Carnival Corp.’s $3.5B infusion ‘good news’ for travel, TLG prez says

Carnival Corp. this week raised $3.5 billion in a private offering  a move that conveys optimism for the leisure travel industry, said Travel Leaders Group president John Lovell.

In an online chat with Carnival Corp. CEO Arnold Donald Wednesday, Lovell said that being able to make such a raise at “very favorable interest rates” without having to put up any assets was “good news.”

“Investors are very wise with their money and when they’re looking at making an investment,” Lovell said. “To put it in the travel industry, and especially the leisure travel industry, really speaks well for all of us and shows a light at end of this tunnel.”

Carnival said Tuesday it had closed the private offering of $3.5 billion of 5.75% senior unsecured notes, due in 2027.

Donald concurred with Lovell, saying that raising that much at interest rates that were better than they had been in recent months, although not better than pre-pandemic rates, is “very positive for the industry.”

“It gives us some additional liquidity so we can withstand an extended pause if we have to,” Donald said. “Hopefully we won’t have to. But I think the fact that we could raise the money does show confidence in the industry and in the near-term future.”

More from the conversation: Donald on requiring vaccines to cruise, the restart and the CDC.

Lovell later said of Travel Leaders Group advisors, “cash for these people is running out and running out quick.” He asked if Carnival was exploring any ways to speed up commission payments to advisors.

Donald said that Carnival Corp. brands were honoring commission on refunds and allowing commissions to be earned on future cruise credits; paying commission on full payments whether the cruise was happening or not; and, at the brand level, “working with partners to see what can possibly be done.”

“Unfortunately, we’re in a similar bind,” he said. “You talked about the money we raised. Unfortunately for us we have a huge burn rate: $600 million a month with no revenue. So we’re limited in what we can do outside of doing the things we’re currently doing.”

But he added that Carnival Corp. was open to ideas to help the trade and said that travel advisors were critical to the cruise company’s business.