What happened
The choppy seas for cruise line investors continued on Wednesday, as shares of Royal Caribbean (RCL 2.15%) and Norwegian Cruise Line Holdings (NCLH 1.00%), and most especially Carnival Corporation (CCL 1.65%) (CUK 1.54%), which were down yesterday, bounced back today.
As of 10:50 a.m. ET, shares of both Royal Caribbean and Norwegian Cruise are gaining 3%, while Carnival is leading the pack higher with a 3.8% gain.
So what
Why is this happening? Well, there's a bit of good news today on the omicron coronavirus variant front.
Yesterday, warnings of a potential "material drop" in the effectiveness of Moderna's vaccine against COVID-19 sparked a bit of a freak-out among cruise industry investors. Today however, the CEO of Pfizer partner BioNTech is being quoted in The Washington Post literally telling folks, "Don't freak out."
It's too early to tell, and it "remains to be seen ... whether or not we will need extra protection" beyond what existing vaccines provide, soothes BioNTech CEO Uğur Şahin. In the meantime, "the plan remains the same: Speed up the administration of a third booster shot," and if that later turns out not to be enough, then the vaccine makers will cross that bridge when they come to it.
Now what
Whether that message will play with consumers remains to be seen, but as for the cruise industry itself, it seems reassured. As CruiseIndustryNews.com reports today, "the global cruise industry restart" is continuing apace despite the arrival of omicron, "with 239 cruise ships set to operate from 68 brands globally" in December.
Of the big brands, Royal Caribbean has the most boats on the water, with 20 cruise vessels set to sail in December. Carnival Cruise will have 17 ships at sea, followed by privately held MSC Cruises with 13, and Norwegian Cruise in the No. 4 slot with 11 ships. And so long as regulators don't clamp down on cruising, and passengers don't cancel their reservations, analysts are still forecasting a return to profitability for both Royal Caribbean and Carnival in 2022. Norwegian Cruise is expected to be at least pro forma profitable next year, and follow that up with profits as calculated according to generally accepted accounting principles (GAAP) in 2023.
It might not be smooth sailing exactly, but so long as the cruise lines remain on track for profits, investors seem willing to stick with them today.