Former Chairman & Chief Executive Officer, Royal Caribbean Group
Royal Caribbean CEO Says Most Ships Will Sail by Year-End
Jun.28 -- Royal Caribbean Chief Executive Officer Richard Fain said Monday that he expects most of the company’s ships to be sailing by year-end and that he was “amazingly happy” with bookings he’s seeing for the next two years. He's on "Bloomberg Markets: The Close."
About Richard Fain
Richard Fain, former chairman and CEO of Royal Caribbean Group, appeared on the podcast "Delivering the WOW" on March 1, 2024, where he discussed the company's experience during the Covid-19 pandemic. Fain said that within a few weeks the company went from generating a billion dollars a month to zero revenue, a situation he said his training and business school background had not prepared him for. He described the period as both horrifying and gratifying, citing how employees came together toward a common goal. Fain also discussed the company's decision-making during the pandemic, stating that the mantra was not about saving money by putting ships in cold layup, but about ensuring they would be ready when the pandemic ended. He characterized this approach as a "cheap expense" when viewed in the context of the company's goal of operating after the pandemic. Fain added that the company's focus was on how to emerge from the crisis rather than on short-term expenses.
Transcript (14 segments)
✨ AI-enhanced transcript with speaker attribution
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Interviewer0:00
Course, the man not necessarily piloting the ship but definitely piloting the company, Richard Fain, Royal Caribbean chairman and CEO, joining us now from one of the decks of the ship somewhere. First, Richard, congratulations on getting back out to sea after what I'm sure was a very long and arduous year and a half. Obviously we have to talk about the risk and how you mitigate those risks and how you make sure that the people who get on your cruise and the cruises to come are going to feel safe and be safe. What are you doing?
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Richard Fain0:30
Well, the science has evolved so much from last year. We're in a whole different thing. If you remember last March in April, the CDC was recommending against face masks. We had no testing, we had no contact tracing. But now we have the vaccines. On board this ship today, 99% of everybody on board has been vaccinated. That's not perfect, and nothing is, because you will have COVID happening on land and at sea. But if and when a case happens, because of the vaccine, because of the contact tracing, we can contain it, take care of it, locate all the close contacts, test them all, and it doesn't affect anybody else's cruise. So no fuss, no muss.
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Interviewer1:16
Richard, it's notable 99% who say are vaccinated, but not perfect. We're hearing of companies now starting to mandate people coming back to the office to be vaccinated. Would you like the ability to be able to do that, because I know legally you're unable to?
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Richard Fain1:32
Well, no. The rule that I think you're referring to in Florida applies to customers, but not to employees. So a number of businesses in Florida are requiring all their employees to be vaccinated. We are requiring every member of our crew to be vaccinated, and that is obviously something we're looking at for our eventual return to the office for our employees there.
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Interviewer1:55
But what about just being able to mandate that the people who come on board are too? Would you like that ability?
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Richard Fain2:02
Well, the good thing is that the vast bulk of our guests want to be vaccinated. So on this ship, although we said that we would accept people who weren't vaccinated, we've ended up with only one percent of everybody on board who has not been vaccinated. So I think the process is working. The vast bulk of everybody is being vaccinated, and the vaccines are amazingly effective.
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Interviewer2:30
Carnival Cruise Lines, of course, saying that they're looking for a full fleet to be operating by next spring. When are you looking at full capacity? Full fleet? Is it coming later than you might have wanted?
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Richard Fain2:43
Well, we're already 15 months later than I would have wanted, and it's been a long 15 months. But we are coming back very quickly. We have the first ship that's starting operating out of the U.S. Remember, we've been operating abroad for a while. We also will have, this coming Friday, the second ship operating out of the U.S. And we really feel that it's important to get the flywheel going. We're constraining, we're choosing to constrain capacity so that we can learn, because we have to learn. And our objective is to bring our ships back fairly quickly. I would expect the majority of our fleet to be back operating before the end of the year.
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Interviewer3:28
Have you had any staffing issues so far, Richard?
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Richard Fain3:30
You know, interestingly, as we all know in the United States, hospitality has had trouble getting people. But absolutely not. Our people are so happy to be back. The welcome that I received coming on board, the enthusiasm of the crew, is amazing. Now, we do have problems because some of the countries that we recruit from, such as India, have had outbreaks and put in place certain restrictions. But even having to overcome those kinds of problems, our crew is so anxious to get back. We've already vaccinated 22,000 of them. So it hasn't been an issue, and we don't think it will be.
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Interviewer4:10
Enthusiasm from your employees, the enthusiasm from the investor base. Richard, when do you think you'll be able to reward them with a cash flow positive business again, as hard as that might be at the moment when you're having to operate at just 40% capacity?
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Richard Fain4:23
Well, we haven't made any public estimates of that, so I can't talk about it here. But we have talked about the fact that our forward bookings, particularly as you're getting into '22 and '23, have really supported our view that people are desperate to get back out of the house, get to do things. So we are amazingly happy with our bookings for '22 and '23, and I think that argues well. We're a long-term business, and our investors clearly feel that we'll be back in good shape relatively soon.
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Interviewer5:00
Can you give us any bit of timeline then on how to pay down some of the debt and get back to maybe some of the pre-pandemic debt leverage ratios, for example?
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Richard Fain5:11
Well, we were dual rated between Triple B minus and Double B plus. And one of our objectives is to get back to investment grade very quickly. And our cash flows, this is very much a cash flow business. We don't need huge load factors, we don't need huge pricing to be generating cash. We were doing so with billions of dollars a year before the crisis hit, and I think we'll soon be back there.