Given an extended pause in operations due to the coronavirus pandemic, Carnival Corporation (CCL - Free Report) has announced a series of layoffs and furloughs across its Florida offices.
Per the reports, the company has terminated 820 positions in Florida, with an additional 537 employees, placed on temporary furlough for up to six months. Employees in California and Washington state will also be impacted by the pandemic. This along with the combination of reduced work hours and salary reductions of senior executives is likely to save millions in cash on an annual basis.
Carnival President & CEO Arnold Donald stated "Taking these extremely difficult employee actions involving our highly dedicated workforce is a very tough thing to do. Unfortunately, it's necessary, given the current low level of guest operations and to further endure this pause."
Meanwhile, other companies are resorting to such a strategy to survive a financial crisis. In mid-April, Royal Caribbean Cruises Ltd. (RCL - Free Report) announced plans to terminate 26% of its workforce. Even Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) has announced plans to furlough 20% of its staff.
Coronavirus Hits Hard
The rapid spread of COVID-19 is affecting all aspects of Carnival’s business. Recently, the company extended the suspension of global cruise operations — Holland America Line, Seabourn and Cunard.
However, the company is providing guests with either a Future Cruise Credit for 125% of their booking value along with a $250 shipboard credit or a full refund.
Coming to price performance, shares of the company have declined 75.8% compared with the industry’s fall of 57.2%. Notably, the company’s operations and global bookings have been hurt by the global pandemic. Moreover, earning estimates for 2020 have declined over the past 30 days, depicting analysts’ concern over the stock’s growth potential.
Zacks Rank & Key Pick
Carnival currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A better-ranked stock in the same space is Manchester United Ltd. (MANU - Free Report) , carrying a Zacks Rank #2 (Buy).
Manchester United has a three-five year earnings per share growth rate of 22.8%.
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