What happened
Second verse, same as the first.
After sinking steadily through the tail end of last week, shares of cruise industry marquee stocks Carnival Corporation (CCL 1.58%) (CUK 1.27%), Norwegian Cruise Line Holdings (NCLH 3.15%), and Royal Caribbean (RCL 1.08%) are down again in early Monday trading, falling 6%, 7.5%, and 8.3%, respectively, through 10:30 a.m. EDT.
Image source: Getty Images.
So what
Multiple crosscurrents seem to be hitting the industry this morning.
On the "good news" side of the ship, this morning, the Healthy Sail Panel, which Norwegian Cruise and Royal Caribbean set up in June to work out social distancing measures that will permit cruise ships to resume cruising safely, submitted its recommendations to the U.S. Centers for Disease Control. The CDC had previously issued a no-sail order forbidding U.S. cruise lines from leaving port before Sept. 30. The panel has offered up a 65-page report containing 74 best practices the cruise lines plan to follow to keep customers safe once the no sail order is lifted.
Now here's the bad news: Over in Britain, the government's chief scientific advisor is warning that the U.K. faces a second wave of coronavirus that could see infections rise to 50,000 new cases per day by the middle of next month. The United Kingdom is bracing for a potential second lockdown of its economy, which would firstly deprive cruise lines of British passengers for the foreseeable future, and secondly perhaps foreshadow a renewal of lockdowns in the U.S. as well, depriving cruise lines of all passengers.
Meanwhile, CruiseLawNews.com reported over the weekend that Carnival Corporation has begun sending out "as many as 7,000 termination letters Carnival officers and crew members."
Now what
Carnival's move is not entirely unexpected. The company has made public its plans to dispose of some 18 of its cruise ships, for example, and the termination letters cited by CruiseLawNews include letters to eight ship captains and five staff captains. Still, Carnival's move suggests that the situation at the cruise line is getting bad enough that Carnival must take more dramatic measures to conserve cash in light of a no-sail order that might be lifted a little over a week from now -- but probably won't.
When you add in the threat of a renewed lockdown of the economy -- in Britain possibly, and perhaps elsewhere as well -- it's no wonder investors are veering away from cruise stocks again this morning.
