Cruise Lines - Devastation in the making?Lets flash back to 2009...
Royal Caribbean Cruises in January 2008 was $35 per share.
By February 21, 2009 it hit $5.04 per share based on recession events.
Today, following a "correction" it is at $89, meanwhile, the liabilities have not been reduced. A "correction" to $89 is nothing more than an indicator of a correction on the way.
This could get really bad really quick.
Last quarter they reported cash of $243MM.
The curent dividend is ~3.5%. That is $650MM per year of net income required to pay the divi. If you haven't assumed that the divi is gone, then I would now assume it is gone. Gauranteed.
The Coronavirus shows most severe symptoms in 65+ age brackets. What's the average age of cruiser? Rhetorical question - Yes.
One person tests positive on a cruise ship, the entire cruise ship travellers are liekly not getting back on ground. Would anyone risk stepping on a cruise ship for a 7 ro 14 day sail at the present?
I would be worried that RCL could burn +/-$350MM each month that ships are grounded or loosely filled.
I sure hope that RCL has insane amounts of disruption insurance - I think they would have reported that by now.
I hope that the credit lines are at max and cannot be touched.
Short sellers are all over the cruise industry - you can't blame them.
U.S. gov normally steps in to save essential services, even airlines and automakers, in times of crisis. Essential services or the backbone of the economy gets relief. I have been on cruises, and it is nearly all international workers aboard. Cruise lines loaded with international workers will be on their own I would guess.
For everyones sake, I hope that this Covid19 blows over and the stock markets and everyones health is protected, but I think that is a zero probability at this point. Good luck. Lets see what happens in the coming weeks. I could see the gov dropping interest rates further to address the over-leveredged corporate America.
Looking for management to provide revied guideance or any commentary on the current situation for damage control.