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Cruise lines voluntarily suspend all trips out of U.S. ports until Sept. 15, trade group says

Key Points
  • Major cruise lines have agreed to voluntarily extend a suspension of operations out of U.S. ports until Sept. 15, the Cruise Lines International Association announced Friday.
  • Members of the trade group, which includes cruising giants such as Royal Caribbean, Carnival Corp. and Norwegian Cruise Line, had previously announced a pause of operations on March 13. 
  • On March 14, the Centers for Disease Control and Prevention issued a no-sail order for cruise ships, and on April 9 it extended the order until July 24. 
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Cruises from U.S. ports suspended until September 15: Trade body

Major cruise lines have agreed to voluntarily extend a suspension of operations out of U.S. ports until Sept. 15, the Cruise Lines International Association announced Friday.

"Due to the ongoing situation within the U.S. related to COVID-19, CLIA member cruise lines have decided to voluntarily extend the period of suspended passenger operations," CLIA, which represents the largest cruise companies in the world, said in a statement. "It is increasingly clear that more time will be needed to resolve barriers to resumption in the United States."

Members of the trade group, which includes cruising giants such as Royal Caribbean, Carnival Corp. and Norwegian Cruise Line, had previously announced a pause of operations on March 13. 

On March 14, the Centers for Disease Control and Prevention issued a no-sail order for cruise ships, and on April 9 it extended the order until July 24. 

The extension order said "that cruise ship travel exacerbates the global spread of Covid-19 and that the scope of this pandemic is inherently and necessarily a problem that is international and interstate in nature and has not been controlled sufficiently by the cruise ship industry or individual State or local health authorities."

Representatives from the CDC were not immediately available Friday for comment. 

Carnival Cruise Line, which is owned by the world's largest cruise company, Carnival Corp., had previously announced plans to resume some U.S. operations on Aug. 1.

Carnival Cruise Line spokesman Vance Gulliksen said the company will notify affected customers of its plan moving forward on Monday. 

Shares of Carnival Corp. finished the day down 5.2%, and Royal Caribbean stock dropped 6.9%. Shares of Norwegian Cruise Line closed 5.6% lower.

"Although we are confident that future cruises will be healthy and safe, and will fully reflect the latest protective measures, we also feel that it is appropriate to err on the side of caution to help ensure the best interests of our passengers and crewmembers," CLIA said Friday. "The additional time will also allow us to consult with the CDC on measures that will be appropriate for the eventual resumption of cruise operations."

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The coronavirus pandemic has roiled the travel industry, hitting major cruise lines particularly hard. Since the outbreak began in China in late December, there have been several major outbreaks, quarantines and deaths aboard cruise ships.

While cruise executives have expressed confidence that the demand for cruising will return, the largest companies have been forced to issue fresh debt and seek new injections of cash to survive months of little to no revenue. 

In May, Norwegian Cruise Line, the smallest of the three major publicly traded cruise companies, said that it might have to seek bankruptcy protection, saying there's "substantial doubt" about its ability to continue as a "going concern." 

The company also announced on the same day that L Catterton, a private equity fund, invested $400 million in NCL Corp., a subsidiary of Norwegian. The day after the announcement, however, the company said it successfully raised more than $2 billion in a mix of stock and debt, ensuring the company can last at least the next year without any revenue if necessary.

While Norwegian's larger rivals, Royal Caribbean and Carnival Corp., have not flashed warning signs of potential bankruptcy, both have also successfully sought additional funds since the coronavirus pandemic took hold. 

The ongoing suspension of operations and poor outlook for the future prompted ratings agency Moody's to downgrade its rating of all three companies' unsecured debt to speculative grade.

"Following recent downgrades of the only two investment grade cruise companies — Carnival and Royal Caribbean — our rated universe for this group is now entirely spec grade, an indication of the sector's growing duress," Pete Trombetta, a Moody's assistant vice president, said on June 4.

Trombetta authored a report that predicted cruising will be suspended for most of 2020 and that when sailing does resume, the companies will suffer from a poor economic environment, among other factors. He added, however, that the three major publicly traded cruise companies have raised enough debt and equity to survive "at least through 2020."

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Correction: This story has been updated to correct that Moody's downgraded its ratings on the unsecured debt of Royal Caribbean, Carnival Corp. and Norwegian Cruise Line. The nature of Moody's ratings was misstated in an earlier version.