Carnival Extends Halt in Operations Due to Coronavirus Fear

The coronavirus outbreak, which has taken the shape of a global pandemic, compelled Carnival Corporation CCL to extend the halt of global cruise operations — Holland America Line, Seabourn and Cunard. Recently, the company was required to undertake quarantine of two ships of Princess Cruises line due to the novel coronavirus outbreak.

The coronavirus outbreak, which is spreading at an alarming rate, has infected more than 600,000 people worldwide and the death toll has crossed 29,000. Notably, the company’s decision is in sync with the unpredictable circumstances evolving from the global crisis.

With continued port closures and travel restrictions surrounding global health concerns, the company’s cruise brands have suspended their operations for an additional 30 days, leading to cancellation of departures starting from May 14.

However, the company is providing guests with opportunity to either receive a Future Cruise Credit for 125% of their booking value along with a $250 shipboard credit or a full refund.

Simon Palethorpe, president, Cunard stated, "Everyone in the Cunard team is aware of the need to support the management and containment of COVID-19 globally. This includes protecting the health and safety of our guests and crew. It is therefore right we extend the pause in operations."

Travel Restriction Hurts Cruise Industry

The Cruise Lines International Association submitted a plan to vice president Michael Pence suggesting that any person over the age of 70 years shouldn’t be allowed to board a cruise if they fail to provide fitness certificate from a doctor. Per Cruise Lines International Association, the average age of passengers on cruises is 47, while 14% are 70 years or above.

Meanwhile, President Trump has put restriction on passengers travelling from 26 European countries to the United States. Trump said, “We made a lifesaving move with early action on China. Now we must take the same action with Europe.”

Clearly, bookings for the broader business are going to be negatively impacted thanks to travel restrictions to contain the spread of the contagion.

Other major cruise operators that have been negatively impacted are Royal Caribbean Cruises Ltd. RCL and Norwegian Cruise Line Holdings Ltd. NCLH. So far this year, shares of Carnival has plummeted 74.8% compared with the industry’s decline of 58.8%.

Zacks Rank & a Key Pick

Carnival currently carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stock in the same space is Camping World Holdings Inc. CWH, sporting a Zacks Rank #1.

Camping World Holdings Inc. 2020 earnings is expected to surge 221.2%.

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Carnival Corporation (CCL) : Free Stock Analysis Report
 
Royal Caribbean Cruises Ltd. (RCL) : Free Stock Analysis Report
 
Camping World Holdings Inc. (CWH) : Free Stock Analysis Report
 
Norwegian Cruise Line Holdings Ltd. (NCLH) : Free Stock Analysis Report
 
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