(1:15 p.m. EDT) – In its second quarter earnings call, Norwegian Cruise Line Holdings Ltd. reported strong pent up demand across all three brands -- Norwegian Cruise Line, Regent Seven Seas Cruises, and Oceania Cruises -- with a full fleet restart expected by April 2022.
NCLH’s phased global restart of its 28 ships began on July 25 with Norwegian Jade in Greece, which “went off without a hitch,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd., during a call with investors today.
The company expects to have approximately 40 percent of its fleet operating by the end of the third quarter 2021 and approximately 75 percent by year-end 2021. The final NCLH’s ship to enter service will be Oceania Nautica in Rome on April 1, 2022.
Norwegian Encore’s departure from Seattle to Alaska tomorrow on August 7 marks Norwegian Cruise Line’s first ship to resume service in the U.S. since the global shutdown in March 2020. The company’s Florida restart won’t happen until August 15 when Norwegian Gem sails from Miami -- “the cruise capital of the world,” says Del Rio -- making it the last of the major cruise lines to resume sailing in the U.S. and out of Florida.
Last month, the company filed a motion for a preliminary injunction against the state of Florida calling on the U.S. District Court for the Southern District of Florida to invalidate the state's law that prohibits businesses from requiring patrons to confirm vaccination status.
Norwegian Cruise Line Holdings’ health policy has been to operate its cruises on Norwegian, Oceania and Regent Seven Seas on a 100 percent vaccinated basis up until at least October 31, 2021. It's a move that the company says is the best way of dealing with the rise of the Delta variant.
Under current Florida law, however, NCLH would be forced instead to adopt sailings requiring a mixture of vaccinated and unvaccinated passengers. Other cruise lines have found creative ways to get around this, including barring non-vaccinated passengersfrom certain areas indoors, such as certain restaurants.
"In order to [operate its cruises on a 100 percent vaccinated basis], we must be able to confirm vaccination status of our guests at every port we sail from, including those from the state of Florida. We owe it to all our stakeholders to do everything possible to deliver on this critical mission. We hope that the Federal Courts will agree with our vision and our mission," Del Rio said.
“Nothing takes priority over health and safety. We have gone to great lengths and expense to pursue this commitment to our guests, crew, and all stakeholders. This fundamental philosophy has never been more important than right now. We want to use every tool available to us that science and medicine have developed to prepare our ships to a return to service, and vaccines are our most powerful tool.”
With a hearing on the motion for preliminary injunction set for today, August 6, NCLH hopes to soon receive additional clarity on its path forward to resume sailing from Florida. NCLH noted that the ruling has no impact on sailings outside of Florida, where the company’s policy of 100 percent vaccination of passengers and crew is in place in every other port it sails from.
During the second quarter 2021, gross advance ticket sales increased by approximately $300million, an over 50 percent increase compared with the previous quarters build. Advanced ticket sales stand at $1.4 billion, including the long-term portion, which includes roughly $800 million of Future Cruise Credit (as of June 30, 2021).
The company did sustain a GAAP $717.8 million net loss for second quarter.
“The pent up demand is real,” said Del Rio, using Norwegian Prima and Regent’s 2024 World Cruise as examples.
In May, Norwegian Prima debuted as the most in-demand ship in the line’s history, taking record bookings on the first day and week of sales. This doubled the previous booking day record set by Norwegian Bliss in 2018 at an approximately 20 percent higher price point. Last month, Regent’s 2024 132-night World Cruise sold out in less than three hours, breaking its record for the third year in a row.
Next year's booking and pricing trends continue to be very positive driven by strong pent-up demand, with NCLH describing robust future demand across all brands. The overall cumulative booking position for 2022 ahead of 2019’s record levels with pricing higher -- even including the impact of Future Cruise Credits, the line said.
The line is very much “focused on its medium and long-term financial recovery plan,” said Del Rio, as NCLH set out its growth plan through 2027. NCLH is set to debut nine new vessels -- including six Norwegian Prima-Class ships, Vista and Allura Class for Oceania, and Seven Seas Grandeur -- representing a 40 percent growth and 24,000 extra berths inside five years.
“In our conservative re-launch plan, we expect to be cash-flow positive over the course of the first quarter of 2022. When you think about that, from a restart to being cash-flow positive within six months, that’s pretty tremendous and we’re pretty proud of that,” said Mark A. Kempa, Norwegian Cruise Line Holdings’ executive vice president and chief financial officer.
“We have 20 percent more capacity coming on through the end of 2023. Look at our historic ability to absorb that growth and how we turn that capacity growth into growth revenue,” said Del Rio.
“We’re bullish on this business.
“We know how to operate a top line cruise company -- we haven’t forgotten how to do that over the [course of the] pandemic and we are seeing the pent up demand from customers allowing us to do exactly what we do best, so we are very much bullish on the future,” said Del Rio.