Royal Caribbean "Unable to Predict" Coronavirus Impact for 2020


Published Feb 25, 2020 8:23 PM by The Maritime Executive

In an earnings report released Tuesday, Royal Caribbean warned that it is "unable to predict the full financial impact" of the coronavirus epidemic on its earnings for 2020, given the ongoing uncertainty surrounding the disease and the public health measures to contain it. 

At the beginning of the year, business in Asia looked good. "Prior to the outbreak, our sailings in China were trending particularly well both in terms of rate and volume," Royal Caribbean reported. "Our itineraries in China were expected to represent six percent of our full year [capacity]." 

However, the travel restrictions that Asian governments have implemented to contain the disease have forced cruise lines to curtail their operations in the region. As a result of these measures, Royal Caribbean has already canceled 30 sailings in Asia and modified several itineraries. 

Like other cruise lines, Royal Caribbean has also been forced to take tough measures to ensure the health of passengers and crew, like banning all Chinese nationals and anyone who has traveled in China within the past two weeks. And in response to U.S. State Department guidance on cruise travel in Asia, Royal Caribbean has also decided to allow U.S. guests on Asian cruises to rebook for a later date without penalty. 

The company expects that the resulting impact from the actions it has taken so far will shave about 90 cents per share (about $190 million) off its 2020 financial performance. If it were to cancel all of its remaining sailings in Asia through the end of April, that would subtract an additional 30 cents per share ($63 million) from 2020 earnings. 

In heavy trading Tuesday, Royal Caribbean's share price fell by seven percent to close at about $90; cumulatively, it has shed about a third of its value since the outbreak began in January. Competitors Carnival Corporation and Norwegian Cruise Line also saw sell-offs Tuesday, and were down by five percent and 7.5 percent respectively.