Businessweek Extra-Arnold Donald

largest cruising group and the cruise industry. Jason, you and I know this. We've been talking about it a lot. It's one of the hardest hit industries by the coronavirus. Carnival alone has seen its stock plummet. It's sold off ships, it's lost billions of dollars. It's raised billions more to get through the crisis. Bottom line, though, it's really all about getting ships back to seat. Check out this conversation. Arnold. It is great to have you back with us. How

are you doing, Carol, Thanks for asking. I'm great. How are you doing? Yeah? Kind of getting used to a new world order. And I guess the million dollar are billion dollar question, Arnold. You know that everybody has on their mind is how do you get the cruise industry? How do you get passengers back on ships? How do you get ships back at sea safely and responsible responsibly

around the world. Well, you know, Carol, the first of all, you know, our primary responsibilities and therefore our top priority is always compliance, environmental protection and the health, safety and well being of our guests, of the people in the places we go, and of course our carnival family, our shipboard and short side personnel. So you know, the interests of public health is always in the forefront for us.

And how do we get people back on ships when there's some social gathering and society has developed the compensating measures that is comfortable with that we have effectively mitigated the spread of COVID nineteen and then we'll be able to cruise again. And there are a lot of people, as you know, Carrol, who are ready to cruise right now.

And in fact, we're looking at starting up in Europe where the spread has been mitigate it substantially in places like Germany and Italy, and we're looking at starting up in September. There and a few um cruise lines have, but there's a lot of pin up demand, you know, for travel in general, and especially for cruise. Well, and what I wonder Arnold, though, can you kind of drill down a little bit what are some of the specific protocols that you might put in place to get ships

safely back at sea. I've been reading, you know, about different folks and what they might be considering different cruise lines. They're talking about no buffets, constant um temperature checks, constant testing, maybe no excursions. What specific protocols will you be putting in place? Well, again, as you well know, we we have a lot of measures in place already on cruise that often short side destinations don't already have or didn't have prior to COVID nineteen. We do medical screens, we

were already doing temperature checks in many cases. Um, we had hand sanitizers throughout the ship and signs all over about washing your hands because we've had to deal with viruses and the over seven hundred parts and destinations we go to annually for many years now. Course, CORVID nineteen is especially unique because the whole world is shut down, and because of that, there's still a lot of learning around COVID nineteen. As you know from all the scientists,

there's still a lining around epidemiology. They're lying around testing, they're lying around the role of testing. The one thing everybody right now is aligned on, though, is that you know, good personal care in terms of wearing a mask, washing your hands, um, using hand sanitizers, you know, physical distancing at appropriate times, but wearing a mask is a great

way to mitigate the spread. So for the time being, any cruises that will happen will certainly incorporate some physical distancing and you know, wearing masks, and of course what we already had was the the hand sanitizers, etcetera. Beyond that, um, there's a plethora of possibilities, but it depends on the destination, depends on the level of community spreading that destination, etcetera. So there could be various testing protocols. I mean, that's

a possibility for the US is premature. You know, we're not ready to sail here yet. Obviously the community spread is still pretty vibrant here in the US, and when went out of position to sail here, and we're walking cautiously in the other places too, because our primary interests is to stand what everyone else in mitigating the spread of COVID nineteen. But I did read your your coster cruise is safety protocols and you talked about three tests

for crew members before boarding. Um. You also talked about, of course social distancing, new filters. UM Entertainment will have more shows on during the day so that they're smaller groups. And then also no self service restaurants, so no buffets, which for many of you go on a cruise, they're pretty used to it. So there are some changes coming.

Oh yeah, absolutely for the ones that are going to sail now, we have to be ready, just like hotels today, any hotel that's opened the day has to deal with the current situation and the limited knowledge thereas. And so for Costa we are deploying a number of testing protocols. Obviously for our crew we have not only testing but quarantine. Except because it's really important for us to have the clue crew UM, you know, safe from the beginning and

then to keep them safe. And obviously UM once we get guests on board, will have protocolls on board for them. I do wonder how you do it safely. I mean, Arnold, you know this industry better than everyone, uh and better than most in terms of lay personnel. But I wonder how you do it safely because there have been some smaller cruise operations that have come out of Europe, come out of Alaska, Tahiti, UM, and I believe there are

less at least ten crew members aboard UM. Your I eat a cruise ships out of Germany that contacted the virus ahead of you getting ready to kind of get back to the seas UM. That was in August. So I just wonder how do you do this safely when even when some small cruise operations are starting to go back out on the water and still having problems with

the virus and people are contacting the virus. Carol, think those two stage Just one is you want to reduce the risk of having UM the COVID nineteen come on board from shore. So that's the first thing. So you test UM, you monitor, and you quarantine in the case of the crew. So the ones you mentioned on Aida, you know, those crew members were tested before they left their home country, and then they were tested again once

they arrived in Germany and we got some positives. They were then retested again and a couple of In several of those cases, the individuals got a double negative test after that, which meant they had a false positive, and then the others were obviously isolated in quarantine and so the risk of them spreading it on board with zero because we wouldn't have them sail. Okay. Now, once you're at that level, the next question is what else are you're doing to mitigate spread? And that's why all the

other practices on board. Any event you do get someone on board who has COVID nineteen, if it's in society, um, if it's out there in general, chances are you eventually will have someone on board the ship that will have it. And so the trick then, of course, is to make certain that you are able to quickly identify, that you can isolate the person, and that during the time they were exposed there was plenty of mitigation and of risk protocols in place, so the probability of spread has been

greatly reduced. And that's where you know, wearing masks, physical distancing, washing your hands, um, using a handstand, the size, et cetera, all come into play. Arnold, I do also wonder you know, what are your plans for passengers and crew members who do get sick in the future. You know, you know the horror stories of ships that were you know, basically lost at sea they couldn't find a homeport. You I know, and your team have spent you know, a long time

repaytrading you know, your crew members back home. So what do you do? Will there be a way to airlift passengers off ships? What will you do? You're absolutely right, you know, we had to repay trade over eighty thousand crew members, and it took us quite a while with boorders closed and airlines shut down, et cetera. So it took us several months to effectively do that, but we

were eventually able to do it. In regards to now, you know that was before now, there's enough understanding we would not go to a destination where we did not have a plan already in the event that there was COVID on board. We're not going to tie up thousands of people off of one positive COVID case or a couple of positive COVID cases. You know, we would have the protocols in place to ensure one that the individual is taken care of whoever has it, that we can

get them the care they need. Um. And then number two that everyone else, uh is an effect that you know, we would have some form of contact tracing on our boards, so we know who we're the most exposed people. But we have to have those protocols for each destination. We go to seven hundred ports and destinations around the world, so they're all not going to have the exact same protocols.

And and but we will not go to a place where we haven't established exactly any event there is a COVID case exactly what's going to happen, all right, But you're not worried about as we know this virus you know, spread so so quickly, um, that you could go out to see and end up with a handful of passengers or a lot more passengers, hundreds of passengers and be kind of stuck at sea. And I mean, I'm just curious,

what would you do that we won't. We won't sail on the situation where we can be stuck at sea. I think again, there's a lot more knowledge now than when that was happening. Number one, you know, we will have some capability of testing on board. When that happened before, we didn't. We we will. There's a lot of understanding now about how to mitigate spread. Back then, nobody was talking about you know, why you were cruising. You know,

potentially wearing masks are physical distancing that that kind of thing. UM. And similarly, we have to look at the incidents of spreading a community. You know, we're not going to probably sell out of a community where the incidents are spread is very high because you're almost certainly they're gonna have it, have it on board. UM, so we we have to have the protocols. We have a great UM group of

advisors UM scientific advisors. A number of them participated in a summit on COVID that we held with the World Travel on Tourism Council. Wasn't about travel, it wasn't about cruise, it was about the science of COVID and UM a number of our advisors participated in that um that that we we produced and and my co hosted with Gloria Gavira from w TCC. And so we're using their advice. And of course every destination is studying this, every port,

every city, every nation and will as always be in compliance. UH. And so we'll all have a protocol in place because no one wants, you know, thousands of people you know stuck s C. Nobody wants no doubt about that, and I am curious about guidance from the CDC. I mean, what are you hearing, Arnold right now from the CDC about what they want to see specifically from Carnival before heading out at sea again. Well, CDC is concentrating initially

on what we call the pause. You know, a number of US volunteer to stop sailing and so on in the CDC issued on no sale orders, and so they've concentrated on the ships because even though we're in a pause, we still have twelve thousand crew required to minimally man our ships. The ships are still out there to still operate,

and so the CDC focus on that initially. UH. And now they've started beginning to ask for public input and UH to be submitted in terms of consideration um for crews going forward, but there have been no specific direction

given on what's expected. What we're gonna do is again use our expert advisory group to inform us, to use the experiences around the world that we have and others have, and we'll put together you know, the appropriate protocol at the time we think that it makes sense to begin to consider cruising again, um out of the U S. So the CDC isn't say anything, aren't like, okay, positivity rates who want to see it, you know, below ten percent, below five percent, they're not giving you any kind of

guidance like that specific items. No, not at this time. And I don't think you know, I don't. I think it's fine that they're not again, you know, right now, look at the US in many places where talking still talking about shell training, place stay at home. Very limited universities are figuring out what to do. Schools are figuring out what to do. And as long as we're not you know, just comfortably socially gathering, then we shouldn't be

talking about cruise. Now you can comfortably socially gather with different protocols, physical distancing where I masks, et cetera. And and at that point when when we're comfortably doing that in US society, then we can seriously, you know, take a look at cruise. Yeah, no, listen, I I get it. It's my first day back in our headquarters here in New York City. I have been home since mid March. Hey, listen, it's like it's crazy, right, Like as we've tried to

figure this out. One thing I want to ask you while we're talking about the c d C, I mean the c d C. You know, um, you guys have read everything that they have put out. They have put out a strongly worded order as they continue to do the no sale and push that off for ships sailing here out of the US. They say, the current scientific evidence suggests that cruise ships is a greater risk of

COVID nineteen transmission than other settings. And you know, they talk specifically some of the research that you know, the Carnival Diamond Princess back in February, they talked about it transmitting COVID nineteen at a reproduction rate that was four times roughly four times higher than what we saw at the epicenter of Wuhan. You know, do you agree with the CDC's assessment that cruise ships pose a greater risk

of COVID nineteen transmission than anywhere else. I think what the industry will do is show the history that we have um with other viruses UM for example, um naul virus and other viruses that happen, and show how, in fact, you know, historically the industry has successfully mitigated the risk of spread on ships, um you know, lowered the risk

relative even to short side type of activities. Now we can't make that claim today for COVID nineteen, but obviously that's what we aspire to what we're working on, and I think we'll show a body of evidence um to the CDC, which I'm sure they are also accessing. As I mentioned, we're being informed by very capable scientists and medical professionals around the world UM to to take a

look at this. But let me assure you as a company and as an industry, the cruise industry in RUS as a company one to expose any guests to greater risk than they would have in similar activities short side, and so our focus is to make certain that you know, we are managing that risk at minimum, you know, relative to what they would experience short side. And we aspire of course that when they cruise was with us, they

have less risk than the same experience short side. And when you talk with the Diamond Princess, I think people have to remember at number one, that happened really early on, when there was very little understanding of COVID nineteen. Number two, that ship was a quarantine ship. The ship was in quarantine for two weeks. It was not just a normal cruise,

okay it was, it was a quarantine ship. And so while it's an example of something that can happen, I think the practices today would be dramatically different than what existed at the time of the Diamond Princess, which and was different than what it was, different than what happened on subsequent sales. So or do you think if that happened today, um, and forgive me for interrupting, do you think if it happened today, you would you would have

shut down immediately in terms of all operations. No new ships would go out. Because I do wonder when you look back at February March, you know, what did you learn? What regrets that you have that maybe do you wish you had shut down ships? You know, right after the news of some of the virus cases on Diamond Princess Carol. And you know it's uh, not any analogy or breakdown if you push it too far. But but should the world have shut down immediately once Wuhan Province had a situation?

You know with COVID nineteen, I think you can only operating the time you're in with the information you have. You know, back when Diamond Princess first started, there was not community spread around the world on COVID nineteen. There was very limited understanding of it. And even at the time of assailing the Diamond Princess, there was very little understanding you know, about COVID nineteen. Even now, we are

still learning every day, you know, about this virus. And so it's not to make an excuse, it's just simply to point out that at that point in time, we did what we always do and what we will continue to do. We complied. We we complied with every authority there was, the World Health Organization, the Japanese Ministry of Health. Actually we didn't manage the quarantine or any of that, you know, as soon as we identified it, you know, we went to the Japanese the Japanese Ministry of Health

told us what to do. And so you know, our number one priority, our highest responsibility is compliance, environmental protection and health, safety and well being. And so you know we would do that today. You know, whatever is the informed you know knowledge um that exists, uh and whatever authority is telling us you know what we need to do, We're going to comply with that as as we always would. You know, it's interesting and I think we all feel this way, Arnold, even those of us UM in the

media world. I think we were hearing stories and trying to make sense of it. But I think I do wonder do you feel like you got good advice from the w H O, from the c d C. Do you feel like out of Washington that the information decision making that you were getting at that time, that it wasn't really good, that it was rather muddled. I think, look, at the time, you know, Washington had very little to do with, for example, the incident in Japan, Okay, very

little to do with that. And I think that all of these agencies are made up of people who are trying to serve the best interests of society and the public health, and so I think they do the best job they can with the information they have at the time. UM. And I think, again, our mistakes made. Of course, mistakes are made, UM, but but it's not because of you know, just irresponsible behavior. UM. Is because people are genuinely trying

to analyze and figure out what to do. And this is new and we just have to keep in mind it's not like there was COVID nineteam popped up one

day and that was perfect knowledge. Even today, we are still learning every day about this virus, and I think that we just all have to stand together, you know, around the world, uh and share the knowledge and learnings and experience and figure out what are the best protocols to mitigate spread of this virus while at the same time allowing society not to create other unintended consequences, whether

they be economic or the health issues. So talk to me a little bit about your timeline for getting back to see because I know when we initially talked about doing this interview, we thought that there would be ships this past week and or yesterday coming out of Germany, and I know all of this is being kind of pushed off to September. So tell me about your expectations for September. Do you anticipate, you know, a lot of ships coming out at sea. Give us a little idea,

and I do wonder. I know the no sale order has been pushed off certainly here in the United States. What are your expectations for the US market? Well, first of all, yes, September, we will start in Germany and we plan to start in Italy. UM. We didn't start previously in Germany, even though we have a German brand AIDA which sources Germans. The ships are flagged in Italy and so we weren't able to get Italy flag clearance.

But now we have it and we also have it UM for Italy, and so we'll start with a few ships. Initially the ships will be cruisers to nowhere. They'll they'll go out to sea and then come back, so just a few days of cruising that that will do multiple things. The one it allows us to manage effectively, you know, the folks on board UH to handle the new processes, make sure all the training we've given our people in the new way to conduct and handle things is practiced

in an efficient way. And it mitigates any risk of you know, spread from stopping at the destination where you might bring COVID on board after you've you know, I'm screening initiative to get started. So that's the initial but then shortly thereafter we will have you know, some longer cruises and we will go to some destinations again approved by you know, the flag states and by the destinations

with the protocols in place that they want. But it will be a few ships at a time initially, and I suspect that overall the industry will roll out slowly. With regards to the US, Carol is early. We'll we'll see what happens. We've extended a number of our brands, have gone beyond the no sale order already, intern Or

do you think it's more? I think, I know. I think there's a possibility if if we can get the mitigation of spread down and with people going back to college and high school and elementary schools and movement of people, if we can manage the mitigation of spread where we're seeing, instead of a surge, a real decline, then I think we can begin to consider, you know, um, social activities, of which, of course, cruise this one. Hey listen. Just got about time for one last question, Arnold, What is

Carnival going forward? I've seen analysts of Verstiphil. They've talked about a leaner Carnival corporation, that the pandemic has allowed you to get rid of some assets that maybe needed to uh and that longer term this is a positive. What kind of company is Carnival going forward? Just got about a minute left. We'll be smaller um with in terms of number of ships, we had a hundred and six ships or so. We've already um either recycled or sold about fifteen ships. Uh. Those ships that would have

happened over a few years. It just happened this year because obviously not going to generating revenue in a sharp term here, and we can eliminate some costs as we prepare a longer runway to withstand you know, have along this thing last um. But all of all, we're going to be a stronger company. UM. You know, it's painful. We we've had to take some people actions, but we have a deep bench and once we once we start up again, we'll be bringing a number of those people

back and we'll ask some new talent. But but we'll be leaner and stronger, but most importantly, will still be the best vacation experience there is. And that one of the best vacation values there is. That was Carnival Corporation President and CEO Arnold Donald. And what's interesting, Jason, we had expected that we would be talking about ships back at sea, because that was the expectation that the weekend before this interview that was going to happen. And they

had to delay it again. These are delays over in Germany and Italy. They are expecting to get chips back out to see come September. The US market, that's a lot more uncertain at this point, but I gotta say it's going to be tough, going so tough. I mean, listening to that interview, you're just reminded that the world is very different and it's not coming back to normal any times. A great interview. You've been listening to Bloomberg Business Week Extra, and be sure to check out our

Bloomberg Business Week Daily Show on radio. It airs live Monday through Friday at two pm Wall Street Time. I'm Carol Massara and I'm chasing Kelly. This is Bloomberg