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Carnival Says China May Be Among First Areas to Cruise Again

Cruising is at a standstill after a series of coronavirus outbreaks at sea prompted concern about the safety of the industry.

Carnival Says China May Be Among First Areas to Cruise Again
The Holland America Line Inc. Rotterdam cruise ship docks at the Port of Everglades in Fort Lauderdale, Florida, U.S. (Photographer: Christina Mendenhall/Bloomberg)

(Bloomberg) -- Carnival Corp. Chief Executive Officer Arnold Donald said China might be among the first areas where cruise lines start sailing again as the coronavirus pandemic eases.

It’s logical for China to be among the first regions to restart sailing, because it is starting to open up to some types of social gathering, 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. Although various cruise lines’ passengers and crews have been afflicted with Covid-19, Carnival’s ships suffered several early and dramatic episodes. Its Diamond Princess ship at one time had the largest outbreak outside of China.

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

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

Donald said that the $6.4 billion Carnival has 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.

But the cruise operator is still evaluating where it fits into stimulus 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 has about $1 billion a month in liquidity needs, 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 some $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.

©2020 Bloomberg L.P.