• The desperate need to avoid bankruptcy seems to be behind the decision by Norwegian Cruise Line to announce a resumption of its cruise ship trips this year
  • The company has enough liquidity to get through 18 months of zero revenues
  • It might resume sailing as early as July 1

Norwegian Cruise Line (NCL), the third-largest cruise line in the world by passenger numbers, has announced plans to sail again immediately after the industry-wide "No Sail Order" from the United States government expires June 30.

The confident and surprising declaration by CEO Frank Del Rio on Thursday that the company expects "to sail sometime in 2020" came only two days after its shares plunged 24% following its statement there is "substantial doubt" the company can continue operating due to a massive liquidity crunch.

"COVID-19 has had, and is expected to continue to have, a significant impact on our financial condition and operations, which adversely affects our ability to obtain acceptable financing to fund resulting reductions in cash from operations," said NCL in a filing with the U.S. Securities and Exchange Commission on May 5.

These factors in combination with debt maturities and other obligations over the next year, led NCL to doubt its "ability to continue as a going concern," since it "does not have sufficient liquidity to meet its obligations over the next twelve months, assuming no additional financing."

As a consequence of these strong headwinds, NCL said it doesn't expect to make any money in 2020. NCL, however, secured $2.2 billion in additional liquidity May 6. The very next day, del Rio declared the company had enough liquidity to get through 18 months of zero revenues.

“It would be irresponsible for me to give you a specific date because we still have to gain clearance from the CDC and other government agencies, but we’re working hard shoulder-to-shoulder with them to develop an enhanced protocol of every kind you can think of,” he told CNBC.

Speculation is NCL might resume cruise operations as soon as July 1. This would give it an enormous advantage over its chief rivals, Royal Caribbean International (RCI), the world's largest cruise line by revenue and second largest by passenger numbers, and Carnival Cruise Line, the world largest cruise line based on passenger numbers.

RCI and Carnival remain hobbled by lawsuits and investigations over the deaths of passengers and crew from COVID-19. RCI faces a wrongful death lawsuit after a 27-year-old crew member died on the Celebrity Infinity.

Carnival has to contend with an investigation being conducted by the U.S. House Committee on Transportation and Infrastructure. This committee is investigating Carnival's handling of the COVID-19 outbreak. More than 1,500 COVID-19 cases were confirmed aboard the company's cruise ships. Dozens of passengers and crew members have died from the disease and lawsuits are piling-up.

Norwegian Cruise Line ship Dawn The Norwegian Cruise Line ship 'Norwegian Dawn' departs the Royal Naval Dockyard near the port of Hamilton, Bermuda, in this file photo taken on July 16, 2013. Photo: Reuters/Gary Cameron