Cruise lines stocks sank as their petition to resume sailing by July fell to deaf ears. Instead, the US Centers for Disease Control and Prevention said that the moratorium preventing cruise lines from setting sail until November 1 remains in effect. This dashes the industry's hopes for a fast restart this year, sending cruise lines stocks falling into the sea.
Cruise Lines Stocks Sinks
Cruise line stocks enjoyed a heyday the past few weeks in anticipation of a resumption in sailing operations. With the CDC’s announcement Tuesday, major lines reported losses as investors began avoiding stocks.
Carnival Corp reported a loss of 1.9% during yesterday's trading session and closed at $24.85. Meanwhile, Royal Caribbean Cruises Ltd fell by 2.8%. Norwegian Cruise Line Holdings Ltd. suffered the biggest industry loss yesterday, dropping 4.9%.
Resume Sailing by July
The Cruise Lines International Association, the main lobbying group for cruise companies including Carnival, issued a statement earlier Wednesday. They called on the CDC to revisit the November 1 moratorium and allow resumption of sailing activities by July.
However, the CDC responded via email that the framework for Conditional Sailing Order or CSO will continue to remain in effect through November. They effectively shut the door on an earlier return to the seas. “Returning to passenger cruising is a phased approach to mitigate the risk of spreading Covid-19. Details for the next phase of the CSO are currently under interagency review,” the agency wrote.
‘Not A Major Setback’
Some analysts chose to remain optimistic about the development. Brian Egger, gaming and lodging analyst, thinks the timetable is short as well. “The decision to keep the CSO in place until Nov. 1, isn’t a major setback from what lines might have otherwise experienced. The order covers only four months after July 1, the earliest Norwegian planned to resume voyages,” he said.
Besides, the cruise industry will get back to business under the current framework, albeit via a phased approach. However, operators complained Wednesday that the CDC set back their timetables. In addition, the agency “unfairly” singled out the industry from other tourism and hospitality sectors.
July Remains The Target
Targeting a July comeback for the cruise ship industry aligns with the federal government’s stated target of normalcy by Independence Day. Previously, President Joe Biden said that he hopes to have all American adults vaccinated by the end of May and that the country can resume normal celebrations by July 4. The CLIA, whose members comprise 95% of the global ocean cruise capacity, hopes that Biden’s projections include their industry.
CLIA spokesperson Laziza Lambert said the timing of the release reflects companies’ need for about 90 days to prepare ships for a return to commercial operations. This means that they will need a clear and distinct government mandate, plus a go-ahead from the CDC, to get ready by July.
Conditional Sailing Order
The current conditional sailing order is a more lenient order compared to the No-sail directive issued last October. It created a multistep process where cruise lines can secure approval to head back to the sea via different phases. However, not one of the major lines managed to get the approval to resume sailing. “The lack of any action by the CDC has effectively banned all sailings in the largest cruise market in the world,” CLIA noted. The cruise lines industry effectively went on hold by March this year. Some companies did start rolling out returns to non-US markets. This includes Royal Caribbean’s plans for May trips from Israel and June voyages from the Bahamas.
Asked about the CDC’s latest remarks, Lambert said the agency isn’t meeting its own deadlines under the CSO. “Since the CSO was issued, the CDC has not released any further guidance, as called for in the CSO, to support the resumption of U.S. cruise operations, even as other sectors have opened or continued to operate throughout the pandemic,” she explained.
Watch The Shiplife video where Royal Caribbean CEO Richard Fain answers questions on the CDC order to hold off full operations until November 1:
Even as the federal government wants a return to normalcy by July, the CDC insists that cruise ships stay grounded. Do you agree with the CDC’s decision to hold off cruise line operations until November 1? Let us know what you think by sharing your comments below.
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