Businessweek Extra- Carnival CEO Arnold Donald

He was one of the many leaders who joined us this past week for Bloomberg's the year had summit held virtually of course, of course, intim we know one of the hardest hit industries by the pandemic. It's everything and anything to do with the travel sector and most notably the cruise industry. So I talked with Arnold to find out what kind of year we can expect from the cruise industry in one and what it's like to be called I gotta tell you a bell weather for the pandemic.

We are very resilient industry, very blessed than so many ways um in terms of everything that has happened and it's gone on. So I'm doing well. So I have to ask you. I was doing a lot of research and getting ready to talk with you, and so many times I would read Carnival, it's the bell weather for the stocks and companies that have been hit hardest by the pandemic. Everybody's watching you guys to get an idea of when do we start to get back to normal. So, first of all, how does it feel to be a

bell weather of this? And what are you and what are you seeing in terms of what looks like. I'm not sure if we're truly a bell weather, but it's been a tough time. It's a it's a very difficult time for travel and leisure um and obviously difficult time for cruise. You know, we voluntarily paused way back in March of and here we are in January of one and we're still not sailing. We've had a few sailings

over in Europe, but you know, very limited basis. So you know, they have a business with no revenue for such an extended period of time and a significant burn rate because obviously we have to keep our ships operationally. You can't set these ships up to that airplanes. You can't just put them in a hangar. You have to continue to operate them, and so it's been very challenging. On the other hand, UM, the company's proven its resilience

are people have been fantastic. We have raised over nineteen billion dollars of capital in the past few months, all virtually nobody in an office, not our people, not the investors, not the bankers, not the lawyers, um. And so some extraordinary things have happened. Plus, we got ninety thousand crew members carroll back home at a time where no flights there were, you know, borders were closed, et cetera. So that was a major ideal not to mention in the

early days, two fifty thousand guests plus as well. Hey, what I wanted to ask you because I feel like, go back a year ago, you folks, Carnival, the cruise industry was seeing I think the depth of the magnitude, the seriousness of what this virus was about. Right you were seeing it. Certainly you had passengers on the ship, you had employees you had to deal with. I just feel like you guys got an earlier window into how

serious this could be. Do you feel like that there's any early windows that you're seeing right now that maybe the rest of the world is not. Yeah, I don't know if we really had an earlier window, but clearly we were impacted because, um, when countries closed their borders, we had ships at sea because this was evolving, nobody understood it. People were shutting down and we had to get people home. So that was a major episode for us.

And maybe that's what I mean, And maybe that's what I mean is that you guys really felt the impact pretty quickly, pretty swiftly before a lot of other folks didn't. A lot of other industries did. I think our return, unfortunately, is probably going to be slower than others um. And it's because we have so many If you take a cruise, you go somewhere, so everyone talks about c d C, which of course is critically important in terms of having you know, the confidence of CDC for us to sale.

But we have to go to destinations. Those destinations have to feel uh, and we're not gonna be able to start all that once. We're gonna have to stagger our start. We'll start with a few ships at a time, et cetera. And so we'll be slower coming back, but we will come back. And depending when um, it is in the best of public health, you know, to sail here in the US and elsewhere in the world. Um, we're cautiously optimistic, hopeful that we could have nearly all the fleet back

sailing by the end of the year. Um. But obviously hotels and schools and other places where there is um congregation of people are going already happening, and so you know, they're kind of in front of us in terms of being able to see when things are coming back to normal. Right, And just recently think on Friday and then also Monday, you guys announced some extending some of your pauses on

your departures in the United States. So do me a favor, Arnold, take me to you know, your first US depart your post COVID. What does it look like and when do you you know, fingers crossed, when do you think it might be? Yeah, well, those are great answers. I would love o great questions. I love to have the answers too, But the reality is, you know what it's gonna look

like is um. You know, obviously there's going to be enhanced protocols on board health protocols because in this time frame, even with the advent of vaccines, even with the acceleration of low cost, rapid, more accurate testing. Even with the advancement of treatments. Um, you know, COVID is still still out there and about and still impacting people. And so we're gonna have to have elevated protocols for a period of time. Physical distance, Yeah, what does it look like? Yeah?

And and and good news is we've done it now in in Italy and Germany for example, And so the guests, for the guests, they have a great experience, but they are wearing masks. You know, there is an attention of physical distancing. It looks like when you go to the grocery store wherever you go now and there's a little spot on the Floria says, you know, stand six ft behind the person in front of you or something or in the air or or whatever. So so that's what

you know. It's going to have those kinds of fields to it. But it will still be a cruise. People will still be experiencing new places and new people in new destinations. Um. You know, we had our very high net promoter scores, you know, guest satisfaction scores on the cruises that we had in Italy in Germany. I have to say, and you know, you know, I spent some time with you guys, went on a cruise, just kind

of went out an overnight. But you know, part of the fun is there's a lot of people on those ships. I mean, they're massive. So I do wonder does the new protocol mean that you have to limit the amount of passengers you have on a ship at least for some time. Well, we'll have to see. I think initially that will probably happen to a degree as we practice the protocols with the crew and get them used to handling everything. We certainly did that with our early sailings

in Europe. Um. But the ships are vast, as you know, you've been on them, and so you know, and so the most important thing is not how many people, but in those situations where you can have a congregation of people, um, you know, is there adequate room for distancing? Can we distribute which we can for dining and other things to have the physical space like you having restaurants square and in places where you're allowed to eat inside the US today.

And so there will probably be some limitation based on those types of things, but maybe not as much as people think. You know, our ships initially will start slow, but chances are we'll be back to relatively full I can see just with different practices. Are you going to require passengers who get on the ship, are you going to require employees to get COVID tests? Are you going to require vaccinations? I'm just curious how that comes into

playing universal testing Right now it is required for the cruises. UM, absolutely the ones we are operating. Vaccines are new, and so we have to see where that evolves. And we're gonna listen to the medical experts around the world, just as we have on everything else. UM, you know, the science and medical experts around the world, and then determine what makes the most sense. UM. You know, everything is still evolving, as you well know. UM that you know,

there's still a lot of questions and unknowns. UM. But yeah, we'll we'll do whatever is in the best interest of public health and UM. And you know we don't want to do anything. We never have historically in the industry and our company certainly not UM to do anything to compromise public health and we certainly are in this situation.

Is there a little part of you, Arnold that is at all worried that looks a lot more like than maybe we're all setting up for Well, here's the differences I see that caused me not to feel that way I feel early on in twenty one. You know, obviously we're having a hangover of fact kind of and uh question about that, UM. But we have vaccines and we didn't. UM. You know, we have some in his treatment protocols that

most of we didn't have. We have much more testing availability and rapid testing and a more accurate testing, which in most of we didn't. We have a much better understanding, although we're not fully knowledgeable about the virus, we have a much better understanding of the virus where we didn't.

And so when I look at all those things, you know, I see twenty one, you know, with with some optimism, but at the same time realizing we have to continue to you know, let things evolve and study and pay attention to the science first and then secondly, you know, to our societal ability to you know, UM, both function as a society and have people feel comfortable in that function. You mentioned at the top that you guys raised nineteen billion dollars, there was debt, there was equity raises. UM.

That puts you guys in a great position. It's really pretty impressive. And and do you feel like Wall Street has acknowledged your ability to do that? And I do wonder do you anticipate that you could do that? You have to do any other kind of capital raises here? Well, you know what we've said, you know, public Dayvius at this point is we have raised over nineteen billion dollars and that gives us a runway. It gives us liquidity to make it through all of twenty one with zero revenues.

So we have no revenues for the full year. Um, you know, with a pretty healthy burned rate given the number of ships we have in everything, and we can get through the years. So so that gives us time. And in terms of UM, and we've already published that we have additional capacity for debt um obviously UM. As we move forward, we'll pay attention to the balance sheet and if we determine it makes sense, well, you know, we can do additional equity raise if if we need to.

So so we have some flexibility which gives us confidence we can sort of weather the storm. And you know it's not without sacrifice, it's not without some pain. UM. Yes, that was raised that pretty aggressive rates and so on and so forth, given the time and with the markets were like at the time. The market today seems to be, you know, somewhat better and so on. But but the bottom line is, you know, it's not what our pain is, not what our sacrifice. But it was necessary. This was

a global pandemic. I mean, it was a major event that shut down travel in the world. And and um, we're in the travel business. So um, so you know, we don't because I take it as a matter of fact. And you know, I don't think that it wasn't painful, It wasn't difficult. My people had to do unbelievable work

to pull all this off. Um, but it proved the resiliency of our company, and we feel we're positioned the weather the storm and come back out and once you know this is more under control globally, we'll be right back to the happy days we were at before. So I am curious what metric you and your team Arnold kind of focused on when it comes to the pandemic.

I mean, we talked about cases, hospitalizations. Obviously, the death rate it we have seen I think some of the case numbers and the hospitalizations albeit there are pretty rough levels, but they've come down a little bit. Is that the thing that will ultimately determine how quickly you guys can get back to operational. I don't think there's so much the number of cases. I think it's society's relative comfort

that is under control. That number one. If you get it, that you are at much lower risk than people have feared up to this point because you have a vaccine or because there are treatments, etcetera. Are just because people know many people who have had it and seem to get through it. But but a lot of this is

is societal risk. The second thing is, as I mentioned, with the adventage of vaccines, with the acceleration of testing, with the advancements and treatments, you're mitigating the consequences from having COVID is the big thing. So you may still have cases and its viruses like a cold or flu overn so you know, you may still have lots of cases.

But if it's not flooding the i c u s, if it's not consuming all the beds in the hospital, if it's not putting the general population at great personal risk permanent health damage or worse, um, then I think you know, people will will kind of come around, and then you layer on top of that all the layers of prevention, mitigation of spread, so on and so forth that you know, we would incorporate um in our business and crews because you know, we've had to deal with

viruses Carrols. You know, we've had with you know, Ebolans, Stars and Ers and Zeke and saw on through the years, and we know how to do that. Um. You know we have to, you know, learn how to do this. We go ahead, Well I do wonder, no, no, no, forgive me. I mean I could talk for an hour with you. You know I do wonder too, is if somebody like in your plan name, when you guys get back to normal, We're not going to totally eradicate this virus.

We know it's going to take a while. That if someone, if someone gets it on a ship, what will you guys do? Will you quarantine that individual? Will you get them off the ship right away? Like, I'm curious what the playbook might be on that going forward. Yeah, we have we have, you know, extensive protocols. So for example, right now and again, these will changes, you know, everything changes, vaccines, treatments and so on. But right now, everybody's universally tested

the PCR tests before they go on board. For the for the sailings, we have UM once on board, this physical distancing mask wearing, et cetera. If someone shows symptoms, okay, there's additional medical screening and all that beforehand, but if someone shows symptoms then immediately, you know, we we encourage

everybody to self report, but you know we're observing. If anyone shows any symptoms, they immediately they We actually have testing on board on these ships now, both PCR and anergen testing, and so you know we'll test, but immediately even with symptoms. Then the visual as size UM, we look at close contact tracing UM and so the rest of the ship is fine because if you can mitigate the risk of spread, then then you're in good shape. And so so that's what we do and then we

monitor along the way. But we also if someone does test positive, obviously you want to get them, you know, to proper care and so you you want to get them off the ship. You do the close contact tracing UM. You you know isolated or have the others you know lead the ship that you know have been in close contact you know, extending a period of time enough time to get a viral load, um whatever, and then you continue to say on and you continue to monitor, so

you know, full time monitoring and paying attention. But the reality is that if it's in the community at large, you know, it's gonna be on ships and things and wherever you go, it's just gonna be there. And so the question is what layers do you have to mitigate the risk of spread um Because even with testing, as you well know, it depends on the timing of the teme guarantee. You know, everybody's different. Some people manifest in a few days, some manifest later, some are asymptomatic, some

have extensive symptoms and so on. And even with extensive testing and everything, you know, you can still have the occurrence of someone you know with the virus. So the key is mitigating the spread. So we've talked about, as you said, we're we've got to kind of wait to see how this year plays out, and the fragility really of kind of our environment overall, and it's not just for the cruise industry but for everything. We're just kind

of taking it day by day. When we talk about fragility, I feel like the first two weeks, the first week of this year, the political chaos created a whole other layer of fragility. We just have a couple more minutes, but I'd be remiss if I didn't kind of get you to weigh in. And I do think about how you saw that, and what's the responsibility of leaders in corporate corporate America in terms of helping us through this division. And I do wonder, Carnival, are you guys still doing

political contributions? Have you pulled back at all like we've seen with other companies. Yeah, so, first of all, you know, we've examined the political contribution. Let me just start with the beginning first. You know, the things that happened originally at the Capitol, Um, you know, obviously are my feeling personally is, you know, those people involved in that, anybody

that promoted, instigated, collaborated, you know, cursed whatever that activity. Um, the full runt of our laws should be enforced with with those people. Now, haven't said that? You know, I think Americans and people more broadly in the world have just gone through one of the most trying years ever. Was hard for everybody, and I really feel that is past time you know, for us to focus on what really matters and come to get that to deal with it.

First and foremost, we have this health crisis, you know, we have a major economic challenge, and clearly we need to continue to work on elevating our standards of social justice. And that's not just in the US as worldwide. And so it's past time that we all come together to to really in earnest work on those things. Yes, we may have different points of view, and that's the beauty

of travel, you know. Travel brings people together who, as you well know who it's so different from each other, and then they discover what they have in common, so they can celebrate the differences, you know, as opposed to fearm and and we just all really truly. I know it sounds like motherhood and apple pie, but but it's so clear to everyone that we come together and work on these issues for real. And yes, they're going to be some differences of opinions, but that doesn't mean we

can't work together this figure out solutions. All right. So then in terms of political contributions, because we know companies can say a lot by what they say or do, and I'm just curious, have you guys, madain decision about backing off on political contributions to candidates not not. First of all, you know, we haven't funded a lot of you know that in the first place. Um. But the bottom line is this, you know, we're gonna look at things as we always have when not single issue type people.

You know, we we don't support based on the single issue because you know, things are more complex than any one issue. Okay, so Heven said that we'll we'll, we'll

study very carefully. But I can tell you right now, if there is anyone that and there are few out there that that have supported the you know, fragmentation of our society that are encouraging um, you know, behaviors that like we saw, then obviously they're not going to be getting contributions um from me individually, are from the Carnival

Corporation more growning. One question, I want to ask you what will be the ultimate cost of this year and what big lesson have you learned this year that you're gonna It's probably going to stay with you as a leader.

You know, it's been so many negative things that the thing that is positive that will stay with me is how our guests know, our our job is, you know, number one compliance environmental protection and health, safety and well being of our guests, of the people in the communities we touch, and of course our crew and our short side personnel. So that's not job one, and we do that so we can then exceed guests expectations by giving them a holiday. You know that that is their dream.

And so in that regard the comments we got, the letters, the emails, that everything we got from guests asking about our crew, caring about our crew, caring about the company. Um that that human spirit which is so defining for our business, you know, getting that was so inspirational to me. I mean, you know, someone brought tears guys because they're so caring. Because the em where people business, where hospitality business people remember on the cruise, they remember the people,

the other gifts, the crew, et cetera. And so that is the big Yeah, I knew it, but seen at outpourn in a moment of real challenge was so encouraging. And our people work like crazy to take care of things, and you know, so that that's my big takeaway. There's a bunch of negative things and all kinds of stuff. You know, I like, I like focusing on the positive, Carol, that was Arno Old Donald presidency of Carnival Corporation, head of the world's largest cruise line operator. You've been listening

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and more. I'm Carol Masser and I'm Tim Stenovick. This is Bloomberg