Royal Caribbean faces significant interest rate risk from variable-rate debt, potentially requiring collateral if credit ratings fall below certain thresholds. Debt repayment obligations are substantial, with significant maturities in the coming years. The company's investment in TUI Cruises, a variable interest entity, presents potential loss exposure. Litigation risk remains, with a recent appeal of a $112 million judgment. Economic downturns and changes in customer demand could negatively impact revenue.
Financial Upside
Royal Caribbean experienced revenue growth in both passenger ticket and onboard revenues during Q3 2024 and the nine-month period. Increased capacity from new ship deliveries contributed to this growth. The company's debt refinancing activities, including note issuances and redemptions, aim to improve financial flexibility. Acquisitions of port facilities and ships represent potential future revenue streams.
