What happened 

Shares of cruise line stocks jumped on Friday after some positive comments were made by a big industry insider. Shares of Carnival (CCL -0.42%) (CUK -0.55%) were up as much as 7.7% earlier and are up 6% at 1 p.m. EST. Norwegian Cruise Line (NCLH 0.66%) was up 6.8% and is now trading 5.4% higher. And Royal Caribbean Cruises (RCL 1.23%) traded 6.1% higher and is now up 4.1%. 

This follows a strong week for cruise line stocks on optimism about the effectiveness of COVID-19 vaccines and Carnival closing a $3.5 billion financing round

Cruise ship in port

Image source: Getty Images.

So what

The most notable news today was from Carnival CEO Arnold Donald, who said he thinks "most, if not all" of its fleet will be in operation by the end of 2021. At worst, he thinks early 2022 will see the full fleet active. 

A huge uncertainty for cruise lines has been when they'll be able to return to action. The longer the pandemic keeps people off cruises, the more companies need to keep their businesses afloat and the more uncertainty when any payback will come to shareholders. If Donald is seeing a quick recovery by the end of 2021, that's extremely bullish for the industry. 

It's not clear exactly what a recovery will look like for cruise lines. Vaccines are expected to be widely available in the U.S. by summer, and some companies are considering vaccine passes that would allow for more open movement than current restrictions. That could also be possible on cruise lines, where passenger safety will not only be a priority for operators, it'll be key to getting customers to board ships. 

Now what

There's still a lot of uncertainty for cruise line operators, but it's becoming increasingly clear that brighter days are ahead. By summer, more capacity could be hitting waters, and if Carnival is right, the industry could be full speed ahead by winter. 

What'll be key to watch for investors is just how fast demand comes back. There's chatter that pent-up demand could lead to a Roaring '20s-style recovery for consumer discretionary stocks, which would be great for entertainment and vacation companies like cruise lines. Both utilization and pricing could be high if the pandemic ends soon. 

As much as the market is clearing these comments today, we've had hope for a recovery before, so caution is in order. Demand may be weak if customers don't want to take the risk of going on a cruise ship, and operators may have to price aggressively to attract customers. And with billions in additional pandemic-related debt on their balance sheets, all three companies are more risky than they were a year ago. For now, the market likes that there's some kind of light at the end of the tunnel.