Royal Caribbean Cruises Ltd. has reported a net income loss of $1.4 billion for its first quarter compared to $249.7 million in the prior year.

The parent company of Royal Caribbean International, Silversea, Celebrity Cruises and Azamara suspended its global cruise operations on 13 March 2020, which resulted in the cancellation of 130 sailings during the first quarter and a consequent capacity reduction of 20 per cent, 17 per cent down from last year.

Royal Caribbean Cruises Ltd. chairman and CEO Richard D. Fain said: “Responding to the dramatic change in business conditions caused by Covid-19 has required focus, dedication, ingenuity and improvisation from all our people, and their efforts have been nonstop.

“We understand that when our ships return to service, they will be sailing in a changed world.  How well we anticipate and solve for this new environment will play a critical role in keeping our guests and crew safe and healthy, as well as position our business and that of our travel agent partners to return to growth.”

Prior to the outbreak of Covid-19, RCCL started the year in a strong booked position and at higher prices on a prior year comparable basis.

Bookings for the remainder of 2020 following the pandemic are “meaningfully lower” than 2019, with lower prices.

Bookings for 2021 cruises so far are “within historical ranges when compared to the same time last year” with “2021 prices up mid-single digits compared to 2020”.

Since the outbreak, the company has taken significant actions to enhance its liquidity, preserve cash and secure additional financing.

These actions include reducing operating expenses; reducing or deferring capital spend; and increasing its available cash position through various financing sources.

Among these efforts, the company highlights a $4 billion increase in additional financing through a secured bond issuance and increased revolver capacity; a $3 billion reduction in its 2020 capital expenditures, a $0.8 billion 12-month debt amortisation holiday from certain export-credit backed facilities, and a substantial reduction in its operating expenses.

Executive vice president and CFO, Jason T. Liberty, said: “We have taken swift and substantial actions to bolster our financial position by significantly reducing our operating and capital spend and leveraging our strong balance sheet to raise additional capital.”

The company estimates its current cash burn to range between $250 million to $275 million per month during a prolonged suspension of operations, encompassing ongoing ship operating expenses, administrative expenses, debt service expense, hedging costs and expected necessary capital expenditures.

RCCL has said it is considering ways to “further reduce the average monthly requirement under a further prolonged out-of-service scenario and during start-up of operations”.

Given the ongoing uncertainty regarding the duration of the pandemic, the company has said it cannot its impact on its business “with reasonable certainty”, but does expect to incur “a net loss on both a US GAAP and adjusted basis for its second quarter and the 2020 fiscal year”.

Royal Caribbean Cruises’ financial report comes a week after Norwegian Cruise Line Holdings released its first-quarter results, revealing a net income loss of $1.9 billion.

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