What happened
Shares of Carnival (CCL 1.13%) were up 5.2% at 11:30 a.m. EST on Friday, outperforming rival cruise line stocks Royal Caribbean (RCL 0.54%) and Norwegian Cruise Line Hodings (NCLH -0.21%), which were up 1.5% and 3.6%, respectively. There's good reason for Carnival's outperformance: It is about to resume cruising.
Image source: Getty Images.
So what
One of Carnival's several brands will, at least. On Wednesday, just ahead of the Thanksgiving holiday, the company announced that its German subsidiary, AIDA Cruises, will resume sailing out of the Canary Islands on Dec. 5.
As Carnival explained, Spain (which governs the Canaries) "adopted clear regulations for safe travel in the Canaries in November, which are in line with AIDA's already established hygiene and prevention measures." So the company can begin cruising with its AIDAperla and, a week later, its AIDAmar ships next month.
Now what
Combined, the two vessels usually accommodate just under 6,000 guests. But Carnival did not specify what their capacities will be in the era of COVID-19 and social distancing. Still, any cruises are better than none from a revenue standpoint.
The resumption of cruising in the Canaries will surely help to diminish Carnival's rate of cash burn somewhat, and help it limp through the tail end of the recession. At the same time, conducting any operational cruises at all should give the company the opportunity to test out procedures for safe cruising across the rest of its fleet, once that is permitted.
This is good news for Carnival, and investors are responding appropriately.
