Carnival Fears Shuttering All Asia Operations Till End April, Cites “Material Impact” From Covid-19

The leading cruise ship operator in Asia, Carnival Corporation & plc, reported Wednesday that if it was forced to suspend all cruise operations from ports in China and across Asia until the end of April due to the Covid-19 outbreak, then it would realize a severe financial impact. 

Carnival warned that suspending cruise operations in Asia for a considerable amount of time could have a severe material impact on financials and lead to earnings revisions for the year.  

“…if the company had to suspend all of its operations in Asia through the end of April, this would impact its fiscal 2020 financial performance by $0.55 to $0.65 per share, which includes guest compensation.” 

The cruise line noted Covid-19 outbreak could impact its global bookings will further affect the company’s financial performance. The company will provide an update on disruption with its 1Q20 earnings release in late March. There could be a deployment of contingency plans to mitigate the impact of disruption if seen in Asia. 

So, the big dilemma Carnival and other cruises ship operators have at the moment, is that closing operations in Asia to prevent further transmission of the virus would damage shareholder value. Protecting profits and shareholder value is more important than human safety. This is explained in a tweet below: 

#nCoV2019 The dilemma#PoliticalDecisions#MyOpinion

Option 1) contain virus, preserve life & Cause serious Sharp Economic Slowdown

Option 2) Let virus spread & globally 50 – 100 Million could die, With Long, Slow, milder Economic impact
(If CFR, currently unknown, is ~1%)

— 0range Crush (@0rangeCru5h) February 12, 2020

Royal Caribbean, another large cruise ship operator in Asia, has also fretted over closing down lines, indicating that “the effects of the outbreak on the cruise industry could be substantial, considering that cruise companies have in the last few years turned their attention to China to try to attract its estimated 83 million potential cruise customers.” 

As for Carnival’s Diamond Princess moored In Japan, 174 confirmed cases of the virus have been detected on the vessel. Carnival had the chance last month to shut down lines in response to the outbreak, but now, they must deal with the consequences.

Japanese authorities are considering whether to allow passengers to disembark from the #DiamondPrincess cruise ship earlier than planned, as they are ill and stressed.

There are at least 174 #coronavirus cases aboard, the largest infection cluster outside China pic.twitter.com/y9Rcffg69E

— QuickTake by Bloomberg (@QuickTake) February 12, 2020

The ethical dilemma that plagues cruise ship operators is protecting shareholder value over doing the right thing and shutting down lines to prevent further transmission of a virus that has no cure for 18 months.