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Carnival PLC Shares Plunge as Investors Adjust to the Latest Cruise Cancellations

Simon Mugo trader
Updated 10 Mar 2022

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Carnival Cruise Lines

Shares of cruise ship operator Carnival plc (LON: CCL) today fell 5.79% as investors factored in the latest wave of cancellations issued Friday affecting cruises departing from various major ports across the globe due to the coronavirus lockdown measures.

US cruise departures were cancelled up to April 30, 2021, while Australian departures were cancelled up to May 19, 2021. European itineraries which were set to resume in May were also pushed to October 31, 2021.

The company recently reported its Q4 2020 provisional results indicating that it had slowed down its monthly cash burn to $500 million a month and that bookings for H2 2021 were in line with historical figures.

Arnold Donald, Carnival’s President and CEO said: “With the aggressive actions we have taken, managing the balance sheet and reducing capacity, we are well-positioned to capitalize on pent up demand and to emerge a leaner, more efficient company, reinforcing our industry-leading position.”

Carnival has enough liquidity to survive in a zero-revenue environment for the whole of fiscal 2021, which means that it is unlikely to raise cash soon.

The pent up demand for cruises indicates that the firm is likely to be overbooked once countries start lifting the coronavirus related restrictions. The ongoing rollout of COVID-19 vaccines across the world means that it is just a matter of time before Carnival resumes operations.

Carnival has also been refreshing its fleet with a plan to phase out 19 old ships, which are less fuel-efficient, with 15 of these having been sold already. The company’s Mardi Gras is the first cruise ship to be powered by liquefied natural gas that is more environmentally friendly than heavy oils or marine fuels.

The recent cancellations had a minimal impact on Carnival’s stock as investors are now accustomed to these events driven by the coronavirus pandemic's impact.

Carnival Plc share price

Tradingview chart of Carnival share price 25-01-2021

Carnival shares fell 5.79% to trade at 1194 having dropped from Friday’s closing price of 1267.5.

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Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading