The coronavirus pandemic has claimed its first cruise line
The possibility of a cruise line becoming insolvent due to the cruise industry's widespread, coronavirus-caused shutdown is no longer theoretical.
Spanish cruise operator Pullmantur Cruises, which is partly owned by Royal Caribbean Cruises, has filed for reorganization under Spanish insolvency laws, Royal Caribbean Cruises said Monday.
Royal Caribbean Cruises owns 49% of the three-ship company, which caters to Spanish speaking vacationers from Spain and Latin America.
"Despite the great progress the company made to achieve a turnaround in 2019 and its huge engagement and best efforts of its dedicated employees, the headwinds caused by the pandemic are too strong for Pullmantur to overcome without a reorganization," Pullmantur's board of directors said in a statement.
For more TPG news delivered each morning to your inbox, sign up for our daily newsletter.
In announcing the restructuring, Royal Caribbean Cruises said Pullmantur management notified employees of the decision after filings were made with Spanish authorities.
For now, Pullmantur has canceled all sailings through Nov. 15. Royal Caribbean Cruises said passengers booked on affected sailings would be offered the option to sail on ships operated by other Royal Caribbean Cruises brands.
Royal Caribbean Cruises is the parent company of its namesake Royal Caribbean brand as well as Celebrity Cruises and Azamara. It also is a part owner of German brand TUI Cruises through a joint venture.
While Pullmantur is little known to most Americans, its three ships are well-known to cruise fans. They include the former Celebrity Cruises ship Celebrity Horizon and former Royal Caribbean vessels Monarch of the Seas and Sovereign of the Seas. The ships have sailed for Pullmantur under the names Horizon, Monarch and Sovereign.
Related: Why you shouldn't take a voucher if your cruise is canceled
Pullmantur removed a fourth ship from its fleet, Zenith, in January. The vessel was the former Celebrity Zenith.
Royal Caribbean Cruises didn't say whether Pullmantur would try to bring back all three of its ships as part of its reorganization. But the Cruise Law News blog is reporting that workers in Italy are in the process of stripping valuables off two of the vessels. The blog cited crew members.
A spokesperson for Royal Caribbean Cruises did not immediately respond to our questions about the report and the future of the vessels.
In its announcement of the Pullmantur reorganization, Royal Caribbean said Pullmantur's ships currently are staffed with crew at a minimum maintenance level, and "the company will take care of their safe return home."
Royal Caribbean Cruises said all its assets related to Pullmantur were included in a non-cash asset impairment charge reported in its first-quarter results. In part due to the write-down of Pullmantur assets, Royal Caribbean Cruises reported a $1.4 billion loss, or $6.91 per share, for the first quarter. That compares to a profit of $249.7 million, or $1.19 per share, during the same period a year earlier.
Royal Caribbean Cruises owns 49% of 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 days have suggested that a recent bond sale by Royal Caribbean Cruises should allow the company to remain solvent for well over a year even if cruising doesn't resume.
Additional resources for cruisers during the coronavirus outbreak:
- When will cruising resume? A line-by-line guide
- Why you shouldn't expect bargain-basement cruise deals anytime soon
- How to cancel or postpone a cruise due to coronavirus
- Expecting a refund for a canceled cruise? Here's how long it will take
- Some of the year's hottest new ships could be delayed
- Stream these 13 movies, television shows to get your cruise ship fix
TPG featured card
at Bilt's secure site
Terms & restrictions apply. See rates & fees.
| 1X | Choose to earn up to 1X points on rent and mortgage payments with no transaction fee |
| 2X | Earn 2X points + the option to earn 4% back in Bilt Cash on everyday purchases |
Pros
- Choice to earn up to 1 Bilt Point per dollar spent on rent and mortgage payments
- Elevated everyday earnings with both Bilt Points and the option to earn Bilt Cash
- $400 Bilt Travel Portal hotel credit per year (up to $200 biannually)
- $200 Bilt Cash annually
- Priority Pass membership
- No foreign transaction fees
Cons
- Moderate annual fee
- Designed primarily for members seeking a premium, all-in-one card
- Earn points on housing with no transaction fee
- Choose to earn 4% back in Bilt Cash on everyday spend. Use Bilt Cash to unlock point earnings on rent and mortgage payments with no transaction fee, up to 1X.
- 2X points on everyday spend
- $400 Bilt Travel Hotel credit. Applied twice a year, as $200 statement credits, for qualifying Bilt Travel Portal hotel bookings.
- $200 Bilt Cash (awarded annually). At the end of each calendar year, any Bilt Cash balance over $100 will expire.
- Welcome bonus (subject to approval): 50,000 Bilt Points + Gold Status after spending $4,000 on everyday purchases in the first 90 days + $300 of Bilt Cash.
- Priority Pass ($469/year value). See Guide to Benefits.
- Bilt Point redemptions include airlines, hotels, future rent and mortgage payments, Lyft rides, statement credits, student loan balances, a down payment on a home, and more.