Norwegian Cruise Line Holdings Ltd. shares and other cruise companies fell on Wednesday after Norwegian extended the suspension of ship departures by at least two months. However, Instinet analyst Harry Curtis said investors should blame the government, not the company.
Norwegian announced late Tuesday that the cruise would be discontinued until September 30, and will also cancel some departures until October, which is a change from the previously announced suspensions until July. Norwegian said it would continue to work with the United States Disease Control and Prevention Centers (CDC), the federal government, and health authorities to ensure the safety of employees and guests.
Curtis said that was the problem.
“This problem is NOT that the industry has been passive in developing health protocols. On the contrary, ”Curtis wrote in a note to customers. “In our view, the hurdle lies in the CDC̵
He said Norwegian had been proposing new protocols for many weeks, but the CDC had shown “limited interest” in discussions about cruise resumption. However, the company has little time to wait for approval since Curtis said the CDC has the power to confiscate or quarantine ships.
“In our view, such one-sided treatment is something unfair.”
The Norwegian share plunged 8.4% in active noon trading with a volume of 66.7 million shares, but reduced previous losses by up to 10%.
News of the extended suspensions weighed on other cruise line holdings with Carnival Corp.
by 6.5% and Royal Caribbean Cruises Ltd.
Curtis said the CDC appears to be telling cruise companies not to even consider resuming operations, even though many companies, including resorts and casinos, have reopened. And airlines have launched many flights with almost full capacity “without a glance” from the CDC.
“It appears that the cruise industry, its passengers and employees have been seen by the CDC as much as meat packaging companies, nursing homes and prisons,” Curtis wrote. “In our view, such one-sided treatment is something unfair.”
He fears that at the current pace, the CDC could take three to six months to respond to recommendations from the panel of experts, until then the 2020 cruise season is over.
Norwegian stocks have continued to double in the past three months (up 147.1%), but have still fallen 67.1% since the beginning of the year, while Carnival shares have lost 62.4% this year and Royal Caribbean fell by 56.5%.
In comparison, Marriott International Inc. shares shares
Las Vegas Sands Corp. has decreased by 39.8% since the beginning of the year
has lost 29.2% in the exchange-traded US Global Jets Fund
lost 42.5% and lost the S&P 500 index
has decreased by 3.6%.