Analyst Note| Jaime M. Katz, CFA |
In a second quarter that held no sailings, Norwegian delivered a $2.78 EPS loss, as only $17 million in revenue was handily outpaced by costs. And with Cruise Lines International Association recently extending its start sail date out to Nov. 1, the third quarter should fare similarly. We remain focused on two key factors in our outlook: (1) when does sailing officially resume, and (2) what do sailing economics look like in a postpandemic world? For no-moat Norwegian, as well as the other cruise lines, it appears the resolutions to these questions stem from its own efforts to remedy risk, as the U.S. Centers for Disease Control and Prevention continues to focus on the unfettered spread of the virus on land. As such, we surmise that Norwegian and Royal Caribbean’s Healthy Sail panel, engaged to improve health and safety standards, will propose adjustments that should appease CDC concerns and share policies across the industry to regain confidence with consumers in upcoming months.