‘Substantial doubt’ about our future: Norwegian Cruise Line

MIAMI — Norwegian Cruise Line Holdings said there is “substantial doubt” about the company’s ability to continue amid the COVID-19 pandemic and warned it might have to seek bankruptcy protection.

Despite that warning, Wall Street analysts say that as long as capital markets remain sturdy, the cruise line should still be able to weather the coronavirus pandemic.

The world’s third largest cruise company, headquartered in Miami, said in a securities filing it expects to report net losses for the quarter ending on March 31 and for the fiscal year ending Dec. 31.

The company owns 28 ships across three cruise lines: Norwegian Cruise Line, Regent Seven Seas and Oceania Cruises.

“If we are not able to fulfil our liquidity needs through operating cash flows and/or borrowings under credit facilities or otherwise in the capital markets, our business and financial condition could be adversely affected and it may be necessary for us to reorganize our company in its entirety, including through bankruptcy proceedings, and our shareholders may lose their investment in our ordinary shares,” the filing said.

Norwegian also said that it had received a $400 million US infusion into its U.S. subsidiary, Norwegian Cruise Line Corp. Ltd., from Greenwich, Connecticut-based private equity firm L Catterton.

The deal gives L Catterton a seat on Norwegian’s board of directors.

As of mid-April, analysts estimated that the industry as a whole had enough cash on hand for 10 cruise-less months.

Norwegian Cruise Line Holdings has 4,000 employees around the world working in its shore-side operations and about 32,000 shipboard employees. Nearly 2,700,000 passengers traveled on its ships in 2019.

Norwegian reported a profit of $930.2 million in 2019, behind its larger competitors Carnival Corp., which reported a profit of $3 billion, and Royal Caribbean, which reported a profit of $1.9 billion.

On March 13, the cruise industry shut down new cruises for 30 days following a no-sail order from the U.S. Center for Disease Control and Prevention, which has since been extended until at least July 24 or until the pandemic is declared over. The pause means onboard revenue — which normally accounts for about one-third of income — has evaporated. Cruises for Norwegian’s three brands are currently canceled through June 30.

To further shore up cash, Norwegian said it has identified about $515 million of capital expenditure reductions, including furloughs for 20 per cent of staff announced last week by chairman Frank Del Rio.

A Miami Herald investigation found that passengers and crew from at least six of the company’s 27 ships have tested positive for COVID-19. In recent weeks the company has been shifting crew between ships without testing them for the disease. A doctor on the Norwegian Gem died last week after treating crew with respiratory illnesses. Crew on the Norwegian Escape and Norwegian Epic, docked at Port Miami Tuesday, report crowded conditions in violation of CDC’s guidelines, which advise companies to keep crew in individual cabins, provide them with masks, and enforce social distancing.