Richard D. Fain
Chairman and Chief Executive Officer at Royal Caribbean Cruises
Thank you, Jason, and good morning, everyone. As always, it's a pleasure to give an update on what's happening within the Royal Caribbean Group. It's certainly been a horrible 1.5 years, looking at our financial statements and seeing that sea of red ink is painful, but we are pleased to be looking at such a positive forward path. The reason we've gotten through this awful period of COVID as well as we have is because we've had our eye firmly on where we needed to go rather than on where we were at any given moment. The same approach is serving us well as we look to the coming months. Before I comment on our position going forward, I have to express my admiration for and appreciation of the men and women of the Royal Caribbean Group, who have worked so hard, so diligently throughout this difficult time. The pandemic has cost us all dearly, but our people stepped up to the plate and work so hard to get us through this period. They invented amazing protocols to protect our crew members and our guests. They put in place financing arrangements with a deft hand, and they have taken care of themselves, their coworkers and their families under some of the most trying circumstances any of us have ever experienced. To them, I say thank you. You are all true heroes. Now the pandemic is not yet fully behind us.
It's still very present, but scientists have given us a good answer to this nightmare with effective vaccines and remarkable treatments. The Delta variant caused a temporary slowdown in our bookings, especially close in, but our trajectory for recovery remains very much intact. In this call, I intend to focus on where we're going rather than where we've been. We are all tired of talking about COVID-19. Every conversation doesn't need to start with a description of the trauma we've experienced. Every discussion doesn't need to dwell on how awful it's been. Fortunately, the path forward appears clear and very positive for our company and for our industry. For some time now, we have said that we hope to take advantage of the special features of cruising and make cruising one of the safest places on earth to spend your vacation. The numbers are now coming in and our objective appears to be validated. Our strategy has been to get the flywheel spinning. For over 18 months, our guests have had to deal with cancellations, interruptions, confusing rules and changing protocols. These constant changes have added uncertainty. Thankfully, today, we're operating almost normally.
Our published itineraries are being delivered on a consistent basis. 2/3 of our ships are already operating, and virtually, everything will be back to normal in our core markets before the end of this year. Our goal is to start the new year with smooth, steady, consistent operations that will give our guests comfort and give travel advisers the confidence to book future cruises. Like the pilot of a plane during takeoff, prioritizing speed over altitude, we have prioritized spreading the wealth. We have prioritized starting up more ships even with lower loads per vessel rather than trying for higher load factors on fewer ships. We have been executing this in a financially and medically prudent manner. January is the start of wave period, and our goal is to have our core markets operating normally as quickly as possible. That will put us in an excellent position to have a good wave period. Our bookings are already showing that the public has a great deal of pent-up demand and is eager to travel again. We have a long period of poor bookings to make up for, but current booking trends give us a high level of confidence for 2022, especially from the summer on. We're not back to normal. However, predictions of a dramatic different new normal do not appear to be bearing out. Once we board a ship, cruises today are remarkably similar to cruises before the pandemic. There are some changes, but most of these are not visible to the public, and the remaining ones are likely to be temporary. Satisfaction level amongst those who are cruising today is the highest in our company's history and their onboard spending is also unparalleled.
The recent announcement by the CDC that they intend to eliminate the prescriptive conditional sale order in January is very welcome. Our own requirements and protocols are stricter than the CSO anyhow. So the confidence though that they are demonstrating by the CDC's actions will help give confidence to the market. Now while we are very encouraged about the strong bookings that we've been seeing, we do appreciate that we are still not in a normal travel environment. We are emerging from a period of lower-than-usual bookings and our international sourcing, which has historically been the strength of the group, has been confusing due to the constantly changing travel restrictions and is just now starting to build back. The image of the cruise industry from the early days of the pandemic is also weighing on the minds of consumers, albeit much, much less than previously. There's also a special story about what's happening in Asia and how that affects the Royal Caribbean Group. China was one of the fastest-growing markets, and we believe will continue to be an important part of our strategy going forward. However, as you know, China is essentially closed to international travel today and that includes cruise travel. We do not expect China to reopen until at least the Olympics in Beijing are over. Another important market for us is Australia. Australia's approach to containing the pandemic has been based on isolation.
They are now rapidly switching to the vaccines as a way of controlling the disease. We do not expect Australia to open the cruise travel until the spring. But since this summer season doesn't start until our next winter anyhow, we're not counting on much from Australia until the end of next year. Against this background, our ability to predict a profitable 2022 is strong evidence of how quickly our future can get better. We are encouraged to see the return to profitability and strong cash flows as a rapid turnaround, rather than a slow, steady progression. It is unusual actually for us to provide any indication of next year's results this early, but we understand the need to have a frame of reference going forward, and we wanted to be constructive in that regard. Obviously, there are a large number of factors that could shift us off this trajectory, including worsening spread of the disease, a new variant, inflation, et cetera. But on the current trajectory that we are seeing, we believe we can prudently predict at least this level of profitability and cash flow. I'd also like to touch on two other subjects that are of interest to any company, human capital and supply chain issues. Our people have been the strongest driver of our performance throughout our history. So we watch this area very carefully, and we are concerned by reports of labor shortages, especially in the hospitality arena. Fortunately, our shipboard jobs are seen as very attractive by crew members around the world. So that has not been a serious problem as we restart, and we do not expect that it will become one.
Similarly, onshore, we have long been seen as a desirable place to work, and while the current situation is something every businessperson should watch closely, we do not expect it to interfere with our ability to operate successfully. Supply chain issues are impacting everyone and we're no exception. Fortunately, we have traditionally hedged our bets by buying key supplies forward, and this is cushioning us from the current volatility. Looking forward, we expect these contracts plus our purchasing power, plus our ingenuity to give us protection. Now while this pandemic has been all consuming, we have not been idle on other fronts either. The need to be a good corporate citizen, to behave in a way that we can all be proud of has remained an important part of our thought process even during this timeframe. Over the last few months, we've announced a significant number of highly significant steps forward on the environmental side of our ESG aspirations. A few weeks ago, we announced that the new Silversea ship, called Project Evolution, will contain some of the most advanced environmental features of any cruise ship on the water or in the construction docks. It will be a multi-fuel vessel capable of burning initially lower carbon producing LNG and later as they develop the noncarbon-based fuels, we'll work off of those. In addition, it will have fuel cell technology, not as a demonstration project, but it's a significant part of the energy capability of the vessel. As a result, it will be able to operate 100% of its hotel load purely on these emission-free fuel cells.
That means not only will the ship need to use its engines in port, but it can do so without even having to plug into shore power. This requires an amazing concentrated effort to develop the technology in conjunction with Meyer Werft and others. In addition, it will use waste-to-energy technology to convert rubbish to energy and use advanced supply chain techniques to reduce the carbon generated during the construction process. An even bigger announcement this week was our disclosure of our new project called Destination Net Zero. This is an ambitious project to eliminate our carbon footprint by 2050. By signing up for the science-based target initiative, we are not only setting a goal for the distant future, but also establishing the interim milestones that will allow us to get there with confidence. It's also interesting to look at the last 19 months and take note that during this period, we've taken delivery of five spectacular new vessels. And during the next nine months, we will accept delivery of three more. In fact, over the next fortnight, we will be naming two of these ships here in South Florida. We have not remained idle. Before I turn it back to Jason, I'd like to reiterate my appreciation for in admiration of the people of the Royal Caribbean Group who have gone above and beyond, not only to get us through the pandemic in far better shape than anyone would have expected but have also prepared us to look forward to the future with confidence and yes, even excitement.
With that, I turn it back to Jason. Jason?
