Carnival Business Update; 16 Months of Cash on Hand

Carnival Corp. Logo

Carnival Corporation provided a business update on Thursday morning.

Carnival Corporation President and Chief Executive Officer Arnold Donald said: "We have come full circle from initiating a suspension in the early days of the pandemic, to transitioning the fleet into a pause status, right sizing our organization and, now, embarking on the phased resumption of guest operations, underway in two of our world leading cruise brands, Costa in Italy and AIDA in Germany. We have accelerated the sale of less efficient ships, enabling us to capitalize on pent up demand on reduced capacity and structurally lower our cost base, while retaining our most cash generating assets. We are taking aggressive actions managing the balance sheet and reducing capacity to position us to weather this disruption and also emerge a leaner, more efficient company, reinforcing our industry leading position."

As of August 31, 2020, the company said it had a total of $8.2 billion of cash and cash equivalents on hand and its monthly cash burn in the fourth quarter is expected to be $530 million, down from $770 million, giving it approximately 16 months of cash.

Carnival Corporation Chief Financial Officer and Chief Accounting Officer David Bernstein noted: "As of the end of the Third Quarter, we had over $8 billion of available cash and additional financing alternatives to opportunistically further improve our liquidity profile. We have recently begun to optimize our capital structure with the early extinguishment of debt on favorable economic terms and the extension of debt maturities. In addition, with the re-launch of our fleet, we saw a good opportunity to improve our balance sheet with an equity offering. So last month we announced an at-the-market or ATM equity offering program. However, once we fully resume guest cruise operations, we expect our cash flow potential will build a path to further strengthen our balance sheet and return us to an investment grade credit rating over time."

Carnival said cruise bookings in the first half of 2021 reflect expectations of the phased resumption of its guest cruise operations and anticipated itinerary changes, as of September 20, 2020, cumulative advanced bookings for the second half of 2021 capacity currently available for sale are at the higher end of the historical range.

"The company believes this demonstrates the long-term potential demand for cruising. Pricing on these bookings are lower by mid-single digits versus the second half of 2019, on a comparable basis, reflecting the effect of future cruise credits ("FCC") from previously cancelled cruises being applied. The company continues to take bookings for both 2021 and 2022," the company said, in a press release.

As of September 20, 2020, approximately 45 percent of guests affected by the company's schedule changes have received enhanced FCCs and approximately 55 percent have requested refunds.

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