Outgoing Royal Caribbean CEO Richard Fine told CNBC on Wednesday that the company sees historically high orders for next summer and plans to use the cash flow to pay off debt and reinvest.
“[The cruise business] has always been a cash flow business. This is a very capital intensive business, but once you have ships, they become cash cows, “Fine told Squawk on the Street a day after Royal Caribbean. announced that he is stepping down as CEO on January 3, after more than 30 years at the helm.
Fine told CNBC that he is confident that he is leaving the top position at a time when the cruise industry is recovering from being hit hard in the midst of the Covid pandemic. Royal Caribbean Chief Financial Officer Jason Liberty will take over as CEO and Fine will remain chairman of the board.
Miami-based Royal Caribbean last month reported lower-than-expected revenues of about $ 457 million for the third quarter and a larger-than-expected adjusted loss of $ 4.91 per share. Reservation volumes have improved significantly this quarter, however, following a slowdown this summer due to the delta option. The company said flights for 2022 are booked within the historical range and at higher prices than in 2019.
“This will create the cash flow we need to pay off debt, to reinvest in our technology, reinvest in our sustainability efforts, reinvest in our new ships,” Fine told CNBC on Wednesday as Royal Caribbean shares fell by about 1.5 %. … Over the year, the shares are up more than 20%. “We have a huge chasm to cross,” he added. “But now it looks like we’re on track to get back to how we used to be. [Covid] and even better. “
In the third quarter issueRoyal Caribbean said its long-term debt is nearly $ 19.9 billion, up 10% from the end of 2020.
With the opening of international borders following the closure of the pandemic, business from Europe is expected to boost the cruise industry. “The US is the dominant market, but international markets are growing even faster,” Fine said. “One of the things we have done very well at is bringing Europeans to our ships in the Caribbean and bringing Americans to our ships in the Mediterranean.”
Fine said the cruise industry is clearly making a comeback and the path forward is very clear. “We’re going to start our new phase of growth,” he said. “As the boundaries begin to open up, as we start living life again, it all works in our favor.”