Cruise Lines - US Stimulus Bill - No direct guarantee in final bill

sethschroeder

DIS Veteran
Joined
Feb 24, 2013
There is more information to come still but I am hearing at this point Cruise Lines are in the final bill. As information is all over the place if I see a final bill that is being voted on (and likely will pass) I will relay the information.
 

over50visits

DIS Veteran
Joined
Jan 16, 2004
Will the bailout be for foreign cruise lines (registered in Bahamas or Liberia for instance) who pay minimal US taxes, just because they market to US citizens? I don’t want anyone to fail, but if I were giving them tens of millions of dollars of my money I might condition it on becoming American cruise lines, meeting our standards and paying our taxes. Just dreaming.
 

sethschroeder

DIS Veteran
Joined
Feb 24, 2013
Will the bailout be for foreign cruise lines (registered in Bahamas or Liberia for instance) who pay minimal US taxes, just because they market to US citizens? I don’t want anyone to fail, but if I were giving them tens of millions of dollars of my money I might condition it on becoming American cruise lines, meeting our standards and paying our taxes. Just dreaming.
It will go to major cruise lines who are foreign based. I am doubtful there will be any requirements of registry.

If you want a brief overview of operational costs, profits, and taxes here is an article. Text may be slanted in some areas but the data seems solid.
 

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  • Intr3pid

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    Will the bailout be for foreign cruise lines (registered in Bahamas or Liberia for instance) who pay minimal US taxes, just because they market to US citizens? I don’t want anyone to fail, but if I were giving them tens of millions of dollars of my money I might condition it on becoming American cruise lines, meeting our standards and paying our taxes. Just dreaming.
    Over 90% of the marine vessels - of which cruise ships are a mere 1% portion - are incorporated in low-/no-tax jurisdictions. The tax code is reciprocal. Marine businesses owned by, say, US oil producers/distributors and shipping companies pay no taxes overseas either. And, in any case, if cruise lines were to pay US income taxes, they would simply pass the expense on to the consumers.

    I also very much doubt there will be a "bailout" of the cruise lines. There may be assistance in getting loans or availability of longer-term loans to replace those due soon. The draft legislation comes out later today.
     

    LAX

    DIS Veteran
    Joined
    Mar 13, 2016
    I brought this up in a different thread, but no one has answered. With DCL being a division of Disney (a US corporate giant, obviously), but registered as a foreign entity, how would that status affect DCL's ability to seek bankruptcy? Can Disney just dump DCL and declare BK while the other divisions are unaffected?

    LAX
     

    sethschroeder

    DIS Veteran
    Joined
    Feb 24, 2013
    And, in any case, if cruise lines were to pay US income taxes, they would simply pass the expense on to the consumers.
    I am not sure how that is a bad thing. Now there are way more things interacting with this but I don't see taxes being passed along to customers as something other than normal business operations in the US.


    I brought this up in a different thread, but no one has answered. With DCL being a division of Disney (a US corporate giant, obviously), but registered as a foreign entity, how would that status affect DCL's ability to seek bankruptcy? Can Disney just dump DCL and declare BK while the other divisions are unaffected?
    Depends how they are setup and separated likely. I would suspect that DCL could go bankrupt simply because Disney likely has 5000 lawyers who likely found ways to make sure that was a reality.

    I don't have a real clue though and I highly doubt DCL would want that. I think whats partly behind this stimulus bill is to make sure that doesn't happen to any of the big players (I would suspect DCL is in that group but maybe not).
     

    Intr3pid

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    Mar 2, 2018
    I am not sure how that is a bad thing. Now there are way more things interacting with this but I don't see taxes being passed along to customers as something other than normal business operations in the US.
    Yes, as long it keeps you competitive. Let's hope they can single out just the cruise lines, as the other US shipping businesses won't be able to compete internationally with higher rates. The so-called tax reforms argument from a couple of years ago...

    By way of higher fares, the US cruisers would indirectly contribute the income taxes to the broader US government budget. The ships aren't operating inside the US, and the ports that handle the US side of the business are being paid their fees.

    That's why there shouldn't really be a "bailout" - just enough 'assistance' like a loan guarantee so that the cruise companies don't disappear in this crisis. Not for tax reasons, but for keeping an excellent travel and vacation choice available to the US consumers.
     

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  • Intr3pid

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    Mar 2, 2018
    I brought this up in a different thread, but no one has answered. With DCL being a division of Disney (a US corporate giant, obviously), but registered as a foreign entity, how would that status affect DCL's ability to seek bankruptcy? Can Disney just dump DCL and declare BK while the other divisions are unaffected?

    LAX
    The only direct loans DCL has are those secured against the ships. The ships are the collateral, and if it ever comes to that, those lenders could take over the ships. Like a foreclosure.

    It's all rhetorical though. DCL contibutes only about 2% of Disney's overall revenues. The existing ship loans are tiny at this point after years of payoff. The Wish is likely to be a bigger offender, but that loan will also take a couple of years to build up.
     

    Intr3pid

    Mouseketeer
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    Mar 2, 2018
    Looks like no special treatment for cruise lines - though they may be able to get a loan or a loan guarantee in a broader $500bn program:

    ---------
    • Create a $500 billion pool of taxpayer money to make loans, loan guarantees or investments to or in businesses, states and municipalites damaged by the crisis
    • Give $25 billion in grants to airlines and $4 billion to cargo carriers to be used exclusively to pay employee wages, salaries and benefits, and set aside another $25 billion and $4 billion, respectively, for loans and loan guarantees
    • Provide $17 billion in loans and loan guarantees for unspecified “businesses critical to maintaining national security”
    ---------

     

    sethschroeder

    DIS Veteran
    Joined
    Feb 24, 2013
    Looks like no special treatment for cruise lines - though they may be able to get a loan or a loan guarantee in a broader $500bn program:
    Its not called out just like Boeing is not called out (I could be wrong though because I still have yet to get a final copy of the voted on bill just previous versions). It could take place in loans, grants, or combination like for airlines.

    There has been promises by Trump that money will be fed to the travel industry including hotels which also are not directly called out based on what I have read.

    Its why you saw a increase in stock prices yesterday for the cruise lines as this bill was getting close to approval. The good thing is this final bill looks to have removed the 6 months of anonymity for corporations getting a loan/grant based on loans/grants not needing to be disclosed right away.

    pool of taxpayer money to make loans, loan guarantees or investments to or in businesses, states and municipalites damaged by the crisis
    There was careful wording chosen to try and avoid the idea this was free money for corporations. When you look at it though and there is grants and forgivable loans that might not be "free money" but depending on the requirements or the strictness could basically be the same thing.
     

    adamki

    Mouseketeer
    Joined
    Feb 13, 2012
    It looks like the cruise lines have been kept out of the final package:

    The industry’s trade group, the Cruise Lines International Association, acknowledged Thursday that the major cruise lines weren’t included in the package, despite providing a plan to policymakers, meeting with Vice President Mike Pence and a phone call from Micky Arison, chairman of the Carnival Corp., to President Trump.
     
  • Intr3pid

    Mouseketeer
    Joined
    Mar 2, 2018
    Its not called out just like Boeing is not called out (I could be wrong though because I still have yet to get a final copy of the voted on bill just previous versions). It could take place in loans, grants, or combination like for airlines.

    There has been promises by Trump that money will be fed to the travel industry including hotels which also are not directly called out based on what I have read.

    Its why you saw a increase in stock prices yesterday for the cruise lines as this bill was getting close to approval. The good thing is this final bill looks to have removed the 6 months of anonymity for corporations getting a loan/grant based on loans/grants not needing to be disclosed right away.

    There was careful wording chosen to try and avoid the idea this was free money for corporations. When you look at it though and there is grants and forgivable loans that might not be "free money" but depending on the requirements or the strictness could basically be the same thing.
    Yes, that's the point. They aren't getting any special treatment. Some businesses like airlines are - but not the cruise lines - though they can tap into the broader fund - maybe.

    It looks like the cruise lines have been kept out of the final package:

    Like I surmised above.

    Most of them have already re-negotiated new loans/longer maturities. They might still be able to tap into some loan guarantees. VP Pence was able to convince them a few weeks ago to shut down operations and put the hammer down with safety and health screening.
     

    sethschroeder

    DIS Veteran
    Joined
    Feb 24, 2013
    Yes, that's the point. They aren't getting any special treatment. Some businesses like airlines are - but not the cruise lines - though they can tap into the broader fund - maybe.
    I think it has to do with the comments on this thread. If they build in funding its a risk come election time and its why they avoided the free money perception as much as possible.

    One thing that might hurt them is the fact that certain Senators pushed for and were able to get the oversight committee plus removal of the 6 month reporting window which could allow funding to be given but not reported right away.

    I don't know more than anyone else.
     

    Disney_Fan_01

    Mouseketeer
    Joined
    Sep 7, 2016
    So the only option to bail out the cruise industry needs to come from investors or their lenders. I am not sure how they would survive if this drags along for another 3-6 months. It would be prudent as consumers to NOT have our hard earned cash tied up in future bookings till there is a resolution to all this. If any of the big 3 cruises file for bankruptcy; the others will follow. I think it is just a matter of time. DCL is the smallest ship in the pond. We will have to wait and see how this all plays out and I know they must be waiting to see what kind of bailout they will receive before releasing new information to the public. If i had a booking this summer, I would try to get a refund, but I don’t think DCL May offer those any more. Also, don’t expect 125% credit for future booking being doled out.
     




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