China May Be Among First Areas for Cruises to Resume, Carnival Says

(Bloomberg) ― China may be among the first areas where cruise lines start sailing again as the coronavirus pandemic eases, according to Carnival Corp. Chief Executive Officer Arnold Donald.

It’s logical for China to be among the first regions to resume sailing as the country is beginning to open up to some types of social gatherings, Donald said Thursday on a conference call with journalists.

“Because of that ― and that alone ― it’s possible that China could be one of the first markets where cruise can be renewed,” Donald said. “There are other issues, though, not the least of which is where the cruise is going to go.”

Cruising is at a standstill after a series of coronavirus outbreaks at sea prompted concern about the safety of the industry. Various cruise lines’ passengers and crews have been afflicted with Covid-19, and Carnival’s ships suffered several early, dramatic and well-publicized episodes. Its Diamond Princess ship at one time had the largest outbreak outside of China.

Rival Royal Caribbean Cruises Ltd. Thursday extended its halt through June 11.

Before the pandemic, China was an important source of growth for Carnival. It expected to base 5% of its fleet there in 2020.

The $6.4 billion Carnival raised in stock and bond markets in recent weeks, in addition to credit lines, will help sustain the company during a period of near-zero revenue, Donald said.

But the cruise operator is still evaluating where it fits into relief packages from European governments.

“Whatever is available to help protect our employees, to help keep the company going, we’re going to take full advantage of,” he said.

Carnival previously said it needs about $1 billion a month in liquidity, including costs associated with docking its fleet of more than 100 ships.

Donald said the goal of any new fundraising would be to further increase the company’s cash cushion, not to refinance existing higher-interest bonds. The company sold $4 billion in bonds this month at an 11.5% coupon rate typically reserved for the riskiest borrowers.

“We’re not predicting we’re going to need it, but we need to be very prepared, because no one predicted where we are today,” Donald said.