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Royal Caribbean's Return To Profit Delayed By Omicron Surge; Norwegian Cruise Expects Net Loss

Published on Feb 17 2022 11:33 AM in General Industry tagged: Royal Caribbean / CDC / Centers for Disease Control and Prevention / Norwegian Cruise Line / Norwegian Cruise Line Holdings / Norwegian Cruise

Royal Caribbean's Return To Profit Delayed By Omicron Surge; Norwegian Cruise Expects Net Loss

Cruise operator Royal Caribbean Group RCL.N has said that the lightning spread of the Omicron COVID-19 variant will delay its return to profitability by a few months, another blow for one of the companies worst affected by the COVID-19 pandemic.

The bleak prediction, as well as a larger-than-expected quarterly loss, sent Royal Caribbean's stock down 4% and also weighed on shares of rivals Carnival Corp CCL.N and Norwegian Cruise Line Holdings Ltd NCLH.N.

The Omicron surge has in recent months forced cruise operators to change their trip itineraries and even cancel voyages, stalling a nascent recovery in the sector whose ships have spent most of the pandemic anchored at US ports.

"The timing of Omicron was particularly painful as a typical wave booking period begins in early January," CEO Jason Liberty said on an earnings call.

The Celebrity Cruises owner expects a loss for the first half of 2022 before turning profitable in the following six months. Analysts polled by Refinitiv had estimated a loss for the first quarter and a return to profits in the second.

"(A recovery is) just going to continue to get pushed out and we're going to have delays and starts and stops until we are all clear of the pandemic," the chief investment officer of Tigress Financial Partners, Ivan Feinseth, said.

The resurgence in COVID-19 cases has prompted a warning against cruise travel from the US health agency and forced even frequent cruise passengers to stay away from voyages.

In the fourth quarter, total revenue came in at $982.2 million, missing analysts' estimates of $1.04 billion. The adjusted per-share loss of $4.78 was also larger than expectations of $3.92.

But in a bright spot, Royal Caribbean said that bookings had picked up in late January and returned to pre-Omicron levels, with cancellations also subsiding.

Norwegian Cruise Expects Net Loss Till Regular Voyages Resume

In other cruise company news, Norwegian Cruise Line Holdings Ltd NCLH.N has said that it expects to report a net loss until it can resume regular voyages, as the Omicron variant of COVID-19 stalls a rebound in a sector ravaged by the COVID-19 pandemic.

Cruising demand was slammed by rising COVID-19 cases during the Delta and Omicron waves as operators had to tweak their itineraries halfway through sailings or cancel trips hours before the start.

Still, the company said that it expects to have positive net income on an adjusted basis for the second half of 2022.

In November, the cruiseliner forecast a return to profitability in the second half of the year.

US CDC Eases Warnings For Cruises As New COVID Infections Fall

In additional cruise-related news, the US Centers for Disease Control and Prevention (CDC) has eased its warnings for cruise ships by a notch from the highest level, seven weeks after it advised Americans against going on cruises.

The health agency made the decision to reduce the warning to level three from four in response to a decline in onboard COVID-19 cases, but still recommended that people who were not up to date with vaccines avoid cruises.

The CDC in December increased the warning to level four due to the rapid spread of the Omicron variant that also forced cruise operators to cancel sailings.

COVID-19 infections are decreasing in the United States, with 168,485 new infections reported on average each day, or about 21% of the peak, with the highest daily average reported on 14 January.

Trade association Cruise Lines International Association said that the CDC's latest decision is "a step in the right direction".

Royal Caribbean Group RCL.N, which also owns Celebrity Cruises, earlier this month said that it had carried nearly 1.3 million guests since mid-2021, with approximately 2,500 guests testing positive for COVID-19.

"We believe we are past COVID-19 in terms of the overall impact on our business," Royal Caribbean Group CEO Jason Liberty said at the beginning of February.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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