CDC says US cruises can resume in mid-July, sending shares higher
Ships can begin limited sailings with passengers if 98 percent of its crew and 95 percent of passengers fully vaccinated
Cruise lines could resume US operations by mid-July, the Centers for Disease Control and Prevention said Thursday, sending the industry’s stocks up on investor hope that a more than year-long suspension could be nearing its end.
Ships can begin limited sailings with passengers if 98 percent of its crew and 95 percent of its passengers are fully vaccinated, according to the CDC, which has met twice-weekly with cruise line reps over the past month to discuss how they can safely resume sailing from US ports.
The CDC said it agreed to ease some requirements on testing and shorten the process through which cruise operators were required to apply for simulated sailings, which are required before passenger sailings under current CDC restrictions.
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"This puts cruise ships closer to open water sailing sooner," the CDC said. "CDC looks forward to continued engagement with the industry and urges cruise lines to submit Phase 2A port agreements as soon as possible to maintain the timeline of passenger voyages by mid-July."
The federal restrictions on cruise lines have recently garnered criticism, particularly from the Sunshine State, where cruise travel is a key industry that its lobby says supports hundreds of thousands of jobs. Florida Gov. Ron DeSantis has blasted the CDC restrictions as "baseless."
Earlier this month, Florida sued the federal government to demand they allow cruising from US ports to resume immediately.
The agency added that its timeline for the resumption of cruising is largely in line with that already announced by the major cruise companies. But authorization to resume operations doesn’t mean that the cruise lines will immediately return to the US as executives try to limit costs of moving ships and match operations to customer demand. Shares of all three of the major publicly traded cruise operators rose Thursday after the news.
Shares of Carnival Corp, the largest of the three, were up almost 2% in early trading. Royal Caribbean stock was up about 1% and shares of Norwegian Cruise Lines, the smallest of the three by fleet size, were up almost 4%.
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The CDC first issued a no-sail order on the cruise industry in March, 2020, after numerous COVID-19 outbreaks and deaths caused by the virus were linked to cruise ships around the world.
Then-CDC Director Dr. Robert Redfield went so far as to say cruise ship travel "exacerbates the global spread of COVID-19."
Since then, the cruise industry has been losing hundreds of millions of dollars per month as its ships sit idle, barred from sailing in the US. Earlier Thursday, Royal Caribbean reported first-quarter earnings that included a $1.13 billion loss, lower than its year-ago loss of $1.4 billion.
On a conference call with analysts, CEO Richard Fain commented on the CDC’s announcement, saying it shows "a significant improvement in the extent and the quality of our dialogue with the CDC."
"We believe that this communication really helps us to see a clear and achievable pathway forward to a safe and healthy cruising in the near future," he said, adding that there are still questions the CDC needs to answer about the cruise line restrictions. But Fain did not rule out a mid-July start date.
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"I would also emphasize that the restart does not mean that we will immediately go in
to full operation. We are hopeful about restarting. That restart will be gradual and deliberate," he said. "It could be possible to restart cruising by mid-July."