Speaker 1: This is Bloomberg Business Week from Bloomberg Radio. I'm Carol
Speaker 1: Masser and I'm Tim Stanavk. Welcome to the Bloomberg Business
Speaker 1: Week Extra. It's a weekly podcast bring you a highlight
Speaker 1: our favorite interview from the week. And this week it
Speaker 1: is a well, it's always good, Carol, but this week
Speaker 1: is a particular good one. Arnold Donald, President CEO of
Speaker 1: Carnival Corporation. He's had of the world's largest cruise line operator.
Speaker 1: He was one of the many leaders who joined us
Speaker 1: this past week for Bloomberg's the year had summit held
Speaker 1: virtually of course, of course, intim we know one of
Speaker 1: the hardest hit industries by the pandemic. It's everything and
Speaker 1: anything to do with the travel sector and most notably
Speaker 1: the cruise industry. So I talked with Arnold to find
Speaker 1: out what kind of year we can expect from the
Speaker 1: cruise industry in one and what it's like to be
Speaker 1: called I gotta tell you a bell weather for the pandemic.
Speaker 1: We are very resilient industry, very blessed than so many
Speaker 1: ways um in terms of everything that has happened and
Speaker 1: it's gone on. So I'm doing well. So I have
Speaker 1: to ask you. I was doing a lot of research
Speaker 1: and getting ready to talk with you, and so many
Speaker 1: times I would read Carnival, it's the bell weather for
Speaker 1: the stocks and companies that have been hit hardest by
Speaker 1: the pandemic. Everybody's watching you guys to get an idea
Speaker 1: of when do we start to get back to normal. So,
Speaker 1: first of all, how does it feel to be a
Speaker 1: bell weather of this? And what are you and what
Speaker 1: are you seeing in terms of what looks like. I'm
Speaker 1: not sure if we're truly a bell weather, but it's
Speaker 1: been a tough time. It's a it's a very difficult
Speaker 1: time for travel and leisure um and obviously difficult time
Speaker 1: for cruise. You know, we voluntarily paused way back in
Speaker 1: March of and here we are in January of one
Speaker 1: and we're still not sailing. We've had a few sailings
Speaker 1: over in Europe, but you know, very limited basis. So
Speaker 1: you know, they have a business with no revenue for
Speaker 1: such an extended period of time and a significant burn
Speaker 1: rate because obviously we have to keep our ships operationally.
Speaker 1: You can't set these ships up to that airplanes. You
Speaker 1: can't just put them in a hangar. You have to
Speaker 1: continue to operate them, and so it's been very challenging.
Speaker 1: On the other hand, UM, the company's proven its resilience
Speaker 1: are people have been fantastic. We have raised over nineteen
Speaker 1: billion dollars of capital in the past few months, all
Speaker 1: virtually nobody in an office, not our people, not the investors,
Speaker 1: not the bankers, not the lawyers, um. And so some
Speaker 1: extraordinary things have happened. Plus, we got ninety thousand crew
Speaker 1: members carroll back home at a time where no flights
Speaker 1: there were, you know, borders were closed, et cetera. So
Speaker 1: that was a major ideal not to mention in the
Speaker 1: early days, two fifty thousand guests plus as well. Hey,
Speaker 1: what I wanted to ask you because I feel like,
Speaker 1: go back a year ago, you folks, Carnival, the cruise
Speaker 1: industry was seeing I think the depth of the magnitude,
Speaker 1: the seriousness of what this virus was about. Right you
Speaker 1: were seeing it. Certainly you had passengers on the ship,
Speaker 1: you had employees you had to deal with. I just
Speaker 1: feel like you guys got an earlier window into how
Speaker 1: serious this could be. Do you feel like that there's
Speaker 1: any early windows that you're seeing right now that maybe
Speaker 1: the rest of the world is not. Yeah, I don't
Speaker 1: know if we really had an earlier window, but clearly
Speaker 1: we were impacted because, um, when countries closed their borders,
Speaker 1: we had ships at sea because this was evolving, nobody
Speaker 1: understood it. People were shutting down and we had to
Speaker 1: get people home. So that was a major episode for us.
Speaker 1: And maybe that's what I mean, And maybe that's what
Speaker 1: I mean is that you guys really felt the impact
Speaker 1: pretty quickly, pretty swiftly before a lot of other folks didn't.
Speaker 1: A lot of other industries did. I think our return, unfortunately,
Speaker 1: is probably going to be slower than others um. And
Speaker 1: it's because we have so many If you take a cruise,
Speaker 1: you go somewhere, so everyone talks about c d C,
Speaker 1: which of course is critically important in terms of having
Speaker 1: you know, the confidence of CDC for us to sale.
Speaker 1: But we have to go to destinations. Those destinations have
Speaker 1: to feel uh, and we're not gonna be able to
Speaker 1: start all that once. We're gonna have to stagger our start.
Speaker 1: We'll start with a few ships at a time, et cetera.
Speaker 1: And so we'll be slower coming back, but we will
Speaker 1: come back. And depending when um, it is in the
Speaker 1: best of public health, you know, to sail here in
Speaker 1: the US and elsewhere in the world. Um, we're cautiously optimistic,
Speaker 1: hopeful that we could have nearly all the fleet back
Speaker 1: sailing by the end of the year. Um. But obviously
Speaker 1: hotels and schools and other places where there is um
Speaker 1: congregation of people are going already happening, and so you know,
Speaker 1: they're kind of in front of us in terms of
Speaker 1: being able to see when things are coming back to normal. Right,
Speaker 1: And just recently think on Friday and then also Monday,
Speaker 1: you guys announced some extending some of your pauses on
Speaker 1: your departures in the United States. So do me a favor, Arnold,
Speaker 1: take me to you know, your first US depart your
Speaker 1: post COVID. What does it look like and when do
Speaker 1: you you know, fingers crossed, when do you think it
Speaker 1: might be? Yeah, well, those are great answers. I would
Speaker 1: love o great questions. I love to have the answers too,
Speaker 1: But the reality is, you know what it's gonna look
Speaker 1: like is um. You know, obviously there's going to be
Speaker 1: enhanced protocols on board health protocols because in this time frame,
Speaker 1: even with the advent of vaccines, even with the acceleration
Speaker 1: of low cost, rapid, more accurate testing. Even with the
Speaker 1: advancement of treatments. Um, you know, COVID is still still
Speaker 1: out there and about and still impacting people. And so
Speaker 1: we're gonna have to have elevated protocols for a period
Speaker 1: of time. Physical distance, Yeah, what does it look like? Yeah?
Speaker 1: And and and good news is we've done it now
Speaker 1: in in Italy and Germany for example, And so the guests,
Speaker 1: for the guests, they have a great experience, but they
Speaker 1: are wearing masks. You know, there is an attention of
Speaker 1: physical distancing. It looks like when you go to the
Speaker 1: grocery store wherever you go now and there's a little
Speaker 1: spot on the Floria says, you know, stand six ft
Speaker 1: behind the person in front of you or something or
Speaker 1: in the air or or whatever. So so that's what
Speaker 1: you know. It's going to have those kinds of fields
Speaker 1: to it. But it will still be a cruise. People
Speaker 1: will still be experiencing new places and new people in
Speaker 1: new destinations. Um. You know, we had our very high
Speaker 1: net promoter scores, you know, guest satisfaction scores on the
Speaker 1: cruises that we had in Italy in Germany. I have
Speaker 1: to say, and you know, you know, I spent some
Speaker 1: time with you guys, went on a cruise, just kind
Speaker 1: of went out an overnight. But you know, part of
Speaker 1: the fun is there's a lot of people on those ships.
Speaker 1: I mean, they're massive. So I do wonder does the
Speaker 1: new protocol mean that you have to limit the amount
Speaker 1: of passengers you have on a ship at least for
Speaker 1: some time. Well, we'll have to see. I think initially
Speaker 1: that will probably happen to a degree as we practice
Speaker 1: the protocols with the crew and get them used to
Speaker 1: handling everything. We certainly did that with our early sailings
Speaker 1: in Europe. Um. But the ships are vast, as you know,
Speaker 1: you've been on them, and so you know, and so
Speaker 1: the most important thing is not how many people, but
Speaker 1: in those situations where you can have a congregation of people, um,
Speaker 1: you know, is there adequate room for distancing? Can we
Speaker 1: distribute which we can for dining and other things to
Speaker 1: have the physical space like you having restaurants square and
Speaker 1: in places where you're allowed to eat inside the US today.
Speaker 1: And so there will probably be some limitation based on
Speaker 1: those types of things, but maybe not as much as
Speaker 1: people think. You know, our ships initially will start slow,
Speaker 1: but chances are we'll be back to relatively full I
Speaker 1: can see just with different practices. Are you going to
Speaker 1: require passengers who get on the ship, are you going
Speaker 1: to require employees to get COVID tests? Are you going
Speaker 1: to require vaccinations? I'm just curious how that comes into
Speaker 1: playing universal testing Right now it is required for the cruises. UM,
Speaker 1: absolutely the ones we are operating. Vaccines are new, and
Speaker 1: so we have to see where that evolves. And we're
Speaker 1: gonna listen to the medical experts around the world, just
Speaker 1: as we have on everything else. UM, you know, the
Speaker 1: science and medical experts around the world, and then determine
Speaker 1: what makes the most sense. UM. You know, everything is
Speaker 1: still evolving, as you well know. UM that you know,
Speaker 1: there's still a lot of questions and unknowns. UM. But yeah,
Speaker 1: we'll we'll do whatever is in the best interest of
Speaker 1: public health and UM. And you know we don't want
Speaker 1: to do anything. We never have historically in the industry
Speaker 1: and our company certainly not UM to do anything to
Speaker 1: compromise public health and we certainly are in this situation.
Speaker 1: Is there a little part of you, Arnold that is
Speaker 1: at all worried that looks a lot more like than
Speaker 1: maybe we're all setting up for Well, here's the differences
Speaker 1: I see that caused me not to feel that way
Speaker 1: I feel early on in twenty one. You know, obviously
Speaker 1: we're having a hangover of fact kind of and uh
Speaker 1: question about that, UM. But we have vaccines and we didn't. UM.
Speaker 1: You know, we have some in his treatment protocols that
Speaker 1: most of we didn't have. We have much more testing
Speaker 1: availability and rapid testing and a more accurate testing, which
Speaker 1: in most of we didn't. We have a much better understanding,
Speaker 1: although we're not fully knowledgeable about the virus, we have
Speaker 1: a much better understanding of the virus where we didn't.
Speaker 1: And so when I look at all those things, you know,
Speaker 1: I see twenty one, you know, with with some optimism,
Speaker 1: but at the same time realizing we have to continue
Speaker 1: to you know, let things evolve and study and pay
Speaker 1: attention to the science first and then secondly, you know,
Speaker 1: to our societal ability to you know, UM, both function
Speaker 1: as a society and have people feel comfortable in that function.
Speaker 1: You mentioned at the top that you guys raised nineteen
Speaker 1: billion dollars, there was debt, there was equity raises. UM.
Speaker 1: That puts you guys in a great position. It's really
Speaker 1: pretty impressive. And and do you feel like Wall Street
Speaker 1: has acknowledged your ability to do that? And I do
Speaker 1: wonder do you anticipate that you could do that? You
Speaker 1: have to do any other kind of capital raises here? Well,
Speaker 1: you know what we've said, you know, public Dayvius at
Speaker 1: this point is we have raised over nineteen billion dollars
Speaker 1: and that gives us a runway. It gives us liquidity
Speaker 1: to make it through all of twenty one with zero revenues.
Speaker 1: So we have no revenues for the full year. Um,
Speaker 1: you know, with a pretty healthy burned rate given the
Speaker 1: number of ships we have in everything, and we can
Speaker 1: get through the years. So so that gives us time.
Speaker 1: And in terms of UM, and we've already published that
Speaker 1: we have additional capacity for debt um obviously UM. As
Speaker 1: we move forward, we'll pay attention to the balance sheet
Speaker 1: and if we determine it makes sense, well, you know,
Speaker 1: we can do additional equity raise if if we need to.
Speaker 1: So so we have some flexibility which gives us confidence
Speaker 1: we can sort of weather the storm. And you know
Speaker 1: it's not without sacrifice, it's not without some pain. UM. Yes,
Speaker 1: that was raised that pretty aggressive rates and so on
Speaker 1: and so forth, given the time and with the markets
Speaker 1: were like at the time. The market today seems to be,
Speaker 1: you know, somewhat better and so on. But but the
Speaker 1: bottom line is, you know, it's not what our pain is,
Speaker 1: not what our sacrifice. But it was necessary. This was
Speaker 1: a global pandemic. I mean, it was a major event
Speaker 1: that shut down travel in the world. And and um,
Speaker 1: we're in the travel business. So um, so you know,
Speaker 1: we don't because I take it as a matter of fact.
Speaker 1: And you know, I don't think that it wasn't painful,
Speaker 1: It wasn't difficult. My people had to do unbelievable work
Speaker 1: to pull all this off. Um, but it proved the
Speaker 1: resiliency of our company, and we feel we're positioned the
Speaker 1: weather the storm and come back out and once you
Speaker 1: know this is more under control globally, we'll be right
Speaker 1: back to the happy days we were at before. So
Speaker 1: I am curious what metric you and your team Arnold
Speaker 1: kind of focused on when it comes to the pandemic.
Speaker 1: I mean, we talked about cases, hospitalizations. Obviously, the death
Speaker 1: rate it we have seen I think some of the
Speaker 1: case numbers and the hospitalizations albeit there are pretty rough levels,
Speaker 1: but they've come down a little bit. Is that the
Speaker 1: thing that will ultimately determine how quickly you guys can
Speaker 1: get back to operational. I don't think there's so much
Speaker 1: the number of cases. I think it's society's relative comfort
Speaker 1: that is under control. That number one. If you get it,
Speaker 1: that you are at much lower risk than people have
Speaker 1: feared up to this point because you have a vaccine
Speaker 1: or because there are treatments, etcetera. Are just because people
Speaker 1: know many people who have had it and seem to
Speaker 1: get through it. But but a lot of this is
Speaker 1: is societal risk. The second thing is, as I mentioned,
Speaker 1: with the adventage of vaccines, with the acceleration of testing,
Speaker 1: with the advancements and treatments, you're mitigating the consequences from
Speaker 1: having COVID is the big thing. So you may still
Speaker 1: have cases and its viruses like a cold or flu
Speaker 1: overn so you know, you may still have lots of cases.
Speaker 1: But if it's not flooding the i c u s,
Speaker 1: if it's not consuming all the beds in the hospital,
Speaker 1: if it's not putting the general population at great personal
Speaker 1: risk permanent health damage or worse, um, then I think
Speaker 1: you know, people will will kind of come around, and
Speaker 1: then you layer on top of that all the layers
Speaker 1: of prevention, mitigation of spread, so on and so forth
Speaker 1: that you know, we would incorporate um in our business
Speaker 1: and crews because you know, we've had to deal with
Speaker 1: viruses Carrols. You know, we've had with you know, Ebolans,
Speaker 1: Stars and Ers and Zeke and saw on through the years,
Speaker 1: and we know how to do that. Um. You know
Speaker 1: we have to, you know, learn how to do this.
Speaker 1: We go ahead, Well I do wonder, no, no, no,
Speaker 1: forgive me. I mean I could talk for an hour
Speaker 1: with you. You know I do wonder too, is if
Speaker 1: somebody like in your plan name, when you guys get
Speaker 1: back to normal, We're not going to totally eradicate this virus.
Speaker 1: We know it's going to take a while. That if someone,
Speaker 1: if someone gets it on a ship, what will you
Speaker 1: guys do? Will you quarantine that individual? Will you get
Speaker 1: them off the ship right away? Like, I'm curious what
Speaker 1: the playbook might be on that going forward. Yeah, we
Speaker 1: have we have, you know, extensive protocols. So for example,
Speaker 1: right now and again, these will changes, you know, everything changes, vaccines,
Speaker 1: treatments and so on. But right now, everybody's universally tested
Speaker 1: the PCR tests before they go on board. For the
Speaker 1: for the sailings, we have UM once on board, this
Speaker 1: physical distancing mask wearing, et cetera. If someone shows symptoms, okay,
Speaker 1: there's additional medical screening and all that beforehand, but if
Speaker 1: someone shows symptoms then immediately, you know, we we encourage
Speaker 1: everybody to self report, but you know we're observing. If
Speaker 1: anyone shows any symptoms, they immediately they We actually have
Speaker 1: testing on board on these ships now, both PCR and
Speaker 1: anergen testing, and so you know we'll test, but immediately
Speaker 1: even with symptoms. Then the visual as size UM, we
Speaker 1: look at close contact tracing UM and so the rest
Speaker 1: of the ship is fine because if you can mitigate
Speaker 1: the risk of spread, then then you're in good shape.
Speaker 1: And so so that's what we do and then we
Speaker 1: monitor along the way. But we also if someone does
Speaker 1: test positive, obviously you want to get them, you know,
Speaker 1: to proper care and so you you want to get
Speaker 1: them off the ship. You do the close contact tracing UM.
Speaker 1: You you know isolated or have the others you know
Speaker 1: lead the ship that you know have been in close
Speaker 1: contact you know, extending a period of time enough time
Speaker 1: to get a viral load, um whatever, and then you
Speaker 1: continue to say on and you continue to monitor, so
Speaker 1: you know, full time monitoring and paying attention. But the
Speaker 1: reality is that if it's in the community at large,
Speaker 1: you know, it's gonna be on ships and things and
Speaker 1: wherever you go, it's just gonna be there. And so
Speaker 1: the question is what layers do you have to mitigate
Speaker 1: the risk of spread um Because even with testing, as
Speaker 1: you well know, it depends on the timing of the
Speaker 1: teme guarantee. You know, everybody's different. Some people manifest in
Speaker 1: a few days, some manifest later, some are asymptomatic, some
Speaker 1: have extensive symptoms and so on. And even with extensive
Speaker 1: testing and everything, you know, you can still have the
Speaker 1: occurrence of someone you know with the virus. So the
Speaker 1: key is mitigating the spread. So we've talked about, as
Speaker 1: you said, we're we've got to kind of wait to
Speaker 1: see how this year plays out, and the fragility really
Speaker 1: of kind of our environment overall, and it's not just
Speaker 1: for the cruise industry but for everything. We're just kind
Speaker 1: of taking it day by day. When we talk about fragility,
Speaker 1: I feel like the first two weeks, the first week
Speaker 1: of this year, the political chaos created a whole other
Speaker 1: layer of fragility. We just have a couple more minutes,
Speaker 1: but I'd be remiss if I didn't kind of get
Speaker 1: you to weigh in. And I do think about how
Speaker 1: you saw that, and what's the responsibility of leaders in
Speaker 1: corporate corporate America in terms of helping us through this division.
Speaker 1: And I do wonder, Carnival, are you guys still doing
Speaker 1: political contributions? Have you pulled back at all like we've
Speaker 1: seen with other companies. Yeah, so, first of all, you know,
Speaker 1: we've examined the political contribution. Let me just start with
Speaker 1: the beginning first. You know, the things that happened originally
Speaker 1: at the Capitol, Um, you know, obviously are my feeling
Speaker 1: personally is, you know, those people involved in that, anybody
Speaker 1: that promoted, instigated, collaborated, you know, cursed whatever that activity. Um,
Speaker 1: the full runt of our laws should be enforced with
Speaker 1: with those people. Now, haven't said that? You know, I
Speaker 1: think Americans and people more broadly in the world have
Speaker 1: just gone through one of the most trying years ever.
Speaker 1: Was hard for everybody, and I really feel that is
Speaker 1: past time you know, for us to focus on what
Speaker 1: really matters and come to get that to deal with it.
Speaker 1: First and foremost, we have this health crisis, you know,
Speaker 1: we have a major economic challenge, and clearly we need
Speaker 1: to continue to work on elevating our standards of social justice.
Speaker 1: And that's not just in the US as worldwide. And
Speaker 1: so it's past time that we all come together to
Speaker 1: to really in earnest work on those things. Yes, we
Speaker 1: may have different points of view, and that's the beauty
Speaker 1: of travel, you know. Travel brings people together who, as
Speaker 1: you well know who it's so different from each other,
Speaker 1: and then they discover what they have in common, so
Speaker 1: they can celebrate the differences, you know, as opposed to
Speaker 1: fearm and and we just all really truly. I know
Speaker 1: it sounds like motherhood and apple pie, but but it's
Speaker 1: so clear to everyone that we come together and work
Speaker 1: on these issues for real. And yes, they're going to
Speaker 1: be some differences of opinions, but that doesn't mean we
Speaker 1: can't work together this figure out solutions. All right. So
Speaker 1: then in terms of political contributions, because we know companies
Speaker 1: can say a lot by what they say or do,
Speaker 1: and I'm just curious, have you guys, madain decision about
Speaker 1: backing off on political contributions to candidates not not. First
Speaker 1: of all, you know, we haven't funded a lot of
Speaker 1: you know that in the first place. Um. But the
Speaker 1: bottom line is this, you know, we're gonna look at
Speaker 1: things as we always have when not single issue type people.
Speaker 1: You know, we we don't support based on the single
Speaker 1: issue because you know, things are more complex than any
Speaker 1: one issue. Okay, so Heven said that we'll we'll, we'll
Speaker 1: study very carefully. But I can tell you right now,
Speaker 1: if there is anyone that and there are few out
Speaker 1: there that that have supported the you know, fragmentation of
Speaker 1: our society that are encouraging um, you know, behaviors that
Speaker 1: like we saw, then obviously they're not going to be
Speaker 1: getting contributions um from me individually, are from the Carnival
Speaker 1: Corporation more growning. One question, I want to ask you
Speaker 1: what will be the ultimate cost of this year and
Speaker 1: what big lesson have you learned this year that you're
Speaker 1: gonna It's probably going to stay with you as a leader.
Speaker 1: You know, it's been so many negative things that the
Speaker 1: thing that is positive that will stay with me is
Speaker 1: how our guests know, our our job is, you know,
Speaker 1: number one compliance environmental protection and health, safety and well
Speaker 1: being of our guests, of the people in the communities
Speaker 1: we touch, and of course our crew and our short
Speaker 1: side personnel. So that's not job one, and we do
Speaker 1: that so we can then exceed guests expectations by giving
Speaker 1: them a holiday. You know that that is their dream.
Speaker 1: And so in that regard the comments we got, the letters,
Speaker 1: the emails, that everything we got from guests asking about
Speaker 1: our crew, caring about our crew, caring about the company.
Speaker 1: Um that that human spirit which is so defining for
Speaker 1: our business, you know, getting that was so inspirational to me.
Speaker 1: I mean, you know, someone brought tears guys because they're
Speaker 1: so caring. Because the em where people business, where hospitality
Speaker 1: business people remember on the cruise, they remember the people,
Speaker 1: the other gifts, the crew, et cetera. And so that
Speaker 1: is the big Yeah, I knew it, but seen at
Speaker 1: outpourn in a moment of real challenge was so encouraging.
Speaker 1: And our people work like crazy to take care of things,
Speaker 1: and you know, so that that's my big takeaway. There's
Speaker 1: a bunch of negative things and all kinds of stuff.
Speaker 1: You know, I like, I like focusing on the positive, Carol,
Speaker 1: that was Arno Old Donald presidency of Carnival Corporation, head
Speaker 1: of the world's largest cruise line operator. You've been listening
Speaker 1: to Bloomberg Business Week Extra. Find more of our conversation
Speaker 1: on our podcast feed downloaded at Bloomberg dot com, and
Speaker 1: be sure to listen to our Bloomberg Business Week Daily
Speaker 1: radio show, airing live Monday through Friday at two pm
Speaker 1: Wall Street Time on Bloomberg Radio. Watches too on our
Speaker 1: daily broadcast on YouTube. Just searched Bloomberg Global News and
Speaker 1: catch Tim on Bloomberg Quicktake and they'll blom Bloomberg dot Com,
Speaker 1: slash qt and streaming platforms like Roku, Apple TV, Samsung TV,
Speaker 1: and more. I'm Carol Masser and I'm Tim Stenovick. This
Speaker 1: is Bloomberg