Cash flows at MSC Cruises expected to start picking up in Q4 2021
Kicking off the Interview, the expert discussed reopening dates for MSC’s ships across the regions in which it operates. “They expect to have a total of eight ships this summer, and then officially by Q4 they expect to have basically all of their fleet operating. I don’t think that’s realistic.” Rather, the former MSC executive expects that approximately 65% of the company’s fleet will be in operation by year-end.
After giving an update on how the CDC has been helping the industry safely return to a more normal level of service, the specialist discussed pent-up demand and how that is likely to translate into real demand.
They added that pricing is currently “in line or even higher than in normal periods”, with the critical question being occupancy. Meanwhile, cash flows are expected to gather pace in Q4 2021, with the main impact seen “only by the end of Q1 ”, when the final payments for summer 2022 are due. “I expect EBITDA for this year to be at least as negative as in 2020 or a little bit higher, probably close to EUR 500m.” MSC brought its CAPEX down to the “bare minimum” in 2020, and the expert anticipated the company will do “exactly the same this year”.
Another area of discussion was market consolidation and what part MSC might play in acquiring ships during the downturn. The specialist didn’t anticipate an opportunity for MSC to buy more ships — in fact, they foresee the opposite. “I think MSC will have an issue with the four older ships. It’s called the Lirica class. I don’t know if those ships will be back to operation.”
They added: “Who that buyer may be when I’m certain that Royal, Carnival and NCL are in the same situation, it’s very difficult to say.”
Consolidation is also unlikely, we heard. “All the cruise lines are taking a lot of debt, particularly MSC that’s taking only debt and not equity, so… at some point in time, they will have to improve their balance sheet position.”
To access all the human insights in Third Bridge Forum’s MSC Cruises – bookings environment & cost dynamics Interview, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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