This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.nytimes.com/2020/04/07/business/coronavirus-cruise-industry-carnival.html
The article has changed 5 times. There is an RSS feed of changes available.
| Version 2 | Version 3 |
|---|---|
| Cruise Industry, a Symbol of the Pandemic, Scrambles to Survive | Cruise Industry, a Symbol of the Pandemic, Scrambles to Survive |
| (3 days later) | |
| First, there was the Diamond Princess, stranded off the coast of Japan as the coronavirus infected hundreds of passengers. Then the Westerdam, circling in the sea for days with nowhere to dock. Then the Grand Princess, the Costa Luminosa and the Zaandam. | First, there was the Diamond Princess, stranded off the coast of Japan as the coronavirus infected hundreds of passengers. Then the Westerdam, circling in the sea for days with nowhere to dock. Then the Grand Princess, the Costa Luminosa and the Zaandam. |
| Cruise ships have been a focal point of the coronavirus pandemic from the beginning, widely blamed for a series of major outbreaks that spread the disease across the world. | Cruise ships have been a focal point of the coronavirus pandemic from the beginning, widely blamed for a series of major outbreaks that spread the disease across the world. |
| Now, the companies that own those ships face a potential financial catastrophe. With most international travel halted, they have virtually no revenue. They have become symbols of deadly contagion. And despite assurances from President Trump, they were left out of the $2 trillion stimulus package Congress passed last month. While analysts say the major cruise lines have enough money to survive at least another six months, the companies are scrambling to line up new financing in anticipation of a slowdown that could last even longer. | Now, the companies that own those ships face a potential financial catastrophe. With most international travel halted, they have virtually no revenue. They have become symbols of deadly contagion. And despite assurances from President Trump, they were left out of the $2 trillion stimulus package Congress passed last month. While analysts say the major cruise lines have enough money to survive at least another six months, the companies are scrambling to line up new financing in anticipation of a slowdown that could last even longer. |
| The Carnival Corporation, which serves nearly 11.5 million travelers a year, or roughly 50 percent of the global cruise market, is at the center of the crisis. Over the last couple of months, the company has had highly publicized outbreaks on several of its ships, including the Diamond Princess and the Zaandam, which has been trying to unload sick passengers in Florida. | The Carnival Corporation, which serves nearly 11.5 million travelers a year, or roughly 50 percent of the global cruise market, is at the center of the crisis. Over the last couple of months, the company has had highly publicized outbreaks on several of its ships, including the Diamond Princess and the Zaandam, which has been trying to unload sick passengers in Florida. |
| Since the beginning of the year, the company’s share price has plummeted more than 80 percent, though on Monday it rose sharply — to $10.21 a share — after Saudi Arabia’s state investment fund said it had acquired a stake in the company. And last week, Carnival, which has already drawn on bank credit lines, began an effort to raise $6 billion by selling stock, bonds and other securities. It was selling some of those bonds with a suggested 12.5 percent interest payment to investors, a strikingly high figure. | Since the beginning of the year, the company’s share price has plummeted more than 80 percent, though on Monday it rose sharply — to $10.21 a share — after Saudi Arabia’s state investment fund said it had acquired a stake in the company. And last week, Carnival, which has already drawn on bank credit lines, began an effort to raise $6 billion by selling stock, bonds and other securities. It was selling some of those bonds with a suggested 12.5 percent interest payment to investors, a strikingly high figure. |
| In an interview, Carnival’s chief executive, Arnold Donald, said the sale would generate enough cash for the company to survive without revenue into 2021. He added that Carnival hoped to take advantage of stimulus programs in other countries where it operates, like Germany, Britain and Australia. | In an interview, Carnival’s chief executive, Arnold Donald, said the sale would generate enough cash for the company to survive without revenue into 2021. He added that Carnival hoped to take advantage of stimulus programs in other countries where it operates, like Germany, Britain and Australia. |
| “If you run out of cash, you lose the company, and we can’t live with that,” Mr. Donald said. “So we want to make sure we’re prepared for an extreme case.” | “If you run out of cash, you lose the company, and we can’t live with that,” Mr. Donald said. “So we want to make sure we’re prepared for an extreme case.” |
| Last week, a voluntary one-month suspension of cruise travel became much longer, with some companies canceling voyages scheduled for October and November. Mr. Donald acknowledged that it was a precarious moment. The high interest rate on the debt deal “is absolutely going to be a challenge to us,” he said. | Last week, a voluntary one-month suspension of cruise travel became much longer, with some companies canceling voyages scheduled for October and November. Mr. Donald acknowledged that it was a precarious moment. The high interest rate on the debt deal “is absolutely going to be a challenge to us,” he said. |
| “It’s not fun to be floating equity at the share price it is,” he added. “It’s very disappointing.” | “It’s not fun to be floating equity at the share price it is,” he added. “It’s very disappointing.” |
| Before the equity offering, Goldman Sachs, JPMorgan Chase and Bank of America had been working to put together a debt deal for Carnival that would offer some investors a potential return in the high teens, according to two people familiar with the discussions. Bankers pitched the deal to hedge funds and private equity investors, some of whom passed on it because of concerns about the company’s long-term viability. | Before the equity offering, Goldman Sachs, JPMorgan Chase and Bank of America had been working to put together a debt deal for Carnival that would offer some investors a potential return in the high teens, according to two people familiar with the discussions. Bankers pitched the deal to hedge funds and private equity investors, some of whom passed on it because of concerns about the company’s long-term viability. |
| The two major cruise lines besides Carnival — Royal Caribbean and Norwegian Cruises — are also looking for cash. Norwegian has tapped an existing $1.55 billion credit line. In March, Royal Caribbean secured a $2.2 billion loan, using its ships as collateral. | The two major cruise lines besides Carnival — Royal Caribbean and Norwegian Cruises — are also looking for cash. Norwegian has tapped an existing $1.55 billion credit line. In March, Royal Caribbean secured a $2.2 billion loan, using its ships as collateral. |
| Of course, the ultimate fate of Carnival and the rest of the cruise industry depends on how long the pandemic lasts. And even if the companies survive, it could take years for them to fully recover. | Of course, the ultimate fate of Carnival and the rest of the cruise industry depends on how long the pandemic lasts. And even if the companies survive, it could take years for them to fully recover. |
| “It wouldn’t surprise me to see the industry redrawn in some ways,” said Ross Klein, a sociologist at Memorial University of Newfoundland who studies cruising. “Perhaps some companies disappearing, others being taken over, seeing ships being retired.” | “It wouldn’t surprise me to see the industry redrawn in some ways,” said Ross Klein, a sociologist at Memorial University of Newfoundland who studies cruising. “Perhaps some companies disappearing, others being taken over, seeing ships being retired.” |
| In February, cruise ships became an early symbol of how rapidly the coronavirus could spread in confined spaces, when more than 700 passengers on the Diamond Princess became infected as the ship idled off Japan. As social distancing grew more common in February and early March, cruises were among the first activities Americans started avoiding. | In February, cruise ships became an early symbol of how rapidly the coronavirus could spread in confined spaces, when more than 700 passengers on the Diamond Princess became infected as the ship idled off Japan. As social distancing grew more common in February and early March, cruises were among the first activities Americans started avoiding. |
| Still, industry experts hope that hard-core cruise fans will come back relatively quickly once the pandemic ends, though even the optimists acknowledge that getting people to go on cruises for the first time will require steep discounts and aggressive marketing. Another challenge: About one-third of cruise passengers are 60 or older — a group at higher risk of serious infection that might be reluctant to risk exposure. | Still, industry experts hope that hard-core cruise fans will come back relatively quickly once the pandemic ends, though even the optimists acknowledge that getting people to go on cruises for the first time will require steep discounts and aggressive marketing. Another challenge: About one-third of cruise passengers are 60 or older — a group at higher risk of serious infection that might be reluctant to risk exposure. |
| For Carnival, the initial coronavirus outbreak in Asia led to weeks of criticism, as the company fumbled its response to the situation on the Diamond Princess. Another of its ships, the Grand Princess, had a cluster of infections last month as it headed to California. | For Carnival, the initial coronavirus outbreak in Asia led to weeks of criticism, as the company fumbled its response to the situation on the Diamond Princess. Another of its ships, the Grand Princess, had a cluster of infections last month as it headed to California. |
| Mr. Donald defended Carnival’s response to the pandemic, including its decision to continue sailing in early March, as the scale of the global crisis was becoming clear. (Carnival eventually suspended global operations, but it still has four ships at sea.) | Mr. Donald defended Carnival’s response to the pandemic, including its decision to continue sailing in early March, as the scale of the global crisis was becoming clear. (Carnival eventually suspended global operations, but it still has four ships at sea.) |
| “We don’t try to play God. We don’t try to play government,” Mr. Donald said. “We comply. We listen to what people say we need to do.” | “We don’t try to play God. We don’t try to play government,” Mr. Donald said. “We comply. We listen to what people say we need to do.” |
| Last month, he and other industry leaders held talks with the White House coronavirus task force led by Vice President Mike Pence. In those conversations, Mr. Donald said, he pushed for a federal loan guarantee that would allow the cruise companies to obtain funding at lower interest rates. And Micky Arison, the chairman of Carnival’s board, has had several calls with Mr. Trump, who last month described the cruise lines as “prime candidates” for federal support. | Last month, he and other industry leaders held talks with the White House coronavirus task force led by Vice President Mike Pence. In those conversations, Mr. Donald said, he pushed for a federal loan guarantee that would allow the cruise companies to obtain funding at lower interest rates. And Micky Arison, the chairman of Carnival’s board, has had several calls with Mr. Trump, who last month described the cruise lines as “prime candidates” for federal support. |
| Updated July 7, 2020 | |
| The coronavirus can stay aloft for hours in tiny droplets in stagnant air, infecting people as they inhale, mounting scientific evidence suggests. This risk is highest in crowded indoor spaces with poor ventilation, and may help explain super-spreading events reported in meatpacking plants, churches and restaurants. It’s unclear how often the virus is spread via these tiny droplets, or aerosols, compared with larger droplets that are expelled when a sick person coughs or sneezes, or transmitted through contact with contaminated surfaces, said Linsey Marr, an aerosol expert at Virginia Tech. Aerosols are released even when a person without symptoms exhales, talks or sings, according to Dr. Marr and more than 200 other experts, who have outlined the evidence in an open letter to the World Health Organization. | |
| Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. | Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days. |
| Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles. | Scientists around the country have tried to identify everyday materials that do a good job of filtering microscopic particles. In recent tests, HEPA furnace filters scored high, as did vacuum cleaner bags, fabric similar to flannel pajamas and those of 600-count pillowcases. Other materials tested included layered coffee filters and scarves and bandannas. These scored lower, but still captured a small percentage of particles. |
| A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico. | A commentary published this month on the website of the British Journal of Sports Medicine points out that covering your face during exercise “comes with issues of potential breathing restriction and discomfort” and requires “balancing benefits versus possible adverse events.” Masks do alter exercise, says Cedric X. Bryant, the president and chief science officer of the American Council on Exercise, a nonprofit organization that funds exercise research and certifies fitness professionals. “In my personal experience,” he says, “heart rates are higher at the same relative intensity when you wear a mask.” Some people also could experience lightheadedness during familiar workouts while masked, says Len Kravitz, a professor of exercise science at the University of New Mexico. |
| The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. | The steroid, dexamethasone, is the first treatment shown to reduce mortality in severely ill patients, according to scientists in Britain. The drug appears to reduce inflammation caused by the immune system, protecting the tissues. In the study, dexamethasone reduced deaths of patients on ventilators by one-third, and deaths of patients on oxygen by one-fifth. |
| The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. | The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave. |
| So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. | So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement. |
| Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. | Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks. |
| A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. | A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study. |
| If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) | If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.) |
| If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. | If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others. |
| But under the terms of the stimulus package Mr. Trump signed into law, the major cruise lines did not qualify for funding because they are incorporated outside the United States, which largely exempts them from paying federal income taxes. | But under the terms of the stimulus package Mr. Trump signed into law, the major cruise lines did not qualify for funding because they are incorporated outside the United States, which largely exempts them from paying federal income taxes. |
| A piece of that package “would’ve been nice to have,” said Felicia Hendrix, a cruise analyst at Barclays. | A piece of that package “would’ve been nice to have,” said Felicia Hendrix, a cruise analyst at Barclays. |
| Still, she said, the cruise companies are in a good position to weather the crisis, partly because operating costs have plummeted. “You’re not feeding a full ship’s worth of people,” Ms. Hendrix said. “You don’t have a full crew. You’re not using the full level of fuel.” | Still, she said, the cruise companies are in a good position to weather the crisis, partly because operating costs have plummeted. “You’re not feeding a full ship’s worth of people,” Ms. Hendrix said. “You don’t have a full crew. You’re not using the full level of fuel.” |
| And unlike neighborhood restaurants and other small business that are now on the brink of collapse, the cruise lines started the crisis with healthy balance sheets. At the beginning of the year, Carnival had $518 million in cash on hand, Royal Caribbean had $243.7 million and Norwegian had $252.9 million. | And unlike neighborhood restaurants and other small business that are now on the brink of collapse, the cruise lines started the crisis with healthy balance sheets. At the beginning of the year, Carnival had $518 million in cash on hand, Royal Caribbean had $243.7 million and Norwegian had $252.9 million. |
| But because of the crisis, Carnival and Royal Caribbean have laid off or furloughed contractors, while Norwegian has cut salaries and moved some employees to a four-day workweek. The impact of the cruise shutdown has also rippled across the economy, hurting travel agents, taxi drivers and performers. | But because of the crisis, Carnival and Royal Caribbean have laid off or furloughed contractors, while Norwegian has cut salaries and moved some employees to a four-day workweek. The impact of the cruise shutdown has also rippled across the economy, hurting travel agents, taxi drivers and performers. |
| Last month, one of Carnival’s nine cruising brands, Carnival Cruises, told dozens of entertainers who perform on its ships that it would not pay them for canceled bookings. Then a few days later, the company said it would pay them after all. Then it announced a new complication — the payment would come at some point in the next 60 days rather than the usual two weeks. | Last month, one of Carnival’s nine cruising brands, Carnival Cruises, told dozens of entertainers who perform on its ships that it would not pay them for canceled bookings. Then a few days later, the company said it would pay them after all. Then it announced a new complication — the payment would come at some point in the next 60 days rather than the usual two weeks. |
| “This billion-dollar company took this burden and moved it from themselves to us,” said Steve Burr, a 52-year-old comedian in Tampa, Fla. “I’m driving Uber now trying to pick up a dime where I can and desperately trying to file for unemployment.” | “This billion-dollar company took this burden and moved it from themselves to us,” said Steve Burr, a 52-year-old comedian in Tampa, Fla. “I’m driving Uber now trying to pick up a dime where I can and desperately trying to file for unemployment.” |
| For the last few weeks, Mr. Donald has been working from his condominium on Miami Beach. He has the place to himself — his wife is on one of the ships still at sea. | For the last few weeks, Mr. Donald has been working from his condominium on Miami Beach. He has the place to himself — his wife is on one of the ships still at sea. |
| Sometimes, he takes walks along the beach, marveling at the emptiness. “The pigeons actually looked confused because there were pigeons and no people,” Mr. Donald said. | Sometimes, he takes walks along the beach, marveling at the emptiness. “The pigeons actually looked confused because there were pigeons and no people,” Mr. Donald said. |
| But mostly he dwells on the line of idle cruise ships anchored at shore, with nowhere to go. “They’re standing right out there as I look out,” he said. “It’s very surreal.” | But mostly he dwells on the line of idle cruise ships anchored at shore, with nowhere to go. “They’re standing right out there as I look out,” he said. “It’s very surreal.” |
| Matthew Goldstein contributed reporting. | Matthew Goldstein contributed reporting. |