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Norwegian (NCLH) Extends Voyage Suspension Due to Coronavirus

Zacks Equity Research
·3 min read

In order to meet the requirements of the framework for conditional sailing order issued by the U.S. centers for disease control and prevention, Norwegian Cruise Line Holdings Ltd. NCLH announced extension of its pause on global cruise voyages till Mar 31, 2021.

Earlier on Nov 9, 2020, the company had announced extension of the pause on global cruise voyages owing to the pandemic through year-end 2020, expanding the halt in operations for more than nine months.

Notably, the latest extension applies to all voyages for Norwegian Cruise Line between Jan 1 through Feb 28 along with select voyages in March 2021. Meanwhile, voyages for Oceania Cruises and Regent Seven Seas Cruises (between Jan 1 to Mar 31) have also been suspended. However, for cancelled cruises, guests are likely to be notified through communication through travel advisors.

Nonetheless, the company continues to work with government authorities and its sail panel expert advisors to ensure necessary measures to protect its guests, crew and the communities visited.

So far this year, shares of the company have declined 59.9% compared with the industry’s 27.6% fall.

Sail Panel to Counter Current Crisis

The cruise industry has been driven to a standstill by the coronavirus-induced crisis. However, the pandemic has compelled companies to forget rivalries and come together to counter the scenario.

Case in point, Royal Caribbean Cruises Ltd. RCL and Norwegian Cruise have teamed up to develop safety standards. Former Utah Governor Mike Leavitt and former U.S. Food and Drug Administration Commissioner Scott Gottlieb are serving as co-chairs for a newly formed group of experts called the "Healthy Sail Panel."

During the third-quarter 2020 conference call, the company announced that its team along with healthy sale panel has worked to produce a health protocol to resume operations. The panel has made 74 specific recommendations to help reduce any risk out of the coronavirus pandemic.

Enough Liquidity to Tide Over Pandemic

Cash and cash equivalents as of Sep 30, 2020, were $2.4 billion, up from $252.9 million as of Dec 31, 2019, and $2.3 billion at the end of Jun 30, 2020. In an effort to boost liquidity, the company launched a series of capital markets transactions. After cost reductions and cash conservation measures, the company’s cash burn is anticipated to be $170 million per month. Although total debt at the end of Sep 30, 2020, was $10.5 billion, it is confident that with the amount of liquidity it holds, it can survive for some time.

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Norwegian — which shares space with Carnival Corporation & Plc CCL in the Zacks Leisure and Recreation Services industry — has a Zacks Rank #4 (Sell) at present.

A Key Pick

A better-ranked stock in the Zacks Consumer Discretionary sector is YETI Holdings, Inc. YETI, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

YETI Holdings’ 2021 earnings are expected to rise 17.8%.

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Carnival Corporation (CCL) : Free Stock Analysis Report
 
Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
 
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