Royal Caribbean's Return to Profit Delayed by Omicron Surge
Cruise operator Royal Caribbean Group said on Friday the lightning spread of the Omicron coronavirus variant would delay its return to profitability by a few months, another blow for one of the companies worst affected by the pandemic.
The bleak prediction, as well as a larger-than-expected quarterly loss, sent Royal Caribbean's stock down 4% and also weighed on shares of rivals Carnival Corp and Norwegian Cruise Line Holdings Ltd.
The Omicron surge has in recent months forced cruise operators to change their trip itineraries and even cancel voyages, stalling a nascent recovery in the sector whose ships have spent most of the pandemic anchored at U.S. ports.
"The timing of Omicron was particularly painful as a typical wave booking period begins in early January," Chief Executive Officer Jason Liberty said on an earnings call.
The Celebrity Cruises owner expects a loss for the first half of 2022 before turning profitable in the following six months. Analysts polled by Refinitiv had estimated a loss for the first quarter and a return to profits in the second.
"(A recovery is) just going to continue to get pushed out and we're going to have delays and starts and stops until we are all clear of the pandemic," said Ivan Feinseth, the chief investment officer of Tigress Financial Partners.
The resurgence in COVID-19 cases has prompted a warning against cruise travel from the U.S. health agency and forced even frequent cruise passengers to stay away from voyages.
In the fourth quarter, total revenue came in at $982.2 million, missing analysts' estimates of $1.04 billion. The adjusted per-share loss of $4.78 was also larger than expectations of $3.92.
But in a bright spot, Royal Caribbean said bookings had picked up in late January and returned to pre-Omicron levels, with cancellations also subsiding.
(Reuters - Reporting by Praveen Paramasivam; Editing by Aditya Soni)