Cruise lines stocks cruising to zero

I thought it strange this last week when the cruise-stocks had a bounce because, according to the news, NCLH (Norwegian Cruise Line Holdings) reported it was cutting crew, cutting expenses and had enough cash to last a year before going completely broke.

That lifted the entire sector?! Are investors paying any attention to this stuff?

At the moment, this sector, as everyone knows, as been in the pandemic news a lot. It is down 60% or so in the last three months.

No wonder.

Passengers and crew were trapped with a lethal virus in quarters nearly as tight as prisons and meat packing plants. There was the “celebrated” moment when President Trump stopped a Carnival Cruise liner from disembarking and made its passengers sit in a ship off San Francisco because he thought infection and death numbers would go up and hurt his his re-election chances.

Early on it was not known what the full implications of that was but now we know.

The Trump Administration, on orders from the boss, was botching the nation’s entire response to on-charging tragedy big time. The cruise companies, maybe more than any other industry, has been truly stuck between the most despicable President ever and the unforgiving deep blue sea. Even Joseph Conrad could not write this sea tale as disastrous as it is.

Right now, the stocks are basing (going sideways) to see what happens next. There is a lot of optimism they can recover once the economy reopens. That hope is so misplaced all I have to say to that is “Good Luck, fellas.”

Two massive problems currently rule the industry’s fortune.

Given all the bad news, customers are going to be a long time coming. Who wants to pay $5,000 to be on a floating death trap? At best, the cruise operators are going to have to give away the trips. At the risk of obvious understatement – let’s just say that will not be good for profits.

But the bigger problem might be who’s going to crew these ships?

Not only were the crews being infected and in some cases dying, but in addition, there are more than 100,000 still trapped on those ships worldwide who can’t get off, who can’t get transportation back to their home ports, who can’t see their families. These are people who have now have been quarantined for two months or more. They have long since realized nobody – not their employers, not the Trump incompetents, not the people they dutiful served — give a damn about them.

So the question arises are these companies ever going to hire any crews again, let alone experienced ones?

What a mess…

So just over that flat ocean horizon bankruptcy and the loss of all shareholder equity looms. Are investors paying any attention to this?

NCLH, CCL, RCL… Cruising to zero.

(click on the chart for a larger view)

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