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Key Words: Norwegian Cruise sees omicron as ‘last major surge’ as COVID-19 transitions to an endemic


Norwegian Cruise Line Holdings Ltd. reported fourth-quarter results that missed Wall Street’s expectations Thursday, but Chief Executive Frank Del Rio remained upbeat on the outlook for the cruise industry, as he indicated the company can start operating with the belief that the worst of the COVID-19 crisis has passed.

On the post-earnings conference call with analysts, Del Rio said conversations with health experts, including Dr. Scott Galloway, the former commissioner of the Food and Drug Administration, suggest there won’t be another major surge of new COVID-19 cases.

““So we believe that, if you believe, that the omicron is the last major surge that’s going to cause upheaval in everyday life, then that healing period that I referred to has begun….There will be variants, there will be mutations, but quite frankly, they’ll be more endemic than they are pandemic.””

— Norwegian Cruise Chief Executive Frank Del Rio

Read more about how Moderna expects COVID to become endemic in 2023, and how California has shifted to an endemic approach to COVID.

Norwegian’s stock

slipped 0.5% in afternoon trading, but bounced sharply off earlier lows, when it was down as much as 10.3% at a 15-month low of $17.31 in intraday trading. The stock had also suffered from a broad selloff in travel-related names in the wake of Russia’s invasion of Ukraine.

Before Thursday’s open, the company reported a fourth-quarter net loss that widened to $1.57 billion, or $4.01 a share, from $738.9 million, or $2.51 a share, in the same period a year ago. Excluding nonrecurring items, adjusted per-share losses narrowed to $1.95 from $2.33, but were wider than the FactSet loss consensus of $1.61.

Revenue jumped to $487.4 million from $9.6 million last year, when cruise sailings were suspended by the Centers for Disease Control and Prevention, but missed the FactSet consensus of $571.9 million. Passenger ticket revenue of $304.9 million was expectations of $386.4 million and onboard revenue of $182.6 million missed expectations of $216.6 million.

Chief Financial Officer Mark Kempa said on the post-earnings call that the company expects the second half of 2022 to be profitable on an adjusted basis, and expects net cash provided by operating activities to turn positive in the second quarter.

He said that marks a “key milestone” in the company’s recovery, and an “important transition from managing the daily business primarily around liquidity needs, to shifting our focus back to maximizing profitability as we exit these unprecedented times.”

The last time the company reported an adjusted profit was the fourth quarter of pre-pandemic 2019.

For the first quarter, the company expects to report a net loss, and projects the monthly average cash burn to increase to about $390 million from $350 million in the fourth quarter, as additional cruise ships are relaunched.

For 2022, the company expects fuel price per metric ton, net of hedges, to slip to $675 from $690 in 2021.

Norwegian’s stock has dropped 15.2% over the past three months, while shares of rival Carnival Corp.

have gained 1.2% and of Royal Caribbean Group

have tacked on 3.0% over the same time. In comparison, the S&P 500 index

has lost 9.6% over the past three months.

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