since March, no one was expecting to see anything better.
The losses it has sustained are substantial; it recorded a loss of $1.3 billion this quarter versus profits of $890 million last year. And this comes after it posted losses of $1.6 billion in the second quarter and $1.4 billion in the first.Royal Caribbean says it expects to post a loss in the fourth quarter, too.
Yet CEO Richard Fain remained optimistic about the cruise operators's future, telling analysts on the earnings conference call that although a second wave of COVID-19 cases "is beyond frustrating," he is hopeful because the company's "biggest advantage is that we have a controlled environment."
Royal Caribbean is fully aware that when its cruises do set sail again, which will be in a phased manner, it will be with reduced guest occupancy. Returning the fleet to service will also cause the company to incur incremental costs, but it hopes to eventually see cash flows rise again.
The cruise line operator says despite its cash burn rate, it has approximately $3.7 billion in liquidity available to it, including $3 billion in cash and equivalents and $700 million in short-term facility commitments.