Royal Caribbean Cruises Ltd (NYS:RCL) and Cruises Investment Holdings have announced plans to restructure their joint venture, Pullmantur Cruceros, as per the Spanish laws of insolvency considering it cancels sailings from November 15 because of COVID-19.
COVID-19 pandemic affected Pallmantur operations
Cruises Investment Holdings holds 51% interest in the joint venture while Royal Caribbean holds the remaining 49% of the cruise line. The Board of Pullmantur indicated that the action was taken as needed because of the unprecedented COVID-19 impact.
The board stated that the company made efforts for a turnaround last through massive engagement and input from its employees. However, the headwinds resulting due to COVID-19 pandemic have been devastating for the company to weather without restructuring.
Regarding sailors whose sailings were canceled by Pullmantur, Royal Caribbean stated that they will have an alternative of sailing with its other brands. The company said that customers can cruise with either Celebrity Cruises or Royal Caribbean International, with details of this offer expected to be shared with customers in the coming weeks.
On the other hand, Royal Caribbean has stated that it will book a non-cash impairment charge related to the Pullmantur JV in Q1. Royal Caribbean has indicated that all assets related to the Pallmantur joint venture are part of the non-cash impairment charge the company booked.
The company has already confirmed that three ships of Pullmantur are staffed at limited maintenance levels as it plans for the safe home return of crew members.
Cruise ships to operate on limited capacity
The cruise ship company has not released safety measures and policies n COVID-19 ahead of its resumption. However, operating in reduced capacity has been considered as one of the ways to enhance social distancing. Vicki Feed, the company’s SVP Sales and Trade Support & Service, stated that operating on a lowered capacity could be one strategy to combat the spread of COVID-19. Feed stated that since cruise ships will operate on reduced capacity, they will not be lowering prices to compromise quality.