The three major cruise lines that rake in millions of dollars annually from U.S. travelers may not be eligible for a bailout under the $2 trillion economic stimulus because they are all incorporated outside America, meaning they pay little if any federal taxes, according to several news reports.
Royal Caribbean, Norwegian Cruises and Carnival — along with its subsidiary Princess Cruises — have shut down global operations for 30 days amid the growing coronavirus pandemic.
All face being shut out from $500 billion in emergency funds specifically meant for distressed businesses affected by the outbreak.
The companies, which pay state income taxes and port fees, can apply for loans or guarantees from the fund being overseen by the Treasury Department, but for now there appear to be no guarantees for that.
"My interpretation is that cruise lines may not qualify, but I'm taking a closer look to see whether that is really the case," said Aaron Cutler, a partner in the government relations and public affairs department at influential international law firm Hogan Lovells, according to CNBC.
Cruise Lines International Association, a cruise industry trade group, said in a statement Thursday that more than 421,000 U.S. jobs “are supported by the cruise industry” and that it expected its 30,000 travel agent members to receive some relief from the package.
The legislation states a company must be “created or organized in the United States or under the laws of the United States” and “have significant operations in and a majority of its employees based in the United States” to be eligible for relief funds.
The cruise lines are all incorporated in countries with more lenient tax, labor and safety laws.
Royal Caribbean is incorporated in Liberia; Norwegian Cruises is incorporated in Bermuda. Carnival is incorporated in Panama but maintains a U.S. headquarters in Miami, according to CNBC.
After outbreaks aboard several vessels, President Donald Trump ordered the companies to suspend all outbound cruises from the United States on March 14 for 30 days — a pause in revenue that could ultimately have a more devastating impact.
Already, the three companies have lost considerable market value.
Carnival shares have fallen nearly 65%, Norwegian’s shares are down 73%, and Royal Caribbean’s shares are down 69%, according to CNBC.
Trump said at a Thursday news briefing that he wants to help the industry, along with hotels and airlines, CNBC reported.
“We’re going to work very hard on the cruise line business, and we’re going to figure something out.”
Trump acknowledged “it’s very hard to make a loan to a company when they are based in a different country,” but said he would like to see cruise lines register in the U.S. to get aid, an idea floated earlier in the day by Sen. Josh Hawley, R-Missouri, according to CNBC.
Last week, Trump said he spoke with Carnival executives, who agreed to make their ships available as “floating hospitals” to lessen the burden on medical facilities during the crisis.
“I spoke with [Chairman] Micky Arison of Carnival Cruise Lines, and he is going to make ships available. So, in addition to the big medical ships that we have going, if we should need ships, lots of rooms, they’ll be docked at New York and Los Angeles and San Francisco, different places,” Trump said Thursday at the White House briefing.
