3 Big Takeaways From Royal Caribbean’s First-Quarter Earnings Call
On Wednesday, May 20, Royal Caribbean (NYSE: RCL) held its first-quarter 2020 conference call with analysts. No one really cared about the cruise company's 16.7% decline in revenue or the $1.48 in adjusted net losses posted in the quarter. Those dismal results were expected since the world changed drastically in March when COVID-19 swept across the world and halted the cruise industry in its wake.
Much more important was management's commentary on the current state of Royal's liquidity, when the company might begin cruising again, and what that scenario might look like. Royal Caribbean just recently raised over $3.3 billion in capital last week, giving it a longer runway to survive without returning to operations.
However, those funds won't last forever. Royal Caribbean disclosed that its monthly cash burn will be between $250 million and $275 million under a scenario of a "prolonged" suspension of operations. Assuming about $3.3 billion in liquidity, and Royal Caribbean appears to have about 12 months before it would go bankrupt or have to do an additional capital raise. Therefore, any indication of when things might get back to "normal" is key for Royal and all the other cruise operators.
Source Fool.com
