The Tribune

By Ricardo Evangelista

The fallout from the coronavirus pandemic over the global economy is threatening to trigger an unprecedented depression; the latest forecast from Goldman Sachs for the United States predicts a contraction of 34 percent in GDP on the second quarter of 2020, accompanied by an unemployment rate of 15 percent.

These numbers are astounding and unfortunately parallels can be found in numerous other countries, as the measures to contain the spread and impact of the virus are causing a sudden deceleration in economic activity, with all but essential services being restricted.

Many industries are suffering, but few as dramatically as those in the travelling and tourism sectors. A few weeks ago I mentioned here the damage being inflicted on aviation. Flying became a heavily controlled activity, almost the exclusive of cargo transport and military operations; entire fleets are grounded and staff laid off. On Friday British Airways suspended 36,000 staff as Heathrow airport, one of the world’s busiest, closed one of its runways.

But amid the torrent of bad news there is a light at the end of the tunnel; last week the American senate authorised a $50bn bailout, intended at keeping airlines alive. It probably won’t solve the most severe crisis ever faced by the industry but will surely help mitigate some of the most immediate damage.

But if you feel bad about what’s happening to aviation, spare a thought for the several cruise ship operators who are staring down the abyss of financial ruin. Its been all over the news: the plight of passengers and crews, stranded aboard ships riddled with coronavirus, as country after country choses to look the other way and close their ports.

On Friday, the Zaandam and its sister vessel, the Rotterdam, finally docked in Florida after 12 days stranded at sea. On board were dozens of passengers suffering from COVID-19 as well as, sadly, four bodies of travellers who succumbed to the illness. This is of course very bad news for an industry that until recently was on the way up with record number of new ships sailing from busy yards, as operators invested heavily in a business that was flourishing.

Both the Zaandam and the Rotterdam are owned by Carnival Corporation, a British-American operator, considered the world’s largest travel leisure company and owning more than 100 vessels operating under ten brands. The nightmare scenarios, lived onboard these ships and widely shared by the media, inflicted a punishing blow to the future prospects of the business, with new bookings drying out and uncountable trips being cancelled.

Even among the recent abundance of economic horror stories, the case of Carnival stands out; the firm’s share value was $3,632 at the beginning of January 2020, now it sits on $625, a drop of 82.5 percent. Despite the company’s healthy balance sheet at the onset of the crisis, investors are walking away. Unless the disease is quickly brought under control, this may be the end of the line for several cruise operators.