Cruise stocks sink after missing out on economic-relief bill

AP – Shares of cruise lines have taken on more water after the industry’s major players were shut out from government assistance as part of the major economic-recovery bill signed by United States (US) President Donald Trump on Friday.

The bill passed by Congress said companies getting loans or loan guarantees must be “organised” in the US under American laws and have a majority of their employees based in the US.

Carnival Corp is registered in Panama, England and Wales; Royal Caribbean Cruises is chartered in Liberia; and Norwegian Cruise Line Holdings is flagged in Bermuda.

The cruise lines could still get a lifeline from taxpayers. Lawmakers could reconsider aid if it looks like the industry is in serious jeopardy of going under.

A Senate Republican aide familiar with the negotiations said Democratic senators balked at helping the cruise lines. It did not become a sticking point because lawmakers from both parties were eager to act swiftly on the bill, added the aide, who spoke on condition of anonymity to discuss behind-the-scenes talks.

The Norwegian Encore cruise ship is docked at the Port of Miami, Florida. PHOTO: AP

Senator Sheldon Whitehouse tweeted, “The giant cruise companies incorporate overseas to dodge US taxes, flag vessels overseas to avoid US taxes and laws, and pollute without offset. Why should we bail them out?”

Trump seemed to endorse that argument on Thursday. The President said he liked the idea expressed on Twitter by Senator Josh Hawley that cruise lines should come back to the US and pay their taxes.

“I do like the concept of perhaps coming in and registering here, coming into the US,” Trump said. “It’s very tough to make a loan to a company when they are based in a different country, but with that being said, they have thousands and thousands of people that work there.”

Then Trump left the door open to helping the cruise lines some other way.

“Look, it’s a big business, it’s a great business,” Trump said. “So we are going to work very hard on the cruise line business, and we are going to try and work something out.”

In trading on Friday, Carnival’s stock dropped 19 per cent. Royal Caribbean fell 15 per cent and Norwegian sank more than 23 per cent.

Cruise ships and airlines are two of the industries hit hardest by the new coronavirus outbreak, and Trump spoke repeatedly about helping both. But while US passenger airlines got special treatment from Congress — they will be able to seek USD50 billion in grants and loans under the economic-stimulus bill — the cruise industry was left high and dry.

Cruise lines cancelled sailings in Asia when the outbreak was mostly limited there, but bookings dropped and cancellations rose just about everywhere as COVID-19 grew into a pandemic. Extensive coverage of ill passengers on quarantined ships added to the industry’s image problem.

Representatives of the industry trade group, Cruise Lines International Association, and individual companies did not immediately comment.

While the major cruise ship companies are not headquartered in the US, travellers getting ready to take a cruise spend large sums flying to port cities, staying at local hotels and eating at restaurants.

The bill provides USD454 billion in loans and loan guarantees to US businesses whose losses result from the coronavirus. American-owned cruise ship companies and owners of smaller passenger vessels and port facilities are expected to qualify for the assistance.

Although the cruise lines will not get help from the bill signed on Friday, their US-based employees who lose their jobs could be eligible for expanded unemployment benefits of USD600 a week on top of state benefits through July 31, and an extra 13 weeks of state benefits. They could also be in line for the bill’s stimulus payments of up to USD1,200 per adult.