Why Cruise Line Stocks Are Surging — And When We Can Sail Again
After cruise line shares fell by 80 percent or more earlier this year, the last few months have been rather unspectacular. At the beginning of June, Carnival Cruise Line (CCL), Royal Caribbean (RCL) and Norwegian Cruise Line Holdings (NCLH) reached new highs for the time being, after brief hopes of an early resumption of cruises.
Then, there was calm. At least until Monday, August 24, 2020, when the world’s largest company in the industry with a fleet of well over 100 ships, CCL, shot up by more than 10 percent. Hopes for a vaccine may have played their part in this.
Rich Smith of Motley Fool is noting:
On the vaccines front, Financial Times is reporting that the Trump administration is on the cusp of granting an “emergency use authorization” to AstraZeneca’s coronavirus vaccine, which is currently in phase 3 trials but could conceivably begin distribution by as early as next month.
Similar news is coming out of the FDA, which on Sunday approved the use of convalescent plasma (blood plasma drawn from patients who have already been infected with but survived COVID-19) to treat new coronavirus patients. President Trump relayed the news in a press conference Sunday, calling it “very good news.”
Ok. But cruise lines only make money when they cruise. Do we have a date?
One week ago CCL CEO Arnold Donald was on Bloomberg saying: „When there’s social gathering and society has developed the compensating measures that its comfortable with that we have effectively mitigated the spread of Covid-19 (…) then we’ll be able to cruise again. (…) There are a lot of people (…) who are ready to cruise right now.” However, exact starting dates or exact measures under which cruising is safely possible, are still not there. Starting dates have been postponed week by week.
After all there is hope: In September, selected trips with Aida, which belong to CCL, are planned to start in Germany. Fact is: The first cruises of other companies have already taken place in Europo. However, these were smaller river cruises with way less people on board.
The corona virus is a major challenge for cruise operators. For months now, the fleets have been bleeding millions of dollars and have to keep ships and crews running. They only generate income when the ships can be operated again. Travelers, as soon as they can re-enter the ships, must be prepared for extensive checks, masks, distance rules and changes like no buffets.
The bottom line: The first planned cruise trips in Germany with bigger ships are a good sign and a ray of hope for the cruise industry. And for the stocks as well.