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The coronavirus crisis just claimed another cruise line

July 04, 2020
5 min read
Birka Stockholm
The coronavirus crisis just claimed another cruise line
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How long can a cruise line survive without revenue coming in from sailings? For Birka Cruises, the answer turned out to be about three-and-a-half months.

The Sweden-based cruise operator on Friday announced it was shutting down due to the financial pressure caused by not being able to operate trips during the coronavirus pandemic. Like many other lines around the world, Birka Cruises hasn't offered any departures since mid-March.

"The financial impact of the COVID-19 pandemic's track ... has hit us hard," the line said in a statement posted on its website. "The uncertainty about how travel will develop has also contributed to our having to make this decision after evaluating all possible alternatives."

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Relatively unknown in North America, Birka Cruises offered two- to four-night Baltic cruises out of Stockholm, Sweden, as well as day trips around the Stockholm archipelago.

The line operated a single ship, the 1,430-passenger Birka Stockholm. Birka Cruises didn't say what would happen to the vessel, which is only 16 years old.

Founded in 1971 and originally called the Birka Line, Birka Cruises initially offered trips between Sweden and Finland's Aland Islands but expanded its offerings over the years.

The shutdown of Birka Cruises comes just 11 days after Spain-based Pullmantur Cruises announced that it was insolvent and had filed for reorganization under Spanish insolvency laws. The line blamed headwinds from the coronavirus pandemic that were “too strong … to overcome.”

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On Friday, reports emerged that Pullmantur, which is partly owned by Royal Caribbean Cruises, may be sending all three of its ships to the scrappers.

Cruise lines around the world halted departures in mid-March as the coronavirus outbreak spread, and nearly all remain in full shutdown mode -- a situation that is resulting in large financial losses.

The 1,430-passenger Birka Stockholm. (Photo courtesy of Birka Cruises)
The 1,430-passenger Birka Stockholm. (Photo courtesy of Birka Cruises)

In part due to a write-down of its Pullmantur assets, Royal Caribbean Cruises in May reported a $1.4 billion loss for the first quarter of the year. That compares to a profit of $249.7 million during the same period a year earlier.

Royal Caribbean Cruises is the parent company of Royal Caribbean, Celebrity Cruises, Azamara and Silversea. It owns a 49% stake in Pullmantur through a joint venture with Cruise Investment Holding.

The reorganization of Pullmantur does not affect Royal Caribbean Cruises’ fully-owned brands such as Royal Caribbean. Wall Street analysts in recent weeks have suggested that a recent bond sale by the publicly traded company should allow it to remain solvent for well over a year even if cruising doesn’t resume.

Wall Street analysts also have said the two other big publicly traded cruise companies -- Carnival Corporation and Norwegian Cruise Line Holdings -- have enough liquidity to survive into early next year or beyond without cruising resuming.

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Carnival Corporation is the parent company of Carnival Cruise Line, Princess Cruises, Holland America and six other lines. Norwegian Cruise Line Holdings is the parent company of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises.

Birka Cruises is part of the Eckero Group, which also owns ferry services in the Baltic. The line said customers booked on upcoming trips would automatically receive a full refund.

"All of us who have worked at Birka Cruises want to take the opportunity to thank you for all the happy laughs and encouraging comments over the years," the line said in its notice of shutdown on its website, according to a Google translation. "It is said that the guest does the party, and you as our guest really did. Big thanks for everything!"

Related: Is cruising done for 2021? This cruise line thinks so

Additional resources for cruisers during the coronavirus outbreak:

Featured image by The 1,430-passenger Birka Stockholm. (Photo courtesy of Birka Cruises)