Carnival Corp. announces Florida layoffs and furloughs totaling nearly half of local workforce
The world’s largest cruise company — one of Miami-Dade’s largest employers — Thursday announced a series of layoffs and furloughs that will affect more than 1,300 workers at its Florida offices.
In a press release, Carnival Corp. announced 820 positions in South Florida would be eliminated out of workforce of roughly 3,000 South Florida employees, with another 537 workers placed on temporary furlough. That works out to more than 45% of its local workforce.
Actions were taken across the company’s workforce, with most in Florida, California and Washington state. Numbers were reported to local authorities, according to the company, but not disclosed globally.
“While these moves will contribute hundreds of millions of dollars in cash conservation on an annualized basis, we are saddened by these decisions and are sorry that we must take these actions,” the company said in a statement. “Our employees are the foundation of our company, and it is unfortunate that many talented people are being impacted, through no fault of their own.”
The cuts are significantly deeper than those taken by the other two largest industry players. In mid-April, Royal Caribbean Cruises Ltd., the world’s second largest cruise company, said it would shed 26% of its workforce. Two weeks alter, Norwegian Cruise Line Holdings Ltd., announced it was laying off 20% of its staff. All three companies are based in Miami.
Earlier this week the company announced the departure of two brand presidents, Seabourn’s Rick Meadows, who is retiring, and Holland America Line’s Orlando Ashford, along with 450 employees in the United Kingdom. Carnival employed about 150,000 workers worldwide prior to the onset of the coronavirus pandemic.
Last month, Carnival completed financing efforts that netted $6.4 billion in additional cash. But to further strengthen its cash position, the company said it was conducting “a combination of layoffs, furloughs, reduced work weeks and salary reductions across the company, including senior management.”
“These moves will contribute hundreds of millions of dollars in cash conservation on an annualized basis,” Carnival said.
Previously the company had announced its senior leadership team would forego all salary from April through June in lieu of equity that will vest in one year. Thursday’s additional actions included a 50% salary reduction through the end of the fiscal year for CEO Arnold Donald, a 25% reduction during the same period for other members of the senior leadership team, and a 20% pay reduction for all remaining shoreside employees through the end of the fiscal year, including some who will also be assigned reduced work hours, according to a spokesman.
The news of Carnival Corp. cuts came as a shock to Teijo Niemela, editor of Cruise Business Magazine. Last month, industry analysts indicated cruise lines had enough cash on hand to survive 10 months without cruising. And earlier this month, Carnival Cruise Line announced it would be restarting cruises on August 1.
“When we talk about how the industry is coming back, I feel we go one step ahead, and then two steps back,” he said.
The layoffs are a sign the industry is bracing itself for a longer recovery period, Niemela said. James Shillinglaw, co-founder of Insider Travel Report, agreed.
“it shows they don’t believe there will be any cruising before next year,” Shillinglaw said. “It’s a huge move and not a good vision for cruising” — raising the possibility that other companies might make additional staff cuts.
Cruise lines were shut out of government relief programs because they are registered off shore.
“None of the cruise lines got government assistance,” said Shillinglaw. “But now these people will be on unemployment lines.”
The cuts strike at the heart of Miami’s most iconic industry. Images of cruise ships berthed at PortMiami, the world’s busiest cruise port, have been flashed across the globe; drawing 6.8 million cruise passengers in 2019. Carnival is the county’s fifth largest employer, according to the Miami-Dade Beacon Council; together the industry contributes about $6 billion to the Miami-Dade economy. Carnival Corp. owns nine brands, including U.S.-based Carnival Cruise Lines, Holland America Line, Princess Cruises and Seabourn.
The Carnival name graces nonprofit spaces ranging from performing arts theater to Big Brothers Big Sisters Center for Excellence. Carnival’s founding family, the Arisons, have long underwritten arts endeavors including the New World Symphony, the National YoungArts Foundation and Miami City Ballet. Carnival Chairman Micky Arison also owns the Miami Heat.
Locally, the company has employees based at the Port of Miami, in Carnival Corp.’s Doral headquarter, at the company’s Experience Innovation Center in Doral, and in Miramar, Davie and Fort Lauderdale, in a wide range of jobs including telephone sales, logistics, human resources, marketing, revenue management, accounting, administration, legal services.
According to company spokesman Roger Frizzell, each cruise line job results in four- to six indirect jobs to the economy. Last year, the company paid more than $700 million in taxes and fees in the U.S., with $600 million going directly to port cities, he said. Overall the cruise industry paid more than $75 million in wharf fees to PortMiami and $60 million to Port Everglades in 2018, according to government reports.
“Companies large and small are making decisions that impact not only their workforce, but entire communities,” said the Miami-Dade Beacon Council, the county’s economic development agency, via a statement. “There is a lot of highly skilled talent facing similar challenges, and our goal is to keep them here as we work together to recover. As Miami-Dade moves forward with re-opening, we anticipate opportunities for individuals like those leaving Carnival to pivot by reskilling or upskilling as they search for new roles.”
Cruise stocks have fallen about 75% year to date but appear to have bottomed amid announcements of stronger financial positions. And earlier Thursday, Norweign Cruise Line Holdings Ltd. reported it was already seeing healthy bookings for the fourth quarter of 2020 and into 2021.
Thursday, share prices of Carnival closed up about 1% at $12.27; Norwegian shares climbed 5% to $10.67, and Royal Caribbean closed up 2% to $35.15.
“The shocker of all this is that this was going to be their best year in history,” Shillinglaw said. “Literally overnight they end up crashing. It’s not their fault.”\
This story was originally published May 14, 2020 at 1:45 PM.
