Expensive fight for survival: This is how Carnival wants to stay afloat

Photo by jonathan leonardo on Unsplash

Until the end of July 2020, cruises are not allowed in America, says the CDC. The largest company in the industry is preparing for the worst-case scenario.

In short:

  • According to Carnival CEO Arnold Donald, liquidity is secured until at least end of this year.
  • It is still completely unclear when cruise ships will be allowed to sail again.
  • Bookings for 2021 are strong.

One thing is for sure: Carnival will not get any bailout money because the company is not based in the USA. Carnival has nevertheless secured the liquidity: with billions in loans, some at double-digit interest rates. Not cheap, but necessary. With these measures, the liquidity is secured until the end of the year, after which further solutions are being sought, explains CEO Arnold Donald in an interview with CNBC a few days ago. The essence: For him too, it is completely unclear how things will continue.

In order for the company to survive in the long term, people will of course have to get back on the ships and go on holiday. It seems like people wanna do this again. Bookings for 2021 are strong, explains the Carnival boss.

A similar picture emerges in social networks and in conversations with cruise fans: the desire to finally be able to travel again is particularly strong among many. And: “Travel is going to return, travel and leisure, and when it does, we’ll return with it. Social gathering at some point will return, and when it does, people will want to cruise,” says Donald on CNBC’s Closing Bell.

I can only agree with that. The crucial question remains: When will we go on and how?

After buying the stock last weeks at a particularly low average price of 7.61 and already taking good gains, I continue to hold on to my bullish thesis: Covid-19 passes, Carnival survives and people go on vacation again.

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