Asia and Europe may open to cruising before the U.S., said Royal Caribbean International CEO Michael Bayley. 

Speaking during Royal Caribbean Cruises Ltd.’s first-quarter earnings call, Bayley said, “It’s highly likely that either the Asian markets in China or the European region could come back earlier because they went through this experience earlier.

“It’s a very different story by region and by country. We will see different markets come back at a different pace, and I think our global infrastructure and the strength of our brands will power us through those opportunities.” 

It was one of several hints RCCL executives gave during the call about what its operations might look like when cruising resumes. Ships will probably not sail full at first, and ship rollout will be gradual.  

“We don’t expect that someday somebody blows a horn and all the ships start operating right away,” RCCL chairman Richard Fain said. “It will be a gradual start, a little bit like society is opening up gradually. We imagine we’ll start with fewer ships, more likely to be in drive markets in the beginning, and then it will evolve and grow from there.”

Both Fain and Bayley reiterated that no ships would sail until it was deemed safe to do so. 

“We are highly focused on ensuring a safe and healthy return to service,” Bayley said. “However we return to service, we’ll only do it, regardless of region or market, when we believe that we have a healthy return-to-service plan that’s deemed as the right way forward and our guests will be comforted by that plan.”

Fain said it’s impossible to know for sure when cruising will start again and that it is highly dependent on many factors, including the ability for testing, contact tracing and possible vaccines.  

“We understand that when our ships return to service, they will be sailing in a changed world,” Fain said. “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.”

RCCL CFO Jason Liberty said that the company’s newest ships only need to be 30% full to break even in terms of EBITDA (earnings before interest, taxes, depreciation and amortization) while older ships need to be 50% full. The newest ships also have more space.

“Certainly, the newer ships have more public space per passenger and would be heavily in consideration for the return to service as well as other ships we’ve modernized,” Liberty said.

As expected, RCCL’s first quarter suffered significantly due to the Covid-19 pandemic and having to cancel 130 cruises.  The company swung to a $1.4 billion loss compared to a net profit of $249.7 million during the first three months of 2019.

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