Carnival Cruise Lines (NYSE:CCL) (NYSE:CUK) is one of the biggest losers of the COVID-19 pandemic. But instead of fading into oblivion or filing for bankruptcy, like other pandemic failures, it's become the talk of investors as it tries to hold on until the pandemic ends. Let's see why it's such a heated discussion.

Slammed with COVID-19

Carnival is the largest cruise vacation company in the world, and revenue was growing before the pandemic, hitting $4.8 billion in sales in the fiscal first quarter, which covered the period ended Feb. 29. But cruises -- and sales -- came to a halt when lockdown orders were issued. 

In the fiscal third quarter ended Aug. 31, Carnival posted a $2.9 billion loss. Its average cash burn rate was $770 million, and with some positive movement in the fourth quarter, it expects that to improve to $530 million.

Carnival cruise ship at Nagasaki port.

Image source: Carnival Cruise Lines.

Management made strenuous efforts to keep cash on hand, including writing debt, offering stock, using its credit line, and pausing debt repayment. As of the end of the third quarter, the company had more than $8 billion in available liquidity.

That puts Carnival into a category of top companies that are faltering due to the pandemic. These companies are struggling with social distancing and closures. But they have the ability to outperform when normal socialization resumes. Investors have two questions to mull over: Will sales indeed go back to pre-pandemic levels? And if you have confidence that it will, when is the time to buy in? 

Getting back in shape

The company has announced delays several times since the initial cruising pause. As of Dec. 14, it said that its Seabourn premium brand luxury cruises will resume operations in May 2021.

Some of Carnival's cruises have already set sail, such as some ships from the Italian Costa line. In the meantime, Carnival is doing whatever it can to be prepared, operationally and financially, for when it can proceed with full operations.

It's selling some of its ships. Carnival is removing 18 vessels, such as the Sun Princess and the Sea Princess, due to inefficiencies. They represent 12% of operating capacity but only 3% of operating income. Unloading them opens up room to focus on more profitable vessels. And while the ships are stationary, Carnival is making plans for dry docks for some of them, which allows them to make repairs and get them into tip-top shape.

Couple drinking champagne and standing in front of a cruise ship.

Image source: Getty Images.

It's also taking advance bookings at a discount to bring in badly needed funds before more ships set sail. These are going well, with volume at the higher end of the historical range for early bookings.

Most recently, it announced the inauguration of the Mardi Gras, an innovative ship that is fueled by liquid natural gas. It also has the first roller coaster on the seas as well as several restaurants backed by top names.

Carnival is a leading company that has the power to return to and surpass pre-coronavirus sales. Its stock is down almost 60% in 2020, and it may not bounce back any time in the near future. Investors are watching closely to see what news will spark a price increase. The stock jumped on the news of a vaccine and is up about 60% since the beginning of November.

The company still faces trouble until the COVID-19 pandemic becomes a memory. But investors who buy low will almost certainly be rewarded when cruise ships do begin to set sail, making Carnival a hot stock to watch.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.