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There’s an old saying “the two happiest days in a boat owner’s life: the day you buy the boat, and the day you sell the boat.” The expression certainly applies here.
In an effort to stay afloat during turbulent times, Royal Caribbean is jettisoning a full operating subsidiary - yesterday announcing a deal to sell the Azamara cruise line to private equity firm Sycamore Partners for just over $200 million
Going Down With The Ship
We won't rehash the full recent cruise line narrative. The pandemic pain persists and Royal Caribbean is expected to post a $2 billion loss for the latest quarter.
Deal Drivers: But despite the economic pain, Royal Caribbean finance chief Jason Liberty told the WSJ the deal “wasn’t driven by financial reasons.” Instead, Liberty said the deal will help prioritize the “minds and time of management” and consolidate the portfolio:
- Royal Caribbean also owns the Celebrity Cruises and Silversea brands, which overlap with the high-end Azamara clientele.
- At just 1.5% of total capacity, Azamara operated just three ships. More of a flotilla than a fleet.
Popular Strategy: Last week Carnival said it was on track to sell 19 older ships representing 13% of its total capacity.
We're still a long way away from returning to all-you-can-eat buffets and packing into over-crowded cruise ship pools. Most of Royal Caribbean's sailings across the globe are canceled until at least April 30.
The return of U.S. cruises will hinge on the CDC, which has told operators they’ll need to apply two months in advance before they want to start passenger trips again.
The Takeaway: Carnival has bold plans for 2022. The publicly-traded cruise operator is currently marketing its "nudist cruises" where travelers will be permitted to parade around in their birthday suits. Read more about the "Bare Necessities" cruise here.