(Miami Herald) – Royal Caribbean Cruises Ltd. is laying off workers contracted by the company for certain “special projects,” spokesperson Jonathan Fishman confirmed Wednesday.
The layoffs are “part of efforts to manage the company prudently and reduce operating expenses,” he said. Only contracted workers are affected.
Rob Zeiger, chief communications officer for the company, said expenses are top of mind for all employees at the moment. The cruise industry has found itself on the front lines of the coronavirus outbreak.
On Tuesday, the company announced it had secured $550 million in loans and was withdrawing its first quarter and full-year guidance.
“Everyone is paying attention to spending,” Zeiger said.
The company did not respond to questions about how many workers it laid off and how many were based in South Florida.
Royal Caribbean shares were down nearly 18% in mid-day trading Wednesday. Royal Caribbean, Carnival Corp., and Norwegian Cruise Line Holdings have each lost more than 50% of their market share in 2020 as their stock prices have plunged as the outbreak has widened. The world’s largest cruise line companies are based in Miami.
A Carnival Corp. representative said there had been no layoffs at the world’s largest cruise company. A representative for Norwegian Cruise Line Holdings did not immediately respond to a request for comment.
The industry reported strong returns last year. Carnival reported a profit of $3 billion in 2019, while Royal Caribbean reported a profit of $1.9 billion. Norwegian Cruise Line reported a profit of $930.2 million.
James Hardiman, managing director and leisure analyst at Wedbush Securities, said the layoffs are understandable given the massive uncertainty the industry now faces. This week, the U.S. State Department advised travelers to avoid cruises.
“They’re doing everything they can to save up for a long winter,” he said. “They’re trying to build up their balance sheet to maximize their cash position and access to credit, and minimize cash outflow on expenses. That means salaries, fuel, food, etc., because they don’t know how this will take to blow over.”
He said that even as the White House signaled support for the industry, it was not yet clear whether it would be enough to offset what are likely to be heavy losses.
“I don’t think they can rely on that,” Hardiman said.