Health and Science

Royal Caribbean cuts earnings guidance, warns more cruises may be canceled amid coronavirus uncertainty

Key Points
  • Royal Caribbean Cruises warned of more canceled cruises in its fourth-quarter earnings call Tuesday.
  • The cruise line said it expects to take an earnings hit of 25 cents per share after canceling eight cruises out of China. 
  • Royal Caribbean has also implemented additional protective measures for passenger boarding.
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Royal Caribbean Cruises warned of more canceled cruises in its fourth-quarter earnings call Tuesday and said it expects to take an earnings hit of 25 cents per share after canceling eight cruises out of China because of the coronavirus outbreak.

"It seems likely that we will have to cancel more, but we don't know how many," Royal Caribbean Chairman and CEO Richard Fain said during the call. "This is all very disappointing to us."

The cruise line has also implemented multiple measures to protect passengers against the illness. Boarding will be denied to anyone who has traveled through mainland China or Hong Kong in the past 15 days. Mandatory health screenings will also be performed on guests who have a China or Hong Kong passport and passengers who report feeling unwell or flu-like symptoms.

The company has already canceled eight cruises out of China and modified itineraries for other trips, including the complete removal of its Spectrum of the Seas ship from service in China. It has contingency plans in place in case the outbreak spreads further, according to Executive Vice President and CFO Jason Liberty.

In an interview with CNBC, Fain said he does not think the restrictions will impact Royal Caribbean negatively.

"I think that everyone understands that the best way to deal with an outbreak is to contain it," he said.

On the earnings call, Fain said the company remains committed to growing its presence in China, but also emphasized the uncertainty concerning the long-term impact of the virus.

"Obviously, the biggest issue of the day is the Wuhan coronavirus," he said during the call. "Unfortunately, no one knows how this outbreak will play out."

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