Royal Caribbean Cruises Ltd. (RCCL), the world’s second largest cruise shipping company, has identified significant reductions in capital expenditure and it estimates its cash burn at $250 million to $275 million per month.
Since the last earnings call, the company has identified approximately $3.0 billion and $1.4 billion of capital expenditure reductions or deferrals in 2020 and 2021, respectively, RCCL said in a statement.
The 2020 reductions and deferrals are comprised of:
$1.2 billion, of non-newbuild, discretionary capital expenditures and
$1.8 billion in reduced spend or deferred installment payments for newbuild related payments which the Company is currently finalizing.
The company believes COVID-19 has impacted shipyard operations and will result in delivery delays of ships previously planned for delivery in 2020 and 2021.
Since the last earnings call, RCCL has taken several additional actions to further improve its liquidity position and manage cash flow:
Increased the capacity under its revolving credit facilities by $0.6 billion, and fully drew on both facilities
Entered into a $2.35 billion 364-day senior secured credit facility with an option to extend (secured by 28 ships with a net book value of approximately $12 billion as of March 31, 2020)
Obtained a $0.8 billion, 12-month debt amortization and financial covenant holiday from certain export-credit backed facilities
Amended its non-export-credit backed bank facilities to incorporate a 12-month financial covenant holiday
Agreed with its lenders that it will not pay dividends or engage in stock repurchases.
“As of May 5, 2020, expected debt maturities for the remainder of 2020 and 2021 are $0.4 billion and $0.9 billion, respectively.
The Company estimates its cash burn to be, on average, in the range of approximately $250 million to $275 million per month during a suspension of operations,” RCCL said.
“The Company is considering ways to further reduce the average monthly requirement under a prolonged out-of-service scenario and during start-up of operations,” RCCL pointed out.
