Why should we Bail out the Cruise industry?

[TriumphTR3fan]

The cruise industry was excluded in the package 9 days ago.

https://www.washingtonpost.com/business/2020/03/26/cruise-line-bailout/

I'm commenting on possible future bailouts.

 

[GravitySucks]

The cruise industry was excluded in the package 9 days ago.

https://www.washingtonpost.com/business/2020/03/26/cruise-line-bailout/

Thank you.

 

[njhowie]

maybe some one knows something the rest of us don't know...

CARNIVAL CORP NOTE CALL MAKE WHOLE - some one just bought $2.7 million today... and several buyers in the $4 mill range...
Cusip 143658BA9 cost basis 94.46 Ask Yield to maturity 15.371% with maturity at 10/15/20 ... pretty easy money with coupon on top of that at 3.95%

A week ago the same bonds were just under 90 with YTM approaching 25%.

Carnival just initiated a massive recapitalization plan - new secured bonds yielding 11.5% plus secondary stock offering at current low prices. This is why the price of the notes has gone up since. Be aware that these 10/15 maturity notes are not secured. So while the large capital raise does enhance the likelihood that the notes will be repaid when they mature in six months, if they don't and a bankruptcy filing does ensue, they could be in line behind the new bondholders.

 

[Rustic23]

Then the real wake-up call will be when they figure out how many other big corporations pay little to no taxes.

No corporation pays taxes. Taxes are a cost of doing business! To the max extent possible they collect the tax from their customers and remit it to the government. Think Sales Tax. You don't pay sales tax, the business pays it to the government. You just don't see 'Corporate Income Tax' as a line item on your bull!

 

[Sunset]

No corporation pays taxes. Taxes are a cost of doing business! To the max extent possible they collect the tax from their customers and remit it to the government. Think Sales Tax. You don't pay sales tax, the business pays it to the government. You just don't see 'Corporate Income Tax' as a line item on your bull!

While corps do minimize taxes paid like anyone else, sometimes they do pay income taxes.

Sure as a corp you can generate lots of expenses to reduce profit so less taxes are paid, but sometimes that is just silly stupid, like buying a humvee (few years ago) to write it off when not really needed.

 

[Music Lover]

Then the real wake-up call will be when they figure out how many other big corporations pay little to no taxes.

Some pay less than others and some may pay none, but corporations provide much needed jobs and all of the employees pay tax on their earnings. Plus they there is the sales tax on the sale of their products. So without corporations and businesses there would be no taxes at all to collect.

 

[Independent]

Some pay less than others and some may pay none, but corporations provide much needed jobs and all of the employees pay tax on their earnings. Plus they there is the sales tax on the sale of their products. So without corporations and businesses there would be no taxes at all to collect.

Also, without workers there would be no taxes at all to collect. That doesn't prevent us from taxing workers.

 

[mh]

My take is that they are equivalent to a Canadian or Mexican hotel right across the border. Would we bail them out if they were one of those? Doesn’t seem likely.

 

[jollystomper]

It is a one-two punch. Cruise line customers tend to older - from stats I have seen, the median age is 60-69 years old. As they get older they need to get new clients. But younger people and folks (like us) who have never taken a cruise before are probably now even less likely to take one.

 

[habelsgtb]

My hope for the future is that we have one nation in the world instead and of fighting about which country should pay for bailouts.

 

[Sunset]

My hope for the future is that we have one nation in the world instead and of fighting about which country should pay for bailouts.

We almost had that in 1944, eine Welt für alle

 

[athena53]

It is a one-two punch. Cruise line customers tend to older - from stats I have seen, the median age is 60-69 years old. As they get older they need to get new clients. But younger people and folks (like us) who have never taken a cruise before are probably now even less likely to take one.

I don't know. I'm 67 and while I don't need anyone to babysit me in Europe, I'm finding that the wonderful thing about the small-ship cruises and the group tours I've taken (India, Nepal, South America- places with which I have less familiarity) is that it's a great relief to know that if something goes wrong someone else will fix it. (I used higher-priced providers and so far have found that to be true.) Cruises, even the mega-ship ones, take a lot of the logistical details off the shoulders of the travelers and I can see why they might be attractive to people as they age.

They do have to make some changes, though, and maybe even raise their prices to pay for them- fewer or no buffets, crowd control on tours, skiffs etc., plans in place to evacuate if airports close down, better medical facilities on board, etc.

 

[easysurfer]

My hope for the future is that we have one nation in the world instead and of fighting about which country should pay for bailouts.

Sounds like a song ... "Imagine all the people .... " .

The cynic in me thinks taxpayers will eventually foot the bill for various bailouts one way or another.

 

[MichaelB]

The cynic in me thinks taxpayers will eventually foot the bill for various bailouts one way or another.

History shows that the bond holders are the ones that pay. If this holds true, that would mean insurance companies, pension funds, banks, wealthy investors and other financial institutions.

 

[Rustic23]

While corps do minimize taxes paid like anyone else, sometimes they do pay income taxes.

Sure as a corp you can generate lots of expenses to reduce profit so less taxes are paid, but sometimes that is just silly stupid, like buying a humvee (few years ago) to write it off when not really needed.

You missed my point. They charge their customers the amount of tax they expect to pay and pass it on to the government. It is no different than the sales tax, telephone tax, excise tax, property tax, etc. It is just hidden, and makes for a great political prose "Tax the Corporations" when in reality the People pay.

 

[easysurfer]

History shows that the bond holders are the ones that pay. If this holds true, that would mean insurance companies, pension funds, banks, wealthy investors and other financial institutions.

Sounds good to me .

 

[Sunset]

You missed my point. They charge their customers the amount of tax they expect to pay and pass it on to the government. It is no different than the sales tax, telephone tax, excise tax, property tax, etc. It is just hidden, and makes for a great political prose "Tax the Corporations" when in reality the People pay.

Ok, sure.
The price you pay includes: corp expenses, salaries, taxes, and profit.

If any of those go up, the corp charges the People more.

 

[Nemo2]

If any of those go up, the corp charges the People more.

"But nobody's breezing through these swinging doors
Just ups and walks away
Everybody has to leave some blood here on the floor
Everybody pays everybody pays to play"

Mark Knopfler....Everybody Pays

 

[gwraigty]

History shows that the bond holders are the ones that pay. If this holds true, that would mean insurance companies, pension funds, banks, wealthy investors and other financial institutions.

Sounds good to me .

easysurfer, you do realize there are some investors on this site, wealthy or otherwise, that may hold bonds either directly or through mutual funds? Most people have insurance of some kind. Bank accounts. Some people on this board have pensions (not us). Bottom line, everyone pays, one way or another.

 

[Just_Steve]

I would put part of the 2 trillion package into identifying any ship that anyone identified as being covid-19 positive having sail on the last 4 months. Use those ships as the hospital ships. Let the public know the ships that have had no linked illness.

After being used as hospital ships and a thorough cleaning, let the ships stay empty for a month before being put into passenger service.

I think this would ease some of the uneasiness. Some people will probably never cruise due to this.

Mark Knopfler....Everybody Pays

Yeah, but thats money for nothing and chicks for free.

 

[Music Lover]

My hope for the future is that we have one nation in the world instead and of fighting about which country should pay for bailouts.

Who gets to decide who is in charge? If it's the UN, I'm not interested.

 

[Chuckanut]

Most people I know who cruise really like it. It's not my style of travel, but many people love it.

I think the industry will survive, but they will have to make some changes and probably their costs will increase. In the mean time, if their ships carry foreign flags to escape US taxes, then let those foreign countries bail them out. That's only fair.

 

[Rustic23]

Music Lover +1

 

[BeachOrCity]

This whole discussion about bailouts is predicated on a basis I disagree with.

The purpose of a bailout is to protect the industry and also its jobs.

So in a bailout equity should be wiped out. Bond holders take a haircut. Job's stay in place, but union contracts and wages are reopened.
This is how GM was saved, and how airlines, cruise industry, and others should be saved as well.

Instead we are handing the airlines 50 billion with little to no conditions other than stock buybacks and exec comp.

 

[Fermion]

This whole discussion about bailouts is predicated on a basis I disagree with.

The purpose of a bailout is to protect the industry and also its jobs.

So in a bailout equity should be wiped out. Bond holders take a haircut. Job's stay in place, but union contracts and wages are reopened.
This is how GM was saved, and how airlines, cruise industry, and others should be saved as well.

Instead we are handing the airlines 50 billion with little to no conditions other than stock buybacks and exec comp.

I don't see why bond holders should not also get wiped out. They took a risk when they purchased the higher yield corporate bond. Wipe out stock holders AND bond holders, then bailout. Executive salary capped at 10x the lowest paid employee.