One Small Move That Might Help Royal Caribbean Surive
Royal Caribbean (NYSE: RCL) has made a number of moves designed to preserve liquidity in order to make it through the coronavirus pandemic, including drawing down its revolving line of credit.
The company closed April with $2.3 billion in cash and cash equivalents, and on May 4 it "increased the 364-day senior secured credit facility and drew $150 million, further enhancing the company's liquidity profile," according to a press release. Royal Caribbean has also greatly cut its spending, though it's still taking on costs "in the range of approximately $250 million to $275 million per month during a suspension of operations," a number that could be reduced if the suspension of cruises continues for an extended period.
That monthly cash burn number does not include refunding customer cash deposits, or money from new or existing bookings as payment comes due. "As of March 31, 2020, the company had $2.4 billion in customer deposits. This includes approximately $0.8 billion of future cruise credits related to previously announced voyage cancellations through June 11, 2020," according to a press release. That means it has $1.6 billion it may have to pay back if customers cancel their trips, which they can do up to two days before sailing.
Source Fool.com
