Cruise Stocks Retreat After CDC Dashes Bid for Swift Restart

(Bloomberg) -- The U.S. Centers for Disease Control and Prevention is holding firm on a phased return to cruise-line operations, dashing the industry’s hopes for a swift restart.

Shares of Carnival Corp., which had been up earlier Wednesday, lost 1.9% to close at $24.85 in New York after Bloomberg News reported on the agency’s remarks. Royal Caribbean Cruises Ltd., also up earlier, fell 2.8% while Norwegian Cruise Line Holdings Ltd. lost 4.9%.

Cruise Lines International Association, the main lobbying group for cruise companies including Carnival, issued a statement earlier Wednesday calling for the CDC to drop the order and agree to let U.S. sailings resume by July.

But in an emailed response to questions, the CDC said the so-called Framework for Conditional Sailing Order, or CSO, remains in effect through November, effectively signaling that nothing would change.

“Returning to passenger cruising is a phased approach to mitigate the risk of spreading Covid-19,” the CDC said. “Details for the next phase of the CSO are currently under interagency review.”

The cruise industry can get back to business under the current framework, but the companies said Wednesday that it has set back their return and “unfairly” singles out the industry from other tourism and hospitality sectors.

What Bloomberg Intelligence Says:

“The decision to keep the CSO in place until Nov. 1, isn’t a major setback from what lines might have otherwise experienced. The order covers only four months after July 1, the earliest Norwegian planned to resume voyages.”

-- Brian Egger, gaming and lodging analyst

Click here to read the research

The dueling statements underscored mounting tension between the industry and the CDC a year after a series of deadly Covid-19 outbreaks at sea put the entire industry into hibernation.

The July goal would align with President Joe Biden’s projection that the U.S. could return to a semblance of normality by Independence Day, according to the CLIA, whose members account for 95% of global ocean-cruise capacity.

The group’s spokeswoman, Laziza Lambert, said the timing of the release reflects companies’ need for about 90 days to prepare ships for a return to commercial operations -- meaning they would have to get clarity in the next week or so to be ready for a July resumption.

Current Order

The current order replaced the previous no-sail order in October, and created a multistep process by which cruise lines might seek approval to return to U.S. waters. No company has yet achieved the full go-ahead.

“The lack of any action by the CDC has effectively banned all sailings in the largest cruise market in the world,” CLIA said.

Asked about the CDC’s latest remarks, CLIA’s Lambert didn’t directly address how the statement would affect the timeline for the companies’ return to sailing. But she said the agency wasn’t meeting its own deadlines under the CSO.

“Since the CSO was issued, the CDC has not released any further guidance, as called for in the CSO, to support the resumption of U.S. cruise operations, even as other sectors have opened or continued to operate throughout the pandemic,” she said.

The industry effectively went on hold in March 2020. But some companies have begun to plot a return in non-U.S. markets, including Royal Caribbean’s plans for May trips from Israel and June voyages from the Bahamas.

©2021 Bloomberg L.P.