As the novel coronavirus pandemic spread across the globe, a hand full of cruise ships soon became major virus hot spots. Now, major cruise lines have voluntarily agreed to extend the halt in operations out of United States ports through Sept. 15, CNBC reports.
"Due to the ongoing situation within the U.S. related to COVID-19, CLIA member cruise lines have decided to voluntarily extend the period of suspended passenger operations," the Cruise Lines International Association (CLIA) said in a statement. "It is increasingly clear that more time will be needed to resolve barriers to resumption in the United States."
CLIA represents the biggest cruise lines in the world including Royal Caribbean
"Cruise ship travel exacerbates the global spread of Covid-19 and... the scope of this pandemic is inherently and necessarily a problem that is international and interstate in nature and has not been controlled sufficiently by the cruise ship industry or individual State or local health authorities," the April CDC extension order read.
Carnival Cruise Lines, owned by Carnival Corp, initially planned to resume select U.S. operations on Aug. 1. A spokesman for the company told CNBC that affected customers would be told of the new Sept. timeline this week.
"Although we are confident that future cruises will be healthy and safe, and will fully reflect the latest protective measures, we also feel that it is appropriate to err on the side of caution to help ensure the best interests of our passengers and crewmembers," CLIA said of the extended date. "The additional time will also allow us to consult with the CDC on measures that will be appropriate for the eventual resumption of cruise operations."
As business came to a halt, the largest cruise lines have been forced to seek new loans and financing to survive the months with no or nearly no revenue.
Norwegian Cruise Lines, the smallest of the major publicly traded cruise line companies, has announced that it may need to file for bankruptcy protection in the future. On the same day, a subsidiary of Norwegian received a $400 million investment from private equity firm L Catterton. After raising another $2 billion in a mix of stock and revenue, the company said it could last at least through next year without filing.
Neither Royal Caribbean nor Carnival Corp have spoken about filing bankruptcy, but both have needed to find additional funds since the beginning of the pandemic. Cruise lines weren't included in the March 27 stimulus package.
As a result of the ongoing halt in operations and a poor outlook for the future, the credit ratings of all three companies have been downgraded by Moody's.
"Following recent downgrades of the only two investment grade cruise companies - Carnival and Royal Caribbean - our rated universe for this group is now entirely spec grade, an indication of the sector's growing duress," Moody's assistant vice president Pete Trombetta said on June 4.
Australia and the U.S. Congress have both initiated investigations into Carnival regarding its response to the virus.
