Norwegian Cruise Line Holdings Ltd (NCLH), the world’s third largest cruise shipping group, has reported a deep loss for the third quarter, while interest expenses more than doubled on the same period last year.
Net loss amounted to $677.4 million, equal to loss per share of $2.50, compared to a profit of $450.6 million and earnings per share of $2.09 year on. Revenue decreased to $6.5 million compared to $1.9 billion in 2019 due to the complete suspension of voyages in the quarter.
“Interest expense, net was $139.7 million in 2020 compared to $60.2 million in 2019. The change in interest expense reflects additional debt outstanding at higher interest rates, partially offset by lower LIBOR. Included in 2020 were losses on extinguishment of debt and debt modification costs of $6.6 million,” the company said in a statement.
“While booking volumes since the emergence of the Covid-19 global pandemic remain below historical levels, there continues to be demand for future cruise vacations, particularly beginning for sailings operating in the second half of 2021 and beyond, despite limited marketing efforts. Our overall cumulative booked position for the first half of 2021 remains below historical ranges as expected due to the current uncertain environment, however, for the second half of 2021 it is in line with historical ranges,” NCLH said.
Pricing for full year 2021 is in line with pre-pandemic levels, even after including the dilutive impact of future cruise credits. “Pent up future demand for cruising is further demonstrated by record booking achievements in September and October including Oceania Cruises’ Labor Day upgrade sale which was the most successful holiday promotion in the line’s history, a new World Cruise opening day booking record for Regent Seven Seas Cruises’ 2023 World Cruise and a new all-time largest single booking day in Regent’s history with the launch of its 2022-2023 Voyage Collection, NCLH stated..
In order to provide additional flexibility to its guests, NCLH has also extended its modified final payment schedule for all voyages through April 30, 2021 which requires final payment 60 days prior to embarkation versus the standard 120 days.
As of September 30, 2020, the Company had $1.2 billion of advance ticket sales, including the long-term portion of advance ticket sales, which includes approximately $0.85 billion of future cruise credits.
NCLH’s monthly average cash burn rate for the third quarter was approximately $150 million. For comparative purposes, assuming vessels remain at minimum manning status, fourth quarter 2020 average cash burn rate would be higher at approximately $175 million per month, primarily driven by the timing of interest expense. For the second half of 2020, this would result in an average monthly cash burn rate of approximately $160 million, in line with the company’s previously disclosed target rate during voyage suspensions, it said.
