Carnival Cruise Line Launches its First Voyage as Covid Cases Ease

It was an exciting day this past Saturday as Carnival Cruise launched its first U.S. cruise since lat year when the coronavirus pandemic shut things down.

The cruise left Port Galveston in Texas on Saturday afternoon and may be help to mark the beginning of the cruise industry coming back. Especially as on Sunday Carnival’s Horizon ship launched from Miami.

Shares of Carnival have soared over 20% in 2021 with the company’s market cap hitting just over $30 billion.

The week-long cruise that left Galveston is set to travel to Roatan, Belize, and Cozumel. Passengers who are aboard must show proof of vaccination, or be pre-approved for an exemption by Carnival, which is following strict guidelines.

It was not long ago that the Centers for Disease Control and Prevention allowed cruise ships to begin sailing again with strict safety protocols, aimed at preventing Covid-19 from spreading onboard.

Royal Caribbean Cruises was the first cruise operator to sail a ship from a U.S. port since the beginning of the pandemic. The company’s Celebrity Edge ship left Miami last Saturday.

Carnival’s next cruise from a U.S. port is the Carnival Breeze, which is scheduled to leave from Galveston on July 15th.

Covid cases have been on decline however the Delta variant of the virus is starting to reverse this trend.

Royal Caribbean changed its vaccination policy for all cruises except those leaving from Florida last week. Unvaccinated guests leaving from Florida ports need to have travel insurance. The company had two unvaccinated guests under the age of 16 test positive for Covid.

“We think the cruise industry will be one of the slowest sub-sectors to recover from Covid-19. Cruising needs not just international travel to return, but ports to reopen, authorities to permit cruising, and the return of customer confidence,” said Morgan Stanley analysts Jamie Rollo. “Risks are rising that further travel restrictions are imposed as the delta variant spreads and we approach the winter flu season.”

Rollo has an underweight rating on the stock. The analyst had slashed forecasts for this year and next due to a slower-than-expected resumption of cruises as one reason.

“There is therefore a fair amount of 2022 left to sell, and it could be misleading to extrapolate from the small amount of cash bookings made to date,” Rollo said. “Additionally, initial cruise deployment is mostly domestic and short duration, which are lower yielding itineraries than the more exotic/international cruises which will take longer to recover.”

Because of the slower-than-expected pace of return, Carnival could be burning cash until the third-quarter of 2022 according to the analyst. He believes that Carnival will only be operating at 18% capacity in its third-quarter and 45% capacity in its fourth-quarter of this year.

Analyst John Staszak said in a note released last week that the pace of bookings are ahead of 2019 bookings, despite limited advertising and marketing.

“Consistent with its plans to resume cruises, Carnival expects to have all of its ships deployed by the spring of 2022. With the number of COVID cases continuing to drop, we are optimistic that management’s targets are achievable,” Staszak said.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.