Royal Caribbean reports $1.4 billion loss because of pandemic.

The coronavirus pandemic that has forced the cruise industry to a halt since March has hit one of the world’s largest cruise companies with a $1.44 billion loss in the first quarter.

The earnings report from Royal Caribbean Cruises Ltd. released Wednesday shows the Miami-based company lost $6.91 on a per share basis. Its stock is down 68% since Jan. 1.

The company is the parent to Royal Caribbean International, Celebrity Cruises, Azamara and Silversea Cruises including the world’s four largest cruise ships that sail out of Port Canaveral, PortMiami and Port Everglades.

“Responding to the dramatic change in business conditions caused by COVID-19 has required focus, dedication, ingenuity and improvisation from all our people, and their efforts have been nonstop,” said company Chairman and CEO Richard Fain in a press release. “We understand that when our ships return to service, they will be sailing in a changed world. How well we anticipate and solve for this new environment will play a critical role in keeping our guests and crew safe and healthy, as well as position our business and that of our travel agent partners to return to growth.”

The earnings release said the company’s revenue for the quarter ending March 31 was $2.03 billion compared with $2.44 billion in 2019.

Cruise lines globally halted service in midMarch and are currently under a “no sail order” from the Centers for Disease Control and Prevention that prohibits sailing from U.S. ports until at least late July.

Royal Caribbean International President and CEO Michael Bayley said on the earnings call that its brand is set to announce more cancellations through July 31, except for in China. Wednesday morning had all Royal Caribbean Cruises LTD brands only having canceled cruises through June 11 while other cruise lines had already extended their cancellations to August.

The cruise company’s press release said that any return to service would come after developing a plan that is being formulated with the help of experts in public health, epidemiology, design and sanitation.

“We have assembled a blue-ribbon team of experts to advise us on the right approach,” Fain said on the earnings call. “It’s tempting to start talking now about all of the individual components and how things will change … but we’re still getting advice. … We’re better prepared today than we were yesterday and we’ll be better prepared tomorrow.”

Fain compared the pandemic to the terrorist attacks of Sept. 11, 2001.

“I recall that in the aftermath of that horrible event, people said that travel was history,” he said. “What happened was we adjusted. Travel didn’t simply revert to what it had been, rather travel adjusted to the new normal. I believe personally that the same thing is going to happen in a post-COVID-19 world.”

While the company offers full refunds for canceled sailings, it’s following the pattern of most lines that offer a credit if customers rebook their canceled cruises for a future sailing date. As of April 30, the company said 45% of customers have opted for the refund, and that future bookings for 2020-2022 continue to be on pace with similar bookings from years past.

“Although still early in the booking cycle, the booked position for 2021 is within historical ranges when compared to same time last year with 2021 prices up mid-single digits compared to 2020,” the earnings report stated.

The company has in hand as of March 31 a total of $2.4 billion in customer deposits.

To ride out the pandemic, if sailing continues to remain halted, the company has also increased its liquidity, the report stated, including an approximately $4 billion increase in additional financing through a secured bond issuance as well as $3 billion in reduced capital expenditures, $800 million in debt holidays and more cost reductions from company operating expenses as the fleet is shut down. That includes reductions in sales, marketing and administrative costs.

“We have taken swift and substantial actions to bolster our financial position by significantly reducing our operating and capital spend and leveraging our strong balance sheet to raise additional capital,” said Jason T. Liberty, executive vice president and CFO.

The monthly cash burn during the halt in service is expected to be between $250 million and $275 million.

“We understand that when our ships return to service, they will be sailing in a changed world.”

Richard Fain, Royal Caribbean chairman and CEO