Royal Caribbean May Still Consider Opportunistic Ship Sales

Empress of the Seas

Royal Caribbean is expected to grow its capacity over the next few years, according to CFO and senior vice president, Jason Liberty, who spoke on the company's third quarter earnings call.

The capacity increase will be driven by the new ships on order, he said, which are more efficient and offer more onboard revenue opportunities, although the rate of growth may be tempered by more opportunistic ship sales or scrapping.

If a ship does not fit in a brand strategically, it will be removed, Liberty said, noting that is an ongoing process.

Meanwhile, he also said that deliveries of current newbuilds will be delayed from eight to 10 months.

Royal Caribbean reported liquidity of $3.7 billion as of Sept. 30, 2020, and also, with all ships now moved into layup, that ship operating expenses dropped significantly from $680. 4 million for the second quarter to $308.6 million in the second quarter.

The overall cash burn is expected to range from $250 million to $290 million per month, including interest expenses, ship operating expenses, administrative costs, hedging costs and capital expenditures.

As for the ships operating. Liberty said they are operating at or about the break-even point.

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