The British Virgin Islands is in danger of losing millions in revenue from one of the territory’s leading cruise companies, the Norwegian Cruise Line, who recently said they might be going out of business due to the COVID-19 pandemic.
International media reports are that Norwegian Cruise Line Holdings submitted a filing to the US Securities and Exchange Commission stating that its accounting firm has substantial doubt about the company’s ability to continue after the pandemic.
A media release from Norwegian also said that the company is making significant cost cuts.
It is granting leave to 20 percent of its estimated 4,000 on-shore staff and reducing the hours and salaries of the remaining employees - which includes almost 32,000 cruise ship staff - by 20 percent.
Massive potential loss for BVI
The cruise line is responsible for shuttling at least 4,000 or more passengers to the territory on each call. Michele Paige, the President of the Florida Caribbean Cruise Association (FCCA) of which Norwegian is a member, said more than half-million-dollars is up for grabs whenever major ships like Norwegian calls into the territory.
According to cruise ship data from the BVI Port Authority, Norwegian made about 37 scheduled calls to the territory last year. By the FCCA’s logic, that could mean the BVI received at least $18 million from Norwegian Cruise Line alone last year.
Plans to raise over $2 billion
Norwegian, in the meantime, announced plans to raise more than $2 billion in additional cash reserves to sustain the company should operations be suspended for more than a year.
It arranged to raise almost $1.35 billion in a private placement of notes due in 2024 and up to $400 million more notes through the sale of additional shares of stock. Norwegian also arranged to borrow $400 million from investment firm L Catterton through notes due in 2026.
“This strengthens the company’s financial position and ensures it is well positioned to withstand well over 12 months of voyage suspensions,” Norwegian said in a statement.
It continued: “While this is not the company’s base case expectation, the company has taken a proactive approach to protect its future given the significant uncertainty and unknown duration of the Covid-19 global pandemic.”
Norwegian, the world’s third-largest cruise operator, operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises, which together have a fleet of 28 ships with nearly 60,000 berths among them.
The company suspended sailings of all its fleets on March 14 following an industrywide shutdown that has now been extended to June 30.