Royal Caribbean Group (RCL) — Q4 2020 Earnings Call Transcript

Thank you, Shelby. Good morning, everybody, and thank you for joining us today for our business update and fourth quarter earnings call. Joining me are Richard Fain, our Chairman and Chief Executive Officer; Michael Bayley, President and CEO of Royal Caribbean International; and Carola Mengolini, our Vice President of Investor Relations. During this call, we will be referring to a few slides which have been posted on our investor website, www.rclinvestor.com. Before we get started, I would like to refer you to our notice about forward-looking statements, which is on our first slide. During this call, we will be making comments that are forward-looking. These statements do not guarantee future performance and do involve risks and uncertainties. Examples are described in our SEC filings and other disclosures. Please note that we do not undertake to update the information in our filings as circumstances change. Also, we will be discussing certain non-GAAP financial measures, which are adjusted as defined, and a reconciliation of all non-GAAP historical items can be found on our website. Richard will begin by providing a strategic overview of the business. I will follow up with a recap of our fourth quarter and full year 2020 results. I will then provide an update on our latest liquidity action and on the booking environment. We will then open up the call for your questions. Richard?

Thanks, Jason, and good morning, everyone. Even though it's late February, I still want to say Happy New Year because I expect that this year will be so much better in so many ways than last year. At the same time, it's hard to believe that we're only seven weeks into 2021 because so much has already happened. It's been very intense in the last one and a half months. And because things are happening so quickly, I think it's a good time to take a moment to review what we, at the Royal Caribbean Group, have been doing over the past year to adjust to the realities of the pandemic in the United States and wherever we sail and operate around the world. As we've summarized on Slide 2, 2020 was an unprecedented year in which our teams took on and accomplished actions that were unthinkable just 12 months ago. I think that there was not one job that stayed the same. In a few months, our teams moved our whole fleet into layup, repatriated more than 45,000 crew members to their hundreds of home countries, restructured our workforce, implemented new credit programs for our guests, took care of our travel agents, and raised billions of dollars in new capital all while working from home. It's been incredibly challenging, but everybody seemed to rise to the occasion. Now, the most important point to keep in mind is that, while most of our ships are still sitting idle and while we suspended most of our global operations through April, at least through April, our company has also been moving ahead to create the conditions and to prepare for a healthy return to sailing. As we continue to navigate this crisis, we've made continued progress on many fronts, as noted on Slide 3. I want to especially speak about how we're engaging with various stakeholders, particularly governments and other actors in the travel industry to ensure that we can ramp up and restart quickly. I'll let Jason talk about the initiatives that we've taken on the finance side. First, let me recall what we've accomplished with our Healthy Sail Panel, composed of medical, public health, maritime, biosecurity, and other experts. We've taken their 74 recommendations for a healthy return to service as the basis for over 2,000 separate protocols, from passenger testing before sailing to physical distancing onboard to disembarkation of COVID symptomatic persons. All of these things will give our guests, our crew, and the destinations the confidence that the environment on the Royal Caribbean, Celebrity, Silversea, or TUI ship is safer than a walk down Main Street. We know that we not only need to provide an environment that protects our guests from COVID, but also works to protect all of our people from having their vacations disrupted due to an isolated case. At the same time, we have to recognize that the panel's recommendations were intended to address a pre-vaccine environment. A lot has occurred over the last four months since their report was submitted, not the least of which is that we're regularly vaccinating over 1.5 million people a day here in the United States and many elsewhere as well. And so, we continue to work with the panel led by Governor Mike Leven and Dr. Scott Gottlieb to identify the safest pathway forward in the new post-vaccine environment when we can protect our guests and crew as never before. And these conversations and the conclusions we draw from them will inform and advance our dialogue with governments around the world, including the CDC under its new leadership. At the same time, I believe strongly in the power of positive example. And in Singapore, we have a good one on how we can safely resume cruising while giving our guests the fun-filled experience they expect. We've been operating there since early December, and even before that we've had successful operations, which continue now in Germany and the Canary Islands, Greece, and in the Middle East. These early returns to service not only provide vacations, but they provide an opportunity to demonstrate proof-of-concept as well. These early cruises provide valuable information about the best way to design and implement our health and safety protocols. They provide important learnings on how we can coordinate most effectively with governments, port authorities, travel partners, and others to protect our guests, crew, and destinations we visit. These early cruises have also given us the opportunity to design new attractive itineraries where we can better control the experience. Now, after 11 months of pandemic, I think we all know that COVID fatigue is real. People are clamoring for the opportunity to have experiences outside their homes. Every day, we see signs of people wanting to get out and get away. And once we're able to reopen and restart more broadly, we'll be ready to respond with our best-in-class hardware, including our new buildings, Odyssey of the Seas, Celebrity Apex, and Silver Moon, and our exclusive private destinations like Perfect Day at CocoCay. Before I hand off to Jason, I do want to brag on our team just a little bit. Again, the dedication, commitment, and the integrity of our employees throughout this very difficult period has been exceptional, and their individual and combined contributions have been extraordinary. I am impressed every day by what they do. I also want to give a shout-out to our loyal and committed travel partners for their ongoing support and to our investors for their trust. So, thank you all. And now I'd like to turn it back over to Jason.

Great. Thank you, Richard. This morning, we reported an adjusted net loss of $1.1 billion for the fourth quarter of 2020 and a $3.9 billion for the full year. Due to the suspension of our global operations, we were able to operate only 20% of the revenue cruises initially expected in our February 2020 guidance. This simple stat reflects the staggering impact that the pandemic brought to our company and the whole industry during 2020. In the fourth quarter, we were able to reduce our quarterly cruise operating expenses by more than 80% from $1.5 billion in Q4 of 2019 to $265 million in Q4 of 2020. We achieved this by expeditiously laying up our fleet and becoming extremely diligent, disciplined, and agile in controlling our costs. Something similar can be said about our general CapEx, which was reduced by approximately 55% between 2020 and 2021. I am incredibly grateful for the efforts from the entire corporation in managing through the toughest year in our history. From a financial standpoint, our top priority remains ensuring that we are in a strong liquidity position. While reducing our cash burn was and still is critical, another crucial liquidity action is accessing capital prudently and opportunistically while also managing our liabilities with our banking partners and export credit agencies. Since we suspended our global cruise operations, we have raised about $9.3 billion in new capital and have secured agreements to defer almost $2 billion of ship-related debt through the spring of 2022. These later efforts are reducing our expected debt maturities for 2021 to approximately $400 million. These successful transactions and negotiations were possible due to the strength of our brands, the relevancy of our product, and the great relationships that we've built during decades of collaborative work with banks, shipyards, and vendors. I also want to highlight that this superb outcome was a huge undertaking executed by our amazing finance, legal, and accounting teams. Now regarding our current liquidity position, we closed the 2020 fiscal year with $4.4 billion in available liquidity. We remain focused on further improving this position while also managing our operating and capital expenditures to ensure that our family of brands are well positioned for the return to service. I will stress that as we return to service and stabilize our operations, our cash flow will be primarily driven by cash, which will be the primary driver to deleverage our balance sheet, return to investment-grade, and create great shareholder value. As it pertains to our cash spend for the fourth quarter, we spent approximately $1.3 billion, which includes the payment of approximately $300 million of bond that matured in November and approximately $180 million from collateral postings, commissions, and financing fees. When excluding these, our average cash burn rate was on the lower end of our previously announced range, driven by the phenomenal diligence of our teams and some timing. Furthermore, this morning, we reaffirmed that the cash burn will be on average in the range of approximately $250 million to $290 million per month during a prolonged suspension of operations. Over the last year, we have executed several measures to structurally reduce our cost base, realign our capital allocation, and improve our scale and margins. Besides reducing our G&A expenses and streamlining procurement efforts, we successfully divested three of our oldest ships and entered into a definitive agreement to sell our Azamara brand. Reshaping our fleet efficiency and the corporation's cost structure will help accelerate our margins by improving our operating leverage as we return to service. I will highlight that when we return to service and start to ramp up our sales, we expect that customer deposits and cash flows from operations will further improve our cash position. At the same time, ramping up our business will also include startup costs that relate to accruing our ships, health and safety protocols, and increased sales and marketing activities. Because the environment is still very fluid, we are not able to provide further guidance or commentary on these figures. I will now provide an update on the booking environment and our capacity. While bookings remain below historical levels, we have been constantly impressed and humbled with the number of cruises booked throughout this extended out-of-service period. It's clear that a lot of people want to cruise, and we can't wait to welcome them back on board, our amazing brands, and ships. Clearly, 2021 is not going to be a traditional year. And to this end, we did not plan for a traditional wave season. Therefore, our sales and marketing activities still remain anemic and extremely strategic. Currently, we don't expect to broadly ramp up our marketing until more ships come back into operation. Despite the lack of marketing spend, we have seen a 30% increase in new bookings since the beginning of the year when compared to November and December. Our Lift and Shift and Future Cruise Credit programs have been very successful in both preserving cash and driving demand for future periods. Having said this, I will highlight that from a cumulative standpoint, almost 75% of our booked business is new and not related to rebooking activities. The cumulative booked position for sailings in the second half of 2021 is aligned with our expectations in terms of resumption of cruising, with pricing higher than 2019, both including and excluding the dilutive impact of future cruise credits. It is probably too early in the booking window to talk too much about 2022, but behavior to date is quite similar to booking activities in previous years. Our book position for the first half of 2022 is within historical ranges at higher average prices. As I noted, we are not expecting a traditional wave season. However, we did see a similar increase in 2022 bookings over the past six weeks to increases seen in prior years. We think that this is a very encouraging statistic given our muted sales and marketing efforts. Regarding our deployment, we are not ready to announce any specifics surrounding the cadence with which we will be bringing our fleet back into service. Currently, we have canceled sailings on most of our ships through the end of April. Our brands operate in multiple markets around the globe; therefore, the timing and pace of the ramp-up in capacity will likely vary by region based on local conditions. We are already operating the Quantum of the Seas in Singapore, and our second ship in the water could also be outside of the U.S. We're also using the learnings from Singapore as well as from our TUI Cruises joint venture, which has had ships sailing in Europe and the Canary Islands since August and November, helping us inform how the ships will return to service. Our customer deposit balance at the end of December 2020 was $1.8 billion. This is relatively equal to the balances reported both at the end of September and at the end of June. We were able to maintain a similar customer deposit balance for six months despite the suspension of approximately 1,100 sailings because of the deposits collected on new bookings and the success of our future cruise certificates and Lift & Shift options. Just over half the guests who were booked on canceled sailings have requested a cash refund, with the other half either holding an FCC or lifting and shifting their booking to our future cruise. Also, approximately half of our customer deposit balance is associated with FCCs, and moreover, about 30% of the overall balance is nonrefundable. As it pertains to our expectations for 2021, I will note that the timing and trajectory of the recovery remains uncertain, and we are therefore unable to provide further guidance for the year. We do expect, however, to incur a net loss on both the U.S. GAAP and an adjusted basis for the first quarter and the full year of 2021. The magnitude of the loss will depend on many factors, including the timing and extent of our return to service. I will close my remarks by saying that we are clearly focused on what we can control. But as the vaccine distribution continues to accelerate, travel restrictions and advisories begin to ease, and customer confidence begins to grow, we feel very optimistic about the future. With that, I will ask our operator to open up the call for a question-and-answer session. Shelby?

Great. Thank you for taking the question. I know it’s very difficult to get any visibility on the timing of a restart. I wonder if you could tell us, when you mentioned your fuel hedges, you talked about you're adjusting it for forecasted fuel consumption. I wonder if you could kind of tell us what you're roughly thinking about for your fuel consumption as a way to sort of help us think about what that would look like versus a normal year? And then also specifically sort of related to Alaska, too. I'm wondering if your fuel consumption assumption is for that market, too? Thank you.

Well, thanks, Robin. And by the way, that's a very interesting angle in trying to get us to provide how many ships we are expecting to have up and running on the water. So, on the fuel consumption side, just like everything else, it's very fluid, and it will be based off of the timing on when we go back into service. So, I don't have a specific number to guide you to, but it was a creative way to ask it, but we will disclose that as we know what the deployment will look like specifically and the ships that will come up and running.

Okay. All right. Maybe then just as a follow-up, since I don't get my first one. Just a clarification. In the release, when you talked about second half of 2021 pricing, you said it's higher than 2019. And I just wanted to clarify, was that higher than second half of 2019? It doesn't specifically say that or did you just mean higher than 2019 overall, because obviously, it has a little bit of a different meaning?

Yes. We were specific around the overall 2019, but it's a similar answer for the back half of 2019.

So in other words, second half 2021 pricing is above second half 2019, specifically both with and without the future cruise credit?

That's correct.

Okay. Because that's an improvement, I think, since your last quarterly call. So okay, great. I will...

Yes, a little bit more. But I mean, we're very – as we said before, there is clear demand. And as we look at 2021, based off of the different scenarios we have in terms of resumption of service, the volumes that we see on a demand standpoint are impressive.

Okay. Great. And I'll hop back in line as I got more questions. But I'll get back in line. Thanks.

Yeah hey guys. Good morning. So Jason, I guess first question would be around the first half 2022 booking commentary. I'm not sure of the right way to ask this question, but can you help us think about how much of your first half 2022 inventory is currently open for sale? And I don't know if that is 100% or it's 50% or whatever that number is. But I'm trying to really understand that pricing comparison relative to 2019? I think there's some confusion out there with investors about what that looks like actually on a pure like-for-like basis, and hopefully that makes sense?

Most of our deployment is planned for the first half of 2022. It is still early in the booking stage, as we're currently in the first quarter of 2021. Traditionally, we don't discuss 2022 at this point, but we are noticing significant pent-up demand for vacations among our customers. Many have saved more and skipped previous vacation plans, and now they are eager to know when we will resume service so they can enjoy their previously booked trips. Looking ahead to the first half of 2022, while it's still very early, the pricing we are observing compared to 2019 shows that our average prices are higher, regardless of whether future cruise certificates are applied.

Okay. Understood. My second question is about your liquidity position, which appears solid on paper. However, you mentioned that you are taking proactive steps. I would like to understand what those steps might indicate moving forward. Are you still considering any possible options in the near term?

Yeah. Well, first off, we have a lot of options. So, it's not just some options. We have a very full quiver of options both in the capital market and even non-capital market activities, whether we still have a lot we can access as it relates to our debt baskets. Obviously, we can access equity and other instruments. But we are and we have been extremely methodical about our capital raises. Some of it's based off of the operating landscape, and some of it is being opportunistic in seeing how we continue to focus on the balance sheet. But we will just continue to evaluate the situation, and based off of that, we'll look to continue to be in a strong liquidity position. So that, as we return out of this, our business can accelerate.

Okay. Got you. Thanks guys. I appreciate it.

Hi. Good morning. So two questions for me, I think you guys talked about in the prepared remarks, just how much time was spent by the Healthy Sails Panel trying to figure out how to sail in sort of a pre-vaccine world? Obviously, that's no longer the world in which we live in. So, I'm just trying to figure out how the cruise experience is, what it's going to look like in 2021 and maybe beyond? So, I guess for starters, the whole notion of a vaccine requirement on board – some ships on board, all ships – may speak to that and maybe the CDC's willingness to let some ships sail earlier if you have a critical mass of people that have already been vaccinated.

I'll try to answer that. You're right, the Healthy Sail Panel's work and discussions took place before the vaccine, and the introduction of the vaccine really does change things. We're currently in a transitional period since the vaccines are still relatively new. They are being rolled out rapidly, but it will take months to vaccinate a large number of people. Therefore, we, along with the CDC and governments worldwide, are examining how this will affect the situation, but we don’t have definitive answers yet. One thing everyone is watching is the effectiveness of the vaccines, and there's a strong desire to see results. A positive aspect is that we can reference Israel, which has one of the highest vaccination rates in the world and can make significant statistical correlations. For instance, data coming from there indicates that the efficacy of the vaccine in vaccinated individuals is as high or higher than it was during clinical trials, now on a larger population. This gives us more confidence in the findings. More importantly, they are reporting that the vaccine's ability to prevent severe cases of the disease is even higher. Historically, these are exciting effectiveness levels that inspire hope. However, we need to see practical results, and we cannot say yet that enough people have been vaccinated to require everyone on board to be vaccinated. Nonetheless, we believe that the vaccine is indeed a crucial tool. The rapid rollout and increasing pace will inform new strategies moving forward, although we have not yet been able to specify what those strategies will entail.

Got it. That's helpful. And then my second question is maybe for Jason. I'm trying to wrap my head around the new revenue and margin profile of your post-pandemic fleet. Obviously, you've gotten rid of quite a few ships. And so, I don't know the best way to frame it, whether it’d be to talk about what the yields and/or margins were on the ships that you got rid of? Or just looking back to pre-pandemic margin levels of, call it, 19%, 20%, and order of magnitude, what those could look like once we're back to – quote, unquote – “normal,” but with a significantly newer and presumably more profitable fleet?

I appreciate the challenge, James. It's still early for us to discuss what the margins will look like as we move forward. The sale of Azamara and our older ships has had a very slight positive effect on yields. It will positively impact our costs because the smaller ships allowed for less efficient cost distribution. As a company, we are taking this opportunity to analyze our costs and identify ways to enhance efficiency. As we emerge from this situation, we expect to improve our margins, although it is too soon to specify how much that will be. Our goal is to be at our ideal state as we exit this phase and then accelerate as we return to service.

Got it. And just to clarify, you called out a couple of positives. There aren't any negatives we should be thinking about in terms of the margin in a post-pandemic world, correct?

Yeah. I mean, I don't think there are necessarily negatives. Obviously, we will have return-to-service costs here as we ramp ourselves up, which could just make it look a little bit lumpy in the beginning.

Sure.

I also think it's important to note that besides for the ships that we have sold or the brand that we have sold, we also have incredible new tonnage that is coming into our fleet. As we know those ships are much more cost-efficient on a fuel perspective and they deliver higher margins. And so all the ships in which Richard had noted that are coming in here in the next couple of years, plus what we have on order will also help us expand our margins further.

Got it. Thanks, Jason. Thanks, Richard.

Good morning everyone. Thanks for taking my questions. I wanted to talk about Azamara quickly, hoping you could give us some comments around the process there if it was competitive and how long you've been working on it? And then shifting gears to maybe additional ship sales. What are the different factors you're assessing for potential future ship divestitures? And sort of what are the flexibilities you have around that in your existing credit agreements?

Sure. Regarding the sale of Azamara, throughout this process, we've aimed to be strategic and opportunistic. As we consider our future priorities, including investments and resource allocation, this opportunity with Sycamore presents a chance for Azamara to expand. We believe it’s a strong brand that will perform well under new management. As we explore additional ship sales, we continue to be opportunistic. It’s important to remember that before the pandemic, all these ships generated significant cash flow. For us, the evaluation of a ship is less about the immediate cash we might receive and more about the strategic fit, whether that’s in its current condition or with some investment, within our brands or with our joint ventures. We will keep looking for opportunities.

Thank you, Jason. I have one more question. For this summer in Europe, I assume you don't need CDC certification to operate, but many of your guests will likely be traveling from the U.S. Could you outline the different scenarios that might unfold for summer sailings in the Mediterranean?

Hi, Brandt, it's Michael. Our operations in Europe aren't under CDC jurisdiction, but many Americans fly to Europe for our products, especially Royal and Celebrity. We're following the protocols from the Healthy Sail Panel or those issued by the European Union and the UK. Operations in countries like Germany, Italy, and the Canary Islands have been ongoing for a few months, guided by policies from the Healthy Sail Panel and specific instructions from health authorities. We expect a similar approach to what we see in the U.S., where as infections decrease and vaccinations rise, protocols will likely incorporate a blend of vaccines and testing. Fortunately, we're moving out of the low winter season and into spring. The Royal Caribbean Group has several ships currently operating in Europe, and we'll adhere to the guidance from the European Union and UK authorities, which we expect to align closely with CDC guidelines. Does that help, or do you need more detail?

If you wanted to provide more, that's very helpful. I appreciate it.

Hi. Good morning. Thanks for taking my questions. I guess, I'd be curious to hear what changes maybe have been made to Quantum that we can implement domestically that might surface when the restart sale begins? And then additionally, is there something that you guys are doing differently, maybe just sort of geographically different that leads you to believe that May 1 is a better start sale date than June 1, which Norwegian has put out there? Thanks.

Hi, Jaime, it's Michael. As Richard mentioned earlier, we are very pleased with Quantum's performance in Singapore. It has been a valuable learning experience for us, showcasing excellent collaboration between the cruise company, the Health Ministry, and the Singapore government. We've been operating for nearly three months and have hosted around 35,000 Singaporeans on ocean cruises. Interestingly, customer satisfaction has actually increased with our protocols compared to before they were implemented. Our revenue has surpassed our expectations in both ticket sales and onboard spending. Overall, our product performance has been quite strong, operating under a series of evolving protocols similar to what we may see in the U.S. or Europe in the future. The initial protocols we established in Singapore are currently under review, and we anticipate changes in the coming weeks, such as discussions to raise the previous load factor cap from 50% to 65%. Besides, the testing regime has also seen adjustments. From our experience with Quantum, we've gained valuable insights into safely operating a large cruise ship during COVID in partnership with the Health Ministry. Additionally, we've made significant technological advancements. One major development is e-mastering, which digitizes lifeboat mastering through a mobile app. Another is our contact tracing technology, which includes a Tracelet worn by each guest to track their interactions with others, complemented by AI connected to CCTV for verification. Thankfully, we haven't had any COVID cases onboard, but this technology is considered groundbreaking. In our recent discussions with the CDC, they asked us to share what we've been doing in Singapore, which we have done. We are learning many lessons that will help shape our operations moving forward, but the landscape is also changing rapidly with vaccines and interaction rates. Thank you, Jaime.

Thank you.

Hi. Thanks. Perhaps I missed this in the intro. But as you've seen an improvement in the mix of new bookings, can you comment on what the demographics of the new bookings look like versus history as you've been marketing less? In other words, are you seeing any change in bifurcated demand trends between older versus younger or new to cruises versus returning customers by region?

After the holidays in January, we noticed a significant increase in the number of guests aged 65 and older booking with us, and this trend has continued to rise. As time has gone on, we believe that as this age group gets vaccinated, they are feeling more comfortable making reservations, which has been evident in our bookings since January. We consider this a major positive development. Additionally, as vaccines are distributed to younger age groups, we anticipate this trend will likely accelerate. Silversea has also experienced an increase in bookings from older demographics, which we view positively. With this ongoing trend, we expect to see more bookings from all age categories.

Over the past year, we have observed a significant number of our loyal guests and experienced cruisers in our booking mix. However, we are not yet back to pre-COVID levels. Recently, there has been an increase in first-time cruisers returning to the market. Additionally, as more people get vaccinated, particularly those aged 65 and older, we are noticing a strong correlation between vaccine distribution and booking volumes. The vaccination rollout is instilling confidence in travelers, indicating a return to travel is approaching sooner rather than later. This relationship is noteworthy, as those 65 and older who are receiving the vaccine are gaining the confidence to travel again.

And Stephen, just to add one more comment, that surprises on our Quantum bookings is that we saw an exceptionally high number of new-to-cruise bookings with Quantum, which surprised us, but that's a real positive.

That's great to hear. As a follow-up on the balance sheet, Jason, how are you thinking about the appropriate net debt-to-EBITDA level near-term and long-term as we think about a recovery path?

The near-term outlook will depend on our ability to return to service, making it challenging to specify a precise timeframe. We are highly focused, from the Board level down, on returning to pre-COVID performance as quickly as possible. In terms of our balance sheet, this means aiming for a debt-to-EBITDA ratio of 3.5 times or better. Most, if not all, of this improvement will come from generating cash through our operations. We are actively pursuing this goal as we work to resume service and restore our balance sheet to a healthy condition.

I wanted to clarify if you mentioned that bookings for January and February increased by 30% compared to November and December. Is that correct? Also, were the figures for November and December discussed?

That is correct, Ben. And, of course, November and December were tough months because of just an incredible rise in cases in society.

Got you. Okay. And then I guess, then you saw the tailwind from normalization plus the 65-plus comment you were kind of alluding to in the previous question?

I believe the situation is normalizing, and we are observing a decline in cases along with the rollout of vaccines. I want to emphasize again the connection to vaccines because it's not only individuals aged 65 and over who have received the vaccines and are now considering travel, but it is also instilling confidence in consumers across all age groups about their ability to travel soon. Thus, we are noticing an increase not only in the 65 and older demographic but also in other age groups as well.

Got you. That makes sense. That's super helpful. Regarding the CDC, I believe the next step is to potentially receive some technical instructions back. I'm curious if you have any perspective on timing there. If not, could you share some of the key questions you hope to clarify or have answered?

We've been in regular communication with the CDC, both at the maritime unit and at the executive level. We're expecting the technical specifications any day now. It's an intergovernmental process involving several agencies that are reviewing these specifications. However, they have assured us that as soon as everything is finalized, they want us to resume operations. So, we are just waiting. Our optimism is growing as we see a significant decline in the infection rate in the U.S. and an increase in vaccinations. Hopefully, we will receive the specifications soon so we can start our trial sailings. When we asked for volunteers for our trial sailings, we received over 250,000 volunteers, indicating a strong interest in cruising.

Got you. That’s great. I appreciate it. Thank you.

Good morning. Thank you for taking my question. And just to follow-up on Ben's question. Now with the change of guard at the CDC, should we expect a more streamlined process, including vaccinations in terms of cases, where both you and all of us have more visibility in terms of how the process will evolve, technical orders, etc.?

Hi, Assia. Yeah, I think our communication and dialogue with the CDC is productive; they're dealing with an incredibly challenging situation and environment. When we have our discussions, it's a relatively open process. And as they've explained to us on many occasions, this really is about what's happening with the virus. And they've assured us on several occasions that when these indicators really start to move in a very positive way, then they'll start working with us to get us back into operation. And that's exactly what we're seeing now. So I must admit every single day I go on the COVID U.S.A. chart on Google, and I see how the trend line is and it's just plummeting. So my sense is that we're getting closer and closer to good news.

Michael, has the CDC offered any sort of a threshold in terms of infection rates where they would be willing to loosen restrictions and provide more of a time frame, if you will, a schedule?

Assia, I think they, like us, are looking at these statistics and it's not just the absolute numbers. There are the unknowns about how quickly the vaccine continues to roll out, and how the variants will affect the numbers going forward. So I think it's premature for them or for us to try and speculate on what threshold the number has to be because it's so many variables. I think every day, we learn a little bit more. And I think we're more encouraged to see the really dramatic drop that we've been experiencing and the really nice rollout, particularly in the United States and the U.K. with the vaccine. But I think it's still too early for them or us to try and pinpoint, this is the threshold that allows us to move forward.

Thank you, Richard. That makes a lot of sense and thank you, Michael as well.

Hi guys. Good morning everyone. You've sold a number of ships and brands so far, thoughts on additional sales going forward?

We remain open to considering opportunities. As I mentioned earlier, our focus is not on selling ships merely for cash. Instead, we assess whether an investment in a ship aligns with our fleet strategy and fits within our brand or could belong to one of our other brands. We continue to explore opportunities that arise, but currently, we do not have any specific plans or targets in mind.

Okay. Thank you. And then just a quick follow-up, Jason, housekeeping, what was the year-end share count?

Let me check on that. I don't have the information right here, but we can get back to you shortly.

Great. Thanks so much for taking my question. So just a couple on the capacity front. Have you summarized the aggregate cut to supply in what summarized the aggregate cut to supply in what you've announced the 3 ships cut and the Azamara fleet? And then as a follow-up, given the Quantum modifications and the insights you've gleaned from that, has anything changed in your view on lead time around once you're ready to get the fleet back in the water, what that lead time might be if you have to make modifications, etc.? Thanks so much.

All right. Well, let me take the first one, and then I'll pass it to Michael in terms of just talking about our lead time for ramp-up to service. But if you consider Azamara and you consider Majesty and Empress, which are the two that we sold, that's about a 5% impact on our capacity. So, just to provide you those numbers.

Thank you. To follow up on the second part of your question regarding bringing ships back into operation based on our lessons learned from Quantum, we have been working on this return to service for many months. Several teams have been coordinating all the logistics and operations involved. The insights we've gained from Quantum have been applied across the organization in planning and logistics. There are many factors and dynamics involved in returning a fleet to operation, but we have extensive experience in bringing new ships into service. We are currently focused on understanding the necessary steps to bring our ships back. An interesting point related to this is our crew members; we recently conducted a survey of our entire crew database of around 70,000 employees. We received 32,000 responses within 12 hours, and within a few days, 98% of our crew had responded. We asked if they planned to return to work, and the overwhelming response was yes, they can't wait to come back. We also inquired about vaccines and their likelihood of being required for work on the ships. A remarkable 98% of the crew favored this requirement. Additionally, we found that over 4,000 crew members have already been vaccinated at home. This aspect of our crew is another critical element for our return to service, and we are very encouraged by the survey results, which came in just late last week. Thank you.

Great. Thanks for taking my question. Curious on your thoughts longer-term about occupancy, do you think you'll get back to pre-COVID levels? Have you seen anything in the bookings data about consumers' appetite for interior cabins? Anything related to maybe spacing of crew that you have to consider going forward? And with all those considerations, has that maybe changed or informed the way that you're building your new ships and the layout there?

It's a great question. One thing we saw on Quantum was that outside rooms sold very quickly. And of course, we put premiums on those rooms, and so you can see that people were considering that or thoughtful of that. We know that in the beginning, when we do start-up, depending upon the environment, that there will be protocols in place with regards potentially to berthing of crew, etc. So that may present some challenges. But we don't see it as permanent. We see it as transitional. And so I think in the beginning, we may see more focus on outside inventory than inside. But there's no really significant dynamic that's in front of us right now. And we do definitely see it as transitional. And in terms of the question of returning to our pre-COVID load factors, we obviously don't know. But I think our expectation is, once we go through the transitional phase that we will be returning to our pre-COVID load factors.

That's helpful. And then unrelated follow-up for Jason related to debt. Did you mention the debt capacity remaining? Maybe I missed that. I think as of August, you said $3 billion, and I think you've utilized $1.3 billion since then? And then I believe that the old debt maturity schedule called for about $1.3 billion of pay down in 2021. I think the most recent number is $0.4 billion. So if you could – is that correct? And could you talk about kind of what changed?

Sure. Currently, we have $2 billion available under our debt agreements. You are correct that our maturities for 2021 are projected to be $400 million. We announced last week that we have secured debt holidays from our export credit agencies for most of the available amount, and we expect to finalize the remaining details in the next couple of weeks. Therefore, our maturities for 2021 will indeed be around $400 million.

Great. Thank you for letting me hop in for the last question. Just two things, one is you mentioned that the next Royal ship to be back in service would likely be outside the U.S. I'm just wondering, is that sort of more likely to be maybe Australia? I'm just thinking about kind of where your sourcing comes from in the market where you can sort of fully source a ship as opposed to Europe. That just – kind of thinking is that more likely to be Australia. And then the other question, and this is very minor, but I was just curious, with the sale of the Empress and Majesty. Those were ships that, my understanding, I thought those were the only Royal Caribbean ships that fit into the port in Havana, in Cuba. And I know that's like way out on your radar screen, but are there other ships that could potentially return to that market if that were to reopen? Thanks.

So Robin, great question on Cuba deployment. And of course, when Jason called us and said, I think we’ve got a buyer for these two ships, it was the very first question we all went and double checked. And we're okay. So we do have ships that will fit into Cuba if that should come back. With regards to ship starting in Australia or China or Europe or elsewhere, for example, we literally are in discussions globally around the world with different governments and looking at where they are with COVID and vaccines, et cetera, et cetera. So I think the point is that there's a lot of opportunity that's starting to open up globally in terms of what's occurring with COVID. And so we are in discussions around the world. One of the products that we opened, this is not a product that would be the next product for Royal Caribbean to open up, but we opened the Odyssey of the Seas, Home Coming in Barbados, sailing out of Barbados in November of 2021 on a mix of seven and 14-night cruises into the Southern Caribbean and really focused into the North American, American, Canadian, and the UK market. It has exceeded our expectations quite significantly. I mean, we literally sold 25% of our load factor within a couple of weeks. So back to Jason's point, there's a lot of demand. We think is building up globally for vacations and cruises and for Royal Caribbean. So we're quite optimistic about where this is heading. Okay. Thank you, everybody, and Shelby, for your assistance for the call today, and we thank all of you for your participation and interest in the company. Carola will be available for any follow-ups you might have, including the share count, which I’ll pass along. I wish you all a very great day.