Cruise Companies Cheer CDC Outline of Quicker Path to Return

Cruise companies expressed relief and optimism after the U.S. Centers for Disease Control and Prevention outlined a new path to the resumption of voyages.

According to the new guidance in a letter sent to companies on Wednesday, ships can sail from U.S. ports with paying customers if 95% of guests and 98% of crew are vaccinated, bypassing a previous requirement for starting with trial voyages. In a response provided to Bloomberg News, the agency said it wants to resume U.S. sailings “as soon as possible to maintain the timeline of passenger voyages by mid-July.”

On Thursday, Royal Caribbean Cruises Ltd. discussed the letter in its quarterly business update, saying the message had addressed some of the company’s “uncertainties and concerns.” Royal Caribbean said it now sees a pathway to sailing from the U.S. again, including for the Alaska cruise season, which runs until September. The letter from the CDC was previously reported by USA Today.

The U.S. cruise industry has been essentially banned from operating via U.S. ports since the beginning of the Covid-19 pandemic in March 2020. The companies have recently ramped up lobbying efforts to win approval for a return, arguing in part that the industry was unfairly singled out for the strictest treatment even as other tourism businesses have returned in some fashion.

CDC Checklist

Technically, the CDC lifted its hard ban on cruising in October, but it replaced it with a checklist for restarting cruises that no operator has yet managed to complete. The industry had previously criticized the conditional sailing order as overly burdensome and out of touch with the new reality since the arrival of Covid inoculations. Florida, where the major cruise companies are headquartered, even sued the federal government to hasten the return of the industry.

But Royal Caribbean said the recent discussions with the CDC have turned more productive.

“They have dealt with many of these items in a constructive manner that takes into account recent advances in vaccines and medical science,” Royal Caribbean Chief Executive Officer Richard Fain said Thursday during the company’s first-quarter business update.

The company reported revenue totaling $42 million, which was slightly better than expected by analysts tracked by Bloomberg.

It said it has started to spend slightly more cash to cover expenses related to restarting the fleet. Royal Caribbean also noted that cumulative advanced bookings for the first half of 2022 are “within historical ranges and at higher prices” to its 2019 pre-pandemic baseline.

Capacity Goals

Jason Liberty, chief financial officer of Royal Caribbean, said the company had already planned to operate at about 19% of its typical capacity, with sailings originating from Singapore, Europe and several Caribbean nations. The new rules could allow it to bring more than half its capacity online by the end of the summer.

“Our goal is get the majority of our fleet back up and running by the end of the year so that 2022 looks like a normal period,” he said in an interview Thursday.

The Miami-based company is working with federal authorities and the Canadian government to allow Alaskan sailings. Federal law requires that cruise ships, which are typically registered in other nations, stop in a foreign port before returning to the U.S., and Canada isn’t allowing such arrivals.

Royal Caribbean said that it has carried more than 125,000 guests since cruises resumed overseas and only 21 people have tested positive for Covid-19.

Royal Caribbean’s shares rose as much as 5.7% to $92.45 in New York trading, though the stock turned negative later in the session. Carnival Corp., the industry market-share leader, rose as much as 4.8%, and Norwegian Cruise Line Holdings Ltd. advanced as much as 7.1%.

©2021 Bloomberg L.P.

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