Cruise lines are likely to cancel all Alaska and Europe
cruises this summer, according to UBS analyst Robin Farley, and they are not
likely to fully resume service until 2021.
Farley also said the cruise lines may operate some short
cruises in the Caribbean before the end of 2020, but not much more than that.
In a note to investors, Farley said, “We think it is unlikely that cruise lines would
be able to resume scheduled cruises in Alaska and Europe for the summer season,
given the uncertainty regarding cross-border travel to reach departure ports,
risk that not all foreign ports may be ready
to accept cruise calls and the risk of further suspensions past July 19.
“As a result, although we may see some limited short cruises
in the Caribbean before the end of the
year, we don't foresee meaningful cruise operations returning until next year,
unless there is significant change in availability of vaccine, testing or
treatment for Covid-19.”
Some cruise lines still have cruises on the books for May
while many have said they will resume service in June. The Centers for Disease
Control and Prevention’s no-sail order from U.S. ports is in place through
mid-July or until Covid-19 is no longer deemed a public health threat.
Farley said slowly ramping up service would help cruise
“While cruise demand will be reduced in the initial months
after travel suspension, the laid-up ships will be able to absorb the reduction
in demand, so that for the next 12
months, the cruise lines won't need to slash prices in an effort to fill
their entire fleets,” Farley wrote.
UBS forecast that during the first half of 2021, roughly 50%
of cruise fleets will be in service, going to 75% in the second half of the
year with pricing down 4-8% from 2019.
By 2022, UBS estimates revenue will be about 10% below 2019
levels for Carnival Corp. and Norwegian Cruise Line Holdings and flat for
Royal Caribbean Cruises Ltd., whose fleet is expected to come back slightly faster.