Carnival says it has no idea how much money it'll lose this year - but 1 key number shows that customers aren't totally abandoning the cruise ship giant
- Carnival is poised for a tough year, the cruise ship giant said in a Friday filing with the Securities and Exchange Commission.
- It's planning for a loss this year, and 6,000 passengers still need to disembark in the next month.
- One critical number shows how its loyal customers aren't abandoning the company: 45% of customers on canceled cruises agreed to future credits, rather than outright refunds.
- And as Carnival's stock plummets, at least one director is bullish, snapping up $10 million of shares in this week's offering.
- For more BI Prime stories, click here.
Carnival Corporation cautioned its shareholders on Friday to expect a tough 2020.
The company said it will lose money this year in a regular filing with the Securities and Exchange Commission - but it doesn't know how much yet.
The coronavirus has already hit the cruise giant's bottom line hard. The company lost $781 million in the three months ending February 29, compared with making $336 million in the same period last year.
Carnival stopped operations on March 13 and still has 6,000 passengers on ships globally that are set to disembark by the end of April.
The cruise industry generally is struggling, analysts told Business Insider on Tuesday. Cruise-ship customers can be a particularly loyal bunch, with hundreds boarding cruises well after the coronavirus had spread beyond Asia. Demand for cruises will come back, analysts said - but it's impossible to know when both companies and consumers will be ready to sail.
One key metric in Carnival's Friday filing shows that many of its customers aren't abandoning the company, despite negative headlines about passengers stuck on cruise ships and other issues. Carnival had $4.7 billion in customer deposits as of February 29, and in the first two weeks of March, 45% of the guests who contacted the company about canceled cruises accepted future cruise credits instead of a cash refund.
"If you look to the past crises, companies have survived them all - and there were some really bad ones," Morningstar analyst Jaime Katz previously told Business Insider. "They pared back marketing spend, and they let the demand come back naturally over time. It takes a few years to get to that same demand level with respect to how people feel about your brand."
$10 million bet on plummeting stock
Customers are booking fewer cruises for 2020, and those they are buying are cheaper than last year's bookings, per Carnival's filing. They're also cautious on trips for 2021, with bookings for the first half of 2021 down "slightly" compared with the previous year.
Other hits to the cruise ship company's bottom line includes current and future lawsuits, with more coronavirus-related litigation likely on the way. Carnival has insurance for coronavirus-related costs, with a $10 million deductible for each of its more than 100 ships - but it acknowledged the insurance payout isn't guaranteed, nor does it cover lost revenue.
Carnival's stock has plummeted more than 84% in the last year, and the company has sought to drum up capital by recent stock and debt offerings.
Despite the stock nosedive, least one of Carnival's directors is bullish on the company's future. During Wednesday's $500 million stock offering, an unnamed director snapped up $10 million in shares, per the filing.
A Carnival spokesman did not respond to a request for comment about the director's identity.
Get in touch! Contact this reporter via encrypted messaging app Signal at +1 (646) 768-1627 using a non-work phone, email at mmorris@businessinsider.com, or Twitter DM at @MeghanEMorris. (PR pitches by email only, please.) You can also contact Business Insider securely via SecureDrop.