RCL expects to return to profit later this year

2022-05-14T10:50:45+00:00 May 14th, 2022|Finance|

Royal Caribbean Group (RCL) has reported a first quarter 2022 net loss of $1.2 bill and loss per share of $4.58, compared with a loss of $1.1 bill and a loss per share of $4.66 in 1Q21.

Adjusted net loss was $1.2 bill or $4.57 per share for 1Q22, compared to $1.1 bill or $4.44 per share in the previous year.

The losses for the quarter were primarily caused by the continued impact of the COVID-19 pandemic on the business.

However, the Group said that it expected to return to a net profit in the second half of this year.


The Group also said that it continued to make strides in its healthy return to operations in a strong demand environment. Load factors continue to improve sequentially with total revenue per passenger cruise day up versus record 2019 levels.

Operating cash flow significantly improved throughout 1Q22 and approached breakeven in March.

“It is gratifying to see our ships and crew returning to our mission of delivering the best vacation experiences in a safe and responsible way,” said Jason Liberty, President and CEO of the Royal Caribbean Group (pictured). “Despite the impact of Omicron earlier in the year and the horrific conflict in Ukraine, we are encouraged by the strong demand for cruising and the steady acceleration in booking volumes.

“Since the beginning of March, booking volumes have exceeded the record levels achieved in 2019 and we are optimistic that 2022 will be a strong transitional year, as we return to full operations and profitability in the second half of the year,” he said.

By the end of 1Q22, RCL had returned 54 out of 62 ships to operations across its five brands, representing close to 90% of worldwide fleet capacity. It expects to have all of the ships in service before the summer season starts.


During the first quarter, RCL carried around 800,000 guests and achieved record guest satisfaction scores and record total revenue per passenger cruise day.


The Group continued to make progress towards profitability with operating cash flow only slightly negative in March and turning positive in April.


Across all markets, 1Q22 bookings were higher than in the previous quarter, and throughout the first quarter, bookings improved each week.


In March and April, booking volumes were claimed to be significantly higher than in the same period in 2019.


Bookings for the second half of this year were slightly below historical ranges but at higher prices than 2019, with and without future cruise credits (FCCs).


Based on the strong and close-in nature of bookings, the company expects load factors to continue to improve each quarter and expects fleetwide load factors to exceed 100% by year end.


For 2023, all quarters are currently booked within historical ranges at record pricing.


The Group is managing through inflationary and supply chain challenges, mainly related to fuel and food costs, as well as transitory costs related to health and safety protocols, which are expected to weigh on 2022 earnings.


Ships that operated the Group’s core itineraries in 1Q22 achieved a load factor of 59%. These excluded sailings during the early ramp-up period of up to four weeks.  First quarter load factor was 57% with month-over-month sequential improvements. March load factors were 68%.

Total revenue per passenger cruise day in 1Q22 was up 4% versus record 2019 levels driven by continued strong on board revenue performance. Cash flow from ships in operation was positive for the period.

The Group’s fleet expanded to 63 ships with the delivery of ‘Wonder of the Seas’ and ‘Celebrity Beyond’ in 1Q22 and early second quarter, respectively. These ships, along with six other new ships, which have joined the fleet over the last 20 months and represent over 10% of total capacity, are significantly contributing to yield growth and profitability, it said.

Australia, one of the last remaining countries to re-open, announced the resumption of cruising effective last month. The Group expects to return to Australia for the local summer season in 4Q22. China remained closed to cruising, due to the ongoing lockdowns and as a result, ships planned for China have been temporarily redeployed to other markets.

RCL said that it expected to operate about 10.3 mill available passenger cruise days (APCD) for 2Q22 with load factors of 75% to 80%.  The Group also expected cash flow from ships in operation to be positive in the second quarter. Operating cash flow significantly improved throughout the first quarter and is turning positive in April.

“The performance of our core business continues to strengthen, fuelled by strong demand and excellent operational execution,” said Naftali Holtz, Royal Caribbean Group CFO. “Our near-term focus is to return to full operations and profitability, as we execute on our recovery and build for long term success.”

As of 31st March, 2022, the company’s customer deposit balance was $3.6 bill, an improvement of about $400 mill over the previous quarter, despite the significant quarter-over-quarter increase in revenue recognition and near-term cancellations, due to the Omicron variant, both of which reduced the customer deposit balance.

About 27% of the customer deposit balance is related to FCCs, compared to 32% in the previous quarter, a positive trend indicating new demand. To date, around 56% of FCCs have been redeemed.

As of 31st March, 2022, the company’s liquidity position was $3.8 bill, which includes cash and cash equivalents, undrawn revolving credit facility capacity, and a $700 mill commitment for a 364-day term loan facility.