Fireside Chat, Interview
Frank Del Rio, President and CEO of Norwegian Cruise Lines
- Norwegian Cruise Line expects to resume operations from U.S. ports within days to weeks following CDC progress, targeting Alaska sailings from Seattle in early August, with competitors potentially launching Caribbean sailings in mid-to-late July.
- Seven ships are scheduled to be operational by the end of the third quarter, while the company projects a potential record year in 2022 if current itineraries can be executed.
- Pent-up demand from approximately 50 million prospective cruisers from 2020 and 2021 is anticipated to drive growth through 2023, with the firm reporting stronger booking curves for 2022 and 2023 than ever before.
- A global "quick domino effect" of countries, including Denmark and Japan, is predicted to allow cruise operations to resume soon after CDC restrictions are lifted.
- The company plans to implement 74 Healthy Sail Panel protocols with minimal exceptions and mandates 100% vaccination for crew and passengers during the initial resumption phase.
- Total bed capacity is projected to grow by more than 40% over the next few years, driven by six ships on order for the Norwegian brand and two for Oceania, alongside nine other vessels.
- Inflationary pressures from rising protein and fuel costs are expected to be offset by approximately 5% price increases.
- Financial operations will adopt a conservative approach with higher cash balances to manage risk, while the company aims to pay down debt but remains restricted from debt buybacks, stock repurchases, or dividends due to current covenant terms.
- Future strategic moves may include acquisitions leveraging the firm's cash position and industry expertise, with a specific focus on returning to pre-pandemic performance levels regarding yields, IBADCPD, ROIC, and gross margins.
- Management acknowledges the critical role of a $2.4 billion capital raise in preventing bankruptcy and reflects that future pandemic responses would involve more aggressive and vocal challenges to CDC industry labeling.