Carnival CEO Comments on the Current State of the Cruise Industry

Carnival Corp. Chief Executive Officer Arnold Donald expressed optimism for recovery in the cruise industry, citing pent-up demand from regular cruisers. Donald spoke with Bloomberg’s Ed Hammond about these topics and more. Watch or read the transcript below.

Donald: We [Carnival] have a nice liquidity runway, we’re at the point where we still have additional debt, we could secure if we needed it, and obviously, we will be opportunistic with regards to the balance sheet overall and in terms of equity. And so on. But at this point, we have the liquidity. We need, you know, for to take us well into next year. And so with zero revenue. And obviously, we’re hoping to have some revenue this year and the beginning, it was a tough time. You know, some of the debt we raise were at rates, you know, that we never would have even considered in the past. Then even more recent ones are at rates where we’re happy about them now. But, you know, two years ago, we wouldn’t have been happy with those rates. So it is what it is. But, you know, we’ll adapt. And we have a great resilient business, a great resilient industry. We will be able to generate lots of cash. And over time, we’ll get back to the solid credit rating that we had prior to the pandemic.

Host: I’m interested in that resilience that you mentioned on, because if I look at this industry, I mean, look, every industry has suffered through COVID. But I think when I think about the cruise industry, there have been some real and very visceral horror stories that have gone on over the last year. I understand you have a sticky customer base, but how do you pitch this as a model to new potential cruises?

Donald: As we look ahead, we have over eight million repeat cruises in our world. And of carnival and our nine world brands. And there’s pent up demand, a cruise on average once every two years. And so there’s a whole year of repeat cruises basically that haven’t been able to cruise. And so we have plenty of pent up demand. Additionally, we reduced the size of the fleet because obviously, we had ships that were less efficient, and it didn’t make sense when they weren’t  generating revenue to continue to invest in those ships. That’s one way we got our burn rate down. And so we plan to exit 19 ships. So that takes our capacity down when we do come back. Furthermore, it’s going to be a staggered return. All the destinations aren’t going to open up at once. Different destinations will open at different times. And so there will be plenty of pent up demand, as is evidenced by the bookings already. As you look at late 2021 and first half, second half of 2022, where the bookings are stronger than they were even prior to COVID on the same basis.

Host: But also, if the cruise from what I understand, this is right, if the cruise of the near future is sort of more people, you know, on these boats in sort of isolation from one another and lose something of its essence, I mean, isn’t the whole allure of going on a cruise that you get these you know, you get to jostle and mingle with strangers, you have this sort of conviviality by the waves. If you don’t have that, then do people really want to go cruising?

Donald: Look, first of all, you’re absolutely right that travel and cruising in particular is about people connecting with other people. What people remember are other people on the cruise ships. The ships are fabulous. We have lots of features, but it’s all about the human spirit and human exchange. And people learn what they have in common. And then they learn to celebrate the differences rather than fear them. And that’s whether it’s through the guests to guests, or guests to the locals of the various destinations that they visit. So you’re absolutely right about that. Having said that, we are ready to resume cruising in Italy and with our Constitution and in Germany on a very limited basis. But our net promoter scores and basically our guest satisfaction scores went through the roof. People love the experience.


*Bloomberg contributed to this content

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