10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 10-Q 

(Mark One) 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to            

Commission File Number: 1-11884

ROYAL CARIBBEAN CRUISES LTD.

(Exact name of registrant as specified in its charter) 

Republic of Liberia	98-0081645
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1050 Caribbean Way, Miami, Florida 33132

(Address of principal executive offices) (zip code) 

(305) 539-6000

(Registrant’s telephone number, including area code) 

N/A

(Former name, former address and former fiscal year, if changed since last report) 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	RCL	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  No ☐ 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒ 

There were 254,570,657 shares of common stock outstanding as of April 26, 2021.

ROYAL CARIBBEAN CRUISES LTD.

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
Item 3. Quantitative and Qualitative Disclosures About Market Risk	49
Item 4. Controls and Procedures	49
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	50
Item 1A. Risk Factors	50
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 6. Exhibits	67
SIGNATURES	70

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited; in thousands, except per share data)

	Quarter Ended March 31,
	2021		2020
Passenger ticket revenues	$	20,844	$	1,376,851
Onboard and other revenues	21,170		655,899
Total revenues	42,014		2,032,750
Cruise operating expenses:
Commissions, transportation and other	2,949		317,129
Onboard and other	4,481		123,718
Payroll and related	96,636		330,390
Food	8,472		121,316
Fuel	41,822		194,268
Other operating	129,127		423,998
Total cruise operating expenses	283,487		1,510,819
Marketing, selling and administrative expenses	258,041		395,890
Depreciation and amortization expenses	310,166		324,330
Impairment and credit losses	(449)		1,108,118
Operating Loss	(809,231)		(1,306,407)
Other income (expense):
Interest income	4,861		5,534
Interest expense, net of interest capitalized	(272,514)		(92,911)
Equity investment loss	(59,871)		(10,392)
Other income (expense)	5,033		(32,859)
	(322,491)		(130,628)
Net Loss	(1,131,722)		(1,437,035)
Less: Net Income attributable to noncontrolling interest	—		7,444
Net Loss attributable to Royal Caribbean Cruises Ltd.	$	(1,131,722)	$	(1,444,479)
Loss per Share:
Basic	$	(4.66)	$	(6.91)
Diluted	$	(4.66)	$	(6.91)
Weighted-Average Shares Outstanding:
Basic	243,004		209,097
Diluted	243,004		209,097
Comprehensive Loss
Net Loss	$	(1,131,722)	$	(1,437,035)
Other comprehensive income (loss):
Foreign currency translation adjustments	9,722		10,290
Change in defined benefit plans	10,463		(7,589)
Gain (loss) on cash flow derivative hedges	10,302		(300,605)
Total other comprehensive income (loss)	30,487		(297,904)
Comprehensive Loss	(1,101,235)		(1,734,939)
Less: Comprehensive Income attributable to noncontrolling interest	—		7,444
Comprehensive Loss attributable to Royal Caribbean Cruises Ltd.	$	(1,101,235)	$	(1,742,383)

The accompanying notes are an integral part of these consolidated financial statements

1

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	As of
	March 31,		December 31,
	2021		2020
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	5,091,463	$	3,684,474
Trade and other receivables, net of allowances of $4,309 and $3,867 at March 31, 2021 and December 31, 2020, respectively	226,740		284,149
Inventories	119,405		118,703
Prepaid expenses and other assets	163,709		154,339
Derivative financial instruments	48,652		70,082
Total current assets	5,649,969		4,311,747
Property and equipment, net	25,794,798		25,246,595
Operating lease right-of-use assets	579,541		599,985
Goodwill	809,459		809,480
Other assets, net of allowances of $81,580 and $81,580 at March 31, 2021 and December 31, 2020, respectively	1,513,306		1,497,380
Total assets	$	34,347,073	$	32,465,187
Liabilities and Shareholders’ Equity
Current liabilities
Current portion of long-term debt	$	221,299	$	961,768
Commercial paper	—		409,319
Current portion of operating lease liabilities	97,431		102,677
Accounts payable	340,872		353,422
Accrued interest	236,942		252,668
Accrued expenses and other liabilities	534,744		615,750
Derivative financial instruments	53,398		56,685
Customer deposits	1,830,144		1,784,832
Total current liabilities	3,314,830		4,537,121
Long-term debt	20,714,376		17,957,956
Long-term operating lease liabilities	547,327		563,876
Other long-term liabilities	598,158		645,565
Total liabilities	25,174,691		23,704,518
Shareholders’ equity
Preferred stock ($0.01 par value; 20,000,000 shares authorized; none outstanding)	—		—
Common stock ($0.01 par value; 500,000,000 shares authorized; 282,414,098 and 265,198,371 shares issued, March 31, 2021 and December 31, 2020, respectively)	2,824		2,652
Paid-in capital	7,513,318		5,998,574
Retained earnings	4,431,053		5,562,775
Accumulated other comprehensive loss	(708,854)		(739,341)
Treasury stock (27,882,987 and 27,799,775 common shares at cost, March 31, 2021 and December 31, 2020, respectively)	(2,065,959)		(2,063,991)
Total shareholders’ equity	9,172,382		8,760,669
Total liabilities and shareholders’ equity	$	34,347,073	$	32,465,187

The accompanying notes are an integral part of these consolidated financial statements

2

ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
	Three Months Ended March 31,
	2021		2020
Operating Activities
Net Loss	$	(1,131,722)	$	(1,437,035)
Adjustments:
Depreciation and amortization	310,166		324,330
Impairment and credit losses	(449)		1,108,118
Net deferred income tax (benefit) expense	(3,556)		253
Loss on derivative instruments not designated as hedges	491		120,765
Share-based compensation expense (income)	18,834		(7,428)
Equity investment loss	59,871		10,392
Amortization of debt issuance costs	35,581		7,795
Amortization of debt discounts and premiums	29,304		8,624
Change in fair value of contingent consideration	—		(51,019)
Changes in operating assets and liabilities:
(Increase) decrease in trade and other receivables, net	(72,397)		84,578
Increase in inventories	(3,708)		(15,598)
(Increase) decrease in prepaid expenses and other assets	(26,118)		24,476
(Decrease) increase in accounts payable	(7,499)		851,342
(Decrease) increase in accrued interest	(15,726)		44,648
(Decrease) increase in accrued expenses and other liabilities	(134,113)		110,440
Increase (decrease) in customer deposits	95,923		(959,555)
Dividends received from unconsolidated affiliates	—		1,991
Other, net	35,935		(28,407)
Net cash (used) provided by operating activities	(809,183)		198,710
Investing Activities
Purchases of property and equipment	(1,061,691)		(1,252,554)
Cash received on settlement of derivative financial instruments	3,758		1,132
Cash paid on settlement of derivative financial instruments	(27,362)		(96,575)
Investments in and loans to unconsolidated affiliates	(70,369)		(2,000)
Cash received on loans to unconsolidated affiliates	12,519		5,160
Proceeds from the sale of property and equipment and other assets	175,439		5,256
Other, net	146		(1,596)
Net cash used in investing activities	(967,560)		(1,341,177)
Financing Activities
Debt proceeds	2,494,077		7,052,189
Debt issuance costs	(82,115)		(62,346)
Repayments of debt	(427,978)		(921,867)
Proceeds from issuance of commercial paper notes	—		6,396,787
Repayments of commercial paper notes	(414,570)		(7,494,025)
Dividends paid	—		(163,563)
Proceeds from common stock issuances	1,617,234		—
Other, net	(2,724)		(16,963)
Net cash provided by financing activities	3,183,924		4,790,212

The accompanying notes are an integral part of these consolidated financial statements

3

ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
	Three Months Ended March 31,
	2021		2020
Effect of exchange rate changes on cash	(192)		(672)
Net increase in cash and cash equivalents	1,406,989		3,647,073
Cash and cash equivalents at beginning of period	3,684,474		243,738
Cash and cash equivalents at end of period	$	5,091,463	$	3,890,811
Supplemental Disclosure
Cash paid during the period for:
Interest, net of amount capitalized	$	228,877	$	31,481
Non-cash Investing Activities
Notes receivable issued upon sale of property and equipment and other assets	$	16,000	$	6,294
Purchase of property and equipment included in accounts payable and accrued expenses and other liabilities	$	26,882	$	29,022

The accompanying notes are an integral part of these consolidated financial statements

4

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(unaudited; in thousands)

	Common Stock		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders' Equity
Balance at January 1, 2021	$	2,652	$	5,998,574	$	5,562,775	$	(739,341)	$	(2,063,991)	$	8,760,669
Activity related to employee stock plans	2		18,638		—		—		—		18,640
Common stock issuance	170		1,496,106		—		—		—		1,496,276
Changes related to cash flow derivative hedges	—		—		—		10,302		—		10,302
Change in defined benefit plans	—		—		—		10,463		—		10,463
Foreign currency translation adjustments	—		—		—		9,722		—		9,722
Purchase of treasury stock	—		—		—		—		(1,968)		(1,968)
Net Loss attributable to Royal Caribbean Cruises Ltd.	—		—		(1,131,722)		—		—		(1,131,722)
Balance at March 31, 2021	$	2,824	$	7,513,318	$	4,431,053	$	(708,854)	$	(2,065,959)	$	9,172,382

	Common Stock		Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total Shareholders' Equity
Balance at January 1, 2020	$	2,365	$	3,493,959	$	11,523,326	$	(797,713)	$	(2,058,091)	$	12,163,846
Activity related to employee stock plans	7		(20,706)		—		—		—		(20,699)
Common stock dividends, $0.78 per share	—		—		(163,089)		—		—		(163,089)
Changes related to cash flow derivative hedges	—		—		—		(300,605)		—		(300,605)
Change in defined benefit plans	—		—		—		(7,589)		—		(7,589)
Foreign currency translation adjustments	—		—		—		10,290		—		10,290
Purchases of treasury stock	—		—		—		—		(5,900)		(5,900)
Net Loss attributable to Royal Caribbean Cruises Ltd.	—		—		(1,444,479)		—		—		(1,444,479)
Balance at March 31, 2020	$	2,372	$	3,473,253	$	9,915,758	$	(1,095,617)	$	(2,063,991)	$	10,231,775

The accompanying notes are an integral part of these consolidated financial statements

5

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

As used in this Quarterly Report on Form 10-Q, the terms “Royal Caribbean,” "Royal Caribbean Group," the “Company,” “we,” “our” and “us” refer to Royal Caribbean Cruises Ltd. and, depending on the context, Royal Caribbean Cruises Ltd.’s consolidated subsidiaries and/or affiliates. The terms “Royal Caribbean International,” “Celebrity Cruises,” and "Silversea Cruises" refer to our wholly owned global cruise brands. Throughout this Quarterly Report on Form 10-Q, we also refer to our partner brands in which we hold an ownership interest, including “TUI Cruises” and "Hapag-Lloyd Cruises." However, because these partner brands are unconsolidated investments, our operating results and other disclosures herein do not include these brands unless otherwise specified. In accordance with cruise vacation industry practice, the term “berths” is determined based on double occupancy per cabin even though many cabins can accommodate three or more passengers. This Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020.

This Quarterly Report on Form 10-Q also includes trademarks, trade names and service marks of other companies. Use or display by us of other parties’ trademarks, trade names or service marks is not intended to and does not imply a relationship with, or endorsement or sponsorship of us by, these other parties other than as described herein.

Note 1. General

Description of Business 

We are a global cruise company. We own and operate three global cruise brands: Royal Caribbean International, Celebrity Cruises and Silversea Cruises (collectively, our "Global Brands"). We also own 50% of TUI Cruises GmbH ("TUIC"), which operates the German brands TUI Cruises and Hapag-Lloyd Cruises (collectively, our "Partner Brands"). We account for our investment in TUIC under the equity method of accounting. Together, our Global Brands and our Partner Brands operate a combined 59 ships as of March 31, 2021. Our ships offer a selection of worldwide itineraries that call on more than 1,000 destinations on all seven continents.

Effective March 19, 2021, we sold our wholly-owned brand, Azamara Cruises ("Azamara"), including its three-ship fleet and associated intellectual property, to Sycamore Partners for $201 million, subject to closing adjustments.

Management's Plan and Liquidity

In response to the COVID-19 pandemic, we voluntarily suspended our global cruise operations effective March 13, 2020 and this suspension remains in effect through at least June 30, 2021, for most of our cruise operations. We continue to work with the U.S. Centers for Disease Control and Prevention (“CDC”), other U.S. and non-U.S. regulatory agencies and a panel composed of leading experts in relevant fields, including epidemiology, infectious diseases, public policy and applicable regulations, engineering and general health safety (the "Healthy Sail Panel" or “HSP”) to develop a plan to return to service in consideration of global vaccination efforts. For cruise ship operations in U.S. waters, our return to service plan also considers the requirements of the CDC’s Framework for the Conditional Sailing Order (the “Conditional Order”), including recently issued technical instructions under the Conditional Order. The Conditional Order permits cruise ship passenger operations in U.S. waters under certain conditions and following the establishment of certain protocols and procedures, with the Conditional Order remaining in effect until the earlier of (1) the expiration of the Secretary of Health and Human Services’ declaration that COVID-19 constitutes a public health emergency, (2) the date the CDC Director rescinds or modifies the Conditional Order based on specific public health or other considerations, or (3) November 1, 2021. On April 28, 2021, the CDC issued a letter to members of the cruising industry communicating that it remains committed to the resumption of cruise ship passenger operations in the U.S. following the requirements of the Conditional Order by mid-summer 2021. In the communication, the CDC provided clarifications to its previously issued technical instructions regarding several matters including port operations and COVID-19 testing and vaccination protocols. We are currently evaluating the impact of these clarifications on the technical instructions.

We expect to re-start the rest of our global cruise operations in a phased manner once we fulfill the requirements of the CDC and other U.S. and non-U.S. regulatory agencies, also with reduced guest occupancy, modified itineraries and enhanced health, safety and vaccination protocols. Based on our assessment of these requirements, the status of COVID-19 infection and/or vaccination rates in the U.S. or globally or for other reasons, we may determine it necessary to further extend our voluntary suspension of our Global Brands’ cruise sailings which currently extends through at least June 30, 2021, for most of our cruise operations. As such, we believe the suspension of our operations and the impact to our global bookings resulting from COVID-19 will continue to have a material negative impact on our results of operations and liquidity, which may be prolonged beyond containment of the disease and its variants.

6

Significant events affecting travel, including COVID-19 and our suspension of operations, typically have an impact on the booking pattern for cruise vacations, with the full extent of the impact generally determined by the length of time the event influences travel decisions. The estimation of our future liquidity requirements include numerous assumptions that are subject to various risks and uncertainties. The principal assumptions used to estimate our future liquidity requirements consist of:

•Expected date of return to operations;

•Expected gradual resumption of cruise operations;

•Expected lower than comparable historical occupancy levels during the resumption of cruise operations; and

•Expected incremental expenses for the resumption of cruise operations, for the maintenance of additional public health protocols and procedures for additional regulations.

There can be no assurance that our assumptions and estimates are accurate due to possible variables, including, but not limited to, the uncertainties associated with the CDC’s interpretation and application of the requirements in the Conditional Order and subsequent changes to those requirements, our ability to meet these requirements, some of which may be significant, and whether efforts by other countries to contain the disease and its variants will further restrict our ability to commence operations. We have implemented and may continue to pursue a number of proactive measures to mitigate the financial and operational impacts of COVID-19, including reduction of capital expenditures and operating expenses (such as reduction and furloughing of workforce and laying up of vessels), the issuance of debt and shares of our common stock, the amendment of credit agreements to defer payments and the waiver and/or modification of covenant requirements and the suspension of dividend payments.

As of March 31, 2021, we had liquidity of $5.8 billion, consisting of cash and cash equivalents of $5.1 billion and a $0.7 billion 364-day term loan facility commitment available to draw through August 12, 2022. Our revolving credit facilities were fully utilized through a combination of amounts drawn and letters of credit issued under the facilities as of March 31, 2021.

We have extended our $1.0 billion unsecured loan due April 2022 and our $1.6 billion unsecured revolving credit facility due October 2022 to October 2023 and April 2024, respectively. As of March 31, 2021, we were in compliance with our financial covenants. Refer to Note 7. Debt for further information regarding the amendments made to our debt facilities and credit card processing agreements, including related covenants, during the quarter ended March 31, 2021.

Based on our assumptions regarding the impact of COVID-19 and our suspension of operations, as well as our present financial condition, we believe that we have sufficient financial resources to fund our obligations for at least the next twelve months from the issuance of these financial statements.

Basis for Preparation of Consolidated Financial Statements

The unaudited consolidated financial statements are presented pursuant to the rules and regulations of the Securities and Exchange Commission. In our opinion, these statements include all adjustments necessary for a fair statement of the results of the interim periods reported herein. Adjustments consist only of normal recurring items, except for any items discussed in the notes below. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted as permitted by such rules and regulations. Estimates are required for the preparation of financial statements in accordance with these principles. Actual results could differ from these estimates. Refer to Note 2. Summary of Significant Accounting Policies in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of our significant accounting policies.

All significant intercompany accounts and transactions are eliminated in consolidation. We consolidate entities over which we have control, usually evidenced by a direct ownership interest of greater than 50%, and variable interest entities where we are determined to be the primary beneficiary. Refer to Note 6. Other Assets for further information regarding our variable interest entities. We consolidate the operating results of Silversea Cruises on a three-month reporting lag to allow for more timely preparation of our consolidated financial statements. No material events or other transactions involving Silversea Cruises have occurred from December 31, 2020 through March 31, 2021.

For affiliates we do not control but over which we have significant influence on financial and operating policies, usually evidenced by a direct ownership interest from 20% to 50%, the investment is accounted for using the equity method.

The March 2021 sale of Azamara does not represent a strategic shift that will have a major effect on our operations and financial results, as we continue to provide similar itineraries to and source passengers from the markets served by the Azamara business. Therefore, the sale of Azamara did not meet the criteria for discontinued operations reporting. Effective March 19, 2021, we no longer consolidate Azamara's balance sheet nor recognize its results of operations in our consolidated financial

7

statements. We recognized an immaterial gain on the sale during the quarter ended March 31, 2021 and have agreed to provide certain transition services to Azamara for a period of time for a fee.

Note 2. Summary of Significant Accounting Policies

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB") issued Accounting Standard Update (“ASU") No. 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions to the current guidance on contract modifications and hedging relationships to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. Subsequently, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), which presents amendments to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The guidance in both ASUs was effective upon issuance and may be applied retrospectively or prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative under ASC 815 or for convertible debt issued at a substantial premium. The ASU removes certain settlement conditions required for equity contracts to qualify for the derivative scope exception, permitting more contracts to qualify for it. In addition, the guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The ASU is effective for annual reporting periods beginning after December 15, 2021, including interim reporting periods within those annual periods, with early adoption permitted no earlier than the fiscal year beginning after December 15, 2020. The guidance is expected to have an impact on our consolidated financial statements given the recent issuance of convertible notes, however, we are still evaluating the magnitude of the new guidance on our consolidated financial statements.

Reclassifications

For the three months ended March 31, 2021, we separately presented Amortization of debt discounts and premiums, which includes amortization of commercial paper notes discount, in our consolidated statements of cash flows. As a result, the prior year amortization amounts were reclassified from Other, net within Operating Activities to conform to the current year presentation. Also, for the three months ended March 31, 2021, we no longer separately presented Proceeds from exercise of common stock options in our consolidated statements of cash flows. As a result, the prior year amounts were reclassified to Other, net within Financing Activities to conform to the current year presentation.

Note 3. Impairments and Credit Losses

Starting in early 2020, the challenges related to COVID-19 have significantly impacted our expected investments, operating plans and projected cash flows. Refer to Note 1. General for further information regarding COVID-19 and its impact to the Company. As a result of these events, we performed interim impairment evaluations during 2020 on certain assets.

During the quarter ended March 31, 2020, we recognized combined impairment and credit losses of $1.1 billion which are reported within Impairment and credit losses within our consolidated statements of comprehensive loss. The impairment losses of $1.1 billion were primarily related to our goodwill, trademarks and trade names, property and equipment, net and right-of-use assets. The credit losses of $38.1 million recognized during the quarter ended March 31, 2020 related to our notes receivable.

In addition, an impairment charge of $39.7 million related to our equity investments was recognized in earnings during the quarter ended March 31, 2020 and is reported within Equity investment loss within our consolidated statements of comprehensive loss.

For the quarter ended March 31, 2021, we had no indication of impairment or credit losses. The adverse impact COVID-19 will continue to have on our business, operating results, cash flows and overall financial condition is uncertain and may result in changes to the assumptions used in the impairment tests discussed above, which may result in additional impairments to these assets in the future.

8

Note 4. Revenues

Revenue Recognition

Revenues are measured based on consideration specified in our contracts with customers and are recognized as the related performance obligations are satisfied.

Historically, the majority of our revenues when we are operating are derived from passenger cruise contracts which are reported within Passenger ticket revenues in our consolidated statements of comprehensive loss. Our performance obligation under these contracts is to provide a cruise vacation in exchange for the ticket price. We satisfy this performance obligation and recognize revenue over the duration of each cruise, which generally range from two to 24 nights.

Passenger ticket revenues include charges to our guests for port costs that vary with passenger head counts. These type of port costs, along with port costs that do not vary by passenger head counts, are included in our cruise operating expenses. The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $1.5 million and $124.5 million for the quarters ended March 31, 2021 and 2020, respectively.

Our total revenues also include Onboard and other revenues, which consist primarily of revenues from the sale of goods and services onboard our ships that are not included in passenger ticket prices. We receive payment before or concurrently with the transfer of these goods and services to passengers during a cruise and recognize revenue at the time of transfer over the duration of the related cruise.

As a practical expedient, we have omitted disclosures on our remaining performance obligations as the duration of our contracts with customers is less than a year.

Disaggregated Revenues

The following table disaggregates our total revenues by geographic regions where we provide cruise itineraries (in thousands):

	Quarter Ended March 31,
	2021		2020
Revenues by itinerary
North America(1)	$	—	$	1,324,573
Asia/Pacific(2)	29,885		362,398
Europe(3)	—		19,540
Other regions(4)	810		158,043
Total revenues by itinerary	30,695		1,864,554
Other revenues(5)	11,319		168,196
Total revenues	$	42,014	$	2,032,750

(1)Includes the United States, Canada, Mexico and the Caribbean.

(2)Includes Southeast Asia (e.g., Singapore, Thailand and the Philippines), East Asia (e.g., China and Japan), South Asia (e.g., India and Pakistan) and Oceania (e.g., Australia and Fiji Islands) regions.

(3)Includes European countries (e.g., Nordics, Germany, France, Italy, Spain and the United Kingdom).

(4)Includes seasonality impacted itineraries primarily in South and Latin American countries.

(5)Includes revenues primarily related to cancellation fees, vacation protection insurance, pre- and post-cruise tours and fees for operating certain port facilities. Amounts also include revenues related to our bareboat charter, which was terminated when Pullmantur Holdings filed for reorganization in Spain in 2020, and procurement and management related services we perform on behalf of our unconsolidated affiliates. Refer to Note 6. Other Assets for more information on our unconsolidated affiliates.

9

Passenger ticket revenues are attributed to geographic areas based on where the reservation originates. For the quarters ended March 31, 2021 and 2020, our guests were sourced from the following areas:

	Quarter Ended March 31,
	2021		2020
Passenger ticket revenues:
Singapore	69	%	—	%
China	31	%	—	%
United States	—	%	68	%
All other countries (1)	—	%	32	%

(1)No other individual country's revenue exceeded 10% for the quarter ended March 31, 2020.

Customer Deposits and Contract Liabilities

Our payment terms generally require an upfront deposit to confirm a reservation, with the balance due prior to the cruise. Deposits received on sales of passenger cruises are initially recorded as Customer deposits in our consolidated balance sheets and subsequently recognized as passenger ticket revenues during the duration of the cruise. ASC 606, Revenues from Contracts with Customers, defines a “contract liability” as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. We do not consider customer deposits to be a contract liability until the customer no longer retains the unilateral right, resulting from the passage of time, to cancel such customer's reservation and receive a full refund.

The current reduction in demand for cruising due to COVID-19 resulted in an unprecedented low level of advance bookings and the associated customer deposits received. At the same time, we have experienced significant cancellations as a result of our suspension of operations, which has led to issuance of refunds to customers, while the remainder have been rebooked on future cruises or received credits in lieu of cash refunds.

As of March 31, 2021, refunds due to customers mostly as a result of booking cancellations were $107.3 million compared to $95.8 million as of December 31, 2020. Due to the uncertainty around the return of demand for cruising, we are unable to estimate the amount of the March 31, 2021 customer deposits that will be recognized in earnings compared to amounts that will be refunded to customers or issued as a credit for future travel through the end of 2021. Customer deposits presented in our consolidated balance sheets include contract liabilities of $503.3 million and $124.8 million as of March 31, 2021 and December 31, 2020, respectively.

Contract Receivables and Contract Assets

Although we generally require full payment from our customers prior to their cruise, we grant credit terms to a relatively small portion of our revenue sourced in select markets outside of the United States. As a result, we have outstanding receivables from passenger cruise contracts in those markets. We also have receivables from credit card merchants for cruise ticket purchases and goods and services sold to guests during cruises that are collected before, during or shortly after the cruise voyage. In addition, we have receivables due from concessionaires onboard our vessels. These receivables are included within Trade and other receivables, net in our consolidated balance sheets.

We have contract assets that are conditional rights to consideration for satisfying the construction services performance obligations under a service concession arrangement. As of March 31, 2021 and December 31, 2020, our contract assets were $53.7 million and were included within Other assets in our consolidated balance sheets. Given the short duration of our cruises and our collection terms, we do not have any other significant contract assets.

Assets Recognized from the Costs to Obtain a Contract with a Customer

Prepaid travel agent commissions are an incremental cost of obtaining contracts with customers that we recognize as an asset and include within Prepaid expenses and other assets in our consolidated balance sheets. Prepaid travel agent commissions were $13.6 million as of March 31, 2021 and $1.1 million as of December 31, 2020. Substantially all of our prepaid travel agent commissions at December 31, 2020 were expensed and reported primarily within Commissions, transportation and other in our consolidated statements of comprehensive loss for the quarter ended March 31, 2021.

10

Note 5. (Loss) Per Share

A reconciliation between basic and diluted (loss) per share is as follows (in thousands, except per share data):

	Quarter Ended March 31,
	2021		2020
Net (Loss) attributable to Royal Caribbean Cruises Ltd. for basic and diluted loss per share	$	(1,131,722)	$	(1,444,479)
Weighted-average common shares outstanding	243,004		209,097
Diluted weighted-average shares outstanding	243,004		209,097
Basic (loss) per share	$	(4.66)	$	(6.91)
Diluted (loss) per share	$	(4.66)	$	(6.91)

There were approximately 413,501 and 877,000 antidilutive shares for the quarters ended March 31, 2021 and March 31, 2020, respectively.

Since the Company expects to settle in cash the principal outstanding convertible notes that mature in 2023, we currently use the treasury stock method when calculating their potential dilutive effect, if any. While no shares of the convertible notes are currently convertible, they would be anti-dilutive for the three months ended March 31, 2021.

Note 6. Other Assets

A Variable Interest Entity (“VIE”) is an entity in which the equity investors have not provided enough equity to finance the entity’s activities or the equity investors: (1) cannot directly or indirectly make decisions about the entity’s activities through their voting rights or similar rights; (2) do not have the obligation to absorb the expected losses of the entity; (3) do not have the right to receive the expected residual returns of the entity; or (4) have voting rights that are not proportionate to their economic interests and the entity’s activities involve or are conducted on behalf of an investor with a disproportionately small voting interest.

We have determined that TUI Cruises GmbH ("TUIC"), our 50%-owned joint venture, which operates the brands TUI Cruises and Hapag-Lloyd Cruises, is a VIE. In addition, we have determined that we are not the primary beneficiary of TUIC. We believe that the power to direct the activities that most significantly impact TUIC’s economic performance is shared between ourselves and TUI AG, our joint venture partner. All the significant operating and financial decisions of TUIC require the consent of both parties, which we believe creates shared power over TUIC. Accordingly, we do not consolidate this entity and account for this investment under the equity method of accounting.

As of March 31, 2021, the net book value of our investment in TUIC was $538.8 million, primarily consisting of $395.8 million in equity and a loan of €114.9 million, or approximately $135.1 million based on the exchange rate at March 31, 2021. As of December 31, 2020, the net book value of our investment in TUIC was $538.4 million, primarily consisting of $387.5 million in equity and a loan of €118.9 million, or approximately $145.5 million based on the exchange rate at December 31, 2020. The loan, which was made in connection with the sale of Splendour of the Seas in April 2016, accrues interest at a rate of 6.25% per annum and is payable over 10 years. This loan is 50% guaranteed by TUI AG, our joint venture partner in TUIC, and is secured by a first priority mortgage on the ship. The majority of these amounts were included within Other assets in our consolidated balance sheets. During the quarter ended March 31, 2021, we and TUI AG each contributed €59.5 million, or approximately $69.9 million based on the exchange rate at March 31, 2021, of additional equity through a combination of cash contributions and conversion of existing receivables.

TUIC has various ship construction and financing agreements which include certain restrictions on each of our and TUI AG’s ability to reduce our current ownership interest in TUI Cruises below 37.55% through May 2033. Our investment amount and outstanding term loan are substantially our maximum exposure to loss in connection with our investment in TUIC.

TUI Cruises and Hapag-Lloyd Cruises, our Partner Brands, have been adversely affected by COVID-19, resulting in the suspension of the majority of the brands' cruise operations and a material negative impact to the brands' results of operations and liquidity. The brands have executed cost containment actions and liquidity measures, including the issuance of new financing and the deferral of existing financing, to mitigate the impact of COVID-19 until normal operations may be resumed.

We have determined that Pullmantur Holdings, in which we have a 49% noncontrolling interest and Springwater Capital LLC has a 51% interest, is a VIE for which we are not the primary beneficiary, as we do not have the power to direct the

11

activities that most significantly impact the entity's economic performance. In 2020, Pullmantur Holdings and certain of its subsidiaries filed for reorganization under the terms of the Spanish insolvency laws due to the negative impact of COVID-19 on the companies. We suspended the equity method of accounting for Pullmantur Holdings during the second quarter of 2020 as we do not intend to fund the entity's future losses and we lost our ability to exert significant influence over the entity's activities as a result of the liquidation process.

We have determined that Grand Bahama, a ship repair and maintenance facility in which we have a 40% noncontrolling interest, is a VIE. This facility serves cruise and cargo ships, oil and gas tankers and offshore units.  We utilize this facility, among other ship repair facilities, for our regularly scheduled drydocks and certain emergency repairs as may be required. We have determined that we are not the primary beneficiary of this facility as we do not have the power to direct the activities that most significantly impact the facility’s economic performance. Accordingly, we do not consolidate this entity.

During the quarter ended March 31, 2020, we performed an impairment evaluation on our investment in Grand Bahama. As a result of the evaluation, we did not deem our investment balance to be recoverable and recorded an impairment charge of $30.1 million bringing our investment balance to zero. The impairment assessment and the resulting charge on our equity method investment in Grand Bahama were determined based on management’s estimates and projections. We are currently recognizing our share of equity method losses against the carrying value of our loans receivable from Grand Bahama.

As of March 31, 2021, we had exposure to credit loss in Grand Bahama consisting of a $8.6 million loan. Our loan to Grand Bahama matures March 2026 and bears interest at LIBOR plus 3.5% to 3.75%, capped at 5.75%. Interest payable on the loan is due on a semi-annual basis. During the quarter ended March 31, 2021, we received principal and interest payments of $8.9 million related to a term loan that had fully matured. We did not receive principal and interest payments during the quarter ended March 31, 2020. The outstanding loan balance is included within Trade and other receivables, net and Other assets in our consolidated balance sheets.

We monitor credit risk associated with the loan through our participation on Grand Bahama’s board of directors along with our review of Grand Bahama’s financial statements and projected cash flows. Effective April 1, 2020, we placed the loans in non-accrual status based on our review of Grand Bahama's projected cash flows, which have been adversely affected by impacts to their operations caused by the 2019 crane accident related to Oasis of the Seas, Hurricane Dorian and most recently, COVID-19. During the quarter ended March 31, 2021, no credit losses were recorded related to these loans.

For further information on the measurements used to estimate the fair value of our equity investments, refer to Note 12. Fair Value Measurements and Derivative Instruments.

The following tables set forth information regarding our investments accounted for under the equity method of accounting, including the entities discussed above (in thousands):

	Quarter Ended March 31,
	2021		2020
Share of equity (loss) income from investments	$	(59,871)	$	(10,392)
Dividends received (1)	$	—	$	1,991

(1)There were no dividends received from TUI Cruises for the quarters ended March 31, 2021 and March 31, 2020.

	As of March 31, 2021		As of December 31, 2020
Total notes receivable due from equity investments	$	143,642	$	164,596
Less-current portion (1)	20,018		29,501
Long-term portion (2)	$	123,624	$	135,095

(1)Included within Trade and other receivables, net in our consolidated balance sheets.

(2)Included within Other assets in our consolidated balance sheets.

12

We also provide ship management services to TUIC and provided management services to Pullmantur Holdings (which filed for reorganization in Spain in June 2020). Additionally, we bareboat chartered to Pullmantur Holdings the vessels previously operated by its brands, which were retained by us following the sale of our 51% interest in Pullmantur Holdings. These bareboat charters were terminated when Pullmantur Holdings filed for reorganization in Spain. We recorded the following as it relates to these services in our operating results within our consolidated statements of comprehensive income (loss) (in thousands):

	Quarter Ended March 31,
	2021		2020
Revenues	$	5,231	$	7,411
Expenses	$	1,275	$	782

Credit Losses

We reviewed our notes receivable for credit losses in connection with the preparation of our financial statements for the quarter ended March 31, 2021. In evaluating the allowance for loan losses, management considered factors such as historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, peer group information and prevailing economic conditions.

The following table summarizes our credit loss allowance related to receivables for the three months ended March 31, 2021 (in thousands):

	Credit Loss Allowance
Beginning balance January 1, 2021	$	85,447
Loss provision for receivables	971
Write-offs	(529)
Ending balance March 31, 2021	$	85,889

Our credit loss allowance balance as of March 31, 2021 primarily related to a $81.6 million loss provision recognized during 2020 on notes receivable related to a previous sale of property and equipment.

13

Note 7. Debt

Debt consist of the following (in thousands):

	Interest Rate (1)	Maturities Through	Quarter Ended March 31, 2021		Year Ended December 31, 2020
Fixed rate debt:
Unsecured senior notes	3.70% to 7.50%	2022 - 2028	$	3,962,852	$	2,464,994
Secured senior notes	7.25% to 11.50%	2023 - 2025	3,897,963		3,895,166
Unsecured term loans	2.53% to 5.41%	2021 - 2032	3,130,363		3,210,161
Convertible notes	2.88% to 4.25%	2023	1,480,561		1,454,488
Total fixed rate debt			12,471,739		11,024,809
Variable rate debt:
Unsecured revolving credit facilities (2)	1.49% to 1.89%	2022 - 2024	3,004,342		3,289,000
Unsecured UK Commercial paper		2021	—		409,319
USD unsecured term loan	0.61% to 3.31%	2021 - 2033	4,904,446		4,002,249
Euro unsecured term loan	1.15% to 2.25%	2021 - 2028	708,663		705,064
Total variable rate debt			8,617,451		8,405,632
Finance lease liabilities			209,748		213,365
Total debt (3)			21,298,938		19,643,806
Less: unamortized debt issuance costs			(363,263)		(314,763)
Total debt, net of unamortized debt issuance costs			20,935,675		19,329,043
Less—current portion including commercial paper			(221,299)		(1,371,087)
Long-term portion			$	20,714,376	$	17,957,956

(1) Interest rates based on outstanding loan balance as of March 31, 2021 and, for variable rate debt, include either LIBOR or EURIBOR plus the applicable margin.

(2) Includes $1.9 billion facility and $1.3 billion facility, the vast majority of which is due in 2024. Our $1.9 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.30%, which interest was 1.49% as of March 31, 2021 and is subject to a facility fee of a maximum of 0.20%. Our $1.3 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.70%, which interest was 1.89% as of March 31, 2021 and is subject to a facility fee of a maximum of 0.30%.

(3) At March 31, 2021 and December 31, 2020, the weighted average interest rate for total debt was 5.78% and 6.02%, respectively.

In March 2021, we amended our $1.55 billion unsecured revolving credit facility due October 2022 and our $1.0 billion unsecured loan due April 2022. These amendments, among other things, extend the maturity date or termination date of certain of the advances and commitments, as applicable, under the facilities held by consenting lenders by 18 months and increase the interest rate margin and/or the facility fee, as applicable, with respect to advances and commitments held by such lenders. Consenting lenders also received a prepayment and commitment reduction equal to 20% of their respective outstanding advances and commitments. Following these amendments, the aggregate revolving capacity of the revolving credit facility is approximately $1.3 billion, with approximately $0.2 billion terminating in October 2022 and approximately $1.1 billion terminating in April 2024 and the aggregate principal balance of the term loan is approximately $0.9 billion, with approximately $0.3 billion maturing in April 2022 and approximately $0.6 billion maturing in October 2023.

As of March 31, 2021, our aggregate revolving borrowing capacity was $3.2 billion and was fully utilized through a combination of amounts drawn and letters of credit issued under the facilities. Certain of our surety agreements with third party providers for the benefit of certain agencies and associations that provide travel related bonds, allow the sureties to request collateral. We also have agreements with our credit card processors relating to customer deposits received by us for future voyages. These agreements allow the credit card processors to require us, under certain circumstances, to maintain a reserve

14

that can be satisfied by posting collateral. As of March 31, 2021, we have posted letters of credit as collateral with our sureties and credit card processors, under our revolving credit facilities in the amount of $172.7 million.

Executed amendments are in place for the majority of our credit card processors, waiving reserve requirements tied to breach of our financial covenants through at least September 30, 2022, and as such, we do not anticipate any incremental collateral requirements for the processors covered by these waivers in the next 12 months. We have a reserve with a processor where the agreement was amended in the first quarter of 2021, such that proceeds are withheld in reserve, until the sailing takes place or the funds are refunded to the customer. The maximum projected exposure with the processor, including amounts currently withheld and reported in Trade and other receivables, is approximately $170.6 million. The amount and timing are dependent on future factors that are uncertain, such as the date we return to operations, volume and value of future deposits and whether we transfer our business to other processors. If we require additional waivers on the credit card processing agreements and are not able to obtain them, this could lead to the termination of these agreements or the trigger of reserve requirements.

In March 2021, we took delivery of Odyssey of the Seas. To finance the purchase, we borrowed $994.1 million under a previously committed unsecured term loan which is 95% guaranteed by Euler Hermes Aktiengesellschaft (“Hermes”), the official export credit agency of Germany. The loan amortizes semi-annually over 12 years and bears interest at a floating rate equal to LIBOR plus a margin of 0.96%. Prior to delivery during the first quarter of 2021, we amended the credit agreement to (i) increase the maximum loan amount under the facility to make available to us a maximum amount equal to the US dollar equivalent of 80% of the vessel purchase price plus 100% of the premium payable to Hermes and (ii) defer the payment of all principal payments due between April 2021 and April 2022, which amounts will be repayable semi-annually over a five year period starting in April 2022.

In March 2021, we issued $1.50 billion of senior unsecured notes that mature in 2028, for net proceeds of $1.48 billion. Interest on the senior notes accrues at 5.5% per annum and is payable semi-annually.

In March 2021, we extended our binding commitment for a $700.0 million term loan facility by one year. As amended, we may draw on the facility at any time prior to August 12, 2022. Once drawn, the loan will bear interest at LIBOR plus 3.75% and will mature 364 days from funding. In addition, the facility will be guaranteed by RCI Holdings, LLC, our wholly owned subsidiary that owns the equity interests in subsidiaries that own seven of our vessels. We have the ability to increase the capacity of the facility by an additional $300.0 million from time to time subject to the receipt of additional or increased commitments and the issuance of guarantees from additional subsidiaries.

During the first quarter of 2021, we repaid in full at maturity £300.0 million of Sterling-denominated notes issued under the Joint HM Treasury and Bank of England’s COVID Corporate Financing Facility.

During the first quarter of 2021, we amended $4.9 billion of our non-export credit facilities and certain of our credit card processing agreements to extend the waiver of the financial covenants through and including the third quarter of 2022 or, if earlier, the date falling after January 1, 2022 on which we elect to comply with the modified covenants. Pursuant to the amendments, we have modified the manner in which such covenants are calculated (temporarily in certain cases and permanently in others) as well as the levels at which our net debt to capitalization covenant will be tested during the period commencing immediately following the end of the waiver period and continuing through the end of 2023. As of March 31, 2021, the monthly-tested minimum liquidity covenant was $350 million for the duration of the waiver period. As of the date of these financial statements, we were in compliance with the applicable minimum liquidity covenant. Pursuant to these amendments, the restrictions on paying cash dividends and effectuating share repurchases were extended through and including the third quarter of 2022. As of March 31, 2021, we had one $130.0 million term loan which benefited from a financial covenant waiver through the end of the first quarter of 2021. This term loan was repaid in full in April of 2021 and was reported in Current portion of long-term debt in our Consolidated Balance Sheet as of March 31, 2021.

During the first quarter of 2021, we also amended $6.3 billion of our export credit facilities to extend the waiver of the financial covenants through and including at least the end of the third quarter of 2022. These amendments defer $1.15 billion of principal payments due between April 2021 and April 2022. The deferred amounts will be repayable semi-annually over a five-year period starting in April 2022. Pursuant to these amendments, we have agreed to implement the same liquidity covenant that applies in our non-export credit facilities. The amendments provide for mandatory prepayment of the deferred amounts upon the taking of certain actions. Subject to a number of carve outs, these include, but are not limited to, the issuance of dividends, the completion of share repurchases, issuances of debt other than for crisis and recovery purposes, the making of loans and the sale of assets other than at arm’s length.

For information related to the covenants in our Port of Miami Terminal "A" operating lease agreement, refer to Note 8. Leases.

15

In the fourth quarter of 2020 and the first quarter of 2021, we entered into amendments to our drawn and undrawn ECA facilities to provide for the issuance of guarantees in satisfaction of existing obligations under these facilities. Following issuance (which, in the case of the undrawn facilities, will occur once the debt is drawn), the guarantees will be released under certain circumstances as other debt is repaid or refinanced on an unsecured and unguaranteed basis. In connection with and following the issuance of the guarantees, the guarantor subsidiaries are restricted from issuing additional guarantees in favor of lenders (other than those lenders who are party to the ECA facilities), and certain of the guarantor subsidiaries are restricted from incurring additional debt. In addition, the ECA facilities will benefit from guarantees to be issued by intermediary parent companies of subsidiaries that take delivery of any new vessels subject to export-credit backed financing.

Under certain of our agreements, the contractual interest rate, facility fee and/or export credit agency fee vary with our debt rating. On February 25, 2021, S&P Global downgraded our senior unsecured rating from B+ to B, which had no financial impact, and downgraded our $3.32 billion Senior Secured Notes and Silversea Notes from BB to BB-. This downgrade had no impact on the terms of the notes.

Except for the term loans we incurred to acquire Celebrity Flora, Azamara Pursuit and Silver Moon, all of our unsecured ship financing term loans are guaranteed by the export credit agency in the respective country in which the ship is constructed. The term loan incurred to acquire Azamara Pursuit was repaid in full in April of 2021. For the majority of the loans as of March 31, 2021, we pay to the applicable export credit agency, depending on the financing agreement, an upfront fee of 2.35% to 5.48% of the maximum loan amount in consideration for these guarantees. For one of our loans, we pay to the applicable export credit agency a fee of 2.97% per annum, based on the outstanding loan balance. The fee is paid semi-annually over the term of the loan (subject to adjustments based upon our credit ratings).We amortize the fees that are paid upfront over the life of the loan and those that are paid semi-annually over each respective payment period. We classify these fees within Amortization of debt issuance costs in our consolidated statements of cash flows. Prior to the loan being drawn, we present these fees within Other assets in our consolidated balance sheets. Once the loan is drawn, such fees are classified as a discount to the related loan, or contra-liability account, within Current portion of long-term debt or long-term debt.

The following is a schedule of annual maturities on our total debt net of debt issuance costs, and including finance leases and commercial paper, as of March 31, 2021 for each of the next five years (in thousands):

Year
Remainder of 2021	189,207
2022	2,211,011
2023	6,251,032
2024	4,670,735
2025	4,436,340
Thereafter	3,177,350
	20,935,675

Note 8. Leases

Operating leases

Our operating leases primarily relate to preferred berthing arrangements, real estate and shipboard equipment and are included within Operating lease right-of-use assets, and Long-term operating lease liabilities with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheets as of March 31, 2021 and December 31, 2020. Leases with an initial term of 12 months or less are not recorded on our consolidated balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term. Our operating leases include Silver Explorer, operated by Silversea Cruises. The operating lease for Silver Explorer will expire in 2023.

For some of our real estate leases and berthing agreements, we have the option to extend our current lease term. For those lease agreements with renewal options, the renewal periods for real estate leases range from one to 10 years and the renewal periods for berthing agreements range from one to 20 years. Generally, we do not include renewal options as a component of our present value calculation for berthing agreements. However, for certain real estate leases, we include them.

We have a residual value guarantee associated with our Port of Miami Terminal "A" operating lease agreement ("Port of Miami terminal lease") that approximates a percentage of the cost of the asset as of the inception of the lease. We consider the possibility of incurring costs associated with the residual value guarantee to be remote.

16

Also in connection with the Port of Miami terminal lease, we are required to deliver on or before July 18, 2021, cash collateral in an amount equal to the lesser of our residual value guarantee or the aggregate balance of the lenders' terminal construction debt, estimated at $181.1 million as of March 31, 2021. The collateral is to be returned when all amounts due by us under the lease have been paid in full.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of lease payments. We estimate our incremental borrowing rates based on LIBOR and U.S. Treasury note rates corresponding to lease terms increased by the Company’s credit risk spread and reduced by the estimated impact of collateral. In addition, we have lease agreements with lease and non-lease components, which are generally accounted for separately. However, for berthing agreements, we account for the lease and non-lease components as a single lease component.

Finance Leases

Silversea Cruises operates the Silver Whisper under a finance lease. The finance lease for the Silver Whisper will expire in 2022, subject to an option to purchase the ship. The total aggregate amount of the finance lease liabilities recorded for this ship was $31.5 million at March 31, 2021 and December 31, 2020. The lease payments on the Silver Whisper are subject to adjustments based on the LIBOR rate.

The components of lease expense were as follows (in thousands):

	Consolidated Statement of Comprehensive Loss Classification	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Lease costs:
Operating lease costs	Commission, transportation and other	$	—	$	14,745
Operating lease costs	Other operating expenses	5,130		7,001
Operating lease costs	Marketing, selling and administrative expenses	6,035		5,368
Financial lease costs:
Amortization of right-of-use-assets	Depreciation and amortization expenses	3,744		4,881
Interest on lease liabilities	Interest expense, net of interest capitalized	310		1,933
Total lease costs		$	15,219	$	33,928

In addition, certain of our berthing agreements include variable lease costs based on the number of passengers berthed. During the quarter ended March 31, 2021, we had no variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive loss.

Weighted average of the remaining lease terms and weighted average discount rates are as follows:

	As of March 31, 2021		As of December 31, 2020
Weighted average of the remaining lease term
Operating leases	9.9		7.8
Finance leases	42.1		41.2
Weighted average discount rate
Operating leases	5.25	%	4.59	%
Finance leases	7.02	%	6.89	%

Supplemental cash flow information related to leases is as follows (in thousands):

	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5,531	$	27,841
Operating cash flows from finance leases	$	310	$	1,933
Financing cash flows from finance leases	$	4,305	$	3,823

17

As of March 31, 2021, maturities related to lease liabilities were as follows (in thousands):

Year	Operating Leases		Finance Leases
Remainder of 2021	$	96,266	$	55,831
2022	119,321		23,822
2023	112,718		12,789
2024	84,696		12,529
2025	77,323		12,566
Thereafter	386,342		395,460
Total lease payments	876,666		512,997
Less: Interest	(231,908)		(303,249)
Present value of lease liabilities	$	644,758	$	209,748

Note 9. Commitments and Contingencies

Ship Purchase Obligations

Our future capital commitments consist primarily of new ship orders. As of March 31, 2021, two Oasis-class ships and three ships of a new generation, known as our Icon-class, are on order for our Royal Caribbean International brand with an aggregate capacity of approximately 28,200 berths. As of March 31, 2021, we had two Edge-class ships on order for our Celebrity Cruises brand with an aggregate capacity of approximately 6,500 berths. Additionally, as of March 31, 2021, we have three ships on order for our Silversea Cruises brand with an aggregate capacity of approximately 2,000 berths.

COVID-19 has impacted shipyard operations which have and may continue to result in delays of our previously contracted ship deliveries. As of March 31, 2021, the dates that the ships on order by our Global and Partner Brands are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

18

Ship	Shipyard	Expected Delivery Dates	Approximate Berths
Royal Caribbean International —
Oasis-class:
Wonder of the Seas	Chantiers de l'Atlantique	1st Quarter 2022	5,700
Unnamed	Chantiers de l'Atlantique	2nd Quarter 2024	5,700
Icon-class:
Unnamed	Meyer Turku Oy	3rd Quarter 2023	5,600
Unnamed	Meyer Turku Oy	2nd Quarter 2025	5,600
Unnamed	Meyer Turku Oy	2nd Quarter 2026	5,600
Celebrity Cruises —
Edge-class:
Celebrity Beyond	Chantiers de l'Atlantique	2nd Quarter 2022	3,250
Unnamed	Chantiers de l'Atlantique	4th Quarter 2023	3,250
Silversea Cruises — (1)
Muse-Class:
Silver Dawn	Fincantieri	4th Quarter 2021	600
Evolution Class:
Unnamed	Meyer Werft	2nd Quarter 2023	700
Unnamed	Meyer Werft	2nd Quarter 2024	700
TUI Cruises (50% joint venture)
Mein Schiff 7	Meyer Turku Oy	2nd Quarter 2024	2,900
Unnamed	Fincantieri	3rd Quarter 2024	4,100
Unnamed	Fincantieri	1st Quarter 2026	4,100
Hapag-Lloyd Cruises (50% joint venture) —
Hanseatic Spirit	Vard Fincantieri	2nd Quarter 2021	230
Total Berths			48,030

(1)    The revenue impact from Silversea Cruises' new ships will be recognized on a three month reporting lag from when the ships enter service. Refer to Note 1. General for further information.

In addition, as of March 31, 2021, we have an agreement in place with Chantiers de l'Atlantique to build an additional Edge-class ship for delivery in 2025, which is contingent upon completion of conditions precedent and financing.

As of March 31, 2021, the aggregate cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was approximately $12.9 billion, of which we had deposited $602.5 million as of such date. Approximately 70.5% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at March 31, 2021. Refer to Note 12. Fair Value Measurements and Derivative Instruments for further information.

Litigation

As previously reported, two lawsuits were filed against us in August 2019 in the U.S. District Court for the Southern District of Florida under Title III of the Cuban Liberty and Democratic Solidarity Act, also known as the Helms-Burton Act. The complaint filed by Havana Docks Corporation ("Havana Docks Action") alleges it holds an interest in the Havana Cruise Port Terminal and the complaint filed by Javier Garcia-Bengochea (the "Port of Santiago Action") alleges that he holds an interest in the Port of Santiago, Cuba, both of which were expropriated by the Cuban government. The complaints further allege that we trafficked in those properties by embarking and disembarking passengers at these facilities. The plaintiffs seek all available statutory remedies, including the value of the expropriated property, plus interest, treble damages, attorneys’ fees and costs. We filed our answer to each complaint in October 2019 and on October 15, 2020, and the Court dismissed the Port of Santiago Action with prejudice on the basis that the plaintiffs in that action lacked standing to bring the claim. This decision has been appealed by the plaintiffs. We believe we have meritorious defenses to the claims alleged in both the Havana Docks Action and the Port of Santiago Action, and we intend to vigorously defend ourselves against them. We believe that it is

19

unlikely that the outcome of either action will have a material adverse impact to our financial condition, results of operations or cash flows. However, the outcome of litigation is inherently unpredictable and subject to significant uncertainties, and there can be no assurances that the final outcome of either case will not be material.

As previously disclosed, on October 7, 2020, a shareholder filed a putative class action complaint against us, and three officers, Richard Fain, Jason Liberty and Michael Bayley, in the United States District Court for the Southern District of Florida, alleging misrepresentations relating to COVID-19 in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, seeking unspecified damages on behalf of a purported class consisting of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired our securities from February 4, 2020 through March 17, 2020. In addition, on October 27, 2020, a second complaint was filed by another shareholder against us and these same officers in the District Court alleging the same misrepresentations relating to COVID-19. As is the case with the first action, the second action seeks unspecified damages on behalf of a purported class consisting of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired our securities from February 4, 2020 through March 17, 2020. On December 23, 2020, these cases were consolidated with a new lead plaintiff, Indiana Public Retirement System. On February 25, 2021, the lead plaintiff filed with the District Court a voluntary dismissal of the action without prejudice. On February 26, 2021, the District Court dismissed the entire action without prejudice based on the request for voluntary dismissal.

We are also routinely involved in claims typical within the cruise vacation industry. The majority of these claims are covered by insurance. We believe the outcome of such claims, net of expected insurance recoveries, will not have a material adverse impact on our financial condition or results of operations and cash flows.

Other

If any person acquires ownership of more than 50% of our common stock or, subject to certain exceptions, during any 24-month period, a majority of our board of directors is no longer comprised of individuals who were members of our board of directors on the first day of such period, we may be obligated to prepay indebtedness outstanding under our credit facilities, which we may be unable to replace on similar terms. Our public debt securities also contain change of control provisions that would be triggered by a third-party acquisition of greater than 50% of our common stock coupled with a ratings downgrade. If this were to occur, it would have an adverse impact on our liquidity and operations.

Note 10. Shareholders' Equity

Common Stock Issued

During March 2021, we issued 16.9 million shares of common stock, par value $0.01 per share, at a price of $91.00 per share. We received net proceeds of $1.5 billion from the sale of our common stock, after deducting the estimated offering expenses payable by us.

Dividends

During the second quarter of 2020, we agreed with certain of our lenders not to pay dividends or engage in common stock repurchases for so long as our debt covenant waivers are in effect. In addition, in the event we declare a dividend or engage in share repurchases, we will need to repay the amounts deferred under our export credit facilities. Accordingly, we did not declare a dividend during the first quarter of 2021. Pursuant to amendments made to these agreements during the first quarter of 2021, the restrictions on paying cash dividends and effectuating share repurchases were extended through and including the third quarter of 2022.

During the first quarter of 2020, we declared a cash dividend on our common stock of $0.78 per share, which was paid in April 2020. During the first quarter of 2020, we also paid a cash dividend on our common stock of $0.78 per share, which was declared during the fourth quarter of 2019.

20

Note 11. Changes in Accumulated Other Comprehensive Loss

The following table presents the changes in accumulated other comprehensive loss by component for the quarters ended March 31, 2021 and 2020 (in thousands):

	Accumulated Other Comprehensive Loss for the Quarter Ended March 31, 2021								Accumulated Other Comprehensive Loss for the Quarter Ended March 31, 2020
	Changes related to cash flow derivative hedges		Changes in defined benefit plans		Foreign currency translation adjustments		Accumulated other comprehensive loss		Changes related to cash flow derivative hedges		Changes in defined benefit plans		Foreign currency translation adjustments		Accumulated other comprehensive loss
Accumulated comprehensive loss at beginning of the year	$	(650,519)	$	(65,542)	$	(23,280)	$	(739,341)	$	(688,529)	$	(45,558)	$	(63,626)	$	(797,713)
Other comprehensive income (loss) before reclassifications	(927)		9,720		9,722		18,515		(322,985)		(8,094)		10,290		(320,789)
Amounts reclassified from accumulated other comprehensive loss	11,229		743		—		11,972		22,380		505		—		22,885
Net current-period other comprehensive income (loss)	10,302		10,463		9,722		30,487		(300,605)		(7,589)		10,290		(297,904)
Ending balance	$	(640,217)	$	(55,079)	$	(13,558)	$	(708,854)	$	(989,134)	$	(53,147)	$	(53,336)	$	(1,095,617)

The following table presents reclassifications out of accumulated other comprehensive loss for the quarters ended March 31, 2021 and 2020 (in thousands):

	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
Details About Accumulated Other Comprehensive Loss Components	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020		Affected Line Item in Statements of Comprehensive Loss
Gain (loss) on cash flow derivative hedges:
Interest rate swaps	$	(9,509)	$	(3,391)	Interest expense, net of interest capitalized
Foreign currency forward contracts	(3,781)		(3,337)		Depreciation and amortization expenses
Foreign currency forward contracts	(1,291)		(1,763)		Other income (expense)
Fuel swaps	(407)		344		Other income (expense)
Fuel swaps	3,759		(14,233)		Fuel
	(11,229)		(22,380)
Amortization of defined benefit plans:
Actuarial loss	(743)		(505)		Payroll and related
	(743)		(505)
Total reclassifications for the period	$	(11,972)	$	(22,885)

21

Note 12. Fair Value Measurements and Derivative Instruments 

Fair Value Measurements

The estimated fair value of our financial instruments that are not measured at fair value, categorized based upon the fair value hierarchy, are as follows (in thousands): 

	Fair Value Measurements at March 31, 2021 Using										Fair Value Measurements at December 31, 2020 Using
Description	Total Carrying Amount		Total Fair Value		Level 1(1)		Level 2(2)		Level 3(3)		Total Carrying Amount		Total Fair Value		Level 1(1)		Level 2(2)		Level 3(3)
Assets:
Cash and cash equivalents(4)	$	5,091,463	$	5,091,463	$	5,091,463	$	—	$	—	$	3,684,474	$	3,684,474	$	3,684,474	$	—	$	—
Total Assets	$	5,091,463	$	5,091,463	$	5,091,463	$	—	$	—	$	3,684,474	$	3,684,474	$	3,684,474	$	—	$	—
Liabilities:
Long-term debt (including current portion of debt)(5)	$	20,725,927	$	23,195,196	$	—	$	23,195,196	$	—	$	18,706,359	$	20,981,040	$	—	$	20,981,040	$	—
Total Liabilities	$	20,725,927	$	23,195,196	$	—	$	23,195,196	$	—	$	18,706,359	$	20,981,040	$	—	$	20,981,040	$	—

(1) Inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.

(2) Inputs other than quoted prices included within Level 1 that are observable for the liability, either directly or indirectly. For unsecured revolving credit facilities and unsecured term loans, fair value is determined utilizing the income valuation approach. This valuation model takes into account the contract terms of our debt such as the debt maturity and the interest rate on the debt. The valuation model also takes into account the creditworthiness of the Company.

(3) Inputs that are unobservable. The Company did not use any Level 3 inputs as of March 31, 2021 and December 31, 2020.

(4) Consists of cash and marketable securities with original maturities of less than 90 days.

(5) Consists of unsecured revolving credit facilities, senior notes, term loans and convertible notes. These amounts do not include our finance lease obligations or commercial paper.

Other Financial Instruments 

The carrying amounts of accounts receivable, accounts payable, accrued interest, accrued expenses and commercial paper approximate fair value at March 31, 2021 and December 31, 2020.

Assets and liabilities that are recorded at fair value have been categorized based upon the fair value hierarchy. The following table presents information about the Company’s financial instruments recorded at fair value on a recurring basis (in thousands):

	Fair Value Measurements at March 31, 2021 Using								Fair Value Measurements at December 31, 2020 Using
Description	Total		Level 1(1)		Level 2(2)		Level 3(3)		Total		Level 1(1)		Level 2(2)		Level 3(3)
Assets:
Derivative financial instruments(4)	$	72,900	$	—	$	72,900	$	—	$	108,539	$	—	$	108,539	$	—
Total Assets	$	72,900	$	—	$	72,900	$	—	$	108,539	$	—	$	108,539	$	—
Liabilities:
Derivative financial instruments(5)	$	196,293	$	—	$	196,293	$	—	$	259,705	$	—	$	259,705	$	—
Total Liabilities	$	196,293	$	—	$	196,293	$	—	$	259,705	$	—	$	259,705	$	—

(1)Inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.

(2)Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. For foreign currency forward contracts, interest rate swaps and fuel swaps, fair value is derived using valuation models that utilize the income valuation approach. These valuation models take into account the contract terms, such as maturity, as well as other inputs, such as foreign exchange rates and curves, fuel types, fuel curves and interest rate yield curves. Derivative instrument fair values take into account the creditworthiness of the counterparty and the Company.

(3)Inputs that are unobservable. No Level 3 inputs were used in fair value measurements of Other financial instruments as of March 31, 2021 and December 31, 2020.

(4)Consists of foreign currency forward contracts, interest rate swaps and fuel swaps. Refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.

(5) Consists of foreign currency forward contracts, interest rate swaps and fuel swaps. Refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.

The reported fair values are based on a variety of factors and assumptions. Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of March 31, 2021 or December 31, 2020, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement.

Nonfinancial Instruments Recorded at Fair Value on a Nonrecurring Basis

The following table presents information about the Company’s nonfinancial instruments recorded at fair value on a nonrecurring basis (in thousands):

	Fair Value Measurement at December 31, 2020 Using
Description	Total Carrying Amount	Total Fair Value	Level 3	Total Impairment for the year ended December 31, 2020
Silversea Goodwill(1)	508,578	508,578	508,578	576,208
Indefinite-life intangible asset(2)	318,700	318,700	318,700	30,800
Long-lived assets(3)	577,193	577,193	577,193	727,063
Right-of-use assets(4)	67,265	67,265	67,265	65,909
Equity-method investments(5)	—	—	—	39,735
Total	1,471,736	1,471,736	1,471,736	1,439,715

___________________________________________________________________________________________________

(1) We estimated the fair value of the Silversea Cruises reporting unit using a probability-weighted discounted cash flow model in combination with a market based valuation approach. The principal assumptions used in the discounted cash flow model were (i) the timing of our return to service, changes in market conditions and port or other restrictions; (ii) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate; and (iii) weighted average cost of capital (i.e., discount rate). The discounted cash flow model used our 2020 projected operating results as a base. To that base we added future years’ cash flows through 2030 assuming multiple revenue and expense scenarios that reflect the impact of different global economic environments for this period on the Silversea Cruises' reporting unit. We assigned a probability to each revenue and expense scenario. We discounted the projected cash flows using rates specific to the Silversea Cruises' reporting unit based on its weighted-average cost of capital, which was determined to be 12.75%. The fair value of Silversea Cruises’ goodwill was estimated as of March 31, 2020, the date the asset was last impaired.

(2) Amount represents the Silversea Cruises trade name which makes up the majority of our indefinite-life intangible assets, totaling $321.5 million. We estimated the fair value of our the Silversea Cruises trade name using a discounted cash flow model and the relief-from-royalty method and used a discount rate of 13.25%. Significant inputs in performing the fair value assessment for the trade name were (i) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate; (ii) the royalty rate of 3.0%; and (iii) weighted average cost of capital (i.e., discount rate). The fair value of the Silversea Cruises trade name was estimated as of March 31, 2020, the date the asset was last impaired.

(3) Impairments primarily relate to certain vessels during 2020. In addition, certain construction in progress projects generated impairments during the quarter ended September 30, 2020 and quarter ended December 31, 2020. For the vessels impaired during the quarter ended March 31, 2020, we estimated the fair value of two of our vessels using a blended indication from the income and cost approaches and the fair value of the remaining vessels was estimated primarily based on their orderly liquidation values. For the vessels impaired during the quarter ended June 30, 2020, we estimated the fair value of the vessels using a modified market approach based on the carrying values and orderly liquidation values of the vessels. For the vessels impaired during the quarter ended December 31, 2020, we estimated the fair value of the three Azamara vessels using a market approach. A significant input in performing the fair value assessments for these vessels was management's expected use of the vessels, which takes into consideration forecasted operating results. During the quarter ended September 30, 2020 and quarter ended

December 31, 2020, construction in progress assets were impaired due to a reduction in scope or the decision to not complete the projects. The impairment was calculated based on orderly liquidation values. The fair value of these assets were estimated as of the date the asset was last impaired.

(4) Impairments to our right-of-use assets relate to certain of our berthing arrangements and a ship operating lease. We estimated the fair value of the berthing arrangements using estimated projected discounted cash flows and the fair value of the ship operating lease was estimated using a market approach. The fair value of the berthing arrangements was estimated as of March 31, 2020, the date these assets were last impaired. A significant input in performing the fair value assessments for these assets was our expected passenger headcount. The fair value of the ship operating lease was estimated as of December 31, 2020, the date this asset was last impaired, and significant inputs in performing the fair value assessment using the market approach for this asset were the expected rate of return and remaining lease payments.

(5) We estimated the fair value of our other than temporarily impaired equity-method investments using a discounted cash flow model. A significant input in performing the fair value assessments for these assets was forecasted operating results for these investments. The fair value of these equity-method investments was estimated as of March 31, 2020, the date these assets were last impaired. For further information on our equity method investments, refer to Note 6. Other Assets.

Master Netting Agreements

We have master International Swaps and Derivatives Association (“ISDA”) agreements in place with our derivative instrument counterparties. These ISDA agreements generally provide for final close out netting with our counterparties for all positions in the case of default or termination of the ISDA agreement. We have determined that our ISDA agreements provide us with rights of setoff on the fair value of derivative instruments in a gain position and those in a loss position with the same counterparty. We have elected not to offset such derivative instrument fair values in our consolidated balance sheets.

See Credit Related Contingent Features for further discussion on contingent collateral requirements for our derivative instruments.

The following table presents information about the Company’s offsetting of financial assets under master netting agreements with derivative counterparties (in thousands):

	Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
	As of March 31, 2021								As of December 31, 2020
	Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet		Gross Amount of Eligible Offsetting Recognized Derivative Liabilities		Cash Collateral Received		Net Amount of Derivative Assets		Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet		Gross Amount of Eligible Offsetting Recognized Derivative Liabilities		Cash Collateral Received		Net Amount of Derivative Assets
Derivatives subject to master netting agreements	$	72,900	$	(63,789)	$	—	$	9,111	$	108,539	$	(80,743)	$	—	$	27,796
Total	$	72,900	$	(63,789)	$	—	$	9,111	$	108,539	$	(80,743)	$	—	$	27,796

The following table presents information about the Company’s offsetting of financial liabilities under master netting agreements with derivative counterparties (in thousands):

	Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
	As of March 31, 2021								As of December 31, 2020
	Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet		Gross Amount of Eligible Offsetting Recognized Derivative Assets		Cash Collateral Pledged		Net Amount of Derivative Liabilities		Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet		Gross Amount of Eligible Offsetting Recognized Derivative Assets		Cash Collateral Pledged		Net Amount of Derivative Liabilities
Derivatives subject to master netting agreements	$	(196,293)	$	63,789	$	71,587	$	(60,917)	$	(259,705)	$	80,743	$	57,273	$	(121,689)
Total	$	(196,293)	$	63,789	$	71,587	$	(60,917)	$	(259,705)	$	80,743	$	57,273	$	(121,689)

Concentrations of Credit Risk

We monitor our credit risk associated with financial and other institutions with which we conduct significant business and to minimize these risks, we select counterparties with credit risks acceptable to us and we seek to limit our exposure to an individual counterparty. Credit risk, including but not limited to counterparty nonperformance under derivative instruments, our credit facilities and new ship progress payment guarantees, is not considered significant, as we primarily conduct business with large, well-established financial institutions, insurance companies and export credit agencies many of which we have long-term relationships with and which have credit risks acceptable to us or where the credit risk is spread out among a large number of counterparties. As of March 31, 2021, we had counterparty credit risk exposure under our derivative instruments of $4.8 million, which were limited to the cost of replacing the contracts in the event of non-performance by the counterparties to the contracts, the majority of which are currently our lending banks. We do not anticipate nonperformance by any of our significant counterparties. In addition, we have established guidelines we follow regarding credit ratings and instrument maturities to maintain safety and liquidity. We do not normally require collateral or other security to support credit relationships; however, in certain circumstances this option is available to us.

Derivative Instruments

We are exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices. We try to mitigate these risks through a combination of our normal operating and financing activities and through the use of derivative financial instruments pursuant to our hedging practices and policies. The financial impact of these hedging instruments is primarily offset by corresponding changes in the underlying exposures being hedged. We achieve this by closely matching the notional amount, term and conditions of the derivative instrument with the underlying risk being hedged. Although certain of our derivative financial instruments do not qualify or are not accounted for under hedge accounting, our objective is not to hold or issue derivative financial instruments for trading or other speculative purposes. 

We enter into various forward, swap and option contracts to manage our interest rate exposure and to limit our exposure to fluctuations in foreign currency exchange rates and fuel prices. These instruments are recorded on the balance sheet at their fair value and the vast majority are designated as hedges. We also use non-derivative financial instruments designated as hedges of our net investment in our foreign operations and investments.

At inception of the hedge relationship, a derivative instrument that hedges the exposure to changes in the fair value of a firm commitment or a recognized asset or liability is designated as a fair value hedge. A derivative instrument that hedges a forecasted transaction or the variability of cash flows related to a recognized asset or liability is designated as a cash flow hedge.

Changes in the fair value of derivatives that are designated as fair value hedges are offset against changes in the fair value of the underlying hedged assets, liabilities or firm commitments. Gains and losses on derivatives that are designated as cash flow hedges are recorded as a component of Accumulated other comprehensive loss until the underlying hedged transactions are recognized in earnings. The foreign currency transaction gain or loss of our non-derivative financial instruments and the changes in the fair value of derivatives designated as hedges of our net investment in foreign operations and investments are recognized as a component of Accumulated other comprehensive loss along with the associated foreign currency translation adjustment of the foreign operation or investment, with the amortization of excluded components affecting earnings. 

On an ongoing basis, we assess whether derivatives used in hedging transactions are "highly effective" in offsetting changes in the fair value or cash flow of hedged items. For our net investment hedges, we use the dollar offset method to measure effectiveness. For all other hedging programs, we use the long-haul method to assess hedge effectiveness using regression analysis for each hedge relationship. The methodology for assessing hedge effectiveness is applied on a consistent basis for each one of our hedging programs (i.e., interest rate, foreign currency ship construction, foreign currency net investment and fuel). For our regression analyses, we use an observation period of up to three years, utilizing market data relevant to the hedge horizon of each hedge relationship. High effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the changes in the fair values of the derivative instrument and the hedged item. If it is determined that a derivative is not highly effective as a hedge or hedge accounting is discontinued, any change in fair value of the derivative since the last date at which it was determined to be effective is recognized in earnings.

Cash flows from derivative instruments that are designated as fair value or cash flow hedges are classified in the same category as the cash flows from the underlying hedged items. In the event that hedge accounting is discontinued, cash flows subsequent to the date of discontinuance are classified within investing activities. Cash flows from derivative instruments not designated as hedging instruments are classified as investing activities. 

We consider the classification of the underlying hedged item’s cash flows in determining the classification for the designated derivative instrument’s cash flows. We classify derivative instrument cash flows from hedges of benchmark interest rate or hedges of fuel expense as operating activities due to the nature of the hedged item. Likewise, we classify derivative instrument cash flows from hedges of foreign currency risk on our newbuild ship payments as investing activities.

Interest Rate Risk

Our exposure to market risk for changes in interest rates primarily relates to our debt obligations including future interest payments. At March 31, 2021 and December 31, 2020, approximately 68.2% and 64.5%, respectively, of our debt was effectively fixed. We use interest rate swap agreements to modify our exposure to interest rate movements and to manage our interest expense.

Market risk associated with our fixed-rate debt is the potential increase in fair value resulting from a decrease in interest rates. We use interest rate swap agreements that effectively convert a portion of our fixed-rate debt to a floating-rate basis to manage this risk. At March 31, 2021 and December 31, 2020, we maintained interest rate swap agreements on the following fixed-rate debt instruments:

Debt Instrument	Swap Notional as of March 31, 2021 (in thousands)		Maturity	Debt Fixed Rate	Swap Floating Rate: LIBOR plus	All-in Swap Floating Rate as of March 31, 2021
Oasis of the Seas term loan	$	35,000	October 2021	5.41%	3.87%	4.12%
Unsecured senior notes	650,000		November 2022	5.25%	3.63%	3.83%
	$	685,000

These interest rate swap agreements are accounted for as fair value hedges.

Market risk associated with our long-term floating-rate debt is the potential increase in interest expense from an increase in interest rates. We use interest rate swap agreements that effectively convert a portion of our floating-rate debt to a fixed-rate basis to manage this risk. At March 31, 2021 and December 31, 2020, we maintained interest rate swap agreements on the following floating-rate debt instruments:

Debt Instrument	Swap Notional as of March 31, 2021 (in thousands)		Maturity	Debt Floating Rate		All-in Swap Fixed Rate
Celebrity Reflection term loan	$	218,167	October 2024	LIBOR plus	0.40%	2.85%
Quantum of the Seas term loan	367,500		October 2026	LIBOR plus	1.30%	3.74%
Anthem of the Seas term loan	392,708		April 2027	LIBOR plus	1.30%	3.86%
Ovation of the Seas term loan	518,750		April 2028	LIBOR plus	1.00%	3.16%
Harmony of the Seas term loan (1)	509,411		May 2028	EURIBOR plus	1.15%	2.26%
Odyssey of the Seas term loan (2)	460,000		October 2032	LIBOR plus	0.95%	3.21%
Odyssey of the Seas term loan (2)	191,667		October 2032	LIBOR plus	0.95%	2.84%
	$	2,658,203

(1)Interest rate swap agreements hedging the Euro-denominated term loan for Harmony of the Seas include EURIBOR zero-floor matching the hedged debt EURIBOR zero-floor. Amount presented is based on the exchange rate as of March 31, 2021.

(2)Interest rate swap agreements hedging the term loan of Odyssey of the Seas include LIBOR zero-floors matching the debt LIBOR zero-floor. The effective dates of the $460.0 million and $191.7 million interest rate swap agreements are October 2020 and October 2022, respectively. The unsecured term loan for the financing of Odyssey of the Seas was drawn on March 2021.

These interest rate swap agreements are accounted for as cash flow hedges.

The notional amount of interest rate swap agreements related to outstanding debt and our current unfunded financing arrangements as of March 31, 2021 and December 31, 2020 was $3.3 billion and $3.4 billion, respectively.

Foreign Currency Exchange Rate Risk

Derivative Instruments

Our primary exposure to foreign currency exchange rate risk relates to our ship construction contracts denominated in Euros, our foreign currency denominated debt and our international business operations. We enter into foreign currency forward contracts to manage portions of the exposure to movements in foreign currency exchange rates. As of March 31, 2021, the aggregate cost of our ships on order was $12.9 billion, of which we had deposited $602.5 million as of such date. These amounts do not include any ships placed on order that are contingent upon completion of conditions precedent and/or financing, any ships on order by our Partner Brands and any ships on order placed by Silversea Cruises during the reporting lag period. Refer to Note 9. Commitments and Contingencies, for further information on our ships on order.  At March 31, 2021 and December 31, 2020, approximately 70.5% and 66.3%, respectively, of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate. Our foreign currency forward contract agreements are accounted for as cash flow or net investment hedges depending on the designation of the related hedge.

On a regular basis, we enter into foreign currency forward contracts and, from time to time, we utilize cross-currency swap agreements and collar options to minimize the volatility resulting from the remeasurement of net monetary assets and liabilities denominated in a currency other than our functional currency or the functional currencies of our foreign subsidiaries. During the first quarter of 2021, we maintained an average of approximately $462.6 million of these foreign currency forward contracts. These instruments are not designated as hedging instruments. For the quarters ended March 31, 2021 and 2020, changes in the fair value of the foreign currency forward contracts resulted in losses of $13.5 million and $52.7 million, respectively. These amounts were recognized in earnings within Other income (expense) in our consolidated statements of comprehensive loss.

We consider our investments in our foreign operations to be denominated in relatively stable currencies and to be of a long-term nature. As of March 31, 2021, we maintained foreign currency forward contracts and designated them as hedges of a portion of our net investments primarily in TUI Cruises of €245.0 million, or approximately $288.0 million based on the exchange rate at March 31, 2021. These forward currency contracts mature in October 2021.

The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of both March 31, 2021 and December 31, 2020 was $2.5 billion and $3.1 billion, respectively.

Non-Derivative Instruments

We also address the exposure of our investments in foreign operations by denominating a portion of our debt in our subsidiaries’ and investments’ functional currencies and designating it as a hedge of these subsidiaries and investments. We had designated debt as a hedge of our net investments primarily in TUI Cruises of €113.0 million, or approximately $132.8 million, as of March 31, 2021. As of December 31, 2020, we had designated debt as a hedge of our net investments in TUI Cruises of €215.0 million, or approximately $263.0 million.

Fuel Price Risk

Our exposure to market risk for changes in fuel prices relates primarily to the consumption of fuel on our ships. We use fuel swap agreements to mitigate the financial impact of fluctuations in fuel prices.

Our fuel swap agreements are generally accounted for as cash flow hedges. In the case that our hedged forecasted fuel consumption is not probable of occurring, hedge accounting will be discontinued and the related accumulated other comprehensive gain or loss will be reclassified to Other income (expense) immediately. For hedged forecasted fuel consumption that remains possible of occurring, hedge accounting will be discontinued and the related accumulated other comprehensive gain or loss will remain in accumulated other comprehensive gain or loss until the underlying hedged transactions are recognized in earnings or the related hedged forecasted fuel consumption is deemed probable of not occurring.

The current suspension of our cruise operations due to the COVID-19 pandemic resulted in reductions to our forecasted fuel purchases. During the quarter ended March 31, 2021, we discontinued cash flow hedge accounting on 48 thousand metric tons of our fuel swap agreements maturing in 2021, which resulted in the reclassification of a net $4.4 million loss from Accumulated other comprehensive loss to Other income (expense). During the quarter ended March 31, 2020, we discontinued cash flow hedge accounting on 212 thousand metric tons of our fuel swap agreements maturing in 2020, which resulted in the reclassification of a net $54.9 million loss from Accumulated other comprehensive loss to Other income (expense). Changes in the fair value of fuel swaps for which cash flow hedge accounting was discontinued are currently recognized in Other income (expense) each reporting period through the maturity dates of the fuel swaps.

Future suspension of our operations or modifications to our itineraries may affect our expected forecasted fuel purchases which could result in further discontinuance of fuel swap cash flow hedge accounting and the reclassification of deferred gains or losses from Accumulated other comprehensive loss into earnings. Refer to Risk Factors in Part II, Item 1A. for further discussion on risks related to COVID-19.

At March 31, 2021, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2024. As of March 31, 2021 and December 31, 2020, we had the following outstanding fuel swap agreements:

	Fuel Swap Agreements
	As of March 31, 2021	As of December 31, 2020
Designated as hedges:	(metric tons)
2021	284,050	385,050
2022	389,650	389,650
2023	82,400	82,400

	Fuel Swap Agreements
	As of March 31, 2021		As of December 31, 2020
	(% hedged)
Designated hedges as a % of projected fuel purchases:
2021	43	%	40	%
2022	25	%	23	%
2023	5	%	5	%

	Fuel Swap Agreements
	As of March 31, 2021	As of December 31, 2020
Not designated as hedges:	(metric tons)
2021	172,400	229,850
2022	14,650	14,650

As of March 31, 2021, $8.9 million of estimated unrealized loss associated with our cash flow hedges pertaining to fuel swap agreements is expected to be reclassified to earnings from Accumulated other comprehensive loss within the next twelve months. Reclassification is expected to occur as the result of fuel consumption associated with our hedged forecasted fuel purchases.

The fair value and line item caption of derivative instruments recorded within our consolidated balance sheets were as follows (in thousands):

	Fair Value of Derivative Instruments
	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	As of March 31, 2021		As of December 31, 2020		Balance Sheet Location	As of March 31, 2021		As of December 31, 2020
		Fair Value		Fair Value			Fair Value		Fair Value
Derivatives designated as hedging instruments under ASC 815-20(1)
Interest rate swaps	Other assets	$	16,152	$	17,271	Other long-term liabilities	$	97,981	$	144,653
Interest rate-swaps	Derivative financial instruments	149		261		Derivative financial instruments	—		—
Foreign currency forward contracts	Derivative financial instruments	30,268		63,894		Derivative financial instruments	26,903		13,294
Foreign currency forward contracts	Other assets	5,842		20,836		Other long-term liabilities	23,032		7,306
Fuel swaps	Derivative financial instruments	15,099		5,093		Derivative financial instruments	9,135		25,203
Fuel swaps	Other assets	2,225		350		Other long-term liabilities	20,854		50,117
Total derivatives designated as hedging instruments under 815-20		69,735		107,705			177,905		240,573
Derivatives not designated as hedging instruments under ASC 815-20
Foreign currency forward contracts	Derivative financial instruments	$	1,201	$	—	Derivative financial instruments	$	4,284	$	160
Foreign currency forward contracts	Other assets	—		—		Other long-term liabilities	—		—
Fuel swaps	Derivative financial instruments	1,935		834		Derivative financial instruments	13,076		18,028
Fuel swaps	Other Assets	29		—		Other long-term liabilities	1,028		944
Total derivatives not designated as hedging instruments under 815-20		3,165		834			18,388		19,132
Total derivatives		$	72,900	$	108,539		$	196,293	$	259,705

(1)Accounting Standard Codification 815-20 “Derivatives and Hedging.”

The location and amount of gain or (loss) recognized in income on fair value and cash flow hedging relationships were as follows (in thousands):

Quarter Ended March 31, 2021

Quarter Ended March 31, 2020

Fuel Expense

Depreciation and Amortization Expenses

Interest Income (Expense)

Other Income (Expense)

Fuel Expense

Depreciation and Amortization Expenses

Interest Income (Expense)

Other Income (Expense)

Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded

$41,822

$310,166

$(267,653)

$5,033

$194,268

$324,330

$(87,377)

$(32,859)

The effects of fair value and cash flow hedging:

Gain or (loss) on fair value hedging relationships in Subtopic 815-20

Interest contracts

Hedged items

n/a

n/a

$2,930

$—

n/a

n/a

$(21,330)

$—

Derivatives designated as hedging instruments

n/a

n/a

$(552)

$—

n/a

n/a

$20,430

$—

Gain or (loss) on cash flow hedging relationships in Subtopic 815-20

Interest contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income

n/a

n/a

$(9,509)

n/a

n/a

n/a

$(3,391)

n/a

Commodity contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income

$3,759

n/a

n/a

$(407)

$(14,233)

n/a

n/a

$344

Foreign exchange contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income

n/a

$(3,781)

n/a

$(1,291)

n/a

$(3,337)

n/a

$(1,763)

The carrying value and line item caption of non-derivative instruments designated as hedging instruments recorded within our consolidated balance sheets were as follows (in thousands):

		Carrying Value
Non-derivative instrument designated as hedging instrument under ASC 815-20	Balance Sheet Location	As of March 31, 2021		As of December 31, 2020
Foreign currency debt	Current portion of debt	$	—	$	43,696
Foreign currency debt	Long-term debt	132,826		219,335
		$	132,826	$	263,031

The effect of derivative instruments qualifying and designated as hedging instruments and the related hedged items in fair value hedges on the consolidated statements of comprehensive loss was as follows (in thousands):

Derivatives and Related Hedged Items under ASC 815-20 Fair Value Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivative and Hedged Item	Amount of Gain (Loss) Recognized in Income on Derivative				Amount of Gain (Loss) Recognized in Income on Hedged Item
		Quarter Ended March 31, 2021		Quarter Ended March 31, 2020		Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Interest rate swaps	Interest expense, net of interest capitalized	$	(552)	$	20,430	$	2,930	$	(21,330)
		$	(552)	$	20,430	$	2,930	$	(21,330)

The fair value and line item caption of derivative instruments recorded within our consolidated balance sheets for the cumulative basis adjustment for fair value hedges were as follows (in thousands):

Line Item in the Statement of Financial Position Where the Hedged Item is Included	Carrying Amount of the Hedged Liabilities				Cumulative amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liabilities
	As of March 31, 2021		As of December 31, 2020		As of March 31, 2021		As of December 31, 2020
Current portion of debt and Long-term debt	$	662,822	$	700,331	$	14,582	$	17,512
	$	662,822	$	700,331	$	14,582	$	17,512

The effect of derivative instruments qualifying and designated as cash flow hedging instruments on the consolidated financial statements was as follows (in thousands):

Derivatives under ASC 815-20  Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss on Derivatives				Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020			Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Interest rate swaps	$	43,408	$	(52,595)	Interest expense, net of interest capitalized	$	(9,509)	$	(3,391)
Foreign currency forward contracts	(99,581)		(100,014)		Depreciation and amortization expenses	(3,781)		(3,337)
Foreign currency forward contracts	—		—		Other income (expense)	(1,291)		(1,763)
Fuel swaps	—		—		Other income (expense)	(407)		344
Fuel swaps	55,246		(170,376)		Fuel	3,759		(14,233)
	$	(927)	$	(322,985)		$	(11,229)	$	(22,380)

The table below represents amounts excluded from the assessment of effectiveness for our net investment hedging instruments for which the difference between changes in fair value and periodic amortization is recorded in accumulated other comprehensive income (loss) (in thousands):

Gain (Loss) Recognized in Income (Net Investment Excluded Components)	Three Months Ended March 31, 2021
Net inception fair value at January 1, 2021	$	(1,915)
Amount of gain recognized in income on derivatives for the period ended March 31, 2021	1,637
Amount of gain (loss) remaining to be amortized in accumulated other comprehensive loss, as of March 31, 2021	(993)
Fair value at March 31, 2021	$	(1,271)

The effect of non-derivative instruments qualifying and designated as net investment hedging instruments on the consolidated financial statements was as follows (in thousands):

	Amount of Gain (Loss) Recognized in Other Comprehensive Loss
Non-derivative instruments under ASC 815-20 Net Investment Hedging Relationships	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Foreign Currency Debt	$	5,822	$	7,489
	$	5,822	$	7,489

There was no amount recognized in income (ineffective portion and amount excluded from effectiveness testing) for the quarters ended March 31, 2021 and March 31, 2020.

The effect of derivatives not designated as hedging instruments on the consolidated financial statements was as follows (in thousands):

		Amount of Gain (Loss) Recognized in Income on Derivatives
Derivatives Not Designated as Hedging Instruments under ASC 815-20	Location of Gain (Loss) Recognized in Income on Derivatives	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Foreign currency forward contracts	Other income (expense)	$	(13,498)	$	(52,676)
Fuel swaps	Other income (expense)	12,655		(67,206)
		$	(843)	$	(119,882)

Credit Related Contingent Features

Our current interest rate derivative instruments require us to post collateral if our Standard & Poor’s and Moody’s credit ratings fall below specified levels. Specifically, under most of our agreements, if on the fifth anniversary of executing a derivative instrument, or on any succeeding fifth-year anniversary, our credit ratings for our senior unsecured debt is rated below BBB- by Standard & Poor’s and Baa3 by Moody’s, then the counterparty will periodically have the right to demand that we post collateral in an amount equal to the difference between (i) the net market value of all derivative transactions with such counterparty that have reached their fifth year anniversary, to the extent negative, and (ii) the applicable minimum call amount.

The amount of collateral required to be posted will change as, and to the extent, our net liability position increases or decreases by more than the applicable minimum call amount. If our credit rating for our senior unsecured debt is subsequently equal to or above BBB- by Standard & Poor’s or Baa3 by Moody’s, then any collateral posted at such time will be released to us and we will no longer be required to post collateral unless we meet the collateral trigger requirement, generally, at the next fifth-year anniversary.

As of March 31, 2021, our senior unsecured debt credit rating was B by Standard & Poor's and B2 by Moody's. As of March 31, 2021, seven of our interest rate derivative hedges had a term of at least five years requiring us to post collateral of $71.6 million to satisfy our obligations under our interest rate derivative agreements, taking into account any collateral waivers issued by banks. We believe we have reached the maximum collateral amount that we may need to provide under these agreements in the next twelve months.

22

Note 13. Restructuring Charges

In April 2020, we reduced our U.S. shoreside workforce by approximately 23% through permanent layoffs. We incurred severance costs of $28.0 million during the year ended December 31, 2020.

The following table summarizes our restructuring costs during the quarter ended March 31, 2021 as it relates to the April 2020 reduction in our workforce (in thousands):

	Beginning balance January 1, 2021		Accruals		Payments		Ending balance March 31, 2021		Cumulative Charges Incurred		Expected Additional Expenses to be Incurred
Termination benefits	$	4,257	$	3,468	$	—	$	7,725	$	31,421	$	—
Total	$	4,257	$	3,468	$	—	$	7,725	$	31,421	$	—

23

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 

Cautionary Note Concerning Forward-Looking Statements

The discussion under this caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, business and industry prospects or future results of operations or financial position, made in this Quarterly Report on Form 10-Q are forward-looking. Words such as "anticipate," "believe," "could," "driving," "estimate," "expect," "goal," "intend," "may," "plan," "project," "seek," "should," "will," "would," "considering" and similar expressions are intended to further identify any of these forward-looking statements. Forward-looking statements reflect management's current expectations but they are based on judgments and are inherently uncertain. Furthermore, they are subject to risks, uncertainties and other factors that could cause our actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in those forward-looking statements. Examples of these risks, uncertainties and other factors include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q and, in particular, the risks discussed under the caption "Risk Factors" in Part II, Item 1A herein.

All forward-looking statements made in this Quarterly Report on Form 10-Q speak only as of the date of this filing.  Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  

Overview

The discussion and analysis of our financial condition and results of operations is organized to present the following:

•a review of our financial presentation, including discussion of certain operational and financial metrics we utilize to assist us in managing our business;

•a discussion of our results of operations for the quarter ended March 31, 2021, compared to the same period in 2020;

•a discussion of our business outlook; and

•a discussion of our liquidity and capital resources, including our future capital and contractual commitments and potential funding sources. 

33

Critical Accounting Policies

For a discussion of our critical accounting policies, refer to Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations within our Annual Report on Form 10-K for the year ended December 31, 2020.

Seasonality

Historically, our revenues are seasonal based on demand for cruises. Demand has historically been strongest for cruises during the Northern Hemisphere’s summer months and holidays. In order to mitigate the impact of the winter weather in the Northern Hemisphere and to capitalize on the summer season in the Southern Hemisphere, our brands have focused on deployment to the Caribbean, Asia and Australia during that period.

Financial Presentation

Description of Certain Line Items

Revenues

Our revenues are comprised of the following:

•Passenger ticket revenues, which consist of revenue recognized from the sale of passenger tickets and the sale of air transportation to and from our ships; and

•Onboard and other revenues, which consist primarily of revenues from the sale of goods and/or services onboard our ships not included in passenger ticket prices, cancellation fees, sales of vacation protection insurance, pre- and post-cruise tours and fees for operating certain port facilities. Onboard and other revenues also include revenues we receive from independent third party concessionaires that pay us a percentage of their revenues in exchange for the right to provide selected goods and/or services onboard our ships, as well as revenues received for our bareboat charter, procurement and management related services we perform on behalf of our unconsolidated affiliates. 

Cruise Operating Expenses 

Our cruise operating expenses are comprised of the following:

•Commissions, transportation and other expenses, which consist of those costs directly associated with passenger ticket revenues, including travel agent commissions, air and other transportation expenses, port costs that vary with passenger head counts and related credit card fees;

•Onboard and other expenses, which consist of the direct costs associated with onboard and other revenues, including the costs of products sold onboard our ships, vacation protection insurance premiums, costs associated with pre- and post-cruise tours and related credit card fees, as well as, the minimal costs associated with concession revenues, as the costs are mostly incurred by third-party concessionaires, and costs incurred for the procurement and management related services we perform on behalf of our unconsolidated affiliates;

•Payroll and related expenses, which consist of costs for shipboard personnel (costs associated with our shoreside personnel are included in Marketing, selling and administrative expenses);

•Food expenses, which include food costs for both guests and crew;

•Fuel expenses, which include fuel and related delivery, storage and emission consumable costs and the financial impact of fuel swap agreements; and

•Other operating expenses, which consist primarily of operating costs such as repairs and maintenance, port costs that do not vary with passenger head counts, vessel related insurance, entertainment and gains and/or losses related to the sale of our ships, if any.  

We do not allocate payroll and related expenses, food expenses, fuel expenses or other operating expenses to the expense categories attributable to passenger ticket revenues or onboard and other revenues since they are incurred to provide the total cruise vacation experience.

Selected Operational and Financial Metrics 

We utilize a variety of operational and financial metrics which are defined below to evaluate our performance and financial condition. As discussed in more detail herein, certain of these metrics are non-GAAP financial measures. These non-GAAP

34

financial measures are provided along with the related GAAP financial measures as we believe they provide useful information to investors as a supplement to our consolidated financial statements, which are prepared and presented in accordance with GAAP. The presentation of non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Adjusted Loss per Share ("Adjusted EPS") represents Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd. divided by weighted average shares outstanding or by diluted weighted average shares outstanding, as applicable. We believe that this non-GAAP measure is meaningful when assessing our performance on a comparative basis.

Adjusted Net Loss represents net loss less net income attributable to noncontrolling interest excluding certain items that we believe adjusting for is meaningful when assessing our performance on a comparative basis. For the periods presented, these items included (i) loss on the extinguishment of debt; (ii) the amortization of non-cash debt discount on our convertible notes; (iii) the estimated cash refund expected to be paid to Pullmantur guests and other expenses incurred as part of the Pullmantur S.A. reorganization; (iv) impairment and credit losses recognized in the first quarter of 2020 as a result of the impact of COVID-19 and, in 2021, recovery of credit losses recognized during 2020; (v) equity investment asset impairments; (vi) net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas; (vii) restructuring charges incurred in relation to the reduction in our U.S. workforce and other initiative expenses; (viii) the change in the fair value in the Silversea Cruises contingent consideration and the amortization of the Silversea Cruises intangible assets resulting from the our acquisition of a 66.7% interest in Silversea Cruises in 2018; (ix) the noncontrolling interest adjustment to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.'s (previously known as Silversea Cruises Group Ltd.) noncontrolling interest in Silversea Cruises; and (x) the net gain recognized in the first quarter of 2021 in relation to the sale of the Azamara brand.

Available Passenger Cruise Days (“APCD”) is our measurement of capacity and represents double occupancy per cabin multiplied by the number of cruise days for the period, which excludes canceled cruise days and drydock days. We use this measure to perform capacity and rate analysis to identify our main non-capacity drivers that cause our cruise revenue and expenses to vary.

Occupancy, in accordance with cruise vacation industry practice, is calculated by dividing Passenger Cruise Days by APCD. A percentage in excess of 100% indicates that three or more passengers occupied some cabins.

Passenger Cruise Days represent the number of passengers carried for the period multiplied by the number of days of their respective cruises.

Although discussed in previous periods, we did not report nor reconcile our Gross Yields, Net Yields, Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs Excluding Fuel, as defined in our Annual Report on Form 10-K for the year ended December 31, 2019. Historically, we have utilized these financial metrics to measure relevant rate comparisons to other periods. However, our 2020 and 2021 reduction in capacity and revenues and the shift in the nature of our running costs due to the suspension of our operations do not allow for a meaningful analysis and comparison of these metrics and as such these metrics have been excluded from this report.

Recent Developments: COVID-19

Return to Healthy Sailing

Our voluntary suspension of our Global Brands’ cruise operations established in March 2020 in an effort to contain COVID-19, has been extended through at least June 30, 2021, for most of our cruise operations. The disruptions to our operations resulting from COVID-19 have had, and continue to have, a material negative impact on our financial condition and results of operations. The outbreak of COVID-19 has resulted in an unprecedented global response to contain the spread of the disease. These global efforts have resulted in travel restrictions and created significant uncertainty regarding worldwide port closures and availability of ports and destinations generally.

We have begun certain limited operations and have announced additional, limited cruise operations on 13 out of our 59 Global and Partner Brand ships, in each case, outside of the U.S. with reduced guest occupancy, modified itineraries, and enhanced health, safety and vaccination protocols for our crew and guests, developed in collaboration with governments and health authorities and under the advice of the Healthy Sail Panel (“HSP”). The HSP was formed in June 2020 by us and Norwegian Cruise Line Holdings Ltd. and composed of leading experts in relevant fields, including epidemiology, infectious diseases, public policy, applicable regulations, engineering and general health safety.

CDC Framework for Conditional Sailing Order

On and effective as of October 30, 2020, the U.S. Centers for Disease Control and Prevention ("CDC") issued a Framework for Conditional Sailing Order (the “Conditional Order”), and recently issued technical instructions under the

35

Conditional Order, that will permit cruise ship passenger operations in U.S. waters under certain conditions and using a phased approach. The Conditional Order will remain in effect until the earlier of (1) the expiration of the Secretary of Health and Human Services’ declaration that COVID-19 constitutes a public health emergency, (2) the rescission or modification by the CDC Director of the Conditional Order based on specific public health or other considerations, or (3) November 1, 2021.

We continue to work with the CDC, other U.S. and non-U.S. regulatory agencies and the HSP to develop our plan to return to service in consideration of global vaccination efforts. For cruise ship operations in U.S. waters, our return to service plan also considers the requirements of the CDC's framework for the Conditional Order, including recently issued technical instructions. On April 28, 2021, the CDC issued a letter to members of the cruising industry communicating that it remains committed to the resumption of cruise ship passenger operations in the U.S. following the requirements of the Conditional Order by mid-summer 2021. In the communication, the CDC provided clarifications to its previously issued technical instructions regarding several matters including port operations and COVID-19 testing and vaccination protocols. We are currently evaluating the impact of these clarifications on the technical instructions.

Many uncertainties remain as to the specifics, timing and costs of administering and implementing the requirements of the Conditional Order, some of which may be significant. Further, the Conditional Order contemplates that the CDC may issue additional requirements through additional technical instructions or orders as needed and that the phases described above will be further determined based on public health considerations, including the trajectory of the pandemic, variants of disease and the ability of cruise ship operators to successfully employ measures that mitigate the risk of COVID-19. Based on our assessment of these conditions or for other reasons, we may determine it necessary to further extend our voluntary suspension of our Global Brands’ cruise sailings which currently extends through at least June 30, 2021, for most of our cruise operations.

Update on Bookings

Booking activity for the second half of 2021 is aligned with our anticipated resumption of cruising. Pricing on these bookings is higher than 2019 both including and excluding the dilutive impact of future cruise credits ("FCC"s). Cumulative advance bookings for the first half of 2022 are within historical ranges and at higher prices when compared to 2019. This was achieved with minimal sales and marketing spend, which we believe highlights a strong long-term demand for cruising

Since our annual filing, approximately 75% of bookings made for the remainder of 2021 are new and the rest are due to the redemption of FCCs and our “Lift & Shift” program. We continue to provide guests who were booked on a suspended sailing with the option to request a refund, to receive an FCC, or to “Lift and Shift” their booking to the following year.

As of March 31, 2021 we had $1.8 billion in customer deposits, of which approximately 45% are FCCs. Approximately 50% of the guests booked on cancelled sailings since our suspension of operations have requested cash refunds.

Update on Recent Liquidity Actions and Ongoing Uses of Cash

As of March 31, 2021, we had liquidity of approximately $5.8 billion in the form of cash and cash equivalents of $5.1 billion and a $0.7 billion commitment expiring on August 12, 2022 for a 364-day term loan facility. As of March 31, 2021, our revolving credit facilities were fully utilized through a combination of amounts drawn and letters of credit issued under the facilities. Given the current environment, we continue to prioritize and bolster liquidity through significant cost and capital expenditure reductions, cash conservation and additional financing sources, as described below, to ensure that we are well positioned for recovery.

Reduced Operating Expenses

We have taken significant actions to reduce operating expenses during the suspension of our global cruise operations. In particular, we:

•    significantly reduced ship operating expenses, including crew payroll, food, fuel, insurance and port charges;

•    further reduced operating expenses as the Company’s ships are currently transitioning into various levels of layup with     several ships in the fleet transitioning into cold layup;

•    significantly reduced marketing and selling expenses;

•    reduced and furloughed our workforce, with approximately 23% of our US shoreside employee base being impacted in 2020; and

•    suspended travel for shoreside employees and instituted a hiring freeze across the organization.

The average monthly cash burn rate for the first quarter of 2021 was approximately $300 million. This is slightly higher than the previously announced range driven mainly by fleet wide restart expenses and timing.

36

As we transition back to operations, we expects to incur incremental spend related to bringing ships back to operating status, returning crew members to ships and implementing enhanced health and safety protocols. The decision to return each vessel considers many variables, including deployment opportunities, commercial potential, cost of operations and cash flow. Given the fluidity of return to service decisions and costs related to the ramp-up, we cannot reasonably estimate a monthly average cash burn rate or related offsets to the cash burn generated by revenue and deposits from returning ships. Monthly average cash burn rate for ships that are still in lay-up status will remain consistent with previous expectations.

Capital Expenditures

COVID-19 has impacted shipyard operations which have and may continue to result in delays of our previously contracted ship deliveries. Based upon current ship orders and delivery schedules, we project capital expenditures of $1.1 billion for the remainder of 2021. We took delivery of Odyssey of the Seas during the first quarter ended March 31, 2021 and expect delivery of Silver Dawn during the fourth quarter of 2021. For 2022, we have two ship deliveries scheduled: Wonder of the Seas and Celebrity Beyond. Excluding newbuild deliveries, our capital expenditures for 2022 will depend on our schedule to return to service.

Debt Maturities, New Financings and Other Liquidity Actions

During the quarter ended March 31, 2021, the Company continued to take actions to further improve its liquidity position and manage cash flow. In particular, we:

•    extended the maturity date or termination date, as applicable, of certain of the advances and commitments held by consenting lenders under our $1.0 billion unsecured loan due April 2022 and our $1.55 billion unsecured revolving credit facility due October 2022, each by 18 months to October 2023 and April 2024, respectively;

•    extended the period during which we may draw upon our binding commitment for a $700.0 million 364-day term loan facility by one year, which is now available for draw any time prior to August 12, 2022;

•    issued $1.5 billion of senior unsecured notes due in 2028 for net proceeds of approximately $1.48 billion; interest on the senior notes accrues at 5.5% per annum and is payable semi-annually;

•issued 16.9 million shares of common stock for approximately $1.5 billion;

•amended $4.9 billion of our non-export-credit facilities and certain of our credit card processing agreements to extend the waiver of the financial covenants through and including the third quarter of 2022 and to implement modified covenants for the period starting fourth quarter of 2022 and extending through and including the fourth quarter of 2023 ; and

•    amended $6.3 billion of our export-credit facilities to extend the waiver of the financial covenants through and including the third quarter of 2022 and defer $1.15 billion of principal payments due between April 2021 and April 2022.

Expected debt maturities for the remainder 2021 are $0.2 billion and $2.2 billion for 2022.

As we gradually return our fleet into service, we will continue to incur incremental spend as we bring the ships out of their various levels of layup, return the crew to our vessels, take the necessary steps to ensure compliance with the recommended protocols and gear up our sales and marketing activities.

We continue to identify and evaluate further actions to enhance our liquidity and support our recovery. These include and are not limited to further reductions in capital expenditures, operating expenses and administrative costs and additional financings and refinancings.

Results of Operations

Summary

Net Loss attributable to Royal Caribbean Cruises Ltd. and Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd. for the first quarter of 2021 were $(1.13) billion and $(1.08) billion, or $(4.66) and $(4.44) per share on a diluted basis, respectively, reflecting the impact of our suspension of global fleet sailings, compared to Net Loss attributable to Royal Caribbean Cruises Ltd. and Adjusted Net Loss attributable Royal Caribbean Cruises Ltd. of $(1.44) billion and $(310.4) million, or $(6.91) and $(1.48) per share on a diluted basis, respectively, for the first quarter of 2020.

Significant items for the quarter ended March 31, 2021 include:

37

•Total revenues, excluding the effect of changes in foreign currency exchange rates, decreased $2.0 billion for the quarter ended March 31, 2021 as compared to the same period in 2020, reflecting the volume impact of our cancelled sailings during the first quarter of 2021, as a result of the continued impact of COVID-19, which was higher than the volume impact of cancelled sailings during the first quarter of 2020. APCDs for the first quarter ended March 31, 2021 were 384,224 compared to 8,217,133 in the same period in 2020.

•The effect of changes in foreign currency exchange rates related to our passenger ticket and onboard and other revenue transactions, denominated in currencies other than the United States dollar, resulted in an increase in total revenues of $2.5 million for the quarter ended March 31, 2021 compared to the same period in 2020.

•Total cruise operating expenses, excluding the effect of changes in foreign currency exchange rates, decreased $1.2 billion for the quarter ended March 31, 2021 as compared to the same period in 2020. The decrease was primarily due to lower costs incurred as a result of our suspension of operations due to COVID-19.

•The effect of changes in foreign currency exchange rates related to our cruise operating expenses, denominated in currencies other than the U.S. dollar, resulted in an increase in total operating expenses of $4.1 million for the quarter ended March 31, 2021, compared to the same period in 2020.

•Our consolidated results of operations include Silversea Cruises’ results of operations on a three-month reporting lag for October, November and December 2020, for the quarter ended March 31, 2021.

•In March 2021, we extended the maturity date or termination date of certain of the advances and commitments, as applicable, held by consenting lenders under our $1.0 billion unsecured loan due April 2022 and our $1.55 billion unsecured revolving credit facility due October 2022, by 18 months to October 2023 and April 2024, respectively.

•In March 2021, we extended our binding commitment for a $700.0 million 364-day term loan facility by one year which is currently available for draw any time prior to August 12, 2022;

•In March 2021, we issued $1.50 billion of senior unsecured notes due in 2028. Interest on the senior notes accrues at 5.5% and is payable semi-annually.

•In March 2021, we issued 16.9 million shares of common stock, par value $0.01 per share, at an average price of $91.00 per share for net proceeds of $1.5 billion.

•In March 2021, we amended $4.9 million of our non-export-credit facilities and certain of our credit card processing agreements to extend the waiver of the financial covenants through and including the third quarter of 2022.

•In March 2021, we amended $6.3 million of our export-credit facilities to extend the waiver of the financial covenants through and including the third quarter of 2022; including the deferral of up to $1.15 billion of principal payments due between April 2021 and April 2022.

•In March 2021, we entered into amendments to our drawn and undrawn ECA facilities to provide for the issuance of guarantees in satisfaction of existing obligations under these facilities.

•In March 2021, we took delivery of Odyssey of the Seas.

38

Operating results for the quarter ended March 31, 2021 compared to the same period in 2020 are shown in the following table (in thousands, except per share data):

	Quarter Ended March 31,
	2021				2020
			% of Total Revenues				% of Total Revenues
Passenger ticket revenues	$	20,844	49.6	%	$	1,376,851	67.7	%
Onboard and other revenues	21,170		50.4	%	655,899		32.3	%
Total revenues	42,014		100.0	%	2,032,750		100.0	%
Cruise operating expenses:
Commissions, transportation and other	2,949		7.0	%	317,129		15.6	%
Onboard and other	4,481		10.7	%	123,718		6.1	%
Payroll and related	96,636		230.0	%	330,390		16.3	%
Food	8,472		20.2	%	121,316		6.0	%
Fuel	41,822		99.5	%	194,268		9.6	%
Other operating	129,127		307.3	%	423,998		20.9	%
Total cruise operating expenses	283,487		674.7	%	1,510,819		74.3	%
Marketing, selling and administrative expenses	258,041		614.2	%	395,890		19.5	%
Depreciation and amortization expenses	310,166		738.2	%	324,330		16.0	%
Impairment and credit losses	(449)		(1.1)	%	1,108,118		54.5	%
Operating Loss	(809,231)		(1,926.1)	%	(1,306,407)		(64.3)	%
Other (expense) income:
Interest income	4,861		11.6	%	5,534		0.3	%
Interest expense, net of interest capitalized	(272,514)		(648.6)	%	(92,911)		(4.6)	%
Equity investment loss	(59,871)		(142.5)	%	(10,392)		(0.5)	%
Other income (expense)	5,033		12.0	%	(32,859)		(1.6)	%
	(322,491)		(767.6)	%	(130,628)		(6.4)	%
Net Loss	(1,131,722)		(2,693.7)	%	(1,437,035)		(70.7)	%
Less: Net Income attributable to noncontrolling interest	—		—	%	7,444		0.4	%
Net Loss attributable to Royal Caribbean Cruises Ltd.	$	(1,131,722)	(2,693.7)	%	$	(1,444,479)	(71.1)	%
Diluted Loss per Share	$	(4.66)			$	(6.91)

39

Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd. and Adjusted Loss per Share attributable to Royal Caribbean Cruises Ltd. were calculated as follows (in thousands, except per share data):

	Quarter Ended March 31,
	2021		2020
Net Loss attributable to Royal Caribbean Cruises Ltd.	$	(1,131,722)	$	(1,444,479)
Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd.	(1,078,279)		(310,412)
Net Adjustments to Net Loss attributable to Royal Caribbean Cruises Ltd.	$	53,443	$	1,134,067
Adjustments to Net Loss attributable to Royal Caribbean Cruises Ltd.:
Loss on extinguishment of debt (1)	$	1,314	$	—
Convertible debt amortization of debt discount (2)	26,073		—
Pullmantur reorganization settlement (3)	5,000		—
Impairment and credit losses (4)	(449)		1,108,118
Equity investment impairment (5)	26,042		39,735
Oasis of the Seas incident, Grand Bahama's drydock write-off and other incidental expenses (6)	(1,321)		(1,938)
Restructuring charges and other initiatives expense (7)	1,317		12,043
Change in the fair value of contingent consideration and amortization of Silversea Cruises intangible assets related to Silversea Cruises acquisition (8)	1,623		(47,950)
Noncontrolling interest adjustment (9)	—		24,059
Net gain related to the sale of the Azamara brand (10)	(6,156)		—
Net Adjustments to Net Loss attributable to Royal Caribbean Cruises Ltd.	$	53,443	$	1,134,067
Basic:
Loss per Share	$	(4.66)	$	(6.91)
Adjusted Loss per Share	$	(4.44)	$	(1.48)
Diluted:
Loss per Share	$	(4.66)	$	(6.91)
Adjusted Loss per Share	$	(4.44)	$	(1.48)
Weighted-Average Shares Outstanding:
Basic	243,004		209,097
Diluted	243,004		209,097

(1)Represents a debt extinguishment loss on the partial repayment of the $1.55 billion unsecured revolving credit facility.

(2)Represents the amortization of non-cash debt discount on our convertible notes.

(3)Represents estimated cash refunds expected to be paid to Pullmantur guests and other expenses incurred as part of the Pullmantur S.A. reorganization.

(4)In 2021, represents the recovery of credit losses recognized during 2020. In 2020, represents asset impairment and credit losses recorded in the first quarter of 2020 as a result of the impact of COVID-19.

(5)Represent equity investment asset impairments, primarily for our investment in TUI Cruises GmbH in 2021 and Grand Bahama Shipyard in 2020, as a result of the impact of COVID-19.

(6)Amounts includes net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas.

(7)Represents primarily restructuring charges incurred in relation to the reduction in our U.S. workforce and other initiatives expenses. Refer to Note 13. Restructuring Charges to our consolidated financial statements under Item 1. Financial Statements for further information on the restructuring activities.

(8)Related to the Silversea Cruises acquisition.

40

(9)Adjustment made to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.'s (previously known as Silversea Cruises Group Ltd.'s) noncontrolling interest.

(10)Represents the net gain recognized in the first quarter of 2021 in relation to the sale of the Azamara brand.

Selected statistical information is shown in the following table:

	Quarter Ended March 31, (1)
	2021		2020
Passengers Carried	41,209		1,239,817
Passenger Cruise Days	144,916		8,467,106
APCD	384,224		8,217,133
Occupancy	37.7	%	103.0	%

(1)Due to the three-month reporting lag, these metrics include October, November and December amounts for Silversea Cruises.

41

2021 Outlook

The Company’s operations are still heavily impacted by the magnitude, duration, speed and geographic reach of COVID-19 and its related variants. As a consequence, we cannot reasonably estimate the impact of COVID-19 on our business, financial condition or near or longer-term financial or operational results. The adverse impact of the COVID-19 pandemic on our revenues, consolidated results of operations, cash flows and financial condition has been and will continue to be material in 2021. We expect to incur a net loss on both a U.S. GAAP and adjusted basis for our second quarter and our 2021 fiscal year, the extent of which will depend on many factors including the timing and extent of our return to service. See Recent Developments: COVID-19 – Update on Bookings for further indication of the booking environment for 2021 and 2022.

42

Quarter Ended March 31, 2021 Compared to Quarter Ended March 31, 2020

In this section, references to 2021 refer to the quarter ended March 31, 2021 and references to 2020 refer to the quarter ended March 31, 2020.

Revenues

Total revenues for 2021 decreased $2.0 billion, or 97.9%, to $42.0 million from $2.0 billion in 2020.

Passenger ticket revenues comprised 49.6% of our 2021 total revenues. Passenger ticket revenues for 2021 decreased by $1.4 billion, or 98.5%, from 2020. The decrease was due to a decrease in capacity, driven by a higher amount of cancelled sailings in 2021 resulting from the suspension of our global fleet operations in response to COVID-19, which began in mid-March 2020.

The remaining 50.4% of 2021 total revenues was comprised of Onboard and other revenues, which decreased $634.7 million, or 96.8%, to $21.2 million in 2021 from $655.9 million in 2020. The decrease in Onboard and other revenues was primarily due to the decrease in capacity noted above.

Favorable movements in foreign currency exchange rates related to our revenue transactions denominated in currencies other than the United States dollar increased Onboard and other revenues by $2.5 million.

Onboard and other revenues included concession revenues of $0.7 million in 2021 and $72.0 million in 2020.

Cruise Operating Expenses

Total Cruise operating expenses for 2021 decreased $1.2 billion, or 81.2%, to $0.3 billion from $1.5 billion in 2020. The decrease was primarily due to:

•a decrease in commissions as a result of sailing cancellations, including those reported in Other operating;

•a $233.8 million decrease in Payroll and related;

•a $152.4 million increase in Fuel expenses; and

•a $119.2 million decrease in Onboard and other expenses and $112.8 million decrease in Food due to the decrease in capacity discussed above.

The decrease Cruise operating expenses was partially offset by the unfavorable effect of changes in foreign currency exchange rates related to our cruise operating expenses denominated in currencies other than the United States dollar of $4.1 million.

Marketing, Selling and Administrative Expenses

Marketing, selling and administrative expenses for 2021 decreased $137.8 million, or 34.8%, to $258.0 million from $395.9 million in 2020. The decrease was primarily due to the reduction and deferral of global sales and marketing activities due to the suspension of our operations and a decrease in payroll and benefits due to our reduced headcount. The decrease is partially offset by the impact of a higher stock price year-over-year on our performance share awards.

Depreciation and Amortization Expenses 

Depreciation and amortization expenses for 2021 decreased $14.2 million, or 4.4%, to $310.2 million from $324.3 million in 2020. The decrease was primarily due to a reduction in the carrying value of depreciable assets, resulting from the 2020 asset impairments, that exceeded the carrying value of assets placed in service during the same period. Additionally, we ceased the recognition of depreciation expense on the Azamara fleet during the quarter ended March 31, 2021. The decreases were partially offset by the addition of Celebrity Apex in 2020.

Impairment and Credit Losses

Impairment and credit losses for 2021 decreased by $1.1 billion as a result of charges recorded during the quarter ended March 31, 2020 due to the impact of COVID-19 on our operations and cash flows, impacting our long-lived assets related to goodwill, intangibles, vessels and operating lease right-of-use asset, as well as incurring credit losses.

Other Income (Expense)

Interest expense, net of interest capitalized for 2021 increased $179.6 million, or 193.3%, to $272.5 million from $92.9 million in 2020. The increase was primarily due to new debt issuances after the first quarter of 2020 and through the first quarter of 2021, higher interest rates on our new debt and a higher average balance on our revolver.

43

Equity investment loss increased by $49.5 million to $59.9 million from $10.4 million mainly due to continued losses reported by our equity investments as a result of the adverse impact of COVID-19 on their operations and earnings.

Other income (expense) We recognized Other income of $5.0 million in 2021, compared to Other expense of $32.9 million in 2020. The $37.9 million increase in income was primarily due to: the 2020 recognition of $65.7 million expense related to the change in fair value of mostly fuel swap derivative instruments with no hedge accounting, compared to $14.3 million in income recognized in 2021, resulting in a change of $80.0 million of income; an increase of $6.4 million in foreign exchange gain on remeasurement of our monetary assets, net of hedging, and an increase of $6.7 million in net tax benefit mostly attributable to the suspension in our operations in 2021 compared to 2020. The increases in income were partially offset by $51.0 million in income recognized in 2020, which did not recur in 2021, for the change in fair value of contingent consideration related to our acquisition of 66.7% interest in Silversea Cruises in 2018. Due to the settlement of the contingent consideration in 2020, there was no impact for the three months ended March 31, 2021.

Other Comprehensive Income (Loss)

Other comprehensive income in 2021 was $30.5 million compared to Other comprehensive loss of $297.9 million in 2020. The increase in income of $328.4 million was primarily due to a Gain on cash flow derivative hedges in 2021 of $10.3 million compared to a Loss on cash flow derivative hedges in 2020 of $300.6 million, as a result of an increase in the fair value of our fuel swaps and interest rate swaps in 2021 compared to a decrease in the fair value of our fuel swaps and interest rate swaps in 2020.

Future Application of Accounting Standards

Refer to Note 2. Summary of Significant Accounting Policies to our consolidated financial statements for further information on Recent Accounting Pronouncements.

Liquidity and Capital Resources

Sources and Uses of Cash

Net cash used by operating activities decreased $1.0 billion to $(0.8) billion for the first quarter of 2021 compared to Net cash provided by operating activities of $198.7 million for the same period in 2020. The continued suspension of the majority of our global sailings as a result of COVID-19 has significantly affected our liquidity and cash flow resulting in decreased guest ticket collections and a decrease of Onboard and other revenues of $634.7 million during the first three months in 2021, compared to the same period in 2020. We also began to incur return to service expenses for certain ships in our fleet during the first quarter of 2021, as we have announced additional limited sailings for the summer of 2021.

Net cash used in investing activities decreased $373.6 million to $1.0 billion for the first three months in 2021, compared to $1.3 billion for the same period in 2020. The decrease was primarily attributable to a decrease in capital expenditures of $190.9 million during the first quarter of 2021, compared to the same period in 2020 and an increase in proceeds from the sale of property and equipment and other assets of $175.4 million during the first quarter of 2021 compared to 2020.

Net cash provided by financing activities was $3.2 billion for the first quarter of 2021, compared to $4.8 billion for the same period in 2020. The decrease of $1.6 billion was primarily attributable to a decrease in debt proceeds and issuance of commercial paper notes of $11.0 billion, partially offset by lower repayments of debt and commercial paper notes of $7.6 million during the first quarter of 2021, compared to the same period in 2020. The $3.4 billion decrease in net debt and commercial paper notes proceeds, was further offset by $1.6 billion of proceeds from common stock issuances during the first quarter of 2021.

44

Future Capital Commitments

Capital Expenditures

COVID-19 has impacted shipyard operations which have and may continue to result in delays of our previously contracted ship deliveries. As of March 31, 2021, the dates that the ships on order by our Global and Partner Brands are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

Ship	Shipyard	Expected Delivery Date	Approximate Berths
Royal Caribbean International —
Oasis-class:
Wonder of the Seas	Chantiers de l'Atlantique	1st Quarter 2022	5,700
Unnamed	Chantiers de l'Atlantique	2nd Quarter 2024	5,700
Icon-class:
Unnamed	Meyer Turku Oy	3rd Quarter 2023	5,600
Unnamed	Meyer Turku Oy	2nd Quarter 2025	5,600
Unnamed	Meyer Turku Oy	2nd Quarter 2026	5,600
Celebrity Cruises —
Edge-class:
Celebrity Beyond	Chantiers de l'Atlantique	2nd Quarter 2022	3,250
Unnamed	Chantiers de l'Atlantique	4th Quarter 2023	3,250
Silversea Cruises
Muse-Class:
Silver Dawn	Fincantieri	4th Quarter 2021	600
Evolution Class:
Unnamed	Meyer Werft	2nd Quarter 2023	700
Unnamed	Meyer Werft	2nd Quarter 2024	700
TUI Cruises (50% joint venture)
Mein Schiff 7	Meyer Turku Oy	2nd Quarter 2024	2,900
Unnamed	Fincantieri	3rd Quarter 2024	4,100
Unnamed	Fincantieri	1st Quarter 2026	4,100
Hapag-Lloyd Cruises (50% joint venture) —
Hanseatic Spirit	Vard Fincantieri	2nd Quarter 2021	230
Total Berths			48,030

In April 2019, we entered into an agreement with Chantiers de l’Atlantique to build the fifth Edge-class ship for Celebrity Cruises. The ship is expected to have an aggregate capacity of approximately 3,200 berths and is expected to enter service in the fourth quarter of 2025. The order with Chantiers de l’Atlantique is contingent upon completion of conditions precedent and financing.

Our future capital commitments consist primarily of new ship orders. As of March 31, 2021, the aggregate cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was $12.9 billion, of which we had deposited $602.5 million. Approximately 70.5% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at March 31, 2021.

Decreased demand for cruising as a result of concerns regarding COVID-19 has had, and is expected to continue to have, a material impact on our cash flows, liquidity and financial position. In order to preserve liquidity throughout the COVID-19 pandemic, we deferred a significant portion of our planned 2020 and 2021 capital expenditures. As of March 31, 2021, we anticipate overall full year capital expenditures, based on our existing ships on order, will be approximately $2.1 billion for 2021. This amount does not include any ships on order by our Partner Brands.  

Contractual Obligations

As of March 31, 2021, our contractual obligations were as follows (in thousands):

45

	Payments due by period
			Less than		1-3		3-5		More than
	Total		1 year		years		years		5 years
Operating Activities:
Operating lease obligations(1)	$	876,664	$	96,265	$	232,039	$	162,019	$	386,341
Interest on debt(2)	4,105,547		981,396		1,632,850		820,719		670,582
Other(3)	578,637		192,420		321,536		42,922		21,759
Investing Activities:	0
Ship purchase obligations(4)	10,536,398		1,807,228		4,020,000		3,373,314		1,335,856
Financing Activities:	0
Debt obligations(5)	20,725,927		171,774		7,598,959		7,859,138		5,096,056
Finance lease obligations(6)	209,748		49,525		20,913		10,423		128,887
Other(7)	25,763		11,193		14,456		114		—
Total	$	37,058,684	$	3,309,801	$	13,840,753	$	12,268,649	$	7,639,481

(1)     We are obligated under noncancelable operating leases primarily for preferred berthing arrangements, real estate and shipboard equipment. Amounts represent contractual obligations with initial terms in excess of one year.

(2)      Long-term debt obligations mature at various dates through fiscal year 2033 and bear interest at fixed and variable rates. Interest on variable-rate debt is calculated based on forecasted debt balances, including the impact of interest rate swap agreements using the applicable rate at March 31, 2021. Debt denominated in other currencies is calculated based on the applicable exchange rate at March 31, 2021.

(3)    Amounts primarily represent future commitments with remaining terms in excess of one year to pay for our usage of certain port facilities, marine consumables, services and maintenance contracts.

(4)    Amounts are based on contractual installment and delivery dates for our ships on order. Included in these figures are $8.3 billion in final contractual installments, which have committed financing. COVID-19 has impacted shipyard operations and we expect that this will result in delivery delays of ships on order and will adjust the timing of our contractual ship deliveries. Amounts do not include potential obligations which remain subject to cancellation at our sole discretion or any agreements entered for ships on order that remain contingent upon completion of conditions precedent. Additionally, amounts do not include activity related to Silversea Cruises, including ships placed on order, if any, during the three-month reporting lag period.

(5)    Amounts represent debt obligations with initial terms in excess of one year. Debt denominated in other currencies is calculated based on the applicable exchange rate at March 31, 2021. In addition, debt obligations presented above are net of debt issuance costs of $363.3 million as of March 31, 2021.

(6)    Amounts represent finance lease obligations with initial terms in excess of one year, net of imputed interest.

(7)    Amounts represent fees payable to sovereign guarantors in connection with certain of our export credit debt facilities and facility fees on our revolving credit facilities.

Please refer to Funding Needs and Sources for discussion on the planned funding of the above contractual obligations.

As a normal part of our business, depending on market conditions, pricing and our overall growth strategy, we continuously consider opportunities to enter into contracts for the building of additional ships. We may also consider the sale of ships or the purchase of existing ships. We continuously consider potential acquisitions and strategic alliances. If any of these were to occur, they would be financed through the incurrence of additional indebtedness, the issuance of additional shares of equity securities or through cash flows from operations.

Off-Balance Sheet Arrangements

TUI Cruises has entered into various ship construction and credit agreements that include certain restrictions on each of our and TUI AG’s ability to reduce our current ownership interest in TUI Cruises below 37.55% through May 2033.

Some of the contracts that we enter into include indemnification provisions that obligate us to make payments to the counterparty if certain events occur. These contingencies generally relate to changes in taxes, increased lender capital costs and other similar costs. The indemnification clauses are often standard contractual terms and are entered into in the normal course of business.  There are no stated or notional amounts included in the indemnification clauses and we are not able to estimate the maximum potential amount of future payments, if any, under these indemnification clauses. We have not been required to make

46

any payments under such indemnification clauses in the past and, under current circumstances, we do not believe an indemnification obligation is probable.

We have a residual value guarantee associated with our operating lease of a terminal at Port of Miami in Miami, Florida that approximates a percentage of cost of the asset as of the inception of the lease. We consider the possibility of incurring costs associated with the residual value guarantee to be remote. Also in connection with the Port of Miami terminal operating lease, we are required to deliver on or before July 18, 2021, cash collateral in an amount equal to the lesser of our residual value guarantee or the aggregate balance of the lessors' terminal construction debt, estimated at $181.1 million as of March 31, 2021. The collateral is to be issued to an escrow agent and pledged to the benefit of the terminal construction debt lenders until all amounts due by us under the lease have been paid in full.

On February 25, 2021, S&P Global downgraded our senior unsecured rating from B+ to B, which had no financial impact, and downgraded our $3.32 billion Senior Secured Notes and Silversea Notes from BB to BB-. This downgrade had no impact on the terms of the notes.

Certain of our surety agreements with third party providers for the benefit of certain agencies and associations that provide travel related bonds, allow the sureties to request collateral. We also have agreements with our credit card processors relating to customer deposits received by us for future voyages. These agreements allow the credit card processors to require us, under certain circumstances, including breach of the financial covenants, the existence of other material adverse changes, excessive chargebacks, and other triggering events, to maintain a reserve that can be satisfied by posting collateral. As of March 31, 2021, we have posted letters of credit as collateral with our sureties and credit card processors, under our revolving credit facilities in the amount of $172.7 million.

Executed amendments are in place for the majority of our credit card processors, waiving reserve requirements tied to breach of our financial covenants through at least September 30, 2022, and as such, we do not anticipate any incremental collateral requirements for the processors covered by these waivers in the next 12 months. We have a reserve with a processor where the agreement was amended in the first quarter of 2021, such that proceeds are withheld in reserve, until the sailing takes place or the funds are refunded to the customer. The maximum projected exposure with the processor, including amounts currently withheld and reported in Trade and other receivables, is approximately $170.6 million. The amount and timing are dependent on future factors that are uncertain, such as the date we return to operations, volume and value of future deposits and whether we transfer our business to other processors. If we require additional waivers on the credit card processing agreements and are not able to obtain them, this could lead to the termination of these agreements or the trigger of reserve requirements.

As of March 31, 2021, other than the items described above, we are not party to any other off-balance sheet arrangements, including guarantee contracts, retained or contingent interest, certain derivative instruments and variable interest entities, that either have, or are reasonably likely to have, a current or future material effect on our financial position.

Funding Needs and Sources

Historically, we relied on a combination of cash flows provided by operations, drawdowns under our available credit facilities, the incurrence of additional debt and/or the refinancing of our existing debt and the issuance of additional shares of equity securities to fund our obligations. The impact of COVID-19 has resulted in our voluntary suspension of global cruise operations from March 2020 through at least June 30, 2021, for most of our cruise operations. This suspension of operations has strained our sources of cash flow and liquidity, causing us to take actions resulting in reductions in our operating expenses, reductions in our capital expenses and new financings and other liquidity actions.

The Company continues to identify and evaluate further actions to improve its liquidity. These include and are not limited to: further reductions in capital expenditures, operating expenses and administrative costs and additional financings. See further discussion on these liquidity actions at Recent Developments - COVID-19.

We have significant contractual obligations of which our debt service obligations and the capital expenditures associated with our ship purchases represent our largest funding needs. As of March 31, 2020, we had $10.5 billion of committed financing for final delivery installments on our ships on order.

As of March 31, 2021, we had $3.3 billion in contractual obligations due through March 31, 2022, of which approximately $0.2 billion relates to debt maturities, $981.4 million relates to interest on debt and $1.8 billion relates to progress payments on our ship orders and the final installments payable due upon the delivery of Silver Dawn and Wonder of the Seas, based on their expected delivery dates.

As of March 31, 2021, we had liquidity of $5.8 billion, consisting of cash and cash equivalents of $5.1 billion and a $0.7 billion commitment through August 12, 2022 for a 364-day term loan facility. As of March 31, 2021, our revolving credit facilities were fully utilized through a combination of amounts drawn and letters of credit issued under the facilities. We have

47

agreed with certain of our lenders not to pay dividends or engage in stock repurchases. Refer to Note 10. Shareholders' Equity to our consolidated financial statements for further information.

If any person acquires ownership of more than 50% of our common stock or, subject to certain exceptions, during any 24-month period, a majority of our board of directors is no longer comprised of individuals who were members of our board of directors on the first day of such period, we may be obligated to prepay indebtedness outstanding under our credit facilities, which we may be unable to replace on similar terms. Our public debt securities also contain change of control provisions that would be triggered by a third-party acquisition of greater than 50% of our common stock coupled with a ratings downgrade. If this were to occur, it would have an adverse impact on our liquidity and operations.

Based on our assumptions and estimates and our financial condition, we believe that the liquidity resulting from the actions mentioned above will be sufficient to fund our liquidity requirements over at least the next twelve months. However, there is no assurance that our assumptions and estimates are accurate due to possible unknown variables related to this unprecedented suspension of our operations and, as such, there is inherent uncertainty in our ability to predict future liquidity requirements.

Debt Covenants

Both our export credit facilities and our non-export credit facilities contain covenants that require us, among other things, to maintain a fixed charge coverage ratio of at least 1.25x and limit our net debt-to-capital ratio to no more than 62.5%, and under certain facilities, to maintain a minimum level of shareholders' equity. The fixed charge coverage ratio is calculated by dividing net cash from operations for the past four quarters by the sum of dividend payments plus scheduled principal debt payments in excess of any new financings for the past four quarters. Our minimum net worth and maximum net debt-to-capital calculations exclude the impact of Accumulated other comprehensive loss on Total shareholders’ equity.

During the first quarter of 2021, we amended $4.9 billion of our non-export credit facilities and $6.3 billion of our export credit facilities, and certain credit card processing agreements, to extend the waiver of our financial covenants through and including at least the third quarter of 2022.

In addition, pursuant to the amendments for the non-export credit facilities, we have modified the manner in which such covenants are calculated, temporarily in certain cases and permanently in others, as well as the levels at which our net debt to capitalization covenant will be tested during the period commencing immediately following the end of the waiver period and continuing through the end of 2023.

The amendments impose a monthly-tested minimum liquidity covenant of $350 million. In addition, the amendments to the non-export credit facilities place restrictions on paying cash dividends and effectuating share repurchases through the end of the third quarter of 2022, while the export credit facility amendments require us to prepay any deferred amounts if we elect to issue dividends or complete share repurchases. As of March 31, 2021, we were in compliance with the applicable minimum liquidity covenant and we estimate that we will be in compliance for at least the next twelve months.

In the first quarter of 2021, we amended our Port of Miami Terminal "A" operating lease agreement to obtain a financial covenant waiver through the end of the third quarter of 2022, on the same terms as apply to the non-export credit facilities. As of March 31, 2021, we were in compliance with the amended covenants under the lease agreement.

Any further covenant waivers may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections as may be agreed with our lenders. There can be no assurance that we would be able to obtain additional waivers in a timely manner, or on acceptable terms. If we require additional waivers and are not able to obtain them or repay the debt facilities, this would lead to an event of default and potential acceleration of amounts due under all of our outstanding debt and derivative contracts.

If we require additional waivers on the credit card processing agreements and are not able to obtain them, this could lead to the termination of these agreements or the trigger of reserve requirements.

Dividends

48

During the first quarter of 2020, we declared a cash dividend on our common stock of $0.78 per share, which was paid in April 2020. During the first quarter of 2020, we also paid a cash dividend on our common stock of $0.78 per share, which was declared during the fourth quarter of 2019.

During the second quarter of 2020, we agreed with certain of our lenders not to pay dividends or engage in common stock repurchases for so long as our debt covenant waivers are in effect. In addition, in the event we declare a dividend or engage in share repurchases, we will need to repay the amounts deferred under our export credit facilities. Accordingly, we did not declare a dividend during the four consecutive quarters ending March 31, 2021. Pursuant to amendments made to these agreements during the first quarter of 2021, the restrictions on paying cash dividends and effectuating share repurchases were extended through and including the third quarter of 2022.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

For a discussion of our market risks, refer to Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our Annual Report on Form 10-K for the year ended December 31, 2020. There have been no significant developments or material changes since the date of our 2020 Annual Report.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chairman and Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, our Chairman and Chief Executive Officer and Chief Financial Officer concluded that those controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chairman and Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Exchange Act Rule 13a-15(d) during the quarter ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Readers are cautioned that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there is only reasonable assurance that our controls will succeed in achieving their goals under all potential future conditions.

49

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

As previously reported, two lawsuits were filed against us in August 2019 in the U.S. District Court for the Southern District of Florida under Title III of the Cuban Liberty and Democratic Solidarity Act, also known as the Helms-Burton Act. The complaint filed by Havana Docks Corporation ("Havana Docks Action") alleges it holds an interest in the Havana Cruise Port Terminal and the complaint filed by Javier Garcia-Bengochea (the "Port of Santiago Action") alleges that he holds an interest in the Port of Santiago, Cuba, both of which were expropriated by the Cuban government. The complaints further allege that we trafficked in those properties by embarking and disembarking passengers at these facilities. The plaintiffs seek all available statutory remedies, including the value of the expropriated property, plus interest, treble damages, attorneys’ fees and costs. We filed our answer to each complaint in October 2019 and on October 15, 2020, and the Court dismissed the Port of Santiago Action with prejudice on the basis that the plaintiffs in that action lacked standing to bring the claim. This decision has been appealed by the plaintiffs. We believe we have meritorious defenses to the claims alleged in both the Havana Docks Action and the Port of Santiago Action, and we intend to vigorously defend ourselves against them. We believe that it is unlikely that the outcome of either action will have a material adverse impact to our financial condition, results of operations or cash flows. However, the outcome of litigation is inherently unpredictable and subject to significant uncertainties, and there can be no assurances that the final outcome of either case will not be material.

As previously disclosed, on October 7, 2020, a shareholder filed a putative class action complaint against us, and three officers, Richard Fain, Jason Liberty and Michael Bayley, in the United States District Court for the Southern District of Florida, alleging misrepresentations relating to COVID-19 in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, seeking unspecified damages on behalf of a purported class consisting of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired our securities from February 4, 2020 through March 17, 2020. In addition, on October 27, 2020, a second complaint was filed by another shareholder against us and these same officers in the District Court alleging the same misrepresentations relating to COVID-19. As is the case with the first action, the second action seeks unspecified damages on behalf of a purported class consisting of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired our securities from February 4, 2020 through March 17, 2020. On December 23, 2020, these cases were consolidated with a new lead plaintiff, Indiana Public Retirement System. On February 25, 2021, the lead plaintiff filed with the District Court a voluntary dismissal of the action without prejudice. On February 26, 2021, the District Court dismissed the entire action without prejudice based on the request for voluntary dismissal.

We are also routinely involved in claims typical within the cruise vacation industry. The majority of these claims are covered by insurance. We believe the outcome of such claims, net of expected insurance recoveries, will not have a material adverse impact on our financial condition or results of operations and cash flows.

Item 1A. Risk Factors

The risk factors set forth below and elsewhere in this Quarterly Report on Form 10-Q are important factors that could cause actual results to differ from expected or historical results. It is not possible to predict or identify all such risks. There may be additional risks that we consider not to be material, or which are not known, and any of these risks could have the effects set forth below. The ordering of the risk factors set forth below is not intended to reflect any Company indication of priority or likelihood. See Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for a cautionary note regarding forward-looking statements.

COVID-19 and Financial Risks

The COVID-19 pandemic has had, and will continue to have, a material adverse impact on our business, results of operations and liquidity. The global spread of COVID-19, the unprecedented responses by governments and other authorities to control and contain the disease, including related variants, and challenges to global vaccination efforts, have caused significant disruptions, created new risks, and exacerbated existing risks to our business.

We have been, and will continue to be, negatively impacted by the COVID-19 pandemic, including impacts that resulted or may result from actions taken in response to the outbreak, including the occurrence and spread of related variants . Examples of these include, but are not limited to: travel bans and cruising advisories and the resulting temporary suspension of our Global Brands' operations, which is expected to continue through at least June 30, 2021, for most of our cruise operations; restrictions on the movement and gathering of people; social distancing measures; shelter-in-place/stay-at-home orders; and disruptions to businesses in our supply chain. In addition to the imposed restrictions affecting our business, the extent, duration, and

50

magnitude of the COVID-19 pandemic’s effect on the economy and consumer demand for cruising and travel is still rapidly fluctuating and difficult to predict. As such, these impacts may persist for an extended period of time or even become more pronounced, even after we are permitted to and/or begin to resume operations.

The COVID-19 pandemic also has elevated risks affecting significant parts of our business:

• Operations: Due to the global public health circumstances, we have decided to extend the suspension of sailings of our Global Brands' fleet through at least June 30, 2021, for most of our cruise operations. We have begun certain limited operations and have announced additional, limited cruise operations, in each case, outside of the U.S. with reduced guest occupancy, modified itineraries, and enhanced health, safety and vaccination protocols for our crew and guests.

There is no assurance that our return to service efforts will be successful and without material setbacks. It is possible that future COVID-19 outbreaks could occur onboard and, even if controlled and contained, it is uncertain as to whether we will need to suspend additional sailings and to what extent in such event. An outbreak could result in possible illness among our guests and crew, incremental costs, guest refunds and negative publicity and media attention. In addition, we may face challenges in executing our return to service plans from new homeports as a result of new and evolving operating protocols and possible changes in regulations in the countries in which we operate and plan to operate.

We continue to work with the U.S. Center for Disease Control and Prevention (“CDC”), other U.S. and non-U.S. regulatory agencies and the Healthy Sail Panel (“HSP”) to develop a plan to return to service in consideration of global vaccination efforts. For cruise ship operations in U.S. waters, our return to service plan also considers the requirements of the CDC’s Framework for the Conditional Sailing Order (the “Conditional Order”), issued on October 30, 2020, including recently issued technical instructions under the Conditional Order. This includes the CDC letter issued to members of the cruising industry on April 28, 2021 that provides clarifications to its previously issued technical instructions regarding several matters including port operations and COVID-19 testing and vaccination protocols.

While the Conditional Order and subsequent CDC guidance represents an important step in our return to service, many uncertainties remain as to the specifics and timing of implementation, administration and costs of the requirements of the Conditional Order, some of which may be significant. Further, the Conditional Order contemplates that the CDC may issue additional requirements through technical instructions or orders as needed and that the phases required to resume operations will be further determined based on public health considerations, including the trajectory of the pandemic and the ability of the Company and other cruise ship operators to successfully employ measures that mitigate the risk of COVID-19 and its variants. In addition, the Conditional Order contains requirements that could negatively impact our results of operations, such as: laboratory testing of crew members and guests; simulated voyages; and the certification process, including implementing the required testing protocols, the prohibition on itineraries longer than seven days, and the demonstration at each port where a ship intends to dock of approval with U.S. port and local health authorities, which requires medical care agreements addressing evacuation to onshore hospitals, housing agreements with onshore facilities for isolation and quarantine of COVID-19 cases, and port agreements to limit the number of cruise ships at any single port. Our ability to meet the requirements under the Conditional Order will determine the timing and implementation of our plans to return to service for the rest of our operations, which we expect to be gradual. We are currently reviewing and assessing the uncertainties relating to the Conditional Order’s requirements and are in dialogue with the CDC. Based on our assessment of these conditions or for other reasons, we may determine it necessary to extend our voluntary suspension of our Global Brands’ cruise sailings which currently extends through at least June 30 , 2021, for most of our cruise operations. It is difficult to predict our ability to meet the requirements of the Conditional Order and the costs associated with compliance, some of which could be significant.

    The suspension of sailings and the expected reduction in demand for future cruising has led to a significant decline in our revenues and cash inflows, which has required us to take cost and capital expenditure containment actions. Consequently, we have reduced and furloughed some of our workforce, with approximately 23% of our U.S. shoreside employee base being impacted and, except for the minimum safe manning shipboard crew required to operate our ships subject to suspension of operations, our shipboard crew were notified that their contracts ended early and are gradually being notified about new assignments as operations resume over time. As a result of these actions, we may be challenged in rebuilding and vaccinating our workforce which could further delay our return to service. Furthermore, our efforts to vaccinate returning crew members could be hindered if vaccine availability does not keep pace with the timing of our phased return to service. In addition, we have reduced our planned capital spending through 2021, which may negatively impact our execution of planned growth strategies, particularly as it relates to investments in our ships, technology, and our expansion of land-based developments. Furthermore, we have taken

51

actions to monitor and mitigate changes in our supply chain, and port destination availability, which may strain relationships with our vendors and port partners.

If we are unable to satisfy the requirements of the Conditional Order our operations may be negatively impacted and we could be exposed to reputational and legal risks. Due to the unprecedented and uncertain nature of the COVID-19 pandemic and CDC or Department of State guidance, it is difficult to predict the impact of further disruptions and their magnitude. The impact of further disruptions may depend on how they coincide with the timing of when we seek to continue to resume sailing. In addition, we had never previously experienced a complete cessation of our cruising operations, and as a consequence, our ability to predict the impact of such a cessation on our brands and future prospects is limited and such impact is uncertain.

•Results of Operations: Our suspensions of sailings have materially impacted the results of our operations. We have incurred and will continue to incur significant costs associated with cancellations as we accommodate passengers with refunds and future cruise credits. In addition, although the majority of our cruise operations are currently suspended, we have incurred and will likely continue to incur significant overhead costs associated with layup of our fleet and enhanced COVID-19 related cleaning, testing, vaccination and other mitigation procedures. We may experience volatility in demand for cruising for an indeterminable length of time due to the uncertain nature of the COVID-19 pandemic and to ongoing concerns about health and safety, and we cannot predict when we will return to pre-outbreak demand or fare pricing or if we will return to such levels in the foreseeable future. In turn, these negative impacts to our financial performance have resulted and may continue to result in impairments of our long-lived and intangible assets, which has influenced our decision making relating to early disposal, sale or retirement of assets. Following the resumption of operations, our Global Brands and our Partner Brands may be subject to the continued impact of the COVID-19 pandemic. Additionally, any future profitability will be impacted by increased debt service costs as a result of our liquidity actions.

•Liquidity: The suspension of our sailings and the reduction in demand for future cruising has adversely impacted our liquidity as we have experienced a significant increase in refunds of customer deposits while cash inflows from new or existing bookings on future sailings has reduced sharply compared to pre-pandemic levels. As a result, we have taken actions to increase our liquidity through a combination of capital and operating expense reductions and financing activities. During the quarter ended March 31, 2021, we executed and amended various financing arrangements including the issuance of $1.5 billion in senior notes and the issuance of 16.9 million shares of common stock for approximately $1.5 billion. Additionally, we extended the draw date for our $700 million 364-day facility for an additional year, extended more than $2.0 billion in debt and revolving credit due in 2022, and deferred $1.2 billion of debt amortization under our export-credit backed loan facilities over a five-year period starting in April 2022.

We have agreed with certain of our lenders that we will not pay dividends or engage in stock repurchases until after the third quarter of 2022. Thereafter, in the event we declare a dividend or engage in stock repurchases we will need to repay the amounts deferred under our export credit facilities. On February 25, 2021, S&P Global downgraded our senior unsecured rating from B+ to B, which had no financial impact, and downgraded our $3.32 billion Senior Secured Notes and Silversea Notes from BB to BB-. This downgrade had no impact on the terms of the notes. Our ability to raise additional financing, whether or not secured, could be limited if our credit rating is further downgraded, and/or if we fail to comply with applicable covenants governing our outstanding indebtedness, and/or if overall financial market conditions worsen. Additionally, due to the complexity of the pandemic’s impact to the economy and uncertainty of its duration, we cannot guarantee that assumptions used to project our liquidity needs will be correct, which may result in the need for additional financing and/or may result in the inability to satisfy covenants required by our current credit facilities. If we continue to raise additional funds through equity or convertible debt issuances, our shareholders could experience dilution of their ownership interest, and these securities could have rights, preferences, and privileges that are superior to that of holders of our ordinary shares. If we raise additional funds by issuing debt, we may be subject to additional limitations on our operations due to restrictive covenants, which may be more restrictive than the covenants in our existing debt agreements, and we may be required to further encumber our assets. Also, as a result of our additional debt issuances, we will require a significant amount of cash to service our debt and sustain operations. Our ability to generate cash depends on factors beyond our control and we may be unable to repay or repurchase debt at maturity. If adequate funds are not available on acceptable terms, or at all, we may be unable to fund our operations, or respond to competitive pressures, any of which could negatively affect our business. There is no guarantee that financing will be available in the future or that such financing will be available with similar terms or terms that are commercially acceptable to us. Further, if any government agrees to provide us with disaster relief assistance, or other assistance due to the impacts of the COVID-19 pandemic, and we determine it is beneficial to seek such government assistance, it may impose restrictions on executive compensation, share buybacks, dividends, prepayment of debt and other restrictions until the aid is repaid or redeemed in full, which could significantly limit our corporate activities and adversely impact our business and operations. We cannot assure you that any more such disaster relief would be available to us.

52

We may not be able to obtain sufficient financing or capital for our needs or may not be able to do so on terms that are acceptable or consistent with our expectations.

To fund our capital expenditures (including new ship orders), operations and scheduled debt payments, we have historically relied on a combination of cash flows provided by operations, drawdowns under available credit facilities, the incurrence of additional indebtedness and the sale of equity or debt securities in private or public securities markets. Any circumstance or event which leads to a decrease in consumer cruise spending, such as worsening global economic conditions or significant incidents impacting the cruise industry, including the COVID-19 pandemic, negatively affects our operating cash flows and currently, we have no net cash flows from operations. In the case of the COVID-19 pandemic and the resulting suspension of our operations, these circumstances have also resulted in credit rating downgrades.

Our ability to access additional funding as and when needed, our ability to timely refinance and/or replace our outstanding debt securities and credit facilities on acceptable terms and our cost of funding will depend upon numerous factors including, but not limited to, the strength of the financial markets, our recovery and financial performance, the recovery and performance of our industry in general and the size, scope and timing of our financial needs. In addition, even where financing commitments have been secured, significant disruptions in the capital and credit markets could cause our banking and other counterparties to breach their contractual obligations to us or could cause the conditions to the availability of such funding not to be satisfied. This could include failures of banks or other financial service companies to fund required borrowings under our loan agreements or to pay us amounts that may become due or return collateral that is refundable under our derivative contracts for hedging of fuel prices, interest rates and foreign currencies or other agreements. If any of the foregoing occurs for a prolonged period of time it will have a long-term negative impact on our cash flows and our ability to meet our obligations cannot be guaranteed.

Our substantial debt could adversely affect our financial condition.

We have a substantial amount of debt and significant debt service obligations. As of March 31, 2021, we had total debt of $20.9 billion. Our substantial debt could have important negative consequences for us. For example, our substantial debt could require us to dedicate a large portion of our cash flow from operations to service debt and fund repayments on our debt, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes; increase our vulnerability to adverse general economic or industry conditions; limit our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate; place us at a competitive disadvantage compared to our competitors that have less debt; make us more vulnerable to downturns in our business, the economy or the industry in which we operate, including the current downturn related to COVID-19; limit our ability to raise additional debt or equity capital in the future to satisfy our requirements relating to working capital, capital expenditures, development projects, strategic initiatives or other purposes; restrict us from making strategic acquisitions, introducing new technologies or exploiting business opportunities; limit or restrict our ability to obtain and maintain performance bonds to cover our financial responsibility requirements in various jurisdictions for non-performance of guest travel, casualty and personal injury; make it difficult for us to satisfy our obligations with respect to our debt; and increase our exposure to the risk of increased interest rates as certain of our borrowings are (and may be in the future) at a variable rate of interest.

Despite our leverage, we may incur more debt, which could adversely affect our business.

We may incur substantial additional debt in the future. Except for the restrictions under the indentures governing our Secured Notes (as defined below) and our 9.125% Senior Guaranteed Notes due 2023 (the “Unsecured Notes”) and certain of our other debt instruments, including our unsecured bank and export credit facilities, we are not restricted under the terms of our debt instruments from incurring additional debt. Although the indentures governing the Secured Notes, the Unsecured Notes, and certain of our other debt instruments, including our unsecured bank and export credit facilities, contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of significant qualifications and exceptions, and under certain circumstances the amount of debt that could be incurred in compliance with these restrictions could be substantial. Our debt instruments do not and will not prevent us from incurring liabilities that do not constitute “Indebtedness” as defined therein. In the event that we execute and borrow under the $700M commitment expiring on August 12, 2022 for a 364-day term loan facility, the credit agreement that would govern such term loan facility would impose substantially similar restrictions (including the related qualifications and exceptions) as are set forth in the indenture governing the Unsecured Notes. If new debt is added to our existing debt levels, the related risks that we now face would increase. As of March 31, 2021, we have commitments for approximately $10.6 billion of debt to finance the purchase of 10 ships on order by our Royal Caribbean International, Celebrity Cruises and Silversea Cruises brands, nine of which are guaranteed by the export credit agencies in the countries in which the ships are being built. The ultimate size of each facility will depend on the final contract price (including change orders and owner’s supply) as well as fluctuations in the EUR/USD exchange rate.

The terms of existing debt financing gives, and any future preferred equity or debt financing may give, holders of any preferred securities or debt securities rights that are senior to rights of our common shareholders or impose more stringent operating restrictions on our company.

53

The holders of our existing debt have rights, preferences and privileges senior to those of holders of our common stock in the event of liquidation. If we incur additional debt or raise equity through the issuance of preferred stock or convertible securities, the terms of the debt or the preferred stock issued may give the holders rights, preferences and privileges senior to those of holders of our common stock, particularly in the event of liquidation. The terms of the debt may also impose additional and more stringent restrictions on our operations. If we raise funds through the issuance of additional equity, the ownership percentage of our existing shareholders would be diluted. Debt or equity financing may not be available to us on acceptable terms.

We will require a significant amount of cash to service our debt and sustain our operations. Our ability to generate cash depends on many factors beyond our control, and we may not be able to generate cash required to service our debt.

Our ability to make scheduled payments on our debt service obligations or refinance our debt depends on our future operating and financial performance and ability to generate cash. This will be affected by our ability to successfully implement our business strategy, as well as general economic, financial, competitive, regulatory and other factors beyond our control, such as the disruption caused by the COVID-19 pandemic. If we cannot generate sufficient cash to meet our debt service obligations or fund our other business needs, we may, among other things, need to refinance all or a portion of our debt, obtain additional financing, delay planned capital expenditures or sell assets. We cannot assure you that we will be able to generate sufficient cash through any of the foregoing. If we are not able to refinance any of our debt, obtain additional financing or sell assets on commercially reasonable terms or at all, we may not be able to satisfy our obligations with respect to our debt.

We are subject to restrictive debt covenants that may limit our ability to finance future operations and capital needs and to pursue business opportunities and activities. In addition, if we fail to comply with any of these restrictions, it could have a material adverse effect on us.

Certain of our debt instruments, including our indentures and our unsecured bank and export credit facilities, limit our flexibility in operating our business. For example, certain of our loan agreements and indentures restrict or limit our and our subsidiaries’ ability to, among other things: incur or guarantee additional indebtedness; pay dividends or distributions on, or redeem or repurchase capital stock and make other restricted payments; make investments; consummate certain asset sales; engage in certain transactions with affiliates; grant or assume certain liens; and consolidate, merge or transfer all or substantially all of our assets. Both our export credit facilities and our non-export credit facilities contain covenants that require us, among other things, to maintain a fixed charge coverage ratio of at least 1.25x and limit our net debt-to-capital ratio to no more than 62.5%. Refer to Note 7. Debt to our consolidated financial statements under Item 1. Financial Statements for further discussion on our covenants and existing waivers.

On February 25, 2021, S&P Global downgraded the Silversea Cruises’ Notes from BB to BB-, which had no impact with respect to the Silversea Cruises’ Notes. The Silversea Notes are guaranteed by the Company on a senior unsecured basis. Any event of default or acceleration of the indebtedness under the Silversea Notes could cause the borrowings under other of our debt instruments that contain cross-default provisions to be accelerated or become payable on demand.

All of these limitations are subject to significant exceptions and qualifications. Despite these exceptions and qualifications, we cannot assure you that the operating and financial restrictions and covenants in certain of our debt instruments will not adversely affect our ability to finance our future operations or capital needs or engage in other business activities that may be in our interest. Any future indebtedness may include similar or other restrictive terms. In addition, our ability to comply with these covenants, and restrictions may be affected by events beyond our control. These include prevailing economic, financial and industry conditions. If we breach any of these covenants or restrictions, we could be in default under such indebtedness and certain of our other debt instruments and the relevant debt holders or lenders could elect to declare the debt, together with accrued and unpaid interest and other fees, if any, immediately due and payable and proceed against any collateral securing that debt. If the debt under certain of our debt instruments that we enter into were to be accelerated, our liquid assets may be insufficient to repay in full such indebtedness. Borrowings under other debt instruments that contain cross-default provisions also may be accelerated or become payable on demand. In these circumstances, our assets may not be sufficient to repay in full that indebtedness and our other indebtedness then outstanding.

In addition, our ability to maintain our credit facilities may also be impacted by changes in our ownership base. More specifically, we may be required to prepay our bank financing facilities if any person acquires ownership of more than 50% of our common stock or, subject to certain exceptions, during any 24-month period, a majority of our board of directors is no longer comprised of individuals who were members of our board of directors on the first day of such period. Our public debt securities also contain change of control provisions that would be triggered by a third-party acquisition of greater than 50% of our common stock coupled with a ratings downgrade, which would require us to offer to repurchase our public debt securities in the event of such change of control.

54

If we elect to settle conversions of our convertible notes, if any, in shares of our common stock or a combination of cash and shares of our common stock, conversions of our convertible notes may result in substantial dilution for our existing shareholders.

We have an aggregate principal amount of $1.725 billion in convertible notes outstanding. The notes are convertible into shares of our common stock, cash, or a combination of common stock and cash, at our election. Prior to March 15 and August 15, 2023, our convertible notes issued June 2020 and October 2020, respectively, will be convertible at the option of holders during certain periods only upon satisfaction of certain conditions. Beyond those dates, the convertible notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding their maturity date. If we elect to settle conversions of our convertible notes, if any, in shares of our common stock or a combination of common stock and cash, conversions of our convertible notes may result in significant dilution to our shareholders.

We did not declare dividends on our common stock in the quarter ended March 31, 2021 and do not expect to pay dividends on our common stock for the foreseeable future.

No cash dividends were declared on our common stock during the four consecutive quarters ended March 31, 2021. We expect that any income received from operations will be devoted to our future operations and recovery. We do not expect to pay cash dividends on our common stock for the foreseeable future due to our agreement with certain of our lenders not to pay dividends until the end of the third quarter 2022. In addition, in the event we thereafter declare a dividend, we will need to repay our debt deferral. Payment of dividends would, in any case, depend upon our profitability at the time, cash available for those dividends, and other factors as our board of directors may consider relevant.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly

A portion of our indebtedness bears interest at variable rates that are linked to changing market interest rates. As a result, an increase in market interest rates would increase our interest expense and our debt service obligations. As of March 31, 2021, we had approximately $6.9 billion of indebtedness that bears interest at variable rates. This amount represented approximately 31.8% of our total indebtedness. As of March 31, 2021, a hypothetical 1% increase in prevailing interest rates would increase our forecasted 2021 interest expense by approximately $40.9 million.

In addition, on July 27, 2017, the United Kingdom’s Financial Conduct Authority ("FCA"), which regulates the London Interbank Offered Rate (“LIBOR”), announced that it will no longer persuade or compel banks to submit LIBOR rates after 2021. Also in 2017, the Alternative Reference Rates Committee, a steering committee comprised of, among other entities, large U.S. financial institutions, selected the Secured Overnight Financing Rate (“SOFR”) as the rate recommended to replace U.S. dollar LIBOR ("USD LIBOR"). SOFR measures the cost of borrowing cash overnight, backed by U.S. Treasury securities. SOFR is observed and backward-looking, which stands in contrast with LIBOR under the current methodology, which is an estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting panel members. On December 4, 2020, ICE Benchmark Administration ("IBA"), the administrator of LIBOR, released a consultation disclosing its intent to cease publication of one-week and two-month USD LIBOR after December 31, 2021, but continue to publish the remaining tenors of USD LIBOR for an additional 18 months, through June 30, 2023. These remaining tenors of USD LIBOR—overnight, one-month, three-month, six-month and 12-months—encompass the tenors referenced in our borrowings and interest rate swaps. On March 5, 2021, the FCA confirmed that it will not require IBA to publish LIBOR beyond the dates proposed in the consultation.

U.S. regulators continue to encourage banks to cease entering into new contracts that use USD LIBOR as a reference rate by December 31, 2021. However, uncertainty remains as many market participants await the development of term SOFR products, i.e., forward-looking rates, and benchmark providers are developing indices that might co-exist with SOFR. If LIBOR ceases to exist, the level of interest payments on the portion of our indebtedness that bears interest at variable rates would be affected, which may materially impact the amount of our interest payments under such debt. Further, if we, the agent or the lenders holding a majority of the outstanding loans or commitments under such indebtedness determine that a LIBOR rate is no longer available, that a specific date has been announced after which a LIBOR rate will no longer be made available, or that syndicated loans are being executed or amended to adopt a replacement rate, then the terms of such indebtedness will allow us and the applicable agent to amend such indebtedness to implement a replacement rate, subject to the negative consent of the lenders holding a majority of the outstanding loans or commitments. Such replacement rate will give due consideration to any evolving or then-existing conventions for similar credit facilities, which may result in different than expected interest payments.

Macroeconomic, Business, Market and Operational Risks

Adverse worldwide economic or other conditions could reduce the demand for cruises and passenger spending, adversely impacting our operating results, cash flows and financial condition including impairing the value of our goodwill, ships,

55

trademarks and other assets and potentially affecting other critical accounting estimates where the change may be material to our operating results.

In addition to health and safety concerns, demand for cruises is affected by international, national, and local economic conditions. Weak or uncertain economic conditions may impact consumer confidence and pose a risk as vacationers postpone or reduce discretionary spending. This, in turn, may result in cruise booking slowdowns, decreased cruise prices and lower onboard revenues, even after the COVID-19 pandemic has ended and/or related health and safety concerns are reduced. Given the global nature of our business, we are exposed to many different economies and our business could be hurt by challenging conditions in any of our markets. Any significant deterioration of international, national, or local economic conditions, including those resulting from geopolitical events and/or international disputes and the current economic and employment impact of the COVID-19 pandemic in countries where many of our customers reside, could result in a prolonged period of booking slowdowns, depressed cruise prices and/or reduced onboard revenues, even after the COVID-19 pandemic has ended and/or related health and safety concerns are reduced. Additionally, the continued impact of COVID-19 on the financial markets is complicated and we cannot predict its effect on geopolitical events and/or international trade policies as countries attempt to mitigate the impact of the pandemic and as they re-open their economies or re-implement lockdown measures. Additionally, uncertainties resulting from the United Kingdom’s recent exit from the European Union may impact our business.

Our operating costs could increase due to market forces and economic or geopolitical factors beyond our control.

Our operating costs, including fuel, food, payroll and benefits, airfare, taxes, insurance, and security costs, are all subject to increases due to market forces and economic or geopolitical conditions or other factors beyond our control, including as a result of rerouting itineraries due to ports closing or not accepting passengers in connection with the COVID-19 pandemic. Increases in these operating costs could adversely affect our future profitability when an economic recovery begins.

Any further impairment of our goodwill, long-lived assets, equity investments and notes receivable could adversely affect our financial condition and operating results.

We evaluate goodwill for impairment on an annual basis, or more frequently when circumstances indicate that the carrying value of a reporting unit may not be recoverable. A challenging operating environment, such as is currently being experienced under the impact of COVID-19, impacts affecting consumer demand or spending, the deterioration of general macroeconomic conditions, or other factors could result in a change to the future cash flows we expect to derive from our operations. Reductions of cash flows used in the valuation analyses may result in the recording of an impairment charge to a reporting unit’s goodwill.

Price increases for commercial airline service for our guests or major changes or reduction in commercial airline service and/or availability could adversely impact the demand for cruises and undermine our ability to provide reasonably priced vacation packages to our guests.

Many of our guests depend on scheduled commercial airline services to transport them to or from the ports where our cruises embark or disembark. Increases in the price of airfare would increase the overall price of the cruise vacation to our guests, which may adversely impact demand for our cruises. In addition, changes in the availability and/or regulations governing commercial airline services, including those resulting from the COVID-19 pandemic, have adversely affected and could continue to adversely affect our guests’ ability to obtain air travel, as well as our ability to transfer our guests to or from our cruise ships, which could adversely affect our results of operations.

Fears of terrorist attacks, war, and other hostilities could have a negative impact on our results of operations.

Events such as terrorist attacks, war (or war-like conditions), conflicts (domestic or cross-border), civil unrest and other hostilities, including an escalation in the frequency or severity of incidents, and the resulting political instability, travel restrictions and advisories, and concerns over safety and security aspects of traveling or the fear of any of the foregoing have had, and could have in the future, a significant adverse impact on demand and pricing in the travel and vacation industry. In view of our global operations, we are susceptible to a wide range of adverse events. These events could also result in additional security measures taken by local authorities which may potentially impact access to ports and/or destinations.

Disease outbreaks and an increase in concern about the risk of illness could adversely impact our business and results from operations.

Disease outbreaks and increased concern related to illness when traveling to, from, and on our ships could cause a drop in demand for cruises, guest cancellations, travel restrictions, an unavailability of ports and/or destinations, cruise cancellations, ship redeployments and an inability to source our crew, provisions or supplies from certain places. Due to the complex and evolving nature of the COVID-19 pandemic, we cannot predict the duration of the effect of the current pandemic, and the magnitude is dependent on the development of future events and responses from governments, other authorities, and individual

56

consumers. Our industry, including our passengers and crew, may be subject to enhanced health and safety requirements in the future which may be costly and take a significant amount of time to implement across our fleet and we may be subject to concerns that cruises are susceptible to the spread of infectious diseases such as COVID-19. For example, local governments may establish their own set of rules for self-quarantines and/or require proof of individuals health status or vaccination prior to or upon visiting. These effects may extend beyond any resolution of the current COVID-19 pandemic through the distribution and roll-out of a vaccine or effective therapeutic treatment, and the impact of any of these factors could have a material adverse effect on our business and results of operations. In addition, the new operating protocols we are developing and any other health protocol we may develop or that may be required by law in the future in response to COVID-19, and related variants, or other infectious diseases may be costly to implement and less effective than we expected in reducing the risk of infection and spread of such disease on our cruise ships, which will negatively impact our operations and expose us to reputational and legal risks.

Incidents on ships, at port facilities, land destinations and/or affecting the cruise vacation industry in general, and the associated negative media coverage and publicity, could affect our reputation and impact our sales and results of operations.

The ownership and/or operation of cruise ships, private destinations, port facilities and shore excursions involves the risk of accidents, illnesses, mechanical failures, environmental incidents and other incidents which may bring into question safety, health, security and vacation satisfaction and can negatively impact our sales, operations and reputation. Incidents involving cruise ships, and, in particular the safety, health and security of guests and crew and the media coverage thereof, including those related to the COVID-19 pandemic, have impacted and could continue to impact demand for our cruises and pricing in the industry. In particular, we cannot predict the impact on our financial performance and our cash flows required for cash refunds of deposits as a result of the pause in our global fleet cruise operations, which may be prolonged, and the public’s concern regarding the health and safety of travel, especially by cruise ship, and related decreases in demand for travel and cruising. Moreover, our ability to attract and retain guests and crew depends, in part, upon the perception and reputation of our company and our brands and the public’s concerns regarding the health and safety of travel generally, as well as regarding the cruising industry and our ships specifically. Our reputation and our business could also be damaged by continued or additional negative publicity regarding the cruise industry in general, including publicity regarding the spread of contagious disease such as COVID-19, over-tourism in key ports and destinations, and the potentially adverse environmental impacts of cruising. The considerable expansion in the use of social and digital media over recent years has compounded the potential scope and reach of any negative publicity. In addition, incidents involving cruise ships may result in additional costs to our business, increasing government or other regulatory oversight and, in certain cases, potential litigation.

Significant weather, climate events and/or natural disasters could adversely impact our business and results from operations.

Natural disasters (e.g. earthquakes, volcanos, wild fires), weather and/or climate events (including hurricanes and typhoons) could impact our source markets and operations resulting in travel restrictions, guest cancellations, an inability to source our crew or our provisions and supplies from certain places. We are often forced to alter itineraries and occasionally cancel a cruise or a series of cruises or to redeploy our ships due to these types of events, which could have an adverse effect on our sales, operating costs and profitability in the current and future periods. Increases in the frequency, severity or duration of these types of events could exacerbate their impact and cause further disruption to our operations or make certain destinations less desirable or unavailable impacting our revenues and profitability further. Any of the foregoing could have an adverse impact on our results of operations and on industry performance.

Our reliance on shipyards, their subcontractors and our suppliers to implement our newbuild and ship upgrade programs and to repair and maintain our ships exposes us to risks which, if realized, could adversely impact our business.

We rely on shipyards, their subcontractors and our suppliers to effectively construct our new ships and to repair, maintain, and upgrade our existing ships on a timely basis and in a cost effective manner; and there are a limited number of shipyards with the capability and capacity to build, repair, maintain and/or upgrade our ships. As such, any disruptions effecting the newbuild or fleet modernization supply chain will adversely impact our business as there are limited substitutes.

The COVID-19 pandemic has led to suspensions and/or slowdowns of work at certain shipyards, which impacts our ability to construct new ships when and as planned, our ability to timely and cost-effectively procure new capacity, and our ability to execute scheduled drydocks and/or fleet modernizations. The effects of the COVID-19 pandemic on the shipyards, their subcontractors, and our suppliers have resulted in delays in our previously scheduled ship deliveries, which are currently under discussion with the shipyards. Variations from our plan could have a significant negative impact on our business operations and financial condition.

Building, repairing, maintaining and/or upgrading a ship is sophisticated work that involves significant risks. In addition, the prices of labor and/or various commodities that are used in the construction of ships can be subject to volatile price changes, including the impact of fluctuations in foreign exchange rates. Shipyards, their subcontractors, and/or our suppliers may

57

encounter financial, technical or design problems when doing these jobs. If materialized, these problems could impact the timely delivery or costs of new ships or the ability of shipyards to repair and upgrade our fleet in accordance with our needs or expectations. In addition, delays, mechanical faults and/or unforeseen incidents may result in cancellation of cruises, or, in more severe situations, delays of new ship orders, or necessitate unscheduled drydocks. Such events could result in lost revenue, increased operating expenses, or both, and thus adversely affect our results of operations.

An increase in capacity worldwide or excess capacity in a particular market could adversely impact our cruise sales and/or pricing.

Although our ships can be redeployed, cruise sales and/or pricing may be impacted by the introduction of new ships into the marketplace, reductions in cruise capacity, overall market growth and deployment decisions of ourselves and our competitors. As of March 31, 2021, a total of 109 new ships with approximately 219,300 berths were on order for delivery through 2027 in the cruise industry, including 11 ships currently scheduled to be delivered to us. The further net growth in capacity from these new ships and future orders, without an increase in the cruise industry’s demand and/or share of the vacation market, could depress cruise prices and impede our ability to achieve yield improvement. Additionally, due to our global suspension of operations and the suspension of operations by other cruise operators, cruise prices and yield improvement are further at risk depending on how, when, and where global operations resume.

In addition, to the extent that we or our competitors deploy ships to a particular itinerary/region and the resulting capacity in that region exceeds the demand, we may lower pricing and profitability may be lower than anticipated. This risk exists in emerging cruise markets, where capacity has grown rapidly over the past few years and in mature markets where excess capacity is typically redeployed. Any of the foregoing could have an adverse impact on our results of operations, cash flows and financial condition, including potentially impairing the value of our ships and other assets.

Unavailability of ports of call may adversely affect our results of operations.

We believe that port destinations are a major reason why guests choose to go on a particular cruise or on a cruise vacation. The availability of ports and destinations is affected by a number of factors, including industry demand and competition for key ports and destinations, existing capacity constraints, constraints related to the size of certain ships, security, financial limitations on port development, exclusivity arrangements that ports may have with our competitors, geopolitical developments and local governmental regulations; and in light of the COVID-19 pandemic, port availability could also be subject to immediate change depending on local and/or onboard disease outbreaks or other government restrictions as well as limited availability when sailing resumes. In addition, higher fuel costs may adversely impact the destinations we choose to call upon on certain of our itineraries as they become too costly to include.

Increased demand and competition for key ports of call or destinations, limitations on the availability or feasibility of use of specific ports of call and/or constraints on the availability of shore excursions and other service providers at such ports or destinations could adversely affect our results of operations.

We may lose business to competitors throughout the vacation market.

We operate in the vacation market and cruising is one of many alternatives for people choosing a vacation. We therefore risk losing business not only to other cruise lines, but also to other vacation operators, which provide other leisure options, including hotels, resorts, internet-based alternative lodging sites and package holidays and tours.

We face significant competition from other cruise lines on the basis of cruise pricing, travel agent preference and also in terms of the nature of ships, services and destinations that we offer to guests. Our principal competitors within the cruise vacation industry include Carnival Corporation & plc, which owns, among others, Aida Cruises, Carnival Cruise Line, Costa Cruises, Cunard Line, Holland America Line, P&O Cruises, Princess Cruises and Seabourn; Disney Cruise Line; MSC Cruises; and Norwegian Cruise Line Holdings Ltd, which owns Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises. Our revenues are sensitive to the actions of other cruise lines in many areas including pricing, scheduling, capacity and promotions, which can have a substantial adverse impact not only on our revenues, but on overall industry revenues.

In the event that we do not effectively market or differentiate our cruise brands from our competitors or otherwise compete effectively with other vacation alternatives and new or existing cruise companies, our results of operations and financial position could be adversely affected.

If we are unable to appropriately balance our cost management and capital allocation strategies with our goal of satisfying guest expectations, it may adversely impact our business success.

Our goals call for us to provide high quality products and deliver high quality services. There can be no assurance that we can successfully balance these goals with our cost management and capital allocation strategies. Our business also requires us to make capital allocation decisions across a broad scope of investment options with varying return profiles and time horizons for

58

value realization. These include significant capital investment decisions such as ordering new ships, upgrading our existing fleet, enhancing our technology and/or data capabilities, and expanding our portfolio of land-based assets, based on expected market preferences, competition and projected demand. There can be no assurance that our strategies will be successful, which could adversely impact our business, financial condition and results of operations. For example, our ownership and operation of older tonnage, in particular during the business disruption caused by COVID-19, has resulted in impaired asset values due to expected returns that we will not be able to recover.

Our attempts to expand our business into new markets and new ventures may not be successful.

We opportunistically seek to grow our business through, among other things, expansion into new destinations or source markets and establishment of new ventures complementary to our current offerings. These attempts to expand our business increase the complexity of our business, require significant levels of investment and can strain our management, personnel, operations and systems. In addition, we have been unable to execute our attempts to expand our business as a result of the impacts of the COVID-19 pandemic, as described elsewhere herein. There can be no assurance that these business expansion efforts will develop as anticipated or that we will succeed, and if we do not, we may be unable to recover our investment, which could adversely impact our business, financial condition and results of operations.

Risks associated with our development and operation of key land-based destination projects may adversely impact our business or results of operations.

We have invested, either directly or indirectly through joint ventures and partnerships, in a growing portfolio of key land-based projects including port and terminal facilities, private destinations and multi-brand destination projects. These investments can increase our exposure to certain key risks depending on the scope, location, and the ownership and management structure of these projects. These risks include susceptibility to weather events, exposure to local political/regulatory developments and policies, logistical challenges and human resource and labor risks; in addition to location-specific safety, environmental, and health risks, including challenges posed by the COVID-19 pandemic and its effects locally where we have these projects and relationships.

Our reliance on travel agencies to sell and market our cruises exposes us to certain risks which, if realized, could adversely impact our business.

We rely on travel agencies to generate the majority of bookings for our ships. Accordingly, we must ensure that our commission rates and incentive structures remain competitive. If we fail to offer competitive compensation packages or fail to maintain our relationships, these agencies may be incentivized to sell cruises offered by our competitors to our detriment, which could adversely impact our operating results. Our reliance on third-party sellers is particularly pronounced in certain markets. In addition, the travel agent industry is sensitive to economic conditions that impact discretionary income of consumers. Significant disruptions, such as those caused by the COVID-19 pandemic, or contractions in the industry could reduce the number of travel agencies available for us to market and sell our cruises, which could have an adverse impact on our financial condition and results of operations. Additionally, the strength of our recovery from suspended operations could be delayed if we are not aligned and partnered with key travel agencies.

Business activities that involve our co-investments with third parties may subject us to additional risks.

Partnerships, joint ventures and other business structures involving our co-investments with third parties generally include some form of shared control over the operations of the business and create additional risks, including the event that other investors in such ventures become bankrupt or otherwise lack the financial resources to meet their obligations, or could have or develop business interests, policies or objectives that are inconsistent with ours. In addition to financial risks, our co-investment activities have also presented managerial and operational risks and expose us to reputational or legal concerns. These or other issues related to our co-investments with third parties could adversely impact our operations or liquidity. Due to the COVID-19 pandemic, Pullmantur S.A. filed for reorganization under the terms of the Spanish insolvency laws. In addition, with the exception of limited sailings outside of the U.S. starting in July 2020, TUI Cruises and Hapag-Lloyd Cruises have, for the most part, suspended sailings and their operations, results of operations and liquidity have been and will continue to be adversely materially impacted. The Company may be required to continue to provide funding for these affiliated entities and it is unclear when and to what extent these entities will fully resume operations and our ability to provide such funding will be limited by the level and terms of our outstanding indebtedness. Further, due to the arrangements we have in place with our partners in these ventures, we are limited in our ability to control the strategy of these ventures if and when they resume operations, or their use of capital and other key factors to their results of operation which could adversely affect our investments and impact our results of operations.

Past or pending business acquisitions or potential acquisitions that we may decide to pursue in the future carry inherent risks which could adversely impact our financial performance and condition.

59

The Company, from time to time, has engaged in acquisitions and may pursue acquisitions in the future, which are subject to, among other factors, the Company’s ability to identify attractive business opportunities and to negotiate favorable terms for such opportunities. Accordingly, the Company cannot make any assurances that potential acquisitions will be completed timely or at all, or that if completed, we would realize the anticipated benefits of such acquisition. Acquisitions also carry inherent risks such as, among others: (1) the potential delay or failure of our efforts to successfully integrate business processes and realizing expected synergies; (2) difficulty in aligning procedures, controls and/or policies; and (3) future unknown liabilities and costs that may be associated with an acquisition. In addition, acquisitions may also adversely impact our liquidity and/or debt levels, and the recognized value of goodwill and other intangible assets can be negatively affected by unforeseen events and/or circumstances, which may result in an impairment charge. Any of the foregoing events could adversely impact our financial condition and results of operations.

We rely on supply chain vendors and third-party service providers who are integral to the operations of our businesses. These vendors and service providers are also affected by COVID-19 and may be unable or unwilling to deliver on their commitments or may act in ways that could harm our business.

We rely on supply chain vendors to deliver key products to the operations of our businesses around the world. Any event impacting a vendor’s ability to deliver goods of the expected quality at the location and time needed could negatively impact our ability to deliver our cruise experience. Events impacting our supply chain could be caused by factors beyond the control of our suppliers or us, including inclement weather, natural disasters, increased demand, problems in production or distribution and/or disruptions in third-party logistics or transportation systems, including those caused by the COVID-19 pandemic. Any such interruptions to our supply chain could increase our costs and could limit the availability of products critical to our operations.

In order to achieve cost and operational efficiencies, we outsource to third-party vendors certain services that are integral to the operations of our global businesses, such as our onboard concessionaires, certain of our call center operations and operation of a large part of our information technology systems, which are also affected by the COVID-19 pandemic. We are subject to the risk that certain decisions are subject to the control of our third-party service providers and that these decisions may adversely affect our activities. A failure to adequately monitor a third-party service provider’s compliance with a service level agreement or regulatory or legal requirements could result in significant economic and reputational harm to us. There is also a risk the confidentiality, privacy and/or security of data held by third parties or communicated over third-party networks or platforms could become compromised.

The potential unavailability of insurance coverage, an inability to obtain insurance coverage at commercially reasonable rates or our failure to have coverage in sufficient amounts to cover our incurred losses may adversely affect our financial condition or results of operations.

We seek to maintain appropriate insurance coverage at commercially reasonable rates. We normally insure based on the cost of an asset rather than replacement value and we also elect to self-insure, co-insure, or use deductibles in certain circumstances for certain risks such as loss of use of a ship or other business interruption. The limits of insurance coverage we purchase are based on the availability of the coverage, evaluation of our risk profile and cost of coverage. We do not carry business interruption insurance and accordingly we have no insurance coverage for loss of revenues or earnings from our ships or other operations. Accordingly, we are not protected against all risks and we cannot be certain that our coverage will be adequate for liabilities actually incurred which could result in an unexpected decrease in our revenue and results of operations in the event of an incident.

We are members of four Protection and Indemnity (“P&I”) clubs, which are part of a worldwide group of 13 P&I clubs, known as the International Group of P&I Clubs (the “IG”). P&I coverage provided by the clubs is on a mutual basis and we are subject to additional premium calls in the event of a catastrophic loss incurred by any member of the 13 P&I clubs, whereby the reinsurance limits purchased by the IG are exhausted. We are also subject to additional premium calls based on investment and underwriting shortfalls experienced by our own individual insurers. Certain liabilities, costs, and expenses associated with COVID-19 cases identified on or traced to our vessels are eligible for insurance coverage under our participation in these P&I clubs.

We cannot be certain that insurance and reinsurance coverage will be available to us and at commercially reasonable rates in the future or at all or, if available, that it will be sufficient to cover potential claims. Additionally, if we or other insureds sustain significant losses, the result may be higher insurance premiums, cancellation of coverage, or the inability to obtain coverage. The COVID-19 pandemic, for example, depending on its on-going scope, and duration and the associated insurance claims volumes driven by the pandemic, may potentially impact the insurance markets we rely on for coverage and could adversely impact both the coverage options available to us in the future as well as the premium costs we are required to pay for those coverages. Such events could adversely affect our financial condition or results of operations.

60

Disruptions in our shoreside or shipboard operations or our information systems may adversely affect our results of operations.

Our principal executive office and principal shoreside operations are located in Florida, and we have shoreside offices throughout the world. Actual or threatened natural disasters (e.g., hurricanes/typhoons, earthquakes, tornadoes, fires or floods), municipal lockdowns, curfews, quarantines, or similar events in these locations may have a material impact on our business continuity, reputation and results of operations. For instance, all Company shoreside operations are working remotely due to the COVID-19 pandemic, which has posed increased technological risks. In addition, substantial or repeated information system failures, computer viruses or cyber attacks impacting our shoreside or shipboard operations could adversely impact our business. We do not generally carry business interruption insurance for our shoreside or shipboard operations or our information systems. As such, any losses or damages incurred by us could have an adverse impact on our results of operations.

Provisions of our Articles of Incorporation, By-Laws and Liberian law could inhibit others from acquiring us, prevent a change of control, and may prevent efforts by our shareholders to change our management.

Certain provisions of our Articles of Incorporation and By-Laws and Liberian law may inhibit third parties from effectuating a change of control of the Company without approval from our board of directors which could result in the entrenchment of current management. These include provisions in our Articles of Incorporation that prevent third parties, other than A. Wilhelmsen AS and Cruise Associates and their permitted transferees, from acquiring beneficial ownership of more than 4.9% of our outstanding shares without the consent of our board of directors.

Compliance and Regulatory Risks

Changes in U.S. or other countries’ foreign travel policy may affect our results of operations.

Changes in U.S. foreign policy could result in the imposition of travel restrictions or travel bans on U.S. persons to certain countries or result in the imposition of U.S. travel advisories, warnings, rules, regulations or legislation that could expose us to penalties or claims of monetary damages. The timing and scope of these changes are unpredictable, and they could cause us to cancel scheduled sailings, possibly on short notice, or could result in possible litigation against us. This, in turn, could decrease our revenue, increase our operating costs and otherwise impair our profitability. For instance, in June 2019, the U.S. government announced that cruise ships would no longer be allowed to travel between the U.S. and Cuba. This required us to change our high yielding Cuba sailings on short notice, which impacted our earnings. Moreover, in May 2019, the U.S. government activated Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, popularly known as the Helms-Burton Act. This allowed certain individuals whose property was confiscated by the Cuban government to sue in U.S. courts anyone who “traffics” in the property in question. The activation of Title III has resulted in litigation against us and others in the tourism industry.

Additionally, in the first quarter of 2020, the U.S. Department of State, along with other governments, including Canada, issued travel advisories warning against cruise travel as a result of the COVID-19 pandemic and subsequently imposed restrictions on those entering the U.S. and many nations imposed strict temporary restrictions on international travel. This, combined with other factors, ultimately lead to the company voluntarily suspending the sailings of our fleet globally and may limit or slow our ability to resume operations in the near term. In addition to the loss of revenues, our financial condition is affected by refund requests, future cruise credit issuances, and other costs associated with returning passengers and crew home safely. Furthermore, many countries have adopted restrictions against U.S. travelers and we currently cannot predict when those restrictions will be eased.

Growing anti-tourism sentiments and environmental concerns related to cruising could adversely impact our operations.

Certain ports and destinations are facing a surge of both cruise and non-cruise tourism which, in certain cases, has fueled anti-tourism sentiments and related countermeasures to limit the volume of tourists allowed in these destinations. In certain destinations, countermeasures to limit the volume of tourists are being contemplated and/or put into effect, including proposed limits on cruise ships and cruise passengers. Potential restrictions in ports and destinations such as Venice, Barcelona or Key West, could limit the itinerary and destination options we can offer our passengers going forward. Some environmental groups have also generated negative publicity about the environmental impact of the cruise vacation industry and are advocating for more stringent regulation of ship emissions at berth and at sea. These anti-tourism sentiments and growing environmental scrutiny of the cruise industry and any related countermeasures could adversely impact our operations and financial results and subject us to increasing compliance costs.

Environmental, labor, health and safety, financial responsibility and other maritime regulations could affect operations and increase operating costs.

61

The U.S. and various state and foreign government or regulatory agencies have enacted or may enact environmental regulations or policies, such as requiring the use of low sulfur fuels (e.g. IMO 2020), that could increase our direct cost to operate in certain markets, increase our cost for fuel, limit the supply of compliant fuel, cause us to incur significant expenses to purchase and/or develop new equipment and adversely impact the cruise vacation industry. While we have taken and expect to continue to take a number of actions to mitigate the potential impact of certain of these regulations, there can be no assurances that these efforts will be successful over the long term.

There is increasing global regulatory focus on climate change, greenhouse gas and other emissions. These regulatory efforts, both internationally and in the U.S. are still developing, and we cannot yet determine what the final regulatory programs or their impact will be in any jurisdiction where we do business. However, such climate change-related regulatory activity in the future may adversely affect our business and financial results by requiring us to reduce our emissions, purchase allowances or otherwise pay for our emissions. Such activity may also impact us by increasing our operating costs, including fuel costs.

In addition, we are subject to various international, national, state and local laws, regulations and treaties that govern, among other things, discharge from our ships, safety standards applicable to our ships, treatment of disabled persons, health and sanitary standards applicable to our guests, security standards on board our ships and at the ship/port interface areas, and financial responsibilities to our guests. These issues are, and we believe will continue to be, an area of focus by the relevant authorities throughout the world. This could result in the enactment of more stringent regulation of cruise ships that could subject us to increasing compliance costs in the future.

A change in our tax status under the U.S. Internal Revenue Code, or other jurisdictions, may have adverse effects on our income.

We and a number of our subsidiaries are foreign corporations that derive income from a U.S. trade or business and/or from sources within the U.S. In connection with the year end audit, each year, Faegre Drinker Biddle & Reath LLP, our U.S. tax counsel, delivers to us an opinion, based on certain representations and assumptions set forth in it, to the effect that this income, to the extent derived from or incidental to the international operation of a ship or ships, is excluded from gross income for U.S. federal income tax purposes pursuant to Section 883 of the Internal Revenue Code. We believe that most of our income (including that of our subsidiaries) is derived from or incidental to the international operation of ships.

Our ability to rely on Section 883 could be challenged or could change in the future. Provisions of the Internal Revenue Code, including Section 883, are subject to legislative change at any time. Moreover, changes could occur in the future with respect to the identity, residence or holdings of our direct or indirect shareholders, trading volume or trading frequency of our shares, or relevant foreign tax laws of Liberia or Bahamas, such that they no longer qualify as equivalent exemption jurisdictions, that could affect our eligibility for the Section 883 exemption. Accordingly, there can be no assurance that we will continue to be exempt from U.S. income tax on U.S. source shipping income in the future. If we were not entitled to the benefit of Section 883, we and our subsidiaries would be subject to U.S. taxation on a portion of the income derived from or incidental to the international operation of our ships, which would reduce our net income.

Additionally, portions of our business are operated by companies that are within the United Kingdom tonnage tax regime. Further, some of our operations are conducted in jurisdictions where we rely on tax treaties to provide exemption from taxation. To the extent the United Kingdom tonnage tax laws change or we do not continue to meet the applicable qualification requirements or if tax treaties are changed or revoked, we may be required to pay higher income tax in these jurisdictions, adversely impacting our results of operations.

As budgetary constraints continue to adversely impact the jurisdictions in which we operate, increases in income tax regulations, tax audits or tax reform affecting our operations may be imposed.

We are not a U.S. corporation and our shareholders may be subject to the uncertainties of a foreign legal system in protecting their interests.

Our corporate affairs are governed by our Articles of Incorporation and By-Laws and by the Business Corporation Act of Liberia. The provisions of the Business Corporation Act of Liberia resemble provisions of the corporation laws of a number of states in the U.S. However, there are very few judicial cases in Liberia interpreting the Business Corporation Act of Liberia. While the Business Corporation Act of Liberia provides that it is to be applied and construed to make the laws of Liberia, with respect of the subject matter of the Business Corporation Act of Liberia, uniform with the laws of the State of Delaware and other states with substantially similar legislative provisions, there have been few Liberian court cases interpreting the Business Corporation Act of Liberia and we cannot predict whether Liberian courts would reach the same conclusions as United States courts. The right of shareholders to bring a derivative action in Liberian courts may be more limited than in U.S. jurisdictions. There may also be practical difficulties for shareholders attempting to bring suit in Liberia and Liberian courts may or may not recognize and enforce foreign judgments. Thus, our public shareholders may have more difficulty in protecting their interests

62

with respect to actions by management, directors or controlling shareholders than would shareholders of a corporation incorporated in a U.S. jurisdiction.

General Risk Factors

Conducting business globally may result in increased costs and other risks.

We operate our business globally, which exposes us to a number of risks, including increased exposure to a wider range of regional and local economic conditions, volatile local political conditions, potential changes in duties and taxes, including changing and/or uncertain interpretations of existing tax laws and regulations, required compliance with additional laws and policies affecting cruising, vacation or maritime businesses or governing the operations of foreign-based companies, currency fluctuations, interest rate movements, difficulties in operating under local business environments, port quality and availability in certain regions, U.S. and global anti-bribery laws or regulations, imposition of trade barriers and restrictions on repatriation of earnings.

Our future growth strategies increasingly depend on the growth and sustained profitability of international markets. Factors that will be critical to our success in these markets include our ability to continue to raise awareness of our products and our ability to adapt our offerings to best suit rapidly evolving consumer demands. This risk is further heightened by the COVID-19 pandemic, as authorities in many of these markets have implemented numerous measures to contain the spread and impact of COVID-19, such as travel bans and restrictions, shelter-in-place/stay-at-home orders, and other limitations on business activity, including business closures. In addition, these measures could change unpredictably and/or could be scaled up or down in response to evolving intensity or resurgence of COVID-19 in or around these markets. The execution of our planned growth strategies is dependent on meeting the governmental and regulatory measures and policies in each of these markets. Our ability to realize our future growth strategy is highly dependent on our ability to satisfy country-specific policies and requirements in order to return to service, as well as meeting the needs of region specific consumer preferences as services come back online. These factors may cause us to reevaluate some of our international business strategies.

Operating globally also exposes us to numerous and sometimes conflicting legal, regulatory and tax requirements. In many parts of the world, including countries in which we operate, practices in the local business communities might not conform to international business standards. These legal and regulatory requirements and standards may change in response to the COVID-19 pandemic, and there may be greater uncertainty as to the interpretation and enforcement of applicable laws and regulations, including those introduced in response to the COVID-19 pandemic. We cannot guarantee consistent interpretation, application, and enforcement of rules and regulations put in place in response to the COVID-19 pandemic, which could place limits on our operations or increase our costs, as well as negatively impact our future growth strategies in our key growth markets. We must adhere to policies designed to promote legal and regulatory compliance as well as applicable laws and regulations. However, we might not be successful in ensuring that our employees, agents, representatives and other third parties with whom we associate throughout the world properly adhere to them. In addition, we may be exposed to the risk of penalties and other liabilities if we fail to comply with all applicable legal and regulatory requirements introduced in response to the COVID-19 pandemic, which may be subject to frequent and rapid change. Failure by us, our employees or any of these third parties to adhere to our policies or applicable laws or regulations could result in penalties, sanctions, damage to our reputation and related costs, which in turn could negatively affect our results of operations and cash flows.

As a global operator, our business also may be impacted by changes in U.S. policy or priorities in areas such as trade, immigration (including any continuation of any of the immigration policies put in place by the U.S. government in response to the COVID-19 pandemic) and/or environmental or labor regulations, among others. Depending on the nature and scope of any such changes, they could impact our domestic and international business operations. Any such changes, and any international response to them, could potentially introduce new barriers to passenger or crew travel and/or cross border transactions, impact our guest experience and/or increase our operating costs.

If we are unable to address these risks adequately, our financial position and results of operations could be adversely affected, including impairing the value of our ships and other assets.

Fluctuations in foreign currency exchange rates, fuel prices and interest rates could affect our financial results.

We are exposed to market risk attributable to changes in foreign currency exchange rates, fuel prices and interest rates. Significant changes in any of the foregoing could have a material impact on our financial results, net of the impact of our hedging activities and natural offsets. Our operating results have been and will continue to be impacted, often significantly, by changes in each of these factors. The value of our earnings in foreign currencies is adversely impacted by a strong U.S. dollar. In addition, any significant increase in fuel prices could materially and adversely affect our business as fuel prices not only impact our fuel costs, but also some of our other expenses, such as crew travel, freight, and commodity prices. Mandatory fuel restrictions, may also create uncertainty related to the price and availability of certain fuel types potentially impacting operating

63

costs and the value of our related hedging instruments. Also, a significant increase in interest rates could materially impact the cost of our floating rate debt.

The loss of key personnel, our inability to recruit or retain qualified personnel, or disruptions among our shipboard personnel due to strained employee relations could adversely affect our results of operations.

Our success depends, in large part, on the skills and contributions of key executives and other employees, and on our ability to recruit, develop and retain high quality personnel as well as having adequate succession plans and back-up operating plans for when critical executives are unable to serve. As demand for qualified personnel in the industry grows, we must continue to effectively recruit, train, motivate and retain our employees, both shoreside and on our ships, in order to effectively compete in our industry, maintain our current business and support our projected global growth. In addition, we may experience difficulties in recruiting and retaining qualified personnel if we reduce the levels of fixed or variable compensation that we offer (including equity compensation impacted by the trading price of our equity), whether in response to the impacts of COVID-19 or otherwise.

For the quarter ended March 31, 2021, approximately 89% of our shipboard employees were covered by collective bargaining agreements. A dispute under our collective bargaining agreements could result in a work stoppage of those employees covered by the agreements. We may not be able to satisfactorily renegotiate these collective bargaining agreements when they expire. In addition, existing collective bargaining agreements may not prevent a strike or work stoppage on our ships. We may also be subject to or affected by work stoppages unrelated to our business or collective bargaining agreements. Any such work stoppages or potential work stoppages could have a material adverse effect on our financial results, as could a loss of key employees, our inability to recruit or retain qualified personnel or disruptions among our personnel.

If we are unable to keep pace with developments in technology or technological obsolescence, including technology in response to the COVID-19 pandemic, our operations or competitive position could become impaired.

Our business continues to demand the use of sophisticated technology and systems. These technologies and systems require significant investment and must be proven, refined, updated, upgraded and/or replaced with more advanced systems in order to continue to meet our customers’ demands and expectations. If we are unable to do so in a timely manner or within reasonable cost parameters or if we are unable to appropriately and timely train our employees to operate any of these new systems, our business could suffer. We also may not achieve the benefits that we anticipate from any new technology or system, which could result in higher than anticipated costs or impair our operating results.

In response to the COVID-19 pandemic, there has been a search for technology to accurately detect, either directly or indirectly, whether an individual is or has been infected with the virus or has been exposed to someone who is or might be infected. While this technology is in the early stages, as this technology continues to develop we may be faced with decisions regarding what technology to adopt for testing our passengers and employees, and what safety procedures to adopt for future sailings. We may be unable to obtain appropriate technology in a timely manner or at all or we may incur significant costs in doing so. A failure to adopt the appropriate technology, a failure or obsolescence in the technology that we do adopt, or a failure in our safety procedures could adversely affect our results of operations.

We are exposed to cyber security attacks, which have significantly increased in frequency and complexity, and data breaches, including the risks and costs associated with protecting our systems and maintaining integrity and security of our business information, as well as personal data of our guests, employees and business partners.

We are subject to cyber security attacks. These cyber attacks can vary in scope and intent from attacks with the objective of compromising our systems, networks and communications for economic gain to attacks with the objective of disrupting, disabling or otherwise compromising our maritime and/or shoreside operations. The attacks can encompass a wide range of methods and intent, including phishing attacks, illegitimate requests for payment, theft of intellectual property, theft of confidential or non-public information, installation of malware, installation of ransomware and theft of personal or business information. The breadth and scope of these attacks, as well as the techniques and sophistication used to conduct these attacks, have grown over time.

A successful cyber security attack may target us directly, or it may be the result of a third party’s inadequate care. In either scenario, the Company may suffer damage to its systems and data that could interrupt our operations, adversely impact our reputation and brand and expose us to increased risks of governmental investigation, litigation, fines and other liability, any of which could adversely affect our business. Furthermore, responding to such an attack and mitigating the risk of future attacks could result in additional operating and capital costs in systems technology, personnel, monitoring and other investments.

In addition, we are also subject to various risks associated with the collection, handling, storage and transmission of sensitive information. In the course of doing business, we collect large volumes of employee, customer and other third-party data, including personally identifiable information and individual credit data, for various business purposes. Although we have

64

policies and procedures in place to safeguard such sensitive information, this information has been and could be subject to cyber security attacks and the aforementioned risks. We are subject to federal, state and international laws (including the European Union General Data Protection Regulation), as well as industry standards, relating to the collection, use, retention, security and transfer of personally identifiable information and individual credit data. In many cases, these laws apply not only to third-party transactions, but also to transfers of information between the Company and its subsidiaries, and among the Company, its subsidiaries and other parties with which the Company has commercial relations. Several jurisdictions have passed laws in this area, and other jurisdictions are considering imposing additional restrictions. These laws continue to develop and may be inconsistent from jurisdiction to jurisdiction. Complying with emerging and changing international requirements has caused, and may cause us to incur substantial costs or require us to change our business practices. If we fail to comply with the various applicable data collection and privacy laws, we could be exposed to fines, penalties, restrictions, litigation or other expenses, and our business could be adversely impacted.

While we continue to evolve our cyber security practices in line with our business’ reliance on technology and the changing external threat landscape, and we invest time, effort and financial resources to secure our systems, networks and communications, our security measures cannot provide absolute assurance that we will be successful in preventing or responding to all cyber security attacks. There can be no assurance that any breach or incident will not have a material impact on our operations and financial results.

Any breach, theft, loss, or fraudulent use of guest, employee, third-party or company data, could adversely impact our reputation and brand and our ability to retain or attract new customers, and expose us to risks of data loss, business disruption, governmental investigation, litigation and other liability, any of which could adversely affect our business. Significant capital investments and other expenditures could be required to remedy the problem and prevent future breaches, including costs associated with additional security technologies, personnel, experts and credit monitoring services for those whose data has been breached. Further, if we or our vendors experience significant data security breaches or fail to detect and appropriately respond to significant data security breaches, we could be exposed to government enforcement actions and private litigation.

Litigation, enforcement actions, fines or penalties could adversely impact our financial condition or results of operations and/or damage our reputation.

Our business is subject to various U.S. and international laws and regulations that could lead to enforcement actions, fines, civil or criminal penalties or the assertion of litigation claims and damages. In addition, improper conduct by our employees, agents or joint venture partners could damage our reputation and/or lead to litigation or legal proceedings that could result in civil or criminal penalties, including substantial monetary fines. In certain circumstances it may not be economical to defend against such matters and/or our legal strategy may not ultimately result in us prevailing in a matter. Such events could lead to an adverse impact on our financial condition or results of operations. In addition, we have experienced, and may continue to experience, increases in litigation pertaining to the COVID-19 crisis, including potential claims for non-refundable cash deposits. We cannot predict the quantum or outcome of any such proceedings and the impact that they will have on our financial results, but any such impact may be material. While some of these claims are covered by insurance, we cannot be certain that all of them will be, which could have an adverse impact on our financial condition or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchases

The following table provides information about our repurchase of common stock during the quarter ended March 31, 2021,

Period	Total number of shares purchased (1)	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plans or programs
January 1, 2021 - January 31,2021	—	—		—	$	—
February 1, 2021 - February 28, 2021	—	—		—	$	—
March 1, 2021 - March 31, 2021	83,212	23.66		—	$	—
Total	83,212	$	23.66

(1) Includes shares related to employee stock plans; primarily 60,011 performance shares issued that did not vest as the performance criteria was not met and were repurchased at par value of $0.01 per share. Additionally, shares were withheld by us to cover withholding

65

taxes due at the election of certain holders.

66

Item 6. Exhibits

4.1	Indenture, dated March 29, 2021, among the Company and The Bank of New York Mellon Trust Company, N.A., as trustee, principal paying agent, transfer agent, registrar and security agent (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 30, 2021).
10.1	Amendment to the Amended and Restated Credit Agreement, dated as of February 12, 2021, among the Company, the various financial institutions party thereto and Nordea Bank ABP, New York Branch as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 18, 2021).
10.2	Amendment to the Amended and Restated Credit Agreement, dated as of February 12, 2021, among the Company, the various financial institutions party thereto and The Bank of Nova Scotia as administrative agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 18, 2021).
10.3	Amendment to Term Loan Agreement, dated as of February 12, 2021, among the Company, the various financial institutions party thereto and Bank of America, N.A. as administrative agent (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on February 18, 2021).
10.4	Amendment No. 2 in connection with the Credit Agreement in respect of Icon 1—Hull 1400, dated as of 15 February 2021, between the Company, the lenders party thereto, KfW IPEX-Bank GmbH, as Hermes agent and facility agent, BNP Paribas Fortis SA/NV as Finnvera agent, the banks and financial institutions listed therein as initial mandated lead arranger, other mandated lead arrangers or lead arrangers and the banks and financial institutions listed therein as lenders (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on February 18, 2021).
10.5	Amendment No. 2 in connection with the Credit Agreement in respect of Icon 2—Hull 1401, dated as of 15 February 2021, between the Company, the lenders party thereto, KfW IPEX-Bank GmbH, as Hermes agent and facility agent, BNP Paribas Fortis SA/NV as Finnvera agent, the banks and financial institutions listed therein as initial mandated lead arranger, other mandated lead arrangers or lead arrangers and the banks and financial institutions listed therein as lenders (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on February 18, 2021).
10.6	Amendment No. 1 in connection with the Credit Agreement in respect of Icon 3—Hull 1402, dated as of 15 February 2021, between the Company, the lenders party thereto, KfW IPEX-Bank GmbH, as Hermes agent, facility agent, initial mandated lead arranger and sole book runner and the banks and financial institutions listed therein as lenders and residual risk guarantors (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on February 18, 2021).
10.7	Amendment No. 5 in connection with the Credit Agreement in respect of “CELEBRITY ECLIPSE” – Hull S-677, dated as of February 17, 2021, between Royal Caribbean Cruises Ltd., KfW IPEX-GmbH as administrative agent and Hermes agent and the banks and financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 23, 2021).
10.8	Amendment No. 5 in connection with the Credit Agreement in respect of “CELEBRITY EQUINOX” – Hull S-676, dated as of February 17, 2021, between Royal Caribbean Cruises Ltd., KfW IPEX-GmbH as administrative agent and Hermes agent and the banks and financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 23, 2021).
10.9	Amendment No. 5 in connection with the Credit Agreement in respect of “CELEBRITY REFLECTION” – Hull S-691, dated as of February 17, 2021, between Royal Caribbean Cruises Ltd., KfW IPEX-GmbH as administrative agent and Hermes agent and the banks and financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on February 23, 2021).
10.10	Amendment No. 5 in connection with the Credit Agreement in respect of “CELEBRITY SILHOUETTE” – Hull S-679, dated as of February 17, 2021, between Royal Caribbean Cruises Ltd., KfW IPEX-GmbH as administrative agent and Hermes agent and the banks and financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on February 23, 2021).
10.11	Amendment No. 5 in connection with the Credit Agreement in respect of “ODYSSEY OF THE SEAS” – Hull S-713, dated as of February 18, 2021, between Royal Caribbean Cruises Ltd., KfW IPEX-GmbH as administrative agent and Hermes agent and the banks and financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on February 23, 2021).
10.12	Amendment No. 5 in connection with the Credit Agreement in respect of “CELEBRITY SOLSTICE” – Hull S-675, dated as of February 18, 2021, between Royal Caribbean Cruises Ltd., KfW IPEX-GmbH as administrative agent and Hermes agent and the banks and financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on February 23, 2021).

67

10.13	Amendment No. 5 in connection with the Credit Agreement in respect of “SPECTRUM OF THE SEAS” – Hull S-700, dated as of February 17, 2021, between Royal Caribbean Cruises Ltd., KfW IPEX-GmbH as administrative agent and Hermes agent and the banks and financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on February 23, 2021).
10.14	Amendment No. 8 in connection with the Credit Agreement in respect of “ANTHEM OF THE SEAS” – Hull S-698, dated as of February 18, 2021, between Royal Caribbean Cruises Ltd., KfW IPEX-GmbH as administrative agent and Hermes agent and the banks and financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed on February 23, 2021).
10.15	Amendment No. 8 in connection with the Credit Agreement in respect of “QUANTUM OF THE SEAS” – Hull S-697, dated as of February 18, 2021, between Royal Caribbean Cruises Ltd., KfW IPEX-GmbH as administrative agent and Hermes agent and the banks and financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed on February 23, 2021).
10.16	Amendment No. 5 in connection with the Credit Agreement in respect of “OVATION OF THE SEAS” – Hull S-699, dated as of February 18, 2021, between Royal Caribbean Cruises Ltd., KfW IPEX-GmbH as administrative agent and Hermes agent and the banks and financial institutions party thereto as lenders (incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed on February 23, 2021).
10.17	Amendment Agreement in connection with the Credit Agreement in respect of “CELEBRITY EDGE” (ex. Hull J34), dated as of February 18, 2021 between Royal Caribbean Cruises Ltd., Citibank N.A., London Branch as global coordinator, SMBC Bank International plc as ECA agent, Citibank Europe plc, UK Branch, as facility agent, the banks and financial institutions listed therein as the mandated lead arrangers and the banks and financial institutions listed as lenders party thereto (incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K filed on February 23, 2021).
10.18	Amendment Agreement in connection with the Credit Agreement in respect of “CELEBRITY APEX” (ex. Hull K34), dated as of February 18, 2021 between Royal Caribbean Cruises Ltd., Citibank N.A., London Branch as global coordinator, SMBC Bank International plc as ECA agent, Citibank Europe plc, UK Branch, as facility agent, the banks and financial institutions listed therein as the mandated lead arrangers and the banks and financial institutions listed as lenders party thereto (incorporated by reference to Exhibit 10.12 to the Company’s Current Report on Form 8-K filed on February 23, 2021).
10.19	Sixth Amendment and Restatement Agreement in connection with the Credit Agreement in respect of “HARMONY OF THE SEAS” (ex Hull A34) (EUR-denominated facility), dated as of February 19, 2021, between Royal Caribbean Cruises Ltd, Société Générale as facility agent, the banks and financial institutions listed therein as mandated lead arrangers and the banks and financial institutions listed as lenders party thereto (incorporated by reference to Exhibit 10.13 to the Company’s Current Report on Form 8-K filed on February 23, 2021).
10.20	Fifth Amendment and Restatement Agreement in connection with the Credit Agreement in respect of “HARMONY OF THE SEAS” (ex Hull A34) (USD-denominated facility), dated as of February 19, 2021, between Royal Caribbean Cruises Ltd, Société Générale as facility agent, the banks and financial institutions listed therein as mandated lead arrangers and the banks and financial institutions listed as lenders party thereto (incorporated by reference to Exhibit 10.14 to the Company’s Current Report on Form 8-K filed on February 23, 2021).
10.21	Amendment Agreement in connection with the Credit Agreement in respect of “SYMPHONY OF THE SEAS” (ex. Hull B34), dated as of February 17, 2021 between Royal Caribbean Cruises Ltd., Citibank N.A., London Branch as global coordinator, SMBC Bank International plc as ECA agent, Citibank Europe plc, UK Branch, as facility agent, the banks and financial institutions listed therein as the mandated lead arrangers and the banks and financial institutions listed as lenders party thereto (incorporated by reference to Exhibit 10.15 to the Company’s Current Report on Form 8-K filed on February 23, 2021).
10.22	Amendment No. 6 in connection with the Credit Agreement in respect of “Odyssey of the Seas” – Hull S-713, dated as of March 10, 2021, between the Company, Kfw IPEX-Bank GmbH as facility agent and Hermes agent, the banks and financial institutions party thereto as mandated lead arrangers and the banks and financial institutions listed therein as lenders (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 16, 2021).
10.23	Amendment No. 3 in connection with the Credit Agreement in respect of “ICON 1” – Hull 1400, dated as of March 16, 2021, between the Company, KfW IPEX-Bank GmbH as facility agent and Hermes agent, BNP Paribas Fortis SA/NV as Finnvera agent, the banks and financial institutions party thereto as mandated lead arrangers and the banks and financial institutions listed therein as lenders (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 19, 2021).
10.24	Amendment No. 3 in connection with the Credit Agreement in respect of “ICON 2” – Hull 1401, dated as of March 16, 2021, between the Company, KfW IPEX-Bank GmbH as facility agent and Hermes agent, BNP Paribas Fortis SA/NV as Finnvera agent, the banks and financial institutions party thereto as mandated lead arrangers and the banks and financial institutions listed therein as lenders (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 19, 2021).

68

10.25	Amendment No. 2 in connection with the Credit Agreement in respect of “ICON 3” - Hull 1402, dated as of March 18, 2021, between the Company, KfW IPEX-Bank GmbH as facility agent and Hermes agent, KfW IPEX-Bank GmbH as the mandated lead arranger, the banks and financial institutions party thereto as mandated lead arrangers and the banks and financial institutions listed therein as lenders (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on March 19, 2021).
10.26	Amendment No. 2 in connection with the Credit Agreement in respect of Hull S-719, dated March 26, 2021, by and among Silversea Cruise Holding Ltd., the Company, KfW IPEX-Bank GmbH as facility agent and Hermes agent and the banks and financial institutions listed in Schedule 1 thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 1, 2021).
10.27	Amendment No. 2 in connection with the Credit Agreement in respect of Hull S-720, dated March 26, 2021, by and among Silversea Cruise Holding Ltd., the Company, KfW IPEX-Bank GmbH as facility agent and Hermes agent and the banks and financial institutions listed in Schedule 1 thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 1, 2021).
10.28	Amended and Restated Credit Agreement, dated March 30, 2021, by and among the Company, the various financial institutions as are or shall be parties thereto and Nordea Bank AB (PUBL) New York branch, as administrative agent for the lender parties (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on April 1, 2021).
10.29	Amended and Restated Term Loan Agreement, dated as of March 30, 2021, by and among the Company, the various financial institutions party thereto and Bank of America NA. as administrative agent (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on April 1, 2021).
10.30	Underwriting Agreement, dated March 1, 2021, among the Company and Morgan Stanley & Co. LLC and BofA Securities, Inc., as representatives of the several underwriters listed in Schedule 1 thereto (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on March 3, 2021)
31.1	Certification of the Chairman and Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934*
32.1	Certifications of the Chairman and Chief Executive Officer and the Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code**

*	Filed herewith
**	Furnished herewith

Interactive Data File

101                         The following financial statements of Royal Caribbean Cruises Ltd. for the period ended March 31, 2021, formatted in iXBRL (Inline extensible Reporting Language) are filed herewith:

(i)                     the Consolidated Statements of Comprehensive Income (Loss) for the quarter ended March 31, 2021 and 2020;

(ii)    the Consolidated Balance Sheets at March 31, 2021 and December 31, 2020;

(iii)                the Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020; and

(iv)                   the Notes to the Consolidated Financial Statements, tagged in summary and detail.

104      Cover page interactive data file (the cover page XBRL tags are embedded within the Inline XBRL document).

69

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ROYAL CARIBBEAN CRUISES LTD.
	(Registrant)
	/s/ JASON T. LIBERTY
	Jason T. Liberty
	Executive Vice President, Chief Financial Officer
April 29, 2021	(Principal Financial Officer and duly authorized signatory)

70

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Richard D. Fain, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Royal Caribbean Cruises Ltd.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	April 29, 2021
		/s/ Richard D. Fain
		Richard D. Fain
		Chairman and
		Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Jason T. Liberty, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Royal Caribbean Cruises Ltd.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	April 29, 2021
		/s/ Jason T. Liberty
		Jason T. Liberty
		Executive Vice President, Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

In connection with the quarterly report on Form 10-Q for the quarterly period ended March 31, 2021 as filed by Royal Caribbean Cruises Ltd. with the Securities and Exchange Commission on the date hereof (the “Report”), Richard D. Fain, Chairman and Chief Executive Officer, and Jason T. Liberty, Chief Financial Officer, each hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

1.the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2.the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Royal Caribbean Cruises Ltd.

Date:	April 29, 2021
		By:	/s/ Richard D. Fain
			Richard D. Fain
			Chairman and
			Chief Executive Officer
			(Principal Executive Officer)
		By:	/s/ Jason T. Liberty
			Jason T. Liberty
			Executive Vice President, Chief Financial Officer
			(Principal Financial Officer)

XML

Cover Page - shares	3 Months Ended
	Mar. 31, 2021	Apr. 26, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2021
Document Transition Report	false
Entity File Number	1-11884
Entity Registrant Name	ROYAL CARIBBEAN CRUISES LTD
Entity Incorporation, State or Country Code	N0
Entity Tax Identification Number	98-0081645
Entity Address, Address Line One	1050 Caribbean Way
Entity Address, City or Town	Miami
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33132
City Area Code	305
Local Phone Number	539-6000
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	RCL
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		254,570,657
Entity Central Index Key	0000884887
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Total revenues	$ 42,014	$ 2,032,750
Cruise operating expenses:
Total cruise operating expenses	283,487	1,510,819
Marketing, selling and administrative expenses	258,041	395,890
Depreciation and amortization expenses	310,166	324,330
Impairment and credit losses	(449)	1,108,118
Operating Loss	(809,231)	(1,306,407)
Other income (expense):
Interest income	4,861	5,534
Interest expense, net of interest capitalized	(272,514)	(92,911)
Equity investment loss	(59,871)	(10,392)
Other income (expense)	5,033	(32,859)
Total other income (expense)	(322,491)	(130,628)
Net Loss	(1,131,722)	(1,437,035)
Less: Net Income attributable to noncontrolling interest	0	7,444
Net Loss attributable to Royal Caribbean Cruises Ltd.	$ (1,131,722)	$ (1,444,479)
Loss per Share:
Basic (in dollars per share)	$ (4.66)	$ (6.91)
Diluted (in dollars per share)	$ (4.66)	$ (6.91)
Weighted-Average Shares Outstanding:
Basic (in shares)	243,004	209,097
Diluted (in shares)	243,004	209,097
Comprehensive Loss
Net Loss	$ (1,131,722)	$ (1,437,035)
Other comprehensive income (loss):
Foreign currency translation adjustments	9,722	10,290
Change in defined benefit plans	10,463	(7,589)
Gain (loss) on cash flow derivative hedges	10,302	(300,605)
Total other comprehensive income (loss)	30,487	(297,904)
Comprehensive Loss	(1,101,235)	(1,734,939)
Less: Comprehensive Income attributable to noncontrolling interest	0	7,444
Comprehensive Loss attributable to Royal Caribbean Cruises Ltd.	(1,101,235)	(1,742,383)
Passenger ticket revenues
Total revenues	20,844	1,376,851
Onboard and other revenues
Total revenues	21,170	655,899
Cruise operating expenses:
Total cruise operating expenses	4,481	123,718
Commissions, transportation and other
Cruise operating expenses:
Total cruise operating expenses	2,949	317,129
Payroll and related
Cruise operating expenses:
Total cruise operating expenses	96,636	330,390
Food
Cruise operating expenses:
Total cruise operating expenses	8,472	121,316
Fuel
Cruise operating expenses:
Total cruise operating expenses	41,822	194,268
Other operating
Cruise operating expenses:
Total cruise operating expenses	$ 129,127	$ 423,998

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Current assets
Cash and cash equivalents	$ 5,091,463	$ 3,684,474
Trade and other receivables, net of allowances of $4,309 and $3,867 at March 31, 2021 and December 31, 2020, respectively	226,740	284,149
Inventories	119,405	118,703
Prepaid expenses and other assets	163,709	154,339
Derivative financial instruments	48,652	70,082
Total current assets	5,649,969	4,311,747
Property and equipment, net	25,794,798	25,246,595
Operating lease right-of-use assets	579,541	599,985
Goodwill	809,459	809,480
Other assets, net of allowances of $81,580 and $81,580 at March 31, 2021 and December 31, 2020, respectively	1,513,306	1,497,380
Total assets	34,347,073	32,465,187
Current liabilities
Current portion of long-term debt	221,299	961,768
Commercial paper	0	409,319
Current portion of operating lease liabilities	97,431	102,677
Accounts payable	340,872	353,422
Accrued interest	236,942	252,668
Accrued expenses and other liabilities	534,744	615,750
Derivative financial instruments	53,398	56,685
Customer deposits	1,830,144	1,784,832
Total current liabilities	3,314,830	4,537,121
Long-term debt	20,714,376	17,957,956
Long-term operating lease liabilities	547,327	563,876
Other long-term liabilities	598,158	645,565
Total liabilities	25,174,691	23,704,518
Shareholders’ equity
Preferred stock ($0.01 par value; 20,000,000 shares authorized; none outstanding)	0	0
Common stock ($0.01 par value; 500,000,000 shares authorized; 282,414,098 and 265,198,371 shares issued, March 31, 2021 and December 31, 2020, respectively)	2,824	2,652
Paid-in capital	7,513,318	5,998,574
Retained earnings	4,431,053	5,562,775
Accumulated other comprehensive loss	(708,854)	(739,341)
Treasury stock (27,882,987 and 27,799,775 common shares at cost, March 31, 2021 and December 31, 2020, respectively)	(2,065,959)	(2,063,991)
Total shareholders’ equity	9,172,382	8,760,669
Total liabilities and shareholders’ equity	$ 34,347,073	$ 32,465,187

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Trade and other receivables, allowance for credit loss	$ 4,309	$ 3,867
Other assets, allowance for credit loss	$ 81,580	$ 81,580
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	20,000,000	20,000,000
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	282,414,098	265,198,371
Treasury stock, common shares (in shares)	27,882,987	27,799,775

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands		3 Months Ended		12 Months Ended
		Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Operating Activities
Net Loss		$ (1,131,722)	$ (1,437,035)
Adjustments:
Depreciation and amortization		310,166	324,330
Impairment and credit losses		(449)	1,108,118
Net deferred income tax (benefit) expense		(3,556)	253
Loss on derivative instruments not designated as hedges		491	120,765
Share-based compensation expense (income)		18,834	(7,428)
Equity investment loss		59,871	10,392
Amortization of debt issuance costs		35,581	7,795
Amortization of debt discounts and premiums		29,304	8,624
Change in fair value of contingent consideration		0	(51,019)
Changes in operating assets and liabilities:
(Increase) decrease in trade and other receivables, net		(72,397)	84,578
Increase in inventories		(3,708)	(15,598)
(Increase) decrease in prepaid expenses and other assets		(26,118)	24,476
(Decrease) increase in accounts payable		(7,499)	851,342
(Decrease) increase in accrued interest		(15,726)	44,648
(Decrease) increase in accrued expenses and other liabilities		(134,113)	110,440
Increase (decrease) in customer deposits		95,923	(959,555)
Dividends received from unconsolidated affiliates	[1]	0	1,991
Other, net		35,935	(28,407)
Net cash (used) provided by operating activities		(809,183)	198,710
Investing Activities
Purchases of property and equipment		(1,061,691)	(1,252,554)
Cash received on settlement of derivative financial instruments		3,758	1,132
Cash paid on settlement of derivative financial instruments		(27,362)	(96,575)
Investments in and loans to unconsolidated affiliates		(70,369)	(2,000)
Cash received on loans to unconsolidated affiliates		12,519	5,160
Proceeds from the sale of property and equipment and other assets		175,439	5,256
Other, net		146	(1,596)
Net cash used in investing activities		(967,560)	(1,341,177)
Financing Activities
Debt proceeds		2,494,077	7,052,189
Debt issuance costs		(82,115)	(62,346)
Repayments of debt		(427,978)	(921,867)
Proceeds from issuance of commercial paper notes		0	6,396,787
Repayments of commercial paper notes		(414,570)	(7,494,025)
Dividends paid		0	(163,563)
Proceeds from common stock issuances		1,617,234	0
Other, net		(2,724)	(16,963)
Net cash provided by financing activities		3,183,924	4,790,212
Effect of exchange rate changes on cash		(192)	(672)
Net increase in cash and cash equivalents		1,406,989	3,647,073
Cash and cash equivalents at beginning of period		3,684,474	243,738	$ 243,738
Cash and cash equivalents at end of period		5,091,463	3,890,811	$ 3,684,474
Cash paid during the period for:
Interest, net of amount capitalized		228,877	31,481
Non-cash Investing Activities
Notes receivable issued upon sale of property and equipment and other assets		16,000	6,294
Purchase of property and equipment included in accounts payable and accrued expenses and other liabilities		$ 26,882	$ 29,022

[1] There were no dividends received from TUI Cruises for the quarters ended March 31, 2021 and March 31, 2020

XML

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Treasury Stock
Beginning balance at Dec. 31, 2019	$ 12,163,846	$ 2,365	$ 3,493,959	$ 11,523,326	$ (797,713)	$ (2,058,091)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Activity related to employee stock plans	(20,699)	7	(20,706)
Changes related to cash flow derivative hedges	(300,605)				(300,605)
Change in defined benefit plans	(7,589)				(7,589)
Foreign currency translation adjustments	10,290				10,290
Purchases of treasury stock	(5,900)					(5,900)
Net Loss attributable to Royal Caribbean Cruises Ltd.	(1,444,479)			(1,444,479)
Common stock dividends	(163,089)			(163,089)
Ending balance at Mar. 31, 2020	10,231,775	2,372	3,473,253	9,915,758	(1,095,617)	(2,063,991)
Beginning balance at Dec. 31, 2020	8,760,669	2,652	5,998,574	5,562,775	(739,341)	(2,063,991)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Activity related to employee stock plans	18,640	2	18,638
Common stock issuance	1,496,276	170	1,496,106
Changes related to cash flow derivative hedges	10,302				10,302
Change in defined benefit plans	10,463				10,463
Foreign currency translation adjustments	9,722				9,722
Purchases of treasury stock	(1,968)					(1,968)
Net Loss attributable to Royal Caribbean Cruises Ltd.	(1,131,722)			(1,131,722)
Ending balance at Mar. 31, 2021	$ 9,172,382	$ 2,824	$ 7,513,318	$ 4,431,053	$ (708,854)	$ (2,065,959)

XML

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Statement of Stockholders' Equity [Abstract]
Common stock dividends declared (in dollars per share)	$ 0.78	$ 0.78

XML

General

3 Months Ended

Mar. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

General

Note 1. General

Description of Business 

We are a global cruise company. We own and operate three global cruise brands: Royal Caribbean International, Celebrity Cruises and Silversea Cruises (collectively, our "Global Brands"). We also own 50% of TUI Cruises GmbH ("TUIC"), which operates the German brands TUI Cruises and Hapag-Lloyd Cruises (collectively, our "Partner Brands"). We account for our investment in TUIC under the equity method of accounting. Together, our Global Brands and our Partner Brands operate a combined 59 ships as of March 31, 2021. Our ships offer a selection of worldwide itineraries that call on more than 1,000 destinations on all seven continents.

Effective March 19, 2021, we sold our wholly-owned brand, Azamara Cruises ("Azamara"), including its three-ship fleet and associated intellectual property, to Sycamore Partners for $201 million, subject to closing adjustments.

Management's Plan and Liquidity

In response to the COVID-19 pandemic, we voluntarily suspended our global cruise operations effective March 13, 2020 and this suspension remains in effect through at least June 30, 2021, for most of our cruise operations. We continue to work with the U.S. Centers for Disease Control and Prevention (“CDC”), other U.S. and non-U.S. regulatory agencies and a panel composed of leading experts in relevant fields, including epidemiology, infectious diseases, public policy and applicable regulations, engineering and general health safety (the "Healthy Sail Panel" or “HSP”) to develop a plan to return to service in consideration of global vaccination efforts. For cruise ship operations in U.S. waters, our return to service plan also considers the requirements of the CDC’s Framework for the Conditional Sailing Order (the “Conditional Order”), including recently issued technical instructions under the Conditional Order. The Conditional Order permits cruise ship passenger operations in U.S. waters under certain conditions and following the establishment of certain protocols and procedures, with the Conditional Order remaining in effect until the earlier of (1) the expiration of the Secretary of Health and Human Services’ declaration that COVID-19 constitutes a public health emergency, (2) the date the CDC Director rescinds or modifies the Conditional Order based on specific public health or other considerations, or (3) November 1, 2021. On April 28, 2021, the CDC issued a letter to members of the cruising industry communicating that it remains committed to the resumption of cruise ship passenger operations in the U.S. following the requirements of the Conditional Order by mid-summer 2021. In the communication, the CDC provided clarifications to its previously issued technical instructions regarding several matters including port operations and COVID-19 testing and vaccination protocols. We are currently evaluating the impact of these clarifications on the technical instructions.

We expect to re-start the rest of our global cruise operations in a phased manner once we fulfill the requirements of the CDC and other U.S. and non-U.S. regulatory agencies, also with reduced guest occupancy, modified itineraries and enhanced health, safety and vaccination protocols. Based on our assessment of these requirements, the status of COVID-19 infection and/or vaccination rates in the U.S. or globally or for other reasons, we may determine it necessary to further extend our voluntary suspension of our Global Brands’ cruise sailings which currently extends through at least June 30, 2021, for most of our cruise operations. As such, we believe the suspension of our operations and the impact to our global bookings resulting from COVID-19 will continue to have a material negative impact on our results of operations and liquidity, which may be prolonged beyond containment of the disease and its variants.

Significant events affecting travel, including COVID-19 and our suspension of operations, typically have an impact on the booking pattern for cruise vacations, with the full extent of the impact generally determined by the length of time the event influences travel decisions. The estimation of our future liquidity requirements include numerous assumptions that are subject to various risks and uncertainties. The principal assumptions used to estimate our future liquidity requirements consist of:

•Expected date of return to operations;

•Expected gradual resumption of cruise operations;

•Expected lower than comparable historical occupancy levels during the resumption of cruise operations; and

•Expected incremental expenses for the resumption of cruise operations, for the maintenance of additional public health protocols and procedures for additional regulations.

There can be no assurance that our assumptions and estimates are accurate due to possible variables, including, but not limited to, the uncertainties associated with the CDC’s interpretation and application of the requirements in the Conditional Order and subsequent changes to those requirements, our ability to meet these requirements, some of which may be significant, and whether efforts by other countries to contain the disease and its variants will further restrict our ability to commence operations. We have implemented and may continue to pursue a number of proactive measures to mitigate the financial and operational impacts of COVID-19, including reduction of capital expenditures and operating expenses (such as reduction and furloughing of workforce and laying up of vessels), the issuance of debt and shares of our common stock, the amendment of credit agreements to defer payments and the waiver and/or modification of covenant requirements and the suspension of dividend payments.

As of March 31, 2021, we had liquidity of $5.8 billion, consisting of cash and cash equivalents of $5.1 billion and a $0.7 billion 364-day term loan facility commitment available to draw through August 12, 2022. Our revolving credit facilities were fully utilized through a combination of amounts drawn and letters of credit issued under the facilities as of March 31, 2021.

We have extended our $1.0 billion unsecured loan due April 2022 and our $1.6 billion unsecured revolving credit facility due October 2022 to October 2023 and April 2024, respectively. As of March 31, 2021, we were in compliance with our financial covenants. Refer to Note 7. Debt for further information regarding the amendments made to our debt facilities and credit card processing agreements, including related covenants, during the quarter ended March 31, 2021.

Based on our assumptions regarding the impact of COVID-19 and our suspension of operations, as well as our present financial condition, we believe that we have sufficient financial resources to fund our obligations for at least the next twelve months from the issuance of these financial statements.

Basis for Preparation of Consolidated Financial Statements

The unaudited consolidated financial statements are presented pursuant to the rules and regulations of the Securities and Exchange Commission. In our opinion, these statements include all adjustments necessary for a fair statement of the results of the interim periods reported herein. Adjustments consist only of normal recurring items, except for any items discussed in the notes below. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted as permitted by such rules and regulations. Estimates are required for the preparation of financial statements in accordance with these principles. Actual results could differ from these estimates. Refer to Note 2. Summary of Significant Accounting Policies in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of our significant accounting policies.

All significant intercompany accounts and transactions are eliminated in consolidation. We consolidate entities over which we have control, usually evidenced by a direct ownership interest of greater than 50%, and variable interest entities where we are determined to be the primary beneficiary. Refer to Note 6. Other Assets for further information regarding our variable interest entities. We consolidate the operating results of Silversea Cruises on a three-month reporting lag to allow for more timely preparation of our consolidated financial statements. No material events or other transactions involving Silversea Cruises have occurred from December 31, 2020 through March 31, 2021.

For affiliates we do not control but over which we have significant influence on financial and operating policies, usually evidenced by a direct ownership interest from 20% to 50%, the investment is accounted for using the equity method.

The March 2021 sale of Azamara does not represent a strategic shift that will have a major effect on our operations and financial results, as we continue to provide similar itineraries to and source passengers from the markets served by the Azamara business. Therefore, the sale of Azamara did not meet the criteria for discontinued operations reporting. Effective March 19, 2021, we no longer consolidate Azamara's balance sheet nor recognize its results of operations in our consolidated financial

statements. We recognized an immaterial gain on the sale during the quarter ended March 31, 2021 and have agreed to provide certain transition services to Azamara for a period of time for a fee.

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2. Summary of Significant Accounting Policies

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB") issued Accounting Standard Update (“ASU") No. 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions to the current guidance on contract modifications and hedging relationships to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. Subsequently, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), which presents amendments to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The guidance in both ASUs was effective upon issuance and may be applied retrospectively or prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative under ASC 815 or for convertible debt issued at a substantial premium. The ASU removes certain settlement conditions required for equity contracts to qualify for the derivative scope exception, permitting more contracts to qualify for it. In addition, the guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The ASU is effective for annual reporting periods beginning after December 15, 2021, including interim reporting periods within those annual periods, with early adoption permitted no earlier than the fiscal year beginning after December 15, 2020. The guidance is expected to have an impact on our consolidated financial statements given the recent issuance of convertible notes, however, we are still evaluating the magnitude of the new guidance on our consolidated financial statements.

Reclassifications

For the three months ended March 31, 2021, we separately presented Amortization of debt discounts and premiums, which includes amortization of commercial paper notes discount, in our consolidated statements of cash flows. As a result, the prior year amortization amounts were reclassified from Other, net within Operating Activities to conform to the current year presentation. Also, for the three months ended March 31, 2021, we no longer separately presented Proceeds from exercise of common stock options in our consolidated statements of cash flows. As a result, the prior year amounts were reclassified to Other, net within Financing Activities to conform to the current year presentation.

XML

Impairment and Credit Losses

3 Months Ended

Mar. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Impairment and Credit Losses

Note 3. Impairments and Credit Losses

Starting in early 2020, the challenges related to COVID-19 have significantly impacted our expected investments, operating plans and projected cash flows. Refer to Note 1. General for further information regarding COVID-19 and its impact to the Company. As a result of these events, we performed interim impairment evaluations during 2020 on certain assets.

During the quarter ended March 31, 2020, we recognized combined impairment and credit losses of $1.1 billion which are reported within Impairment and credit losses within our consolidated statements of comprehensive loss. The impairment losses of $1.1 billion were primarily related to our goodwill, trademarks and trade names, property and equipment, net and right-of-use assets. The credit losses of $38.1 million recognized during the quarter ended March 31, 2020 related to our notes receivable.

In addition, an impairment charge of $39.7 million related to our equity investments was recognized in earnings during the quarter ended March 31, 2020 and is reported within Equity investment loss within our consolidated statements of comprehensive loss.

For the quarter ended March 31, 2021, we had no indication of impairment or credit losses. The adverse impact COVID-19 will continue to have on our business, operating results, cash flows and overall financial condition is uncertain and may result in changes to the assumptions used in the impairment tests discussed above, which may result in additional impairments to these assets in the future.

XML

Revenues

3 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

Revenues

Note 4. Revenues

Revenue Recognition

Revenues are measured based on consideration specified in our contracts with customers and are recognized as the related performance obligations are satisfied.

Historically, the majority of our revenues when we are operating are derived from passenger cruise contracts which are reported within Passenger ticket revenues in our consolidated statements of comprehensive loss. Our performance obligation under these contracts is to provide a cruise vacation in exchange for the ticket price. We satisfy this performance obligation and recognize revenue over the duration of each cruise, which generally range from two to 24 nights.

Passenger ticket revenues include charges to our guests for port costs that vary with passenger head counts. These type of port costs, along with port costs that do not vary by passenger head counts, are included in our cruise operating expenses. The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $1.5 million and $124.5 million for the quarters ended March 31, 2021 and 2020, respectively.

Our total revenues also include Onboard and other revenues, which consist primarily of revenues from the sale of goods and services onboard our ships that are not included in passenger ticket prices. We receive payment before or concurrently with the transfer of these goods and services to passengers during a cruise and recognize revenue at the time of transfer over the duration of the related cruise.

As a practical expedient, we have omitted disclosures on our remaining performance obligations as the duration of our contracts with customers is less than a year.

Disaggregated Revenues

The following table disaggregates our total revenues by geographic regions where we provide cruise itineraries (in thousands):

	Quarter Ended March 31,
	2021		2020
Revenues by itinerary
North America(1)	$	—	$	1,324,573
Asia/Pacific(2)	29,885		362,398
Europe(3)	—		19,540
Other regions(4)	810		158,043
Total revenues by itinerary	30,695		1,864,554
Other revenues(5)	11,319		168,196
Total revenues	$	42,014	$	2,032,750

(1)Includes the United States, Canada, Mexico and the Caribbean.

(2)Includes Southeast Asia (e.g., Singapore, Thailand and the Philippines), East Asia (e.g., China and Japan), South Asia (e.g., India and Pakistan) and Oceania (e.g., Australia and Fiji Islands) regions.

(3)Includes European countries (e.g., Nordics, Germany, France, Italy, Spain and the United Kingdom).

(4)Includes seasonality impacted itineraries primarily in South and Latin American countries.

(5)Includes revenues primarily related to cancellation fees, vacation protection insurance, pre- and post-cruise tours and fees for operating certain port facilities. Amounts also include revenues related to our bareboat charter, which was terminated when Pullmantur Holdings filed for reorganization in Spain in 2020, and procurement and management related services we perform on behalf of our unconsolidated affiliates. Refer to Note 6. Other Assets for more information on our unconsolidated affiliates.

Passenger ticket revenues are attributed to geographic areas based on where the reservation originates. For the quarters ended March 31, 2021 and 2020, our guests were sourced from the following areas:

	Quarter Ended March 31,
	2021		2020
Passenger ticket revenues:
Singapore	69	%	—	%
China	31	%	—	%
United States	—	%	68	%
All other countries (1)	—	%	32	%

(1)No other individual country's revenue exceeded 10% for the quarter ended March 31, 2020.

Customer Deposits and Contract Liabilities

Our payment terms generally require an upfront deposit to confirm a reservation, with the balance due prior to the cruise. Deposits received on sales of passenger cruises are initially recorded as Customer deposits in our consolidated balance sheets and subsequently recognized as passenger ticket revenues during the duration of the cruise. ASC 606, Revenues from Contracts with Customers, defines a “contract liability” as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. We do not consider customer deposits to be a contract liability until the customer no longer retains the unilateral right, resulting from the passage of time, to cancel such customer's reservation and receive a full refund.

The current reduction in demand for cruising due to COVID-19 resulted in an unprecedented low level of advance bookings and the associated customer deposits received. At the same time, we have experienced significant cancellations as a result of our suspension of operations, which has led to issuance of refunds to customers, while the remainder have been rebooked on future cruises or received credits in lieu of cash refunds.

As of March 31, 2021, refunds due to customers mostly as a result of booking cancellations were $107.3 million compared to $95.8 million as of December 31, 2020. Due to the uncertainty around the return of demand for cruising, we are unable to estimate the amount of the March 31, 2021 customer deposits that will be recognized in earnings compared to amounts that will be refunded to customers or issued as a credit for future travel through the end of 2021. Customer deposits presented in our consolidated balance sheets include contract liabilities of $503.3 million and $124.8 million as of March 31, 2021 and December 31, 2020, respectively.

Contract Receivables and Contract Assets

Although we generally require full payment from our customers prior to their cruise, we grant credit terms to a relatively small portion of our revenue sourced in select markets outside of the United States. As a result, we have outstanding receivables from passenger cruise contracts in those markets. We also have receivables from credit card merchants for cruise ticket purchases and goods and services sold to guests during cruises that are collected before, during or shortly after the cruise voyage. In addition, we have receivables due from concessionaires onboard our vessels. These receivables are included within Trade and other receivables, net in our consolidated balance sheets.

We have contract assets that are conditional rights to consideration for satisfying the construction services performance obligations under a service concession arrangement. As of March 31, 2021 and December 31, 2020, our contract assets were $53.7 million and were included within Other assets in our consolidated balance sheets. Given the short duration of our cruises and our collection terms, we do not have any other significant contract assets.

Assets Recognized from the Costs to Obtain a Contract with a Customer

Prepaid travel agent commissions are an incremental cost of obtaining contracts with customers that we recognize as an asset and include within Prepaid expenses and other assets in our consolidated balance sheets. Prepaid travel agent commissions were $13.6 million as of March 31, 2021 and $1.1 million as of December 31, 2020. Substantially all of our prepaid travel agent commissions at December 31, 2020 were expensed and reported primarily within Commissions, transportation and other in our consolidated statements of comprehensive loss for the quarter ended March 31, 2021.

XML

(Loss) Per Share

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

(Loss) Per Share

Note 5. (Loss) Per Share

A reconciliation between basic and diluted (loss) per share is as follows (in thousands, except per share data):

	Quarter Ended March 31,
	2021		2020
Net (Loss) attributable to Royal Caribbean Cruises Ltd. for basic and diluted loss per share	$	(1,131,722)	$	(1,444,479)
Weighted-average common shares outstanding	243,004		209,097
Diluted weighted-average shares outstanding	243,004		209,097
Basic (loss) per share	$	(4.66)	$	(6.91)
Diluted (loss) per share	$	(4.66)	$	(6.91)

There were approximately 413,501 and 877,000 antidilutive shares for the quarters ended March 31, 2021 and March 31, 2020, respectively.

Since the Company expects to settle in cash the principal outstanding convertible notes that mature in 2023, we currently use the treasury stock method when calculating their potential dilutive effect, if any. While no shares of the convertible notes are currently convertible, they would be anti-dilutive for the three months ended March 31, 2021.

XML

Other Assets

3 Months Ended

Mar. 31, 2021

Other Assets [Abstract]

Other Assets

Note 6. Other Assets

A Variable Interest Entity (“VIE”) is an entity in which the equity investors have not provided enough equity to finance the entity’s activities or the equity investors: (1) cannot directly or indirectly make decisions about the entity’s activities through their voting rights or similar rights; (2) do not have the obligation to absorb the expected losses of the entity; (3) do not have the right to receive the expected residual returns of the entity; or (4) have voting rights that are not proportionate to their economic interests and the entity’s activities involve or are conducted on behalf of an investor with a disproportionately small voting interest.

We have determined that TUI Cruises GmbH ("TUIC"), our 50%-owned joint venture, which operates the brands TUI Cruises and Hapag-Lloyd Cruises, is a VIE. In addition, we have determined that we are not the primary beneficiary of TUIC. We believe that the power to direct the activities that most significantly impact TUIC’s economic performance is shared between ourselves and TUI AG, our joint venture partner. All the significant operating and financial decisions of TUIC require the consent of both parties, which we believe creates shared power over TUIC. Accordingly, we do not consolidate this entity and account for this investment under the equity method of accounting.

As of March 31, 2021, the net book value of our investment in TUIC was $538.8 million, primarily consisting of $395.8 million in equity and a loan of €114.9 million, or approximately $135.1 million based on the exchange rate at March 31, 2021. As of December 31, 2020, the net book value of our investment in TUIC was $538.4 million, primarily consisting of $387.5 million in equity and a loan of €118.9 million, or approximately $145.5 million based on the exchange rate at December 31, 2020. The loan, which was made in connection with the sale of Splendour of the Seas in April 2016, accrues interest at a rate of 6.25% per annum and is payable over 10 years. This loan is 50% guaranteed by TUI AG, our joint venture partner in TUIC, and is secured by a first priority mortgage on the ship. The majority of these amounts were included within Other assets in our consolidated balance sheets. During the quarter ended March 31, 2021, we and TUI AG each contributed €59.5 million, or approximately $69.9 million based on the exchange rate at March 31, 2021, of additional equity through a combination of cash contributions and conversion of existing receivables.

TUIC has various ship construction and financing agreements which include certain restrictions on each of our and TUI AG’s ability to reduce our current ownership interest in TUI Cruises below 37.55% through May 2033. Our investment amount and outstanding term loan are substantially our maximum exposure to loss in connection with our investment in TUIC.

TUI Cruises and Hapag-Lloyd Cruises, our Partner Brands, have been adversely affected by COVID-19, resulting in the suspension of the majority of the brands' cruise operations and a material negative impact to the brands' results of operations and liquidity. The brands have executed cost containment actions and liquidity measures, including the issuance of new financing and the deferral of existing financing, to mitigate the impact of COVID-19 until normal operations may be resumed.

We have determined that Pullmantur Holdings, in which we have a 49% noncontrolling interest and Springwater Capital LLC has a 51% interest, is a VIE for which we are not the primary beneficiary, as we do not have the power to direct the

activities that most significantly impact the entity's economic performance. In 2020, Pullmantur Holdings and certain of its subsidiaries filed for reorganization under the terms of the Spanish insolvency laws due to the negative impact of COVID-19 on the companies. We suspended the equity method of accounting for Pullmantur Holdings during the second quarter of 2020 as we do not intend to fund the entity's future losses and we lost our ability to exert significant influence over the entity's activities as a result of the liquidation process.

We have determined that Grand Bahama, a ship repair and maintenance facility in which we have a 40% noncontrolling interest, is a VIE. This facility serves cruise and cargo ships, oil and gas tankers and offshore units.  We utilize this facility, among other ship repair facilities, for our regularly scheduled drydocks and certain emergency repairs as may be required. We have determined that we are not the primary beneficiary of this facility as we do not have the power to direct the activities that most significantly impact the facility’s economic performance. Accordingly, we do not consolidate this entity.

During the quarter ended March 31, 2020, we performed an impairment evaluation on our investment in Grand Bahama. As a result of the evaluation, we did not deem our investment balance to be recoverable and recorded an impairment charge of $30.1 million bringing our investment balance to zero. The impairment assessment and the resulting charge on our equity method investment in Grand Bahama were determined based on management’s estimates and projections. We are currently recognizing our share of equity method losses against the carrying value of our loans receivable from Grand Bahama.

As of March 31, 2021, we had exposure to credit loss in Grand Bahama consisting of a $8.6 million loan. Our loan to Grand Bahama matures March 2026 and bears interest at LIBOR plus 3.5% to 3.75%, capped at 5.75%. Interest payable on the loan is due on a semi-annual basis. During the quarter ended March 31, 2021, we received principal and interest payments of $8.9 million related to a term loan that had fully matured. We did not receive principal and interest payments during the quarter ended March 31, 2020. The outstanding loan balance is included within Trade and other receivables, net and Other assets in our consolidated balance sheets.

We monitor credit risk associated with the loan through our participation on Grand Bahama’s board of directors along with our review of Grand Bahama’s financial statements and projected cash flows. Effective April 1, 2020, we placed the loans in non-accrual status based on our review of Grand Bahama's projected cash flows, which have been adversely affected by impacts to their operations caused by the 2019 crane accident related to Oasis of the Seas, Hurricane Dorian and most recently, COVID-19. During the quarter ended March 31, 2021, no credit losses were recorded related to these loans.

For further information on the measurements used to estimate the fair value of our equity investments, refer to Note 12. Fair Value Measurements and Derivative Instruments.

The following tables set forth information regarding our investments accounted for under the equity method of accounting, including the entities discussed above (in thousands):

	Quarter Ended March 31,
	2021		2020
Share of equity (loss) income from investments	$	(59,871)	$	(10,392)
Dividends received (1)	$	—	$	1,991

(1)There were no dividends received from TUI Cruises for the quarters ended March 31, 2021 and March 31, 2020.

	As of March 31, 2021		As of December 31, 2020
Total notes receivable due from equity investments	$	143,642	$	164,596
Less-current portion (1)	20,018		29,501
Long-term portion (2)	$	123,624	$	135,095

(1)Included within Trade and other receivables, net in our consolidated balance sheets.

(2)Included within Other assets in our consolidated balance sheets.

We also provide ship management services to TUIC and provided management services to Pullmantur Holdings (which filed for reorganization in Spain in June 2020). Additionally, we bareboat chartered to Pullmantur Holdings the vessels previously operated by its brands, which were retained by us following the sale of our 51% interest in Pullmantur Holdings. These bareboat charters were terminated when Pullmantur Holdings filed for reorganization in Spain. We recorded the following as it relates to these services in our operating results within our consolidated statements of comprehensive income (loss) (in thousands):

	Quarter Ended March 31,
	2021		2020
Revenues	$	5,231	$	7,411
Expenses	$	1,275	$	782

Credit Losses

We reviewed our notes receivable for credit losses in connection with the preparation of our financial statements for the quarter ended March 31, 2021. In evaluating the allowance for loan losses, management considered factors such as historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, peer group information and prevailing economic conditions.

The following table summarizes our credit loss allowance related to receivables for the three months ended March 31, 2021 (in thousands):

	Credit Loss Allowance
Beginning balance January 1, 2021	$	85,447
Loss provision for receivables	971
Write-offs	(529)
Ending balance March 31, 2021	$	85,889

Our credit loss allowance balance as of March 31, 2021 primarily related to a $81.6 million loss provision recognized during 2020 on notes receivable related to a previous sale of property and equipment.

XML

Debt

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Debt

Note 7. Debt

Debt consist of the following (in thousands):

	Interest Rate (1)	Maturities Through	Quarter Ended March 31, 2021		Year Ended December 31, 2020
Fixed rate debt:
Unsecured senior notes	3.70% to 7.50%	2022 - 2028	$	3,962,852	$	2,464,994
Secured senior notes	7.25% to 11.50%	2023 - 2025	3,897,963		3,895,166
Unsecured term loans	2.53% to 5.41%	2021 - 2032	3,130,363		3,210,161
Convertible notes	2.88% to 4.25%	2023	1,480,561		1,454,488
Total fixed rate debt			12,471,739		11,024,809
Variable rate debt:
Unsecured revolving credit facilities (2)	1.49% to 1.89%	2022 - 2024	3,004,342		3,289,000
Unsecured UK Commercial paper		2021	—		409,319
USD unsecured term loan	0.61% to 3.31%	2021 - 2033	4,904,446		4,002,249
Euro unsecured term loan	1.15% to 2.25%	2021 - 2028	708,663		705,064
Total variable rate debt			8,617,451		8,405,632
Finance lease liabilities			209,748		213,365
Total debt (3)			21,298,938		19,643,806
Less: unamortized debt issuance costs			(363,263)		(314,763)
Total debt, net of unamortized debt issuance costs			20,935,675		19,329,043
Less—current portion including commercial paper			(221,299)		(1,371,087)
Long-term portion			$	20,714,376	$	17,957,956

(1) Interest rates based on outstanding loan balance as of March 31, 2021 and, for variable rate debt, include either LIBOR or EURIBOR plus the applicable margin.

(2) Includes $1.9 billion facility and $1.3 billion facility, the vast majority of which is due in 2024. Our $1.9 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.30%, which interest was 1.49% as of March 31, 2021 and is subject to a facility fee of a maximum of 0.20%. Our $1.3 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.70%, which interest was 1.89% as of March 31, 2021 and is subject to a facility fee of a maximum of 0.30%.

(3) At March 31, 2021 and December 31, 2020, the weighted average interest rate for total debt was 5.78% and 6.02%, respectively.

In March 2021, we amended our $1.55 billion unsecured revolving credit facility due October 2022 and our $1.0 billion unsecured loan due April 2022. These amendments, among other things, extend the maturity date or termination date of certain of the advances and commitments, as applicable, under the facilities held by consenting lenders by 18 months and increase the interest rate margin and/or the facility fee, as applicable, with respect to advances and commitments held by such lenders. Consenting lenders also received a prepayment and commitment reduction equal to 20% of their respective outstanding advances and commitments. Following these amendments, the aggregate revolving capacity of the revolving credit facility is approximately $1.3 billion, with approximately $0.2 billion terminating in October 2022 and approximately $1.1 billion terminating in April 2024 and the aggregate principal balance of the term loan is approximately $0.9 billion, with approximately $0.3 billion maturing in April 2022 and approximately $0.6 billion maturing in October 2023.

As of March 31, 2021, our aggregate revolving borrowing capacity was $3.2 billion and was fully utilized through a combination of amounts drawn and letters of credit issued under the facilities. Certain of our surety agreements with third party providers for the benefit of certain agencies and associations that provide travel related bonds, allow the sureties to request collateral. We also have agreements with our credit card processors relating to customer deposits received by us for future voyages. These agreements allow the credit card processors to require us, under certain circumstances, to maintain a reserve

that can be satisfied by posting collateral. As of March 31, 2021, we have posted letters of credit as collateral with our sureties and credit card processors, under our revolving credit facilities in the amount of $172.7 million.

Executed amendments are in place for the majority of our credit card processors, waiving reserve requirements tied to breach of our financial covenants through at least September 30, 2022, and as such, we do not anticipate any incremental collateral requirements for the processors covered by these waivers in the next 12 months. We have a reserve with a processor where the agreement was amended in the first quarter of 2021, such that proceeds are withheld in reserve, until the sailing takes place or the funds are refunded to the customer. The maximum projected exposure with the processor, including amounts currently withheld and reported in Trade and other receivables, is approximately $170.6 million. The amount and timing are dependent on future factors that are uncertain, such as the date we return to operations, volume and value of future deposits and whether we transfer our business to other processors. If we require additional waivers on the credit card processing agreements and are not able to obtain them, this could lead to the termination of these agreements or the trigger of reserve requirements.

In March 2021, we took delivery of Odyssey of the Seas. To finance the purchase, we borrowed $994.1 million under a previously committed unsecured term loan which is 95% guaranteed by Euler Hermes Aktiengesellschaft (“Hermes”), the official export credit agency of Germany. The loan amortizes semi-annually over 12 years and bears interest at a floating rate equal to LIBOR plus a margin of 0.96%. Prior to delivery during the first quarter of 2021, we amended the credit agreement to (i) increase the maximum loan amount under the facility to make available to us a maximum amount equal to the US dollar equivalent of 80% of the vessel purchase price plus 100% of the premium payable to Hermes and (ii) defer the payment of all principal payments due between April 2021 and April 2022, which amounts will be repayable semi-annually over a five year period starting in April 2022.

In March 2021, we issued $1.50 billion of senior unsecured notes that mature in 2028, for net proceeds of $1.48 billion. Interest on the senior notes accrues at 5.5% per annum and is payable semi-annually.

In March 2021, we extended our binding commitment for a $700.0 million term loan facility by one year. As amended, we may draw on the facility at any time prior to August 12, 2022. Once drawn, the loan will bear interest at LIBOR plus 3.75% and will mature 364 days from funding. In addition, the facility will be guaranteed by RCI Holdings, LLC, our wholly owned subsidiary that owns the equity interests in subsidiaries that own seven of our vessels. We have the ability to increase the capacity of the facility by an additional $300.0 million from time to time subject to the receipt of additional or increased commitments and the issuance of guarantees from additional subsidiaries.

During the first quarter of 2021, we repaid in full at maturity £300.0 million of Sterling-denominated notes issued under the Joint HM Treasury and Bank of England’s COVID Corporate Financing Facility.

During the first quarter of 2021, we amended $4.9 billion of our non-export credit facilities and certain of our credit card processing agreements to extend the waiver of the financial covenants through and including the third quarter of 2022 or, if earlier, the date falling after January 1, 2022 on which we elect to comply with the modified covenants. Pursuant to the amendments, we have modified the manner in which such covenants are calculated (temporarily in certain cases and permanently in others) as well as the levels at which our net debt to capitalization covenant will be tested during the period commencing immediately following the end of the waiver period and continuing through the end of 2023. As of March 31, 2021, the monthly-tested minimum liquidity covenant was $350 million for the duration of the waiver period. As of the date of these financial statements, we were in compliance with the applicable minimum liquidity covenant. Pursuant to these amendments, the restrictions on paying cash dividends and effectuating share repurchases were extended through and including the third quarter of 2022. As of March 31, 2021, we had one $130.0 million term loan which benefited from a financial covenant waiver through the end of the first quarter of 2021. This term loan was repaid in full in April of 2021 and was reported in Current portion of long-term debt in our Consolidated Balance Sheet as of March 31, 2021.

During the first quarter of 2021, we also amended $6.3 billion of our export credit facilities to extend the waiver of the financial covenants through and including at least the end of the third quarter of 2022. These amendments defer $1.15 billion of principal payments due between April 2021 and April 2022. The deferred amounts will be repayable semi-annually over a five-year period starting in April 2022. Pursuant to these amendments, we have agreed to implement the same liquidity covenant that applies in our non-export credit facilities. The amendments provide for mandatory prepayment of the deferred amounts upon the taking of certain actions. Subject to a number of carve outs, these include, but are not limited to, the issuance of dividends, the completion of share repurchases, issuances of debt other than for crisis and recovery purposes, the making of loans and the sale of assets other than at arm’s length.

For information related to the covenants in our Port of Miami Terminal "A" operating lease agreement, refer to Note 8. Leases.

In the fourth quarter of 2020 and the first quarter of 2021, we entered into amendments to our drawn and undrawn ECA facilities to provide for the issuance of guarantees in satisfaction of existing obligations under these facilities. Following issuance (which, in the case of the undrawn facilities, will occur once the debt is drawn), the guarantees will be released under certain circumstances as other debt is repaid or refinanced on an unsecured and unguaranteed basis. In connection with and following the issuance of the guarantees, the guarantor subsidiaries are restricted from issuing additional guarantees in favor of lenders (other than those lenders who are party to the ECA facilities), and certain of the guarantor subsidiaries are restricted from incurring additional debt. In addition, the ECA facilities will benefit from guarantees to be issued by intermediary parent companies of subsidiaries that take delivery of any new vessels subject to export-credit backed financing.

Under certain of our agreements, the contractual interest rate, facility fee and/or export credit agency fee vary with our debt rating. On February 25, 2021, S&P Global downgraded our senior unsecured rating from B+ to B, which had no financial impact, and downgraded our $3.32 billion Senior Secured Notes and Silversea Notes from BB to BB-. This downgrade had no impact on the terms of the notes.

Except for the term loans we incurred to acquire Celebrity Flora, Azamara Pursuit and Silver Moon, all of our unsecured ship financing term loans are guaranteed by the export credit agency in the respective country in which the ship is constructed. The term loan incurred to acquire Azamara Pursuit was repaid in full in April of 2021. For the majority of the loans as of March 31, 2021, we pay to the applicable export credit agency, depending on the financing agreement, an upfront fee of 2.35% to 5.48% of the maximum loan amount in consideration for these guarantees. For one of our loans, we pay to the applicable export credit agency a fee of 2.97% per annum, based on the outstanding loan balance. The fee is paid semi-annually over the term of the loan (subject to adjustments based upon our credit ratings).We amortize the fees that are paid upfront over the life of the loan and those that are paid semi-annually over each respective payment period. We classify these fees within Amortization of debt issuance costs in our consolidated statements of cash flows. Prior to the loan being drawn, we present these fees within Other assets in our consolidated balance sheets. Once the loan is drawn, such fees are classified as a discount to the related loan, or contra-liability account, within Current portion of long-term debt or long-term debt.

The following is a schedule of annual maturities on our total debt net of debt issuance costs, and including finance leases and commercial paper, as of March 31, 2021 for each of the next five years (in thousands):

Year
Remainder of 2021	189,207
2022	2,211,011
2023	6,251,032
2024	4,670,735
2025	4,436,340
Thereafter	3,177,350
	20,935,675

XML

Leases

3 Months Ended

Mar. 31, 2021

Leases [Abstract]

Leases

Note 8. Leases

Operating leases

Our operating leases primarily relate to preferred berthing arrangements, real estate and shipboard equipment and are included within Operating lease right-of-use assets, and Long-term operating lease liabilities with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheets as of March 31, 2021 and December 31, 2020. Leases with an initial term of 12 months or less are not recorded on our consolidated balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term. Our operating leases include Silver Explorer, operated by Silversea Cruises. The operating lease for Silver Explorer will expire in 2023.

For some of our real estate leases and berthing agreements, we have the option to extend our current lease term. For those lease agreements with renewal options, the renewal periods for real estate leases range from one to 10 years and the renewal periods for berthing agreements range from one to 20 years. Generally, we do not include renewal options as a component of our present value calculation for berthing agreements. However, for certain real estate leases, we include them.

We have a residual value guarantee associated with our Port of Miami Terminal "A" operating lease agreement ("Port of Miami terminal lease") that approximates a percentage of the cost of the asset as of the inception of the lease. We consider the possibility of incurring costs associated with the residual value guarantee to be remote.

Also in connection with the Port of Miami terminal lease, we are required to deliver on or before July 18, 2021, cash collateral in an amount equal to the lesser of our residual value guarantee or the aggregate balance of the lenders' terminal construction debt, estimated at $181.1 million as of March 31, 2021. The collateral is to be returned when all amounts due by us under the lease have been paid in full.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of lease payments. We estimate our incremental borrowing rates based on LIBOR and U.S. Treasury note rates corresponding to lease terms increased by the Company’s credit risk spread and reduced by the estimated impact of collateral. In addition, we have lease agreements with lease and non-lease components, which are generally accounted for separately. However, for berthing agreements, we account for the lease and non-lease components as a single lease component.

Finance Leases

Silversea Cruises operates the Silver Whisper under a finance lease. The finance lease for the Silver Whisper will expire in 2022, subject to an option to purchase the ship. The total aggregate amount of the finance lease liabilities recorded for this ship was $31.5 million at March 31, 2021 and December 31, 2020. The lease payments on the Silver Whisper are subject to adjustments based on the LIBOR rate.

The components of lease expense were as follows (in thousands):

	Consolidated Statement of Comprehensive Loss Classification	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Lease costs:
Operating lease costs	Commission, transportation and other	$	—	$	14,745
Operating lease costs	Other operating expenses	5,130		7,001
Operating lease costs	Marketing, selling and administrative expenses	6,035		5,368
Financial lease costs:
Amortization of right-of-use-assets	Depreciation and amortization expenses	3,744		4,881
Interest on lease liabilities	Interest expense, net of interest capitalized	310		1,933
Total lease costs		$	15,219	$	33,928

In addition, certain of our berthing agreements include variable lease costs based on the number of passengers berthed. During the quarter ended March 31, 2021, we had no variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive loss.

Weighted average of the remaining lease terms and weighted average discount rates are as follows:

	As of March 31, 2021		As of December 31, 2020
Weighted average of the remaining lease term
Operating leases	9.9		7.8
Finance leases	42.1		41.2
Weighted average discount rate
Operating leases	5.25	%	4.59	%
Finance leases	7.02	%	6.89	%

Supplemental cash flow information related to leases is as follows (in thousands):

	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5,531	$	27,841
Operating cash flows from finance leases	$	310	$	1,933
Financing cash flows from finance leases	$	4,305	$	3,823

As of March 31, 2021, maturities related to lease liabilities were as follows (in thousands):

Year	Operating Leases		Finance Leases
Remainder of 2021	$	96,266	$	55,831
2022	119,321		23,822
2023	112,718		12,789
2024	84,696		12,529
2025	77,323		12,566
Thereafter	386,342		395,460
Total lease payments	876,666		512,997
Less: Interest	(231,908)		(303,249)
Present value of lease liabilities	$	644,758	$	209,748

Leases

Note 8. Leases

Operating leases

Our operating leases primarily relate to preferred berthing arrangements, real estate and shipboard equipment and are included within Operating lease right-of-use assets, and Long-term operating lease liabilities with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheets as of March 31, 2021 and December 31, 2020. Leases with an initial term of 12 months or less are not recorded on our consolidated balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term. Our operating leases include Silver Explorer, operated by Silversea Cruises. The operating lease for Silver Explorer will expire in 2023.

For some of our real estate leases and berthing agreements, we have the option to extend our current lease term. For those lease agreements with renewal options, the renewal periods for real estate leases range from one to 10 years and the renewal periods for berthing agreements range from one to 20 years. Generally, we do not include renewal options as a component of our present value calculation for berthing agreements. However, for certain real estate leases, we include them.

We have a residual value guarantee associated with our Port of Miami Terminal "A" operating lease agreement ("Port of Miami terminal lease") that approximates a percentage of the cost of the asset as of the inception of the lease. We consider the possibility of incurring costs associated with the residual value guarantee to be remote.

Also in connection with the Port of Miami terminal lease, we are required to deliver on or before July 18, 2021, cash collateral in an amount equal to the lesser of our residual value guarantee or the aggregate balance of the lenders' terminal construction debt, estimated at $181.1 million as of March 31, 2021. The collateral is to be returned when all amounts due by us under the lease have been paid in full.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of lease payments. We estimate our incremental borrowing rates based on LIBOR and U.S. Treasury note rates corresponding to lease terms increased by the Company’s credit risk spread and reduced by the estimated impact of collateral. In addition, we have lease agreements with lease and non-lease components, which are generally accounted for separately. However, for berthing agreements, we account for the lease and non-lease components as a single lease component.

Finance Leases

Silversea Cruises operates the Silver Whisper under a finance lease. The finance lease for the Silver Whisper will expire in 2022, subject to an option to purchase the ship. The total aggregate amount of the finance lease liabilities recorded for this ship was $31.5 million at March 31, 2021 and December 31, 2020. The lease payments on the Silver Whisper are subject to adjustments based on the LIBOR rate.

The components of lease expense were as follows (in thousands):

	Consolidated Statement of Comprehensive Loss Classification	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Lease costs:
Operating lease costs	Commission, transportation and other	$	—	$	14,745
Operating lease costs	Other operating expenses	5,130		7,001
Operating lease costs	Marketing, selling and administrative expenses	6,035		5,368
Financial lease costs:
Amortization of right-of-use-assets	Depreciation and amortization expenses	3,744		4,881
Interest on lease liabilities	Interest expense, net of interest capitalized	310		1,933
Total lease costs		$	15,219	$	33,928

In addition, certain of our berthing agreements include variable lease costs based on the number of passengers berthed. During the quarter ended March 31, 2021, we had no variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive loss.

Weighted average of the remaining lease terms and weighted average discount rates are as follows:

	As of March 31, 2021		As of December 31, 2020
Weighted average of the remaining lease term
Operating leases	9.9		7.8
Finance leases	42.1		41.2
Weighted average discount rate
Operating leases	5.25	%	4.59	%
Finance leases	7.02	%	6.89	%

Supplemental cash flow information related to leases is as follows (in thousands):

	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5,531	$	27,841
Operating cash flows from finance leases	$	310	$	1,933
Financing cash flows from finance leases	$	4,305	$	3,823

As of March 31, 2021, maturities related to lease liabilities were as follows (in thousands):

Year	Operating Leases		Finance Leases
Remainder of 2021	$	96,266	$	55,831
2022	119,321		23,822
2023	112,718		12,789
2024	84,696		12,529
2025	77,323		12,566
Thereafter	386,342		395,460
Total lease payments	876,666		512,997
Less: Interest	(231,908)		(303,249)
Present value of lease liabilities	$	644,758	$	209,748

XML

Commitments and Contingencies

3 Months Ended

Mar. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 9. Commitments and Contingencies

Ship Purchase Obligations

Our future capital commitments consist primarily of new ship orders. As of March 31, 2021, two Oasis-class ships and three ships of a new generation, known as our Icon-class, are on order for our Royal Caribbean International brand with an aggregate capacity of approximately 28,200 berths. As of March 31, 2021, we had two Edge-class ships on order for our Celebrity Cruises brand with an aggregate capacity of approximately 6,500 berths. Additionally, as of March 31, 2021, we have three ships on order for our Silversea Cruises brand with an aggregate capacity of approximately 2,000 berths.

COVID-19 has impacted shipyard operations which have and may continue to result in delays of our previously contracted ship deliveries. As of March 31, 2021, the dates that the ships on order by our Global and Partner Brands are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

Ship	Shipyard	Expected Delivery Dates	Approximate Berths
Royal Caribbean International —
Oasis-class:
Wonder of the Seas	Chantiers de l'Atlantique	1st Quarter 2022	5,700
Unnamed	Chantiers de l'Atlantique	2nd Quarter 2024	5,700
Icon-class:
Unnamed	Meyer Turku Oy	3rd Quarter 2023	5,600
Unnamed	Meyer Turku Oy	2nd Quarter 2025	5,600
Unnamed	Meyer Turku Oy	2nd Quarter 2026	5,600
Celebrity Cruises —
Edge-class:
Celebrity Beyond	Chantiers de l'Atlantique	2nd Quarter 2022	3,250
Unnamed	Chantiers de l'Atlantique	4th Quarter 2023	3,250
Silversea Cruises — (1)
Muse-Class:
Silver Dawn	Fincantieri	4th Quarter 2021	600
Evolution Class:
Unnamed	Meyer Werft	2nd Quarter 2023	700
Unnamed	Meyer Werft	2nd Quarter 2024	700
TUI Cruises (50% joint venture)
Mein Schiff 7	Meyer Turku Oy	2nd Quarter 2024	2,900
Unnamed	Fincantieri	3rd Quarter 2024	4,100
Unnamed	Fincantieri	1st Quarter 2026	4,100
Hapag-Lloyd Cruises (50% joint venture) —
Hanseatic Spirit	Vard Fincantieri	2nd Quarter 2021	230
Total Berths			48,030

(1)    The revenue impact from Silversea Cruises' new ships will be recognized on a three month reporting lag from when the ships enter service. Refer to Note 1. General for further information.

In addition, as of March 31, 2021, we have an agreement in place with Chantiers de l'Atlantique to build an additional Edge-class ship for delivery in 2025, which is contingent upon completion of conditions precedent and financing.

As of March 31, 2021, the aggregate cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was approximately $12.9 billion, of which we had deposited $602.5 million as of such date. Approximately 70.5% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at March 31, 2021. Refer to Note 12. Fair Value Measurements and Derivative Instruments for further information.

Litigation

As previously reported, two lawsuits were filed against us in August 2019 in the U.S. District Court for the Southern District of Florida under Title III of the Cuban Liberty and Democratic Solidarity Act, also known as the Helms-Burton Act. The complaint filed by Havana Docks Corporation ("Havana Docks Action") alleges it holds an interest in the Havana Cruise Port Terminal and the complaint filed by Javier Garcia-Bengochea (the "Port of Santiago Action") alleges that he holds an interest in the Port of Santiago, Cuba, both of which were expropriated by the Cuban government. The complaints further allege that we trafficked in those properties by embarking and disembarking passengers at these facilities. The plaintiffs seek all available statutory remedies, including the value of the expropriated property, plus interest, treble damages, attorneys’ fees and costs. We filed our answer to each complaint in October 2019 and on October 15, 2020, and the Court dismissed the Port of Santiago Action with prejudice on the basis that the plaintiffs in that action lacked standing to bring the claim. This decision has been appealed by the plaintiffs. We believe we have meritorious defenses to the claims alleged in both the Havana Docks Action and the Port of Santiago Action, and we intend to vigorously defend ourselves against them. We believe that it is

unlikely that the outcome of either action will have a material adverse impact to our financial condition, results of operations or cash flows. However, the outcome of litigation is inherently unpredictable and subject to significant uncertainties, and there can be no assurances that the final outcome of either case will not be material.

As previously disclosed, on October 7, 2020, a shareholder filed a putative class action complaint against us, and three officers, Richard Fain, Jason Liberty and Michael Bayley, in the United States District Court for the Southern District of Florida, alleging misrepresentations relating to COVID-19 in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, seeking unspecified damages on behalf of a purported class consisting of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired our securities from February 4, 2020 through March 17, 2020. In addition, on October 27, 2020, a second complaint was filed by another shareholder against us and these same officers in the District Court alleging the same misrepresentations relating to COVID-19. As is the case with the first action, the second action seeks unspecified damages on behalf of a purported class consisting of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired our securities from February 4, 2020 through March 17, 2020. On December 23, 2020, these cases were consolidated with a new lead plaintiff, Indiana Public Retirement System. On February 25, 2021, the lead plaintiff filed with the District Court a voluntary dismissal of the action without prejudice. On February 26, 2021, the District Court dismissed the entire action without prejudice based on the request for voluntary dismissal.

We are also routinely involved in claims typical within the cruise vacation industry. The majority of these claims are covered by insurance. We believe the outcome of such claims, net of expected insurance recoveries, will not have a material adverse impact on our financial condition or results of operations and cash flows.

Other

If any person acquires ownership of more than 50% of our common stock or, subject to certain exceptions, during any 24-month period, a majority of our board of directors is no longer comprised of individuals who were members of our board of directors on the first day of such period, we may be obligated to prepay indebtedness outstanding under our credit facilities, which we may be unable to replace on similar terms. Our public debt securities also contain change of control provisions that would be triggered by a third-party acquisition of greater than 50% of our common stock coupled with a ratings downgrade. If this were to occur, it would have an adverse impact on our liquidity and operations.

XML

Shareholders' Equity

3 Months Ended

Mar. 31, 2021

Equity [Abstract]

Shareholders' Equity

Note 10. Shareholders' Equity

Common Stock Issued

During March 2021, we issued 16.9 million shares of common stock, par value $0.01 per share, at a price of $91.00 per share. We received net proceeds of $1.5 billion from the sale of our common stock, after deducting the estimated offering expenses payable by us.

Dividends

During the second quarter of 2020, we agreed with certain of our lenders not to pay dividends or engage in common stock repurchases for so long as our debt covenant waivers are in effect. In addition, in the event we declare a dividend or engage in share repurchases, we will need to repay the amounts deferred under our export credit facilities. Accordingly, we did not declare a dividend during the first quarter of 2021. Pursuant to amendments made to these agreements during the first quarter of 2021, the restrictions on paying cash dividends and effectuating share repurchases were extended through and including the third quarter of 2022.

During the first quarter of 2020, we declared a cash dividend on our common stock of $0.78 per share, which was paid in April 2020. During the first quarter of 2020, we also paid a cash dividend on our common stock of $0.78 per share, which was declared during the fourth quarter of 2019.

XML

Changes in Accumulated Other Comprehensive Loss

3 Months Ended

Mar. 31, 2021

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

Changes in Accumulated Other Comprehensive Loss

Note 11. Changes in Accumulated Other Comprehensive Loss

The following table presents the changes in accumulated other comprehensive loss by component for the quarters ended March 31, 2021 and 2020 (in thousands):

	Accumulated Other Comprehensive Loss for the Quarter Ended March 31, 2021								Accumulated Other Comprehensive Loss for the Quarter Ended March 31, 2020
	Changes related to cash flow derivative hedges		Changes in defined benefit plans		Foreign currency translation adjustments		Accumulated other comprehensive loss		Changes related to cash flow derivative hedges		Changes in defined benefit plans		Foreign currency translation adjustments		Accumulated other comprehensive loss
Accumulated comprehensive loss at beginning of the year	$	(650,519)	$	(65,542)	$	(23,280)	$	(739,341)	$	(688,529)	$	(45,558)	$	(63,626)	$	(797,713)
Other comprehensive income (loss) before reclassifications	(927)		9,720		9,722		18,515		(322,985)		(8,094)		10,290		(320,789)
Amounts reclassified from accumulated other comprehensive loss	11,229		743		—		11,972		22,380		505		—		22,885
Net current-period other comprehensive income (loss)	10,302		10,463		9,722		30,487		(300,605)		(7,589)		10,290		(297,904)
Ending balance	$	(640,217)	$	(55,079)	$	(13,558)	$	(708,854)	$	(989,134)	$	(53,147)	$	(53,336)	$	(1,095,617)

The following table presents reclassifications out of accumulated other comprehensive loss for the quarters ended March 31, 2021 and 2020 (in thousands):

	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
Details About Accumulated Other Comprehensive Loss Components	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020		Affected Line Item in Statements of Comprehensive Loss
Gain (loss) on cash flow derivative hedges:
Interest rate swaps	$	(9,509)	$	(3,391)	Interest expense, net of interest capitalized
Foreign currency forward contracts	(3,781)		(3,337)		Depreciation and amortization expenses
Foreign currency forward contracts	(1,291)		(1,763)		Other income (expense)
Fuel swaps	(407)		344		Other income (expense)
Fuel swaps	3,759		(14,233)		Fuel
	(11,229)		(22,380)
Amortization of defined benefit plans:
Actuarial loss	(743)		(505)		Payroll and related
	(743)		(505)
Total reclassifications for the period	$	(11,972)	$	(22,885)

XML

Fair Value Measurements and Derivative Instruments

3 Months Ended

Mar. 31, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements and Derivative Instruments

Note 12. Fair Value Measurements and Derivative Instruments 

Fair Value Measurements

The estimated fair value of our financial instruments that are not measured at fair value, categorized based upon the fair value hierarchy, are as follows (in thousands): 

	Fair Value Measurements at March 31, 2021 Using										Fair Value Measurements at December 31, 2020 Using
Description	Total Carrying Amount		Total Fair Value		Level 1(1)		Level 2(2)		Level 3(3)		Total Carrying Amount		Total Fair Value		Level 1(1)		Level 2(2)		Level 3(3)
Assets:
Cash and cash equivalents(4)	$	5,091,463	$	5,091,463	$	5,091,463	$	—	$	—	$	3,684,474	$	3,684,474	$	3,684,474	$	—	$	—
Total Assets	$	5,091,463	$	5,091,463	$	5,091,463	$	—	$	—	$	3,684,474	$	3,684,474	$	3,684,474	$	—	$	—
Liabilities:
Long-term debt (including current portion of debt)(5)	$	20,725,927	$	23,195,196	$	—	$	23,195,196	$	—	$	18,706,359	$	20,981,040	$	—	$	20,981,040	$	—
Total Liabilities	$	20,725,927	$	23,195,196	$	—	$	23,195,196	$	—	$	18,706,359	$	20,981,040	$	—	$	20,981,040	$	—

(1) Inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.

(2) Inputs other than quoted prices included within Level 1 that are observable for the liability, either directly or indirectly. For unsecured revolving credit facilities and unsecured term loans, fair value is determined utilizing the income valuation approach. This valuation model takes into account the contract terms of our debt such as the debt maturity and the interest rate on the debt. The valuation model also takes into account the creditworthiness of the Company.

(3) Inputs that are unobservable. The Company did not use any Level 3 inputs as of March 31, 2021 and December 31, 2020.

(4) Consists of cash and marketable securities with original maturities of less than 90 days.

(5) Consists of unsecured revolving credit facilities, senior notes, term loans and convertible notes. These amounts do not include our finance lease obligations or commercial paper.

Other Financial Instruments 

The carrying amounts of accounts receivable, accounts payable, accrued interest, accrued expenses and commercial paper approximate fair value at March 31, 2021 and December 31, 2020.

Assets and liabilities that are recorded at fair value have been categorized based upon the fair value hierarchy. The following table presents information about the Company’s financial instruments recorded at fair value on a recurring basis (in thousands):

	Fair Value Measurements at March 31, 2021 Using								Fair Value Measurements at December 31, 2020 Using
Description	Total		Level 1(1)		Level 2(2)		Level 3(3)		Total		Level 1(1)		Level 2(2)		Level 3(3)
Assets:
Derivative financial instruments(4)	$	72,900	$	—	$	72,900	$	—	$	108,539	$	—	$	108,539	$	—
Total Assets	$	72,900	$	—	$	72,900	$	—	$	108,539	$	—	$	108,539	$	—
Liabilities:
Derivative financial instruments(5)	$	196,293	$	—	$	196,293	$	—	$	259,705	$	—	$	259,705	$	—
Total Liabilities	$	196,293	$	—	$	196,293	$	—	$	259,705	$	—	$	259,705	$	—

(1)Inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.

(2)Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. For foreign currency forward contracts, interest rate swaps and fuel swaps, fair value is derived using valuation models that utilize the income valuation approach. These valuation models take into account the contract terms, such as maturity, as well as other inputs, such as foreign exchange rates and curves, fuel types, fuel curves and interest rate yield curves. Derivative instrument fair values take into account the creditworthiness of the counterparty and the Company.

(3)Inputs that are unobservable. No Level 3 inputs were used in fair value measurements of Other financial instruments as of March 31, 2021 and December 31, 2020.

(4)Consists of foreign currency forward contracts, interest rate swaps and fuel swaps. Refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.

(5) Consists of foreign currency forward contracts, interest rate swaps and fuel swaps. Refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.

The reported fair values are based on a variety of factors and assumptions. Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of March 31, 2021 or December 31, 2020, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement.

Nonfinancial Instruments Recorded at Fair Value on a Nonrecurring Basis

The following table presents information about the Company’s nonfinancial instruments recorded at fair value on a nonrecurring basis (in thousands):

	Fair Value Measurement at December 31, 2020 Using
Description	Total Carrying Amount	Total Fair Value	Level 3	Total Impairment for the year ended December 31, 2020
Silversea Goodwill(1)	508,578	508,578	508,578	576,208
Indefinite-life intangible asset(2)	318,700	318,700	318,700	30,800
Long-lived assets(3)	577,193	577,193	577,193	727,063
Right-of-use assets(4)	67,265	67,265	67,265	65,909
Equity-method investments(5)	—	—	—	39,735
Total	1,471,736	1,471,736	1,471,736	1,439,715

___________________________________________________________________________________________________

(1) We estimated the fair value of the Silversea Cruises reporting unit using a probability-weighted discounted cash flow model in combination with a market based valuation approach. The principal assumptions used in the discounted cash flow model were (i) the timing of our return to service, changes in market conditions and port or other restrictions; (ii) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate; and (iii) weighted average cost of capital (i.e., discount rate). The discounted cash flow model used our 2020 projected operating results as a base. To that base we added future years’ cash flows through 2030 assuming multiple revenue and expense scenarios that reflect the impact of different global economic environments for this period on the Silversea Cruises' reporting unit. We assigned a probability to each revenue and expense scenario. We discounted the projected cash flows using rates specific to the Silversea Cruises' reporting unit based on its weighted-average cost of capital, which was determined to be 12.75%. The fair value of Silversea Cruises’ goodwill was estimated as of March 31, 2020, the date the asset was last impaired.

(2) Amount represents the Silversea Cruises trade name which makes up the majority of our indefinite-life intangible assets, totaling $321.5 million. We estimated the fair value of our the Silversea Cruises trade name using a discounted cash flow model and the relief-from-royalty method and used a discount rate of 13.25%. Significant inputs in performing the fair value assessment for the trade name were (i) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate; (ii) the royalty rate of 3.0%; and (iii) weighted average cost of capital (i.e., discount rate). The fair value of the Silversea Cruises trade name was estimated as of March 31, 2020, the date the asset was last impaired.

(3) Impairments primarily relate to certain vessels during 2020. In addition, certain construction in progress projects generated impairments during the quarter ended September 30, 2020 and quarter ended December 31, 2020. For the vessels impaired during the quarter ended March 31, 2020, we estimated the fair value of two of our vessels using a blended indication from the income and cost approaches and the fair value of the remaining vessels was estimated primarily based on their orderly liquidation values. For the vessels impaired during the quarter ended June 30, 2020, we estimated the fair value of the vessels using a modified market approach based on the carrying values and orderly liquidation values of the vessels. For the vessels impaired during the quarter ended December 31, 2020, we estimated the fair value of the three Azamara vessels using a market approach. A significant input in performing the fair value assessments for these vessels was management's expected use of the vessels, which takes into consideration forecasted operating results. During the quarter ended September 30, 2020 and quarter ended

December 31, 2020, construction in progress assets were impaired due to a reduction in scope or the decision to not complete the projects. The impairment was calculated based on orderly liquidation values. The fair value of these assets were estimated as of the date the asset was last impaired.

(4) Impairments to our right-of-use assets relate to certain of our berthing arrangements and a ship operating lease. We estimated the fair value of the berthing arrangements using estimated projected discounted cash flows and the fair value of the ship operating lease was estimated using a market approach. The fair value of the berthing arrangements was estimated as of March 31, 2020, the date these assets were last impaired. A significant input in performing the fair value assessments for these assets was our expected passenger headcount. The fair value of the ship operating lease was estimated as of December 31, 2020, the date this asset was last impaired, and significant inputs in performing the fair value assessment using the market approach for this asset were the expected rate of return and remaining lease payments.

(5) We estimated the fair value of our other than temporarily impaired equity-method investments using a discounted cash flow model. A significant input in performing the fair value assessments for these assets was forecasted operating results for these investments. The fair value of these equity-method investments was estimated as of March 31, 2020, the date these assets were last impaired. For further information on our equity method investments, refer to Note 6. Other Assets.

Master Netting Agreements

We have master International Swaps and Derivatives Association (“ISDA”) agreements in place with our derivative instrument counterparties. These ISDA agreements generally provide for final close out netting with our counterparties for all positions in the case of default or termination of the ISDA agreement. We have determined that our ISDA agreements provide us with rights of setoff on the fair value of derivative instruments in a gain position and those in a loss position with the same counterparty. We have elected not to offset such derivative instrument fair values in our consolidated balance sheets.

See Credit Related Contingent Features for further discussion on contingent collateral requirements for our derivative instruments.

The following table presents information about the Company’s offsetting of financial assets under master netting agreements with derivative counterparties (in thousands):

	Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
	As of March 31, 2021								As of December 31, 2020
	Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet		Gross Amount of Eligible Offsetting Recognized Derivative Liabilities		Cash Collateral Received		Net Amount of Derivative Assets		Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet		Gross Amount of Eligible Offsetting Recognized Derivative Liabilities		Cash Collateral Received		Net Amount of Derivative Assets
Derivatives subject to master netting agreements	$	72,900	$	(63,789)	$	—	$	9,111	$	108,539	$	(80,743)	$	—	$	27,796
Total	$	72,900	$	(63,789)	$	—	$	9,111	$	108,539	$	(80,743)	$	—	$	27,796

The following table presents information about the Company’s offsetting of financial liabilities under master netting agreements with derivative counterparties (in thousands):

	Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
	As of March 31, 2021								As of December 31, 2020
	Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet		Gross Amount of Eligible Offsetting Recognized Derivative Assets		Cash Collateral Pledged		Net Amount of Derivative Liabilities		Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet		Gross Amount of Eligible Offsetting Recognized Derivative Assets		Cash Collateral Pledged		Net Amount of Derivative Liabilities
Derivatives subject to master netting agreements	$	(196,293)	$	63,789	$	71,587	$	(60,917)	$	(259,705)	$	80,743	$	57,273	$	(121,689)
Total	$	(196,293)	$	63,789	$	71,587	$	(60,917)	$	(259,705)	$	80,743	$	57,273	$	(121,689)

Concentrations of Credit Risk

We monitor our credit risk associated with financial and other institutions with which we conduct significant business and to minimize these risks, we select counterparties with credit risks acceptable to us and we seek to limit our exposure to an individual counterparty. Credit risk, including but not limited to counterparty nonperformance under derivative instruments, our credit facilities and new ship progress payment guarantees, is not considered significant, as we primarily conduct business with large, well-established financial institutions, insurance companies and export credit agencies many of which we have long-term relationships with and which have credit risks acceptable to us or where the credit risk is spread out among a large number of counterparties. As of March 31, 2021, we had counterparty credit risk exposure under our derivative instruments of $4.8 million, which were limited to the cost of replacing the contracts in the event of non-performance by the counterparties to the contracts, the majority of which are currently our lending banks. We do not anticipate nonperformance by any of our significant counterparties. In addition, we have established guidelines we follow regarding credit ratings and instrument maturities to maintain safety and liquidity. We do not normally require collateral or other security to support credit relationships; however, in certain circumstances this option is available to us.

Derivative Instruments

We are exposed to market risk attributable to changes in interest rates, foreign currency exchange rates and fuel prices. We try to mitigate these risks through a combination of our normal operating and financing activities and through the use of derivative financial instruments pursuant to our hedging practices and policies. The financial impact of these hedging instruments is primarily offset by corresponding changes in the underlying exposures being hedged. We achieve this by closely matching the notional amount, term and conditions of the derivative instrument with the underlying risk being hedged. Although certain of our derivative financial instruments do not qualify or are not accounted for under hedge accounting, our objective is not to hold or issue derivative financial instruments for trading or other speculative purposes. 

We enter into various forward, swap and option contracts to manage our interest rate exposure and to limit our exposure to fluctuations in foreign currency exchange rates and fuel prices. These instruments are recorded on the balance sheet at their fair value and the vast majority are designated as hedges. We also use non-derivative financial instruments designated as hedges of our net investment in our foreign operations and investments.

At inception of the hedge relationship, a derivative instrument that hedges the exposure to changes in the fair value of a firm commitment or a recognized asset or liability is designated as a fair value hedge. A derivative instrument that hedges a forecasted transaction or the variability of cash flows related to a recognized asset or liability is designated as a cash flow hedge.

Changes in the fair value of derivatives that are designated as fair value hedges are offset against changes in the fair value of the underlying hedged assets, liabilities or firm commitments. Gains and losses on derivatives that are designated as cash flow hedges are recorded as a component of Accumulated other comprehensive loss until the underlying hedged transactions are recognized in earnings. The foreign currency transaction gain or loss of our non-derivative financial instruments and the changes in the fair value of derivatives designated as hedges of our net investment in foreign operations and investments are recognized as a component of Accumulated other comprehensive loss along with the associated foreign currency translation adjustment of the foreign operation or investment, with the amortization of excluded components affecting earnings. 

On an ongoing basis, we assess whether derivatives used in hedging transactions are "highly effective" in offsetting changes in the fair value or cash flow of hedged items. For our net investment hedges, we use the dollar offset method to measure effectiveness. For all other hedging programs, we use the long-haul method to assess hedge effectiveness using regression analysis for each hedge relationship. The methodology for assessing hedge effectiveness is applied on a consistent basis for each one of our hedging programs (i.e., interest rate, foreign currency ship construction, foreign currency net investment and fuel). For our regression analyses, we use an observation period of up to three years, utilizing market data relevant to the hedge horizon of each hedge relationship. High effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the changes in the fair values of the derivative instrument and the hedged item. If it is determined that a derivative is not highly effective as a hedge or hedge accounting is discontinued, any change in fair value of the derivative since the last date at which it was determined to be effective is recognized in earnings.

Cash flows from derivative instruments that are designated as fair value or cash flow hedges are classified in the same category as the cash flows from the underlying hedged items. In the event that hedge accounting is discontinued, cash flows subsequent to the date of discontinuance are classified within investing activities. Cash flows from derivative instruments not designated as hedging instruments are classified as investing activities. 

We consider the classification of the underlying hedged item’s cash flows in determining the classification for the designated derivative instrument’s cash flows. We classify derivative instrument cash flows from hedges of benchmark interest rate or hedges of fuel expense as operating activities due to the nature of the hedged item. Likewise, we classify derivative instrument cash flows from hedges of foreign currency risk on our newbuild ship payments as investing activities.

Interest Rate Risk

Our exposure to market risk for changes in interest rates primarily relates to our debt obligations including future interest payments. At March 31, 2021 and December 31, 2020, approximately 68.2% and 64.5%, respectively, of our debt was effectively fixed. We use interest rate swap agreements to modify our exposure to interest rate movements and to manage our interest expense.

Market risk associated with our fixed-rate debt is the potential increase in fair value resulting from a decrease in interest rates. We use interest rate swap agreements that effectively convert a portion of our fixed-rate debt to a floating-rate basis to manage this risk. At March 31, 2021 and December 31, 2020, we maintained interest rate swap agreements on the following fixed-rate debt instruments:

Debt Instrument	Swap Notional as of March 31, 2021 (in thousands)		Maturity	Debt Fixed Rate	Swap Floating Rate: LIBOR plus	All-in Swap Floating Rate as of March 31, 2021
Oasis of the Seas term loan	$	35,000	October 2021	5.41%	3.87%	4.12%
Unsecured senior notes	650,000		November 2022	5.25%	3.63%	3.83%
	$	685,000

These interest rate swap agreements are accounted for as fair value hedges.

Market risk associated with our long-term floating-rate debt is the potential increase in interest expense from an increase in interest rates. We use interest rate swap agreements that effectively convert a portion of our floating-rate debt to a fixed-rate basis to manage this risk. At March 31, 2021 and December 31, 2020, we maintained interest rate swap agreements on the following floating-rate debt instruments:

Debt Instrument	Swap Notional as of March 31, 2021 (in thousands)		Maturity	Debt Floating Rate		All-in Swap Fixed Rate
Celebrity Reflection term loan	$	218,167	October 2024	LIBOR plus	0.40%	2.85%
Quantum of the Seas term loan	367,500		October 2026	LIBOR plus	1.30%	3.74%
Anthem of the Seas term loan	392,708		April 2027	LIBOR plus	1.30%	3.86%
Ovation of the Seas term loan	518,750		April 2028	LIBOR plus	1.00%	3.16%
Harmony of the Seas term loan (1)	509,411		May 2028	EURIBOR plus	1.15%	2.26%
Odyssey of the Seas term loan (2)	460,000		October 2032	LIBOR plus	0.95%	3.21%
Odyssey of the Seas term loan (2)	191,667		October 2032	LIBOR plus	0.95%	2.84%
	$	2,658,203

(1)Interest rate swap agreements hedging the Euro-denominated term loan for Harmony of the Seas include EURIBOR zero-floor matching the hedged debt EURIBOR zero-floor. Amount presented is based on the exchange rate as of March 31, 2021.

(2)Interest rate swap agreements hedging the term loan of Odyssey of the Seas include LIBOR zero-floors matching the debt LIBOR zero-floor. The effective dates of the $460.0 million and $191.7 million interest rate swap agreements are October 2020 and October 2022, respectively. The unsecured term loan for the financing of Odyssey of the Seas was drawn on March 2021.

These interest rate swap agreements are accounted for as cash flow hedges.

The notional amount of interest rate swap agreements related to outstanding debt and our current unfunded financing arrangements as of March 31, 2021 and December 31, 2020 was $3.3 billion and $3.4 billion, respectively.

Foreign Currency Exchange Rate Risk

Derivative Instruments

Our primary exposure to foreign currency exchange rate risk relates to our ship construction contracts denominated in Euros, our foreign currency denominated debt and our international business operations. We enter into foreign currency forward contracts to manage portions of the exposure to movements in foreign currency exchange rates. As of March 31, 2021, the aggregate cost of our ships on order was $12.9 billion, of which we had deposited $602.5 million as of such date. These amounts do not include any ships placed on order that are contingent upon completion of conditions precedent and/or financing, any ships on order by our Partner Brands and any ships on order placed by Silversea Cruises during the reporting lag period. Refer to Note 9. Commitments and Contingencies, for further information on our ships on order.  At March 31, 2021 and December 31, 2020, approximately 70.5% and 66.3%, respectively, of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate. Our foreign currency forward contract agreements are accounted for as cash flow or net investment hedges depending on the designation of the related hedge.

On a regular basis, we enter into foreign currency forward contracts and, from time to time, we utilize cross-currency swap agreements and collar options to minimize the volatility resulting from the remeasurement of net monetary assets and liabilities denominated in a currency other than our functional currency or the functional currencies of our foreign subsidiaries. During the first quarter of 2021, we maintained an average of approximately $462.6 million of these foreign currency forward contracts. These instruments are not designated as hedging instruments. For the quarters ended March 31, 2021 and 2020, changes in the fair value of the foreign currency forward contracts resulted in losses of $13.5 million and $52.7 million, respectively. These amounts were recognized in earnings within Other income (expense) in our consolidated statements of comprehensive loss.

We consider our investments in our foreign operations to be denominated in relatively stable currencies and to be of a long-term nature. As of March 31, 2021, we maintained foreign currency forward contracts and designated them as hedges of a portion of our net investments primarily in TUI Cruises of €245.0 million, or approximately $288.0 million based on the exchange rate at March 31, 2021. These forward currency contracts mature in October 2021.

The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of both March 31, 2021 and December 31, 2020 was $2.5 billion and $3.1 billion, respectively.

Non-Derivative Instruments

We also address the exposure of our investments in foreign operations by denominating a portion of our debt in our subsidiaries’ and investments’ functional currencies and designating it as a hedge of these subsidiaries and investments. We had designated debt as a hedge of our net investments primarily in TUI Cruises of €113.0 million, or approximately $132.8 million, as of March 31, 2021. As of December 31, 2020, we had designated debt as a hedge of our net investments in TUI Cruises of €215.0 million, or approximately $263.0 million.

Fuel Price Risk

Our exposure to market risk for changes in fuel prices relates primarily to the consumption of fuel on our ships. We use fuel swap agreements to mitigate the financial impact of fluctuations in fuel prices.

Our fuel swap agreements are generally accounted for as cash flow hedges. In the case that our hedged forecasted fuel consumption is not probable of occurring, hedge accounting will be discontinued and the related accumulated other comprehensive gain or loss will be reclassified to Other income (expense) immediately. For hedged forecasted fuel consumption that remains possible of occurring, hedge accounting will be discontinued and the related accumulated other comprehensive gain or loss will remain in accumulated other comprehensive gain or loss until the underlying hedged transactions are recognized in earnings or the related hedged forecasted fuel consumption is deemed probable of not occurring.

The current suspension of our cruise operations due to the COVID-19 pandemic resulted in reductions to our forecasted fuel purchases. During the quarter ended March 31, 2021, we discontinued cash flow hedge accounting on 48 thousand metric tons of our fuel swap agreements maturing in 2021, which resulted in the reclassification of a net $4.4 million loss from Accumulated other comprehensive loss to Other income (expense). During the quarter ended March 31, 2020, we discontinued cash flow hedge accounting on 212 thousand metric tons of our fuel swap agreements maturing in 2020, which resulted in the reclassification of a net $54.9 million loss from Accumulated other comprehensive loss to Other income (expense). Changes in the fair value of fuel swaps for which cash flow hedge accounting was discontinued are currently recognized in Other income (expense) each reporting period through the maturity dates of the fuel swaps.

Future suspension of our operations or modifications to our itineraries may affect our expected forecasted fuel purchases which could result in further discontinuance of fuel swap cash flow hedge accounting and the reclassification of deferred gains or losses from Accumulated other comprehensive loss into earnings. Refer to Risk Factors in Part II, Item 1A. for further discussion on risks related to COVID-19.

At March 31, 2021, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2024. As of March 31, 2021 and December 31, 2020, we had the following outstanding fuel swap agreements:

	Fuel Swap Agreements
	As of March 31, 2021	As of December 31, 2020
Designated as hedges:	(metric tons)
2021	284,050	385,050
2022	389,650	389,650
2023	82,400	82,400

	Fuel Swap Agreements
	As of March 31, 2021		As of December 31, 2020
	(% hedged)
Designated hedges as a % of projected fuel purchases:
2021	43	%	40	%
2022	25	%	23	%
2023	5	%	5	%

	Fuel Swap Agreements
	As of March 31, 2021	As of December 31, 2020
Not designated as hedges:	(metric tons)
2021	172,400	229,850
2022	14,650	14,650

As of March 31, 2021, $8.9 million of estimated unrealized loss associated with our cash flow hedges pertaining to fuel swap agreements is expected to be reclassified to earnings from Accumulated other comprehensive loss within the next twelve months. Reclassification is expected to occur as the result of fuel consumption associated with our hedged forecasted fuel purchases.

The fair value and line item caption of derivative instruments recorded within our consolidated balance sheets were as follows (in thousands):

	Fair Value of Derivative Instruments
	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	As of March 31, 2021		As of December 31, 2020		Balance Sheet Location	As of March 31, 2021		As of December 31, 2020
		Fair Value		Fair Value			Fair Value		Fair Value
Derivatives designated as hedging instruments under ASC 815-20(1)
Interest rate swaps	Other assets	$	16,152	$	17,271	Other long-term liabilities	$	97,981	$	144,653
Interest rate-swaps	Derivative financial instruments	149		261		Derivative financial instruments	—		—
Foreign currency forward contracts	Derivative financial instruments	30,268		63,894		Derivative financial instruments	26,903		13,294
Foreign currency forward contracts	Other assets	5,842		20,836		Other long-term liabilities	23,032		7,306
Fuel swaps	Derivative financial instruments	15,099		5,093		Derivative financial instruments	9,135		25,203
Fuel swaps	Other assets	2,225		350		Other long-term liabilities	20,854		50,117
Total derivatives designated as hedging instruments under 815-20		69,735		107,705			177,905		240,573
Derivatives not designated as hedging instruments under ASC 815-20
Foreign currency forward contracts	Derivative financial instruments	$	1,201	$	—	Derivative financial instruments	$	4,284	$	160
Foreign currency forward contracts	Other assets	—		—		Other long-term liabilities	—		—
Fuel swaps	Derivative financial instruments	1,935		834		Derivative financial instruments	13,076		18,028
Fuel swaps	Other Assets	29		—		Other long-term liabilities	1,028		944
Total derivatives not designated as hedging instruments under 815-20		3,165		834			18,388		19,132
Total derivatives		$	72,900	$	108,539		$	196,293	$	259,705

(1)Accounting Standard Codification 815-20 “Derivatives and Hedging.”

The location and amount of gain or (loss) recognized in income on fair value and cash flow hedging relationships were as follows (in thousands):

Quarter Ended March 31, 2021

Quarter Ended March 31, 2020

Fuel Expense

Depreciation and Amortization Expenses

Interest Income (Expense)

Other Income (Expense)

Fuel Expense

Depreciation and Amortization Expenses

Interest Income (Expense)

Other Income (Expense)

Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded

$41,822

$310,166

$(267,653)

$5,033

$194,268

$324,330

$(87,377)

$(32,859)

The effects of fair value and cash flow hedging:

Gain or (loss) on fair value hedging relationships in Subtopic 815-20

Interest contracts

Hedged items

n/a

n/a

$2,930

$—

n/a

n/a

$(21,330)

$—

Derivatives designated as hedging instruments

n/a

n/a

$(552)

$—

n/a

n/a

$20,430

$—

Gain or (loss) on cash flow hedging relationships in Subtopic 815-20

Interest contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income

n/a

n/a

$(9,509)

n/a

n/a

n/a

$(3,391)

n/a

Commodity contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income

$3,759

n/a

n/a

$(407)

$(14,233)

n/a

n/a

$344

Foreign exchange contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income

n/a

$(3,781)

n/a

$(1,291)

n/a

$(3,337)

n/a

$(1,763)

The carrying value and line item caption of non-derivative instruments designated as hedging instruments recorded within our consolidated balance sheets were as follows (in thousands):

		Carrying Value
Non-derivative instrument designated as hedging instrument under ASC 815-20	Balance Sheet Location	As of March 31, 2021		As of December 31, 2020
Foreign currency debt	Current portion of debt	$	—	$	43,696
Foreign currency debt	Long-term debt	132,826		219,335
		$	132,826	$	263,031

The effect of derivative instruments qualifying and designated as hedging instruments and the related hedged items in fair value hedges on the consolidated statements of comprehensive loss was as follows (in thousands):

Derivatives and Related Hedged Items under ASC 815-20 Fair Value Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivative and Hedged Item	Amount of Gain (Loss) Recognized in Income on Derivative				Amount of Gain (Loss) Recognized in Income on Hedged Item
		Quarter Ended March 31, 2021		Quarter Ended March 31, 2020		Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Interest rate swaps	Interest expense, net of interest capitalized	$	(552)	$	20,430	$	2,930	$	(21,330)
		$	(552)	$	20,430	$	2,930	$	(21,330)

The fair value and line item caption of derivative instruments recorded within our consolidated balance sheets for the cumulative basis adjustment for fair value hedges were as follows (in thousands):

Line Item in the Statement of Financial Position Where the Hedged Item is Included	Carrying Amount of the Hedged Liabilities				Cumulative amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liabilities
	As of March 31, 2021		As of December 31, 2020		As of March 31, 2021		As of December 31, 2020
Current portion of debt and Long-term debt	$	662,822	$	700,331	$	14,582	$	17,512
	$	662,822	$	700,331	$	14,582	$	17,512

The effect of derivative instruments qualifying and designated as cash flow hedging instruments on the consolidated financial statements was as follows (in thousands):

Derivatives under ASC 815-20  Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss on Derivatives				Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020			Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Interest rate swaps	$	43,408	$	(52,595)	Interest expense, net of interest capitalized	$	(9,509)	$	(3,391)
Foreign currency forward contracts	(99,581)		(100,014)		Depreciation and amortization expenses	(3,781)		(3,337)
Foreign currency forward contracts	—		—		Other income (expense)	(1,291)		(1,763)
Fuel swaps	—		—		Other income (expense)	(407)		344
Fuel swaps	55,246		(170,376)		Fuel	3,759		(14,233)
	$	(927)	$	(322,985)		$	(11,229)	$	(22,380)

The table below represents amounts excluded from the assessment of effectiveness for our net investment hedging instruments for which the difference between changes in fair value and periodic amortization is recorded in accumulated other comprehensive income (loss) (in thousands):

Gain (Loss) Recognized in Income (Net Investment Excluded Components)	Three Months Ended March 31, 2021
Net inception fair value at January 1, 2021	$	(1,915)
Amount of gain recognized in income on derivatives for the period ended March 31, 2021	1,637
Amount of gain (loss) remaining to be amortized in accumulated other comprehensive loss, as of March 31, 2021	(993)
Fair value at March 31, 2021	$	(1,271)

The effect of non-derivative instruments qualifying and designated as net investment hedging instruments on the consolidated financial statements was as follows (in thousands):

	Amount of Gain (Loss) Recognized in Other Comprehensive Loss
Non-derivative instruments under ASC 815-20 Net Investment Hedging Relationships	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Foreign Currency Debt	$	5,822	$	7,489
	$	5,822	$	7,489

There was no amount recognized in income (ineffective portion and amount excluded from effectiveness testing) for the quarters ended March 31, 2021 and March 31, 2020.

The effect of derivatives not designated as hedging instruments on the consolidated financial statements was as follows (in thousands):

		Amount of Gain (Loss) Recognized in Income on Derivatives
Derivatives Not Designated as Hedging Instruments under ASC 815-20	Location of Gain (Loss) Recognized in Income on Derivatives	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Foreign currency forward contracts	Other income (expense)	$	(13,498)	$	(52,676)
Fuel swaps	Other income (expense)	12,655		(67,206)
		$	(843)	$	(119,882)

Credit Related Contingent Features

Our current interest rate derivative instruments require us to post collateral if our Standard & Poor’s and Moody’s credit ratings fall below specified levels. Specifically, under most of our agreements, if on the fifth anniversary of executing a derivative instrument, or on any succeeding fifth-year anniversary, our credit ratings for our senior unsecured debt is rated below BBB- by Standard & Poor’s and Baa3 by Moody’s, then the counterparty will periodically have the right to demand that we post collateral in an amount equal to the difference between (i) the net market value of all derivative transactions with such counterparty that have reached their fifth year anniversary, to the extent negative, and (ii) the applicable minimum call amount.

The amount of collateral required to be posted will change as, and to the extent, our net liability position increases or decreases by more than the applicable minimum call amount. If our credit rating for our senior unsecured debt is subsequently equal to or above BBB- by Standard & Poor’s or Baa3 by Moody’s, then any collateral posted at such time will be released to us and we will no longer be required to post collateral unless we meet the collateral trigger requirement, generally, at the next fifth-year anniversary.

As of March 31, 2021, our senior unsecured debt credit rating was B by Standard & Poor's and B2 by Moody's. As of March 31, 2021, seven of our interest rate derivative hedges had a term of at least five years requiring us to post collateral of $71.6 million to satisfy our obligations under our interest rate derivative agreements, taking into account any collateral waivers issued by banks. We believe we have reached the maximum collateral amount that we may need to provide under these agreements in the next twelve months.

XML

Restructuring Charges

3 Months Ended

Mar. 31, 2021

Restructuring and Related Activities [Abstract]

Restructuring Charges

Note 13. Restructuring Charges

In April 2020, we reduced our U.S. shoreside workforce by approximately 23% through permanent layoffs. We incurred severance costs of $28.0 million during the year ended December 31, 2020.

The following table summarizes our restructuring costs during the quarter ended March 31, 2021 as it relates to the April 2020 reduction in our workforce (in thousands):

	Beginning balance January 1, 2021		Accruals		Payments		Ending balance March 31, 2021		Cumulative Charges Incurred		Expected Additional Expenses to be Incurred
Termination benefits	$	4,257	$	3,468	$	—	$	7,725	$	31,421	$	—
Total	$	4,257	$	3,468	$	—	$	7,725	$	31,421	$	—

XML

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2021

Accounting Policies [Abstract]

Basis for Preparation of Consolidated Financial Statements

Basis for Preparation of Consolidated Financial Statements

The unaudited consolidated financial statements are presented pursuant to the rules and regulations of the Securities and Exchange Commission. In our opinion, these statements include all adjustments necessary for a fair statement of the results of the interim periods reported herein. Adjustments consist only of normal recurring items, except for any items discussed in the notes below. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted as permitted by such rules and regulations. Estimates are required for the preparation of financial statements in accordance with these principles. Actual results could differ from these estimates. Refer to Note 2. Summary of Significant Accounting Policies in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of our significant accounting policies.

Basis of Consolidation

All significant intercompany accounts and transactions are eliminated in consolidation. We consolidate entities over which we have control, usually evidenced by a direct ownership interest of greater than 50%, and variable interest entities where we are determined to be the primary beneficiary. Refer to Note 6. Other Assets for further information regarding our variable interest entities. We consolidate the operating results of Silversea Cruises on a three-month reporting lag to allow for more timely preparation of our consolidated financial statements. No material events or other transactions involving Silversea Cruises have occurred from December 31, 2020 through March 31, 2021. For affiliates we do not control but over which we have significant influence on financial and operating policies, usually evidenced by a direct ownership interest from 20% to 50%, the investment is accounted for using the equity method.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB") issued Accounting Standard Update (“ASU") No. 2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions to the current guidance on contract modifications and hedging relationships to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. Subsequently, in January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848), which presents amendments to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The guidance in both ASUs was effective upon issuance and may be applied retrospectively or prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments. The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative under ASC 815 or for convertible debt issued at a substantial premium. The ASU removes certain settlement conditions required for equity contracts to qualify for the derivative scope exception, permitting more contracts to qualify for it. In addition, the guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The ASU is effective for annual reporting periods beginning after December 15, 2021, including interim reporting periods within those annual periods, with early adoption permitted no earlier than the fiscal year beginning after December 15, 2020. The guidance is expected to have an impact on our consolidated financial statements given the recent issuance of convertible notes, however, we are still evaluating the magnitude of the new guidance on our consolidated financial statements.

Reclassifications

Reclassifications

For the three months ended March 31, 2021, we separately presented Amortization of debt discounts and premiums, which includes amortization of commercial paper notes discount, in our consolidated statements of cash flows. As a result, the prior year amortization amounts were reclassified from Other, net within Operating Activities to conform to the current year presentation. Also, for the three months ended March 31, 2021, we no longer separately presented Proceeds from exercise of common stock options in our consolidated statements of cash flows. As a result, the prior year amounts were reclassified to Other, net within Financing Activities to conform to the current year presentation.

XML

Revenues (Tables)

3 Months Ended

Mar. 31, 2021

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table disaggregates our total revenues by geographic regions where we provide cruise itineraries (in thousands):

	Quarter Ended March 31,
	2021		2020
Revenues by itinerary
North America(1)	$	—	$	1,324,573
Asia/Pacific(2)	29,885		362,398
Europe(3)	—		19,540
Other regions(4)	810		158,043
Total revenues by itinerary	30,695		1,864,554
Other revenues(5)	11,319		168,196
Total revenues	$	42,014	$	2,032,750

(1)Includes the United States, Canada, Mexico and the Caribbean.

(2)Includes Southeast Asia (e.g., Singapore, Thailand and the Philippines), East Asia (e.g., China and Japan), South Asia (e.g., India and Pakistan) and Oceania (e.g., Australia and Fiji Islands) regions.

(3)Includes European countries (e.g., Nordics, Germany, France, Italy, Spain and the United Kingdom).

(4)Includes seasonality impacted itineraries primarily in South and Latin American countries.

(5)Includes revenues primarily related to cancellation fees, vacation protection insurance, pre- and post-cruise tours and fees for operating certain port facilities. Amounts also include revenues related to our bareboat charter, which was terminated when Pullmantur Holdings filed for reorganization in Spain in 2020, and procurement and management related services we perform on behalf of our unconsolidated affiliates. Refer to Note 6. Other Assets for more information on our unconsolidated affiliates.

Passenger ticket revenues are attributed to geographic areas based on where the reservation originates. For the quarters ended March 31, 2021 and 2020, our guests were sourced from the following areas:

	Quarter Ended March 31,
	2021		2020
Passenger ticket revenues:
Singapore	69	%	—	%
China	31	%	—	%
United States	—	%	68	%
All other countries (1)	—	%	32	%

(1)No other individual country's revenue exceeded 10% for the quarter ended March 31, 2020.

XML

(Loss) Per Share (Tables)

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Reconciliation Between Basic and Diluted Earnings Per Share

A reconciliation between basic and diluted (loss) per share is as follows (in thousands, except per share data):

	Quarter Ended March 31,
	2021		2020
Net (Loss) attributable to Royal Caribbean Cruises Ltd. for basic and diluted loss per share	$	(1,131,722)	$	(1,444,479)
Weighted-average common shares outstanding	243,004		209,097
Diluted weighted-average shares outstanding	243,004		209,097
Basic (loss) per share	$	(4.66)	$	(6.91)
Diluted (loss) per share	$	(4.66)	$	(6.91)

XML

Other Assets (Tables)

3 Months Ended

Mar. 31, 2021

Other Assets [Abstract]

Schedule of Other Nonoperating Income (Expense)

The following tables set forth information regarding our investments accounted for under the equity method of accounting, including the entities discussed above (in thousands):

	Quarter Ended March 31,
	2021		2020
Share of equity (loss) income from investments	$	(59,871)	$	(10,392)
Dividends received (1)	$	—	$	1,991

(1)There were no dividends received from TUI Cruises for the quarters ended March 31, 2021 and March 31, 2020.

Schedule of Related Party Transactions

	As of March 31, 2021		As of December 31, 2020
Total notes receivable due from equity investments	$	143,642	$	164,596
Less-current portion (1)	20,018		29,501
Long-term portion (2)	$	123,624	$	135,095

(1)Included within Trade and other receivables, net in our consolidated balance sheets.

(2)Included within Other assets in our consolidated balance sheets.

We recorded the following as it relates to these services in our operating results within our consolidated statements of comprehensive income (loss) (in thousands):

	Quarter Ended March 31,
	2021		2020
Revenues	$	5,231	$	7,411
Expenses	$	1,275	$	782

Summary of Credit Loss Allowance

The following table summarizes our credit loss allowance related to receivables for the three months ended March 31, 2021 (in thousands):

	Credit Loss Allowance
Beginning balance January 1, 2021	$	85,447
Loss provision for receivables	971
Write-offs	(529)
Ending balance March 31, 2021	$	85,889

XML

Debt (Tables)

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

Debt consist of the following (in thousands):

	Interest Rate (1)	Maturities Through	Quarter Ended March 31, 2021		Year Ended December 31, 2020
Fixed rate debt:
Unsecured senior notes	3.70% to 7.50%	2022 - 2028	$	3,962,852	$	2,464,994
Secured senior notes	7.25% to 11.50%	2023 - 2025	3,897,963		3,895,166
Unsecured term loans	2.53% to 5.41%	2021 - 2032	3,130,363		3,210,161
Convertible notes	2.88% to 4.25%	2023	1,480,561		1,454,488
Total fixed rate debt			12,471,739		11,024,809
Variable rate debt:
Unsecured revolving credit facilities (2)	1.49% to 1.89%	2022 - 2024	3,004,342		3,289,000
Unsecured UK Commercial paper		2021	—		409,319
USD unsecured term loan	0.61% to 3.31%	2021 - 2033	4,904,446		4,002,249
Euro unsecured term loan	1.15% to 2.25%	2021 - 2028	708,663		705,064
Total variable rate debt			8,617,451		8,405,632
Finance lease liabilities			209,748		213,365
Total debt (3)			21,298,938		19,643,806
Less: unamortized debt issuance costs			(363,263)		(314,763)
Total debt, net of unamortized debt issuance costs			20,935,675		19,329,043
Less—current portion including commercial paper			(221,299)		(1,371,087)
Long-term portion			$	20,714,376	$	17,957,956

(1) Interest rates based on outstanding loan balance as of March 31, 2021 and, for variable rate debt, include either LIBOR or EURIBOR plus the applicable margin.

(2) Includes $1.9 billion facility and $1.3 billion facility, the vast majority of which is due in 2024. Our $1.9 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.30%, which interest was 1.49% as of March 31, 2021 and is subject to a facility fee of a maximum of 0.20%. Our $1.3 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.70%, which interest was 1.89% as of March 31, 2021 and is subject to a facility fee of a maximum of 0.30%.

(3) At March 31, 2021 and December 31, 2020, the weighted average interest rate for total debt was 5.78% and 6.02%, respectively.

Schedule of Maturities of Long-term Debt

The following is a schedule of annual maturities on our total debt net of debt issuance costs, and including finance leases and commercial paper, as of March 31, 2021 for each of the next five years (in thousands):

Year
Remainder of 2021	189,207
2022	2,211,011
2023	6,251,032
2024	4,670,735
2025	4,436,340
Thereafter	3,177,350
	20,935,675

XML

Leases (Tables)

3 Months Ended

Mar. 31, 2021

Leases [Abstract]

Schedule of Lease Expense and Cash Flow Information

The components of lease expense were as follows (in thousands):

	Consolidated Statement of Comprehensive Loss Classification	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Lease costs:
Operating lease costs	Commission, transportation and other	$	—	$	14,745
Operating lease costs	Other operating expenses	5,130		7,001
Operating lease costs	Marketing, selling and administrative expenses	6,035		5,368
Financial lease costs:
Amortization of right-of-use-assets	Depreciation and amortization expenses	3,744		4,881
Interest on lease liabilities	Interest expense, net of interest capitalized	310		1,933
Total lease costs		$	15,219	$	33,928

Weighted average of the remaining lease terms and weighted average discount rates are as follows:

	As of March 31, 2021		As of December 31, 2020
Weighted average of the remaining lease term
Operating leases	9.9		7.8
Finance leases	42.1		41.2
Weighted average discount rate
Operating leases	5.25	%	4.59	%
Finance leases	7.02	%	6.89	%

Supplemental cash flow information related to leases is as follows (in thousands):

	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	5,531	$	27,841
Operating cash flows from finance leases	$	310	$	1,933
Financing cash flows from finance leases	$	4,305	$	3,823

Schedule of Maturities, Operating Leases

As of March 31, 2021, maturities related to lease liabilities were as follows (in thousands):

Year	Operating Leases		Finance Leases
Remainder of 2021	$	96,266	$	55,831
2022	119,321		23,822
2023	112,718		12,789
2024	84,696		12,529
2025	77,323		12,566
Thereafter	386,342		395,460
Total lease payments	876,666		512,997
Less: Interest	(231,908)		(303,249)
Present value of lease liabilities	$	644,758	$	209,748

Schedule of Maturities, Finance Leases

As of March 31, 2021, maturities related to lease liabilities were as follows (in thousands):

Year	Operating Leases		Finance Leases
Remainder of 2021	$	96,266	$	55,831
2022	119,321		23,822
2023	112,718		12,789
2024	84,696		12,529
2025	77,323		12,566
Thereafter	386,342		395,460
Total lease payments	876,666		512,997
Less: Interest	(231,908)		(303,249)
Present value of lease liabilities	$	644,758	$	209,748

XML

Commitment and Contingencies (Tables)

3 Months Ended

Mar. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Summary of Capital Commitments

As of March 31, 2021, the dates that the ships on order by our Global and Partner Brands are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

Ship	Shipyard	Expected Delivery Dates	Approximate Berths
Royal Caribbean International —
Oasis-class:
Wonder of the Seas	Chantiers de l'Atlantique	1st Quarter 2022	5,700
Unnamed	Chantiers de l'Atlantique	2nd Quarter 2024	5,700
Icon-class:
Unnamed	Meyer Turku Oy	3rd Quarter 2023	5,600
Unnamed	Meyer Turku Oy	2nd Quarter 2025	5,600
Unnamed	Meyer Turku Oy	2nd Quarter 2026	5,600
Celebrity Cruises —
Edge-class:
Celebrity Beyond	Chantiers de l'Atlantique	2nd Quarter 2022	3,250
Unnamed	Chantiers de l'Atlantique	4th Quarter 2023	3,250
Silversea Cruises — (1)
Muse-Class:
Silver Dawn	Fincantieri	4th Quarter 2021	600
Evolution Class:
Unnamed	Meyer Werft	2nd Quarter 2023	700
Unnamed	Meyer Werft	2nd Quarter 2024	700
TUI Cruises (50% joint venture)
Mein Schiff 7	Meyer Turku Oy	2nd Quarter 2024	2,900
Unnamed	Fincantieri	3rd Quarter 2024	4,100
Unnamed	Fincantieri	1st Quarter 2026	4,100
Hapag-Lloyd Cruises (50% joint venture) —
Hanseatic Spirit	Vard Fincantieri	2nd Quarter 2021	230
Total Berths			48,030

(1)    The revenue impact from Silversea Cruises' new ships will be recognized on a three month reporting lag from when the ships enter service. Refer to Note 1. General for further information.

XML

Changes in Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Mar. 31, 2021

Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]

Schedule of Changes In Accumulated Other Comprehensive Income (Loss) by Component

The following table presents the changes in accumulated other comprehensive loss by component for the quarters ended March 31, 2021 and 2020 (in thousands):

	Accumulated Other Comprehensive Loss for the Quarter Ended March 31, 2021								Accumulated Other Comprehensive Loss for the Quarter Ended March 31, 2020
	Changes related to cash flow derivative hedges		Changes in defined benefit plans		Foreign currency translation adjustments		Accumulated other comprehensive loss		Changes related to cash flow derivative hedges		Changes in defined benefit plans		Foreign currency translation adjustments		Accumulated other comprehensive loss
Accumulated comprehensive loss at beginning of the year	$	(650,519)	$	(65,542)	$	(23,280)	$	(739,341)	$	(688,529)	$	(45,558)	$	(63,626)	$	(797,713)
Other comprehensive income (loss) before reclassifications	(927)		9,720		9,722		18,515		(322,985)		(8,094)		10,290		(320,789)
Amounts reclassified from accumulated other comprehensive loss	11,229		743		—		11,972		22,380		505		—		22,885
Net current-period other comprehensive income (loss)	10,302		10,463		9,722		30,487		(300,605)		(7,589)		10,290		(297,904)
Ending balance	$	(640,217)	$	(55,079)	$	(13,558)	$	(708,854)	$	(989,134)	$	(53,147)	$	(53,336)	$	(1,095,617)

Schedule of Reclassifications Out of Accumulated Other Comprehensive Income (Loss)

The following table presents reclassifications out of accumulated other comprehensive loss for the quarters ended March 31, 2021 and 2020 (in thousands):

	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
Details About Accumulated Other Comprehensive Loss Components	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020		Affected Line Item in Statements of Comprehensive Loss
Gain (loss) on cash flow derivative hedges:
Interest rate swaps	$	(9,509)	$	(3,391)	Interest expense, net of interest capitalized
Foreign currency forward contracts	(3,781)		(3,337)		Depreciation and amortization expenses
Foreign currency forward contracts	(1,291)		(1,763)		Other income (expense)
Fuel swaps	(407)		344		Other income (expense)
Fuel swaps	3,759		(14,233)		Fuel
	(11,229)		(22,380)
Amortization of defined benefit plans:
Actuarial loss	(743)		(505)		Payroll and related
	(743)		(505)
Total reclassifications for the period	$	(11,972)	$	(22,885)

XML

Fair Value Measurements and Derivative Instruments (Tables)

3 Months Ended

Mar. 31, 2021

Derivative Instruments

Fair Value Measurements, Nonrecurring

The estimated fair value of our financial instruments that are not measured at fair value, categorized based upon the fair value hierarchy, are as follows (in thousands): 

	Fair Value Measurements at March 31, 2021 Using										Fair Value Measurements at December 31, 2020 Using
Description	Total Carrying Amount		Total Fair Value		Level 1(1)		Level 2(2)		Level 3(3)		Total Carrying Amount		Total Fair Value		Level 1(1)		Level 2(2)		Level 3(3)
Assets:
Cash and cash equivalents(4)	$	5,091,463	$	5,091,463	$	5,091,463	$	—	$	—	$	3,684,474	$	3,684,474	$	3,684,474	$	—	$	—
Total Assets	$	5,091,463	$	5,091,463	$	5,091,463	$	—	$	—	$	3,684,474	$	3,684,474	$	3,684,474	$	—	$	—
Liabilities:
Long-term debt (including current portion of debt)(5)	$	20,725,927	$	23,195,196	$	—	$	23,195,196	$	—	$	18,706,359	$	20,981,040	$	—	$	20,981,040	$	—
Total Liabilities	$	20,725,927	$	23,195,196	$	—	$	23,195,196	$	—	$	18,706,359	$	20,981,040	$	—	$	20,981,040	$	—

(1) Inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.

(2) Inputs other than quoted prices included within Level 1 that are observable for the liability, either directly or indirectly. For unsecured revolving credit facilities and unsecured term loans, fair value is determined utilizing the income valuation approach. This valuation model takes into account the contract terms of our debt such as the debt maturity and the interest rate on the debt. The valuation model also takes into account the creditworthiness of the Company.

(3) Inputs that are unobservable. The Company did not use any Level 3 inputs as of March 31, 2021 and December 31, 2020.

(4) Consists of cash and marketable securities with original maturities of less than 90 days.

(5) Consists of unsecured revolving credit facilities, senior notes, term loans and convertible notes. These amounts do not include our finance lease obligations or commercial paper.

The following table presents information about the Company’s nonfinancial instruments recorded at fair value on a nonrecurring basis (in thousands):

	Fair Value Measurement at December 31, 2020 Using
Description	Total Carrying Amount	Total Fair Value	Level 3	Total Impairment for the year ended December 31, 2020
Silversea Goodwill(1)	508,578	508,578	508,578	576,208
Indefinite-life intangible asset(2)	318,700	318,700	318,700	30,800
Long-lived assets(3)	577,193	577,193	577,193	727,063
Right-of-use assets(4)	67,265	67,265	67,265	65,909
Equity-method investments(5)	—	—	—	39,735
Total	1,471,736	1,471,736	1,471,736	1,439,715

___________________________________________________________________________________________________

(1) We estimated the fair value of the Silversea Cruises reporting unit using a probability-weighted discounted cash flow model in combination with a market based valuation approach. The principal assumptions used in the discounted cash flow model were (i) the timing of our return to service, changes in market conditions and port or other restrictions; (ii) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate; and (iii) weighted average cost of capital (i.e., discount rate). The discounted cash flow model used our 2020 projected operating results as a base. To that base we added future years’ cash flows through 2030 assuming multiple revenue and expense scenarios that reflect the impact of different global economic environments for this period on the Silversea Cruises' reporting unit. We assigned a probability to each revenue and expense scenario. We discounted the projected cash flows using rates specific to the Silversea Cruises' reporting unit based on its weighted-average cost of capital, which was determined to be 12.75%. The fair value of Silversea Cruises’ goodwill was estimated as of March 31, 2020, the date the asset was last impaired.

(2) Amount represents the Silversea Cruises trade name which makes up the majority of our indefinite-life intangible assets, totaling $321.5 million. We estimated the fair value of our the Silversea Cruises trade name using a discounted cash flow model and the relief-from-royalty method and used a discount rate of 13.25%. Significant inputs in performing the fair value assessment for the trade name were (i) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate; (ii) the royalty rate of 3.0%; and (iii) weighted average cost of capital (i.e., discount rate). The fair value of the Silversea Cruises trade name was estimated as of March 31, 2020, the date the asset was last impaired.

(3) Impairments primarily relate to certain vessels during 2020. In addition, certain construction in progress projects generated impairments during the quarter ended September 30, 2020 and quarter ended December 31, 2020. For the vessels impaired during the quarter ended March 31, 2020, we estimated the fair value of two of our vessels using a blended indication from the income and cost approaches and the fair value of the remaining vessels was estimated primarily based on their orderly liquidation values. For the vessels impaired during the quarter ended June 30, 2020, we estimated the fair value of the vessels using a modified market approach based on the carrying values and orderly liquidation values of the vessels. For the vessels impaired during the quarter ended December 31, 2020, we estimated the fair value of the three Azamara vessels using a market approach. A significant input in performing the fair value assessments for these vessels was management's expected use of the vessels, which takes into consideration forecasted operating results. During the quarter ended September 30, 2020 and quarter ended

December 31, 2020, construction in progress assets were impaired due to a reduction in scope or the decision to not complete the projects. The impairment was calculated based on orderly liquidation values. The fair value of these assets were estimated as of the date the asset was last impaired.

(4) Impairments to our right-of-use assets relate to certain of our berthing arrangements and a ship operating lease. We estimated the fair value of the berthing arrangements using estimated projected discounted cash flows and the fair value of the ship operating lease was estimated using a market approach. The fair value of the berthing arrangements was estimated as of March 31, 2020, the date these assets were last impaired. A significant input in performing the fair value assessments for these assets was our expected passenger headcount. The fair value of the ship operating lease was estimated as of December 31, 2020, the date this asset was last impaired, and significant inputs in performing the fair value assessment using the market approach for this asset were the expected rate of return and remaining lease payments.

(5) We estimated the fair value of our other than temporarily impaired equity-method investments using a discounted cash flow model. A significant input in performing the fair value assessments for these assets was forecasted operating results for these investments. The fair value of these equity-method investments was estimated as of March 31, 2020, the date these assets were last impaired. For further information on our equity method investments, refer to Note 6. Other Assets.

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

Assets and liabilities that are recorded at fair value have been categorized based upon the fair value hierarchy. The following table presents information about the Company’s financial instruments recorded at fair value on a recurring basis (in thousands):

	Fair Value Measurements at March 31, 2021 Using								Fair Value Measurements at December 31, 2020 Using
Description	Total		Level 1(1)		Level 2(2)		Level 3(3)		Total		Level 1(1)		Level 2(2)		Level 3(3)
Assets:
Derivative financial instruments(4)	$	72,900	$	—	$	72,900	$	—	$	108,539	$	—	$	108,539	$	—
Total Assets	$	72,900	$	—	$	72,900	$	—	$	108,539	$	—	$	108,539	$	—
Liabilities:
Derivative financial instruments(5)	$	196,293	$	—	$	196,293	$	—	$	259,705	$	—	$	259,705	$	—
Total Liabilities	$	196,293	$	—	$	196,293	$	—	$	259,705	$	—	$	259,705	$	—

(1)Inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.

(2)Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. For foreign currency forward contracts, interest rate swaps and fuel swaps, fair value is derived using valuation models that utilize the income valuation approach. These valuation models take into account the contract terms, such as maturity, as well as other inputs, such as foreign exchange rates and curves, fuel types, fuel curves and interest rate yield curves. Derivative instrument fair values take into account the creditworthiness of the counterparty and the Company.

(3)Inputs that are unobservable. No Level 3 inputs were used in fair value measurements of Other financial instruments as of March 31, 2021 and December 31, 2020.

(4)Consists of foreign currency forward contracts, interest rate swaps and fuel swaps. Refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.

(5) Consists of foreign currency forward contracts, interest rate swaps and fuel swaps. Refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.

Offsetting Assets

The following table presents information about the Company’s offsetting of financial assets under master netting agreements with derivative counterparties (in thousands):

	Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
	As of March 31, 2021								As of December 31, 2020
	Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet		Gross Amount of Eligible Offsetting Recognized Derivative Liabilities		Cash Collateral Received		Net Amount of Derivative Assets		Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet		Gross Amount of Eligible Offsetting Recognized Derivative Liabilities		Cash Collateral Received		Net Amount of Derivative Assets
Derivatives subject to master netting agreements	$	72,900	$	(63,789)	$	—	$	9,111	$	108,539	$	(80,743)	$	—	$	27,796
Total	$	72,900	$	(63,789)	$	—	$	9,111	$	108,539	$	(80,743)	$	—	$	27,796

Offsetting Liabilities

The following table presents information about the Company’s offsetting of financial liabilities under master netting agreements with derivative counterparties (in thousands):

	Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements
	As of March 31, 2021								As of December 31, 2020
	Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet		Gross Amount of Eligible Offsetting Recognized Derivative Assets		Cash Collateral Pledged		Net Amount of Derivative Liabilities		Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet		Gross Amount of Eligible Offsetting Recognized Derivative Assets		Cash Collateral Pledged		Net Amount of Derivative Liabilities
Derivatives subject to master netting agreements	$	(196,293)	$	63,789	$	71,587	$	(60,917)	$	(259,705)	$	80,743	$	57,273	$	(121,689)
Total	$	(196,293)	$	63,789	$	71,587	$	(60,917)	$	(259,705)	$	80,743	$	57,273	$	(121,689)

Schedule of Price Risk Derivatives

As of March 31, 2021 and December 31, 2020, we had the following outstanding fuel swap agreements:

	Fuel Swap Agreements
	As of March 31, 2021	As of December 31, 2020
Designated as hedges:	(metric tons)
2021	284,050	385,050
2022	389,650	389,650
2023	82,400	82,400

	Fuel Swap Agreements
	As of March 31, 2021		As of December 31, 2020
	(% hedged)
Designated hedges as a % of projected fuel purchases:
2021	43	%	40	%
2022	25	%	23	%
2023	5	%	5	%

	Fuel Swap Agreements
	As of March 31, 2021	As of December 31, 2020
Not designated as hedges:	(metric tons)
2021	172,400	229,850
2022	14,650	14,650

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The fair value and line item caption of derivative instruments recorded within our consolidated balance sheets were as follows (in thousands):

	Fair Value of Derivative Instruments
	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	As of March 31, 2021		As of December 31, 2020		Balance Sheet Location	As of March 31, 2021		As of December 31, 2020
		Fair Value		Fair Value			Fair Value		Fair Value
Derivatives designated as hedging instruments under ASC 815-20(1)
Interest rate swaps	Other assets	$	16,152	$	17,271	Other long-term liabilities	$	97,981	$	144,653
Interest rate-swaps	Derivative financial instruments	149		261		Derivative financial instruments	—		—
Foreign currency forward contracts	Derivative financial instruments	30,268		63,894		Derivative financial instruments	26,903		13,294
Foreign currency forward contracts	Other assets	5,842		20,836		Other long-term liabilities	23,032		7,306
Fuel swaps	Derivative financial instruments	15,099		5,093		Derivative financial instruments	9,135		25,203
Fuel swaps	Other assets	2,225		350		Other long-term liabilities	20,854		50,117
Total derivatives designated as hedging instruments under 815-20		69,735		107,705			177,905		240,573
Derivatives not designated as hedging instruments under ASC 815-20
Foreign currency forward contracts	Derivative financial instruments	$	1,201	$	—	Derivative financial instruments	$	4,284	$	160
Foreign currency forward contracts	Other assets	—		—		Other long-term liabilities	—		—
Fuel swaps	Derivative financial instruments	1,935		834		Derivative financial instruments	13,076		18,028
Fuel swaps	Other Assets	29		—		Other long-term liabilities	1,028		944
Total derivatives not designated as hedging instruments under 815-20		3,165		834			18,388		19,132
Total derivatives		$	72,900	$	108,539		$	196,293	$	259,705

(1)Accounting Standard Codification 815-20 “Derivatives and Hedging.”

The fair value and line item caption of derivative instruments recorded within our consolidated balance sheets for the cumulative basis adjustment for fair value hedges were as follows (in thousands):

Line Item in the Statement of Financial Position Where the Hedged Item is Included	Carrying Amount of the Hedged Liabilities				Cumulative amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liabilities
	As of March 31, 2021		As of December 31, 2020		As of March 31, 2021		As of December 31, 2020
Current portion of debt and Long-term debt	$	662,822	$	700,331	$	14,582	$	17,512
	$	662,822	$	700,331	$	14,582	$	17,512

Derivative Instruments, Gain (Loss)

The location and amount of gain or (loss) recognized in income on fair value and cash flow hedging relationships were as follows (in thousands):

Quarter Ended March 31, 2021

Quarter Ended March 31, 2020

Fuel Expense

Depreciation and Amortization Expenses

Interest Income (Expense)

Other Income (Expense)

Fuel Expense

Depreciation and Amortization Expenses

Interest Income (Expense)

Other Income (Expense)

Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded

$41,822

$310,166

$(267,653)

$5,033

$194,268

$324,330

$(87,377)

$(32,859)

The effects of fair value and cash flow hedging:

Gain or (loss) on fair value hedging relationships in Subtopic 815-20

Interest contracts

Hedged items

n/a

n/a

$2,930

$—

n/a

n/a

$(21,330)

$—

Derivatives designated as hedging instruments

n/a

n/a

$(552)

$—

n/a

n/a

$20,430

$—

Gain or (loss) on cash flow hedging relationships in Subtopic 815-20

Interest contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income

n/a

n/a

$(9,509)

n/a

n/a

n/a

$(3,391)

n/a

Commodity contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income

$3,759

n/a

n/a

$(407)

$(14,233)

n/a

n/a

$344

Foreign exchange contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income

n/a

$(3,781)

n/a

$(1,291)

n/a

$(3,337)

n/a

$(1,763)

Fair Value and Line Item Caption of Non-derivative Instruments

The carrying value and line item caption of non-derivative instruments designated as hedging instruments recorded within our consolidated balance sheets were as follows (in thousands):

		Carrying Value
Non-derivative instrument designated as hedging instrument under ASC 815-20	Balance Sheet Location	As of March 31, 2021		As of December 31, 2020
Foreign currency debt	Current portion of debt	$	—	$	43,696
Foreign currency debt	Long-term debt	132,826		219,335
		$	132,826	$	263,031

Non Derivative Instruments Qualifying and Designated as Hedging Instruments in Net Investment Hedges

The effect of non-derivative instruments qualifying and designated as net investment hedging instruments on the consolidated financial statements was as follows (in thousands):

	Amount of Gain (Loss) Recognized in Other Comprehensive Loss
Non-derivative instruments under ASC 815-20 Net Investment Hedging Relationships	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Foreign Currency Debt	$	5,822	$	7,489
	$	5,822	$	7,489

Not Designated as Hedging Instrument

Derivative Instruments

Derivative Instruments, Gain (Loss)

The effect of derivatives not designated as hedging instruments on the consolidated financial statements was as follows (in thousands):

		Amount of Gain (Loss) Recognized in Income on Derivatives
Derivatives Not Designated as Hedging Instruments under ASC 815-20	Location of Gain (Loss) Recognized in Income on Derivatives	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Foreign currency forward contracts	Other income (expense)	$	(13,498)	$	(52,676)
Fuel swaps	Other income (expense)	12,655		(67,206)
		$	(843)	$	(119,882)

Fair Value Hedging

Derivative Instruments

Schedule of Interest Rate Derivatives

At March 31, 2021 and December 31, 2020, we maintained interest rate swap agreements on the following fixed-rate debt instruments:

Debt Instrument	Swap Notional as of March 31, 2021 (in thousands)		Maturity	Debt Fixed Rate	Swap Floating Rate: LIBOR plus	All-in Swap Floating Rate as of March 31, 2021
Oasis of the Seas term loan	$	35,000	October 2021	5.41%	3.87%	4.12%
Unsecured senior notes	650,000		November 2022	5.25%	3.63%	3.83%
	$	685,000

Derivative Instruments, Gain (Loss)

The effect of derivative instruments qualifying and designated as hedging instruments and the related hedged items in fair value hedges on the consolidated statements of comprehensive loss was as follows (in thousands):

Derivatives and Related Hedged Items under ASC 815-20 Fair Value Hedging Relationships	Location of Gain (Loss) Recognized in Income on Derivative and Hedged Item	Amount of Gain (Loss) Recognized in Income on Derivative				Amount of Gain (Loss) Recognized in Income on Hedged Item
		Quarter Ended March 31, 2021		Quarter Ended March 31, 2020		Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Interest rate swaps	Interest expense, net of interest capitalized	$	(552)	$	20,430	$	2,930	$	(21,330)
		$	(552)	$	20,430	$	2,930	$	(21,330)

Cash flow hedge

Derivative Instruments

Schedule of Interest Rate Derivatives

At March 31, 2021 and December 31, 2020, we maintained interest rate swap agreements on the following floating-rate debt instruments:

Debt Instrument	Swap Notional as of March 31, 2021 (in thousands)		Maturity	Debt Floating Rate		All-in Swap Fixed Rate
Celebrity Reflection term loan	$	218,167	October 2024	LIBOR plus	0.40%	2.85%
Quantum of the Seas term loan	367,500		October 2026	LIBOR plus	1.30%	3.74%
Anthem of the Seas term loan	392,708		April 2027	LIBOR plus	1.30%	3.86%
Ovation of the Seas term loan	518,750		April 2028	LIBOR plus	1.00%	3.16%
Harmony of the Seas term loan (1)	509,411		May 2028	EURIBOR plus	1.15%	2.26%
Odyssey of the Seas term loan (2)	460,000		October 2032	LIBOR plus	0.95%	3.21%
Odyssey of the Seas term loan (2)	191,667		October 2032	LIBOR plus	0.95%	2.84%
	$	2,658,203

(1)Interest rate swap agreements hedging the Euro-denominated term loan for Harmony of the Seas include EURIBOR zero-floor matching the hedged debt EURIBOR zero-floor. Amount presented is based on the exchange rate as of March 31, 2021.

(2)Interest rate swap agreements hedging the term loan of Odyssey of the Seas include LIBOR zero-floors matching the debt LIBOR zero-floor. The effective dates of the $460.0 million and $191.7 million interest rate swap agreements are October 2020 and October 2022, respectively. The unsecured term loan for the financing of Odyssey of the Seas was drawn on March 2021.

Derivative Instruments, Gain (Loss)

The effect of derivative instruments qualifying and designated as cash flow hedging instruments on the consolidated financial statements was as follows (in thousands):

Derivatives under ASC 815-20  Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss on Derivatives				Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
	Quarter Ended March 31, 2021		Quarter Ended March 31, 2020			Quarter Ended March 31, 2021		Quarter Ended March 31, 2020
Interest rate swaps	$	43,408	$	(52,595)	Interest expense, net of interest capitalized	$	(9,509)	$	(3,391)
Foreign currency forward contracts	(99,581)		(100,014)		Depreciation and amortization expenses	(3,781)		(3,337)
Foreign currency forward contracts	—		—		Other income (expense)	(1,291)		(1,763)
Fuel swaps	—		—		Other income (expense)	(407)		344
Fuel swaps	55,246		(170,376)		Fuel	3,759		(14,233)
	$	(927)	$	(322,985)		$	(11,229)	$	(22,380)

The table below represents amounts excluded from the assessment of effectiveness for our net investment hedging instruments for which the difference between changes in fair value and periodic amortization is recorded in accumulated other comprehensive income (loss) (in thousands):

Gain (Loss) Recognized in Income (Net Investment Excluded Components)	Three Months Ended March 31, 2021
Net inception fair value at January 1, 2021	$	(1,915)
Amount of gain recognized in income on derivatives for the period ended March 31, 2021	1,637
Amount of gain (loss) remaining to be amortized in accumulated other comprehensive loss, as of March 31, 2021	(993)
Fair value at March 31, 2021	$	(1,271)

XML

Restructuring Charges (Tables)

3 Months Ended

Mar. 31, 2021

Restructuring and Related Activities [Abstract]

Summary of Restructuring Charges

The following table summarizes our restructuring costs during the quarter ended March 31, 2021 as it relates to the April 2020 reduction in our workforce (in thousands):

	Beginning balance January 1, 2021		Accruals		Payments		Ending balance March 31, 2021		Cumulative Charges Incurred		Expected Additional Expenses to be Incurred
Termination benefits	$	4,257	$	3,468	$	—	$	7,725	$	31,421	$	—
Total	$	4,257	$	3,468	$	—	$	7,725	$	31,421	$	—

XML

General (Details) destination in Thousands	Mar. 31, 2021 USD ($) destination continent brand ship	Mar. 19, 2021 USD ($) ship	Dec. 31, 2020 USD ($)
Schedule of Equity Method Investments [Line Items]
Number of cruise brands | brand	3
Number of cruise ships | ship	59
Number of destinations | destination	1
Number of continents | continent	7
Liquidity	$ 5,800,000,000
Cash and cash equivalents	$ 5,091,463,000		$ 3,684,474,000
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Azamara
Schedule of Equity Method Investments [Line Items]
Number of ships sold | ship		3
Total consideration from sale		$ 201,000,000
Maximum
Schedule of Equity Method Investments [Line Items]
Investment in a joint venture, percentage of interest	50.00%
Minimum
Schedule of Equity Method Investments [Line Items]
Investment in a joint venture, percentage of interest	20.00%
Unsecured Term Loan Agreement | Unsecured term loans
Schedule of Equity Method Investments [Line Items]
Debt instrument, face amount	$ 1,000,000,000.0
Line of Credit | Term Loan Facility, $700 Million
Schedule of Equity Method Investments [Line Items]
Maximum borrowing capacity	700,000,000.0
Revolving Credit Facility | Unsecured Revolving Credit Facility Due 2024
Schedule of Equity Method Investments [Line Items]
Maximum borrowing capacity	$ 1,550,000,000
TUI Cruises
Schedule of Equity Method Investments [Line Items]
Investment in a joint venture, percentage of interest	50.00%

XML

Impairment and Credit Losses - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Jun. 30, 2020	Mar. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]
Impairment and credit losses			$ 1,100,000
Credit loss	$ 971	$ 81,600	38,100
Equity method investments, other than temporary impairment			$ 39,700

XML

Revenues - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Capitalized Contract Cost [Line Items]
Passenger ticket revenues	$ 42,014	$ 2,032,750
Customer refunds	107,300		$ 95,800
Contract liability	503,300		124,800
Contract asset	53,700		53,700
Commission, transportation and other
Capitalized Contract Cost [Line Items]
Prepaid travel agent commissions	$ 13,600		$ 1,100
Minimum
Capitalized Contract Cost [Line Items]
Length of cruise	2 days
Maximum
Capitalized Contract Cost [Line Items]
Length of cruise	24 days
Port Costs
Capitalized Contract Cost [Line Items]
Passenger ticket revenues	$ 1,500	$ 124,500

XML

Revenues - Disaggregation of Revenue (Details) - USD ($) $ in Thousands		3 Months Ended
		Mar. 31, 2021	Mar. 31, 2020
Disaggregation of Revenue [Line Items]
Total revenues		$ 42,014	$ 2,032,750
Cruise Itinerary
Disaggregation of Revenue [Line Items]
Total revenues		30,695	1,864,554
Cruise Itinerary | North America
Disaggregation of Revenue [Line Items]
Total revenues	[1]	0	1,324,573
Cruise Itinerary | Asia Pacific
Disaggregation of Revenue [Line Items]
Total revenues	[2]	29,885	362,398
Cruise Itinerary | Europe
Disaggregation of Revenue [Line Items]
Total revenues	[3]	0	19,540
Cruise Itinerary | Other regions
Disaggregation of Revenue [Line Items]
Total revenues	[4]	810	158,043
Other Revenues
Disaggregation of Revenue [Line Items]
Total revenues	[5]	$ 11,319	$ 168,196
Passenger Ticket | Other regions
Disaggregation of Revenue [Line Items]
Percentage of revenues by country	[6]	0.00%	32.00%
Passenger Ticket | Singapore
Disaggregation of Revenue [Line Items]
Percentage of revenues by country		69.00%	0.00%
Passenger Ticket | China
Disaggregation of Revenue [Line Items]
Percentage of revenues by country		31.00%	0.00%
Passenger Ticket | United States
Disaggregation of Revenue [Line Items]
Percentage of revenues by country		0.00%	68.00%

[1] Includes the United States, Canada, Mexico and the Caribbean.

[2] Includes Southeast Asia (e.g., Singapore, Thailand and the Philippines), East Asia (e.g., China and Japan), South Asia (e.g., India and Pakistan) and Oceania (e.g., Australia and Fiji Islands) regions.

[3] Includes European countries (e.g., Nordics, Germany, France, Italy, Spain and the United Kingdom).

[4] Includes seasonality impacted itineraries primarily in South and Latin American countries.

[5] Includes revenues primarily related to cancellation fees, vacation protection insurance, pre- and post-cruise tours and fees for operating certain port facilities. Amounts also include revenues related to our bareboat charter, which was terminated when Pullmantur Holdings filed for reorganization in Spain in 2020, and procurement and management related services we perform on behalf of our unconsolidated affiliates. Refer to Note 6. Other Assets for more information on our unconsolidated affiliates.

[6] No other individual country's revenue exceeded 10% for the quarter ended March 31, 2020.

XML

(Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Earnings Per Share [Abstract]
Net (Loss) attributable to Royal Caribbean Cruises Ltd. for basic and diluted loss per share	$ (1,131,722)	$ (1,444,479)
Weighted-average common shares outstanding (in shares)	243,004	209,097
Diluted weighted-average shares outstanding (in shares)	243,004	209,097
Basic (loss) per share (in dollars per share)	$ (4.66)	$ (6.91)
Diluted (loss) per share (in dollars per share)	$ (4.66)	$ (6.91)
Antidilutive securities (in shares)	413,501	877

XML

Other Assets - Narrative (Details) € in Millions	1 Months Ended	3 Months Ended
	Apr. 30, 2016	Mar. 31, 2021 USD ($)	Mar. 31, 2021 EUR (€)	Jun. 30, 2020 USD ($)	Mar. 31, 2020 USD ($)	Mar. 31, 2021 EUR (€)	Dec. 31, 2020 USD ($)	Dec. 31, 2020 EUR (€)
Other Assets
Equity method investments, other than temporary impairment					$ 39,700,000
Proceeds from collection of advance to affiliate		$ 12,519,000			5,160,000
Loss provision for receivables		$ 971,000		$ 81,600,000	38,100,000
Minimum
Other Assets
Percentage of ownership interest		20.00%				20.00%
Maximum
Other Assets
Percentage of ownership interest		50.00%				50.00%
TUI Cruises GmbH joint venture
Other Assets
Percentage of ownership interest		50.00%				50.00%
TUI Cruises GmbH joint venture | Not Primary Beneficiary
Other Assets
Percentage of ownership interest		50.00%				50.00%
Investments in entity		$ 538,800,000					$ 538,400,000
Underlying equity in net assets		395,800,000					387,500,000
Advances to affiliate		135,100,000				€ 114.9	$ 145,500,000	€ 118.9
Contribution amount		$ 69,900,000	€ 59.5
TUI Cruises GmbH joint venture | TUI cruise ships
Other Assets
Restriction on reduction of current ownership interest (as a percent)		37.55%				37.55%
TUI Cruises GmbH joint venture | Splendour of the Seas | Not Primary Beneficiary
Other Assets
Debt instrument, term	10 years
Pullmantur Holdings
Other Assets
Percentage of subsidiary which has been sold		51.00%				51.00%
Pullmantur Holdings | Not Primary Beneficiary
Other Assets
Retained ownership percentage of subsidiary after sale		49.00%	49.00%
Grand Bahamas Shipyard Ltd.
Other Assets
Equity method investments, other than temporary impairment					30,100,000
Grand Bahamas Shipyard Ltd. | Not Primary Beneficiary
Other Assets
Percentage of ownership interest		40.00%				40.00%
Equity method investment					$ 0
Grand Bahamas Shipyard Ltd. | Not Primary Beneficiary | Loans Receivable
Other Assets
Advances to affiliate		$ 8,600,000
Grand Bahamas Shipyard Ltd. | Not Primary Beneficiary | Non-accrual status of advances to affiliates
Other Assets
Proceeds from collection of advance to affiliate		$ 8,900,000
Grand Bahamas Shipyard Ltd. | Not Primary Beneficiary | Non-accrual status of advances to affiliates | Maximum
Other Assets
Interest rate on loan provided to related party (as a percent)		5.75%				5.75%
Grand Bahamas Shipyard Ltd. | Not Primary Beneficiary | Non-accrual status of advances to affiliates | LIBOR | Minimum
Other Assets
Debt instrument, basis spread on variable rate		3.50%	3.50%
Grand Bahamas Shipyard Ltd. | Not Primary Beneficiary | Non-accrual status of advances to affiliates | LIBOR | Maximum
Other Assets
Debt instrument, basis spread on variable rate		3.75%	3.75%
Splendour of the Seas | TUI Cruises GmbH joint venture | Not Primary Beneficiary
Other Assets
Interest rate on loan provided to related party (as a percent)	6.25%
Debt, guaranteed percentage	50.00%
Springwater Capital LLC | Pullmantur Holdings
Other Assets
Percentage of ownership interest		51.00%				51.00%

XML

Other Assets - Share of Equity Income From Investments (Details) - USD ($)		3 Months Ended
		Mar. 31, 2021	Mar. 31, 2020
Schedule of Investments [Line Items]
Share of equity (loss) income from investments		$ (59,871,000)	$ (10,392,000)
Dividends received	[1]	0	1,991,000
TUI Cruises
Schedule of Investments [Line Items]
Dividends received		$ 0	$ 0

[1] There were no dividends received from TUI Cruises for the quarters ended March 31, 2021 and March 31, 2020

XML

Other Assets - Notes Receivable Due From Equity Instruments (Details) - USD ($) $ in Thousands		Mar. 31, 2021	Dec. 31, 2020
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Total notes receivable due from equity investments		$ 143,642	$ 164,596
Less-current portion	[1]	20,018	29,501
Long-term portion	[2]	$ 123,624	$ 135,095

[1] Included within Trade and other receivables, net in our consolidated balance sheets.

[2] Included within Other assets in our consolidated balance sheets.

XML

Other Assets - Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Other Assets [Abstract]
Revenues	$ 5,231	$ 7,411
Expenses	$ 1,275	$ 782

XML

Other Assets - Summary of Credit Loss Allowance (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Jun. 30, 2020	Mar. 31, 2020
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Beginning balance January 1, 2021	$ 85,447
Loss provision for receivables	971	$ 81,600	$ 38,100
Write-offs	(529)
Ending balance March 31, 2021	$ 85,889

XML

Debt - Summary of Debt (Details) - USD ($)		3 Months Ended
		Mar. 31, 2021	Dec. 31, 2020
Debt Instrument [Line Items]
Total debt	[1]	$ 21,298,938,000	$ 19,643,806,000
Less: unamortized debt issuance costs		(363,263,000)	(314,763,000)
Total debt, net of unamortized debt issuance costs		20,935,675,000	19,329,043,000
Less—current portion including commercial paper		(221,299,000)	(1,371,087,000)
Long-term portion		$ 20,714,376,000	$ 17,957,956,000
Weighted average interest rate		5.78%	6.02%
Unsecured UK Commercial paper
Debt Instrument [Line Items]
Long-term debt, gross		$ 0	$ 409,319,000
Total fixed rate debt
Debt Instrument [Line Items]
Long-term debt, gross		12,471,739,000	11,024,809,000
Unsecured senior notes
Debt Instrument [Line Items]
Long-term debt, gross		$ 3,962,852,000	2,464,994,000
Unsecured senior notes | Minimum
Debt Instrument [Line Items]
Interest rate	[2]	3.70%
Unsecured senior notes | Maximum
Debt Instrument [Line Items]
Interest rate	[2]	7.50%
Secured senior notes
Debt Instrument [Line Items]
Long-term debt, gross		$ 3,897,963,000	3,895,166,000
Secured senior notes | Minimum
Debt Instrument [Line Items]
Interest rate	[2]	7.25%
Secured senior notes | Maximum
Debt Instrument [Line Items]
Interest rate	[2]	11.50%
Unsecured term loans
Debt Instrument [Line Items]
Long-term debt, gross		$ 3,130,363,000	3,210,161,000
Unsecured term loans | Minimum
Debt Instrument [Line Items]
Interest rate	[2]	2.53%
Unsecured term loans | Maximum
Debt Instrument [Line Items]
Interest rate	[2]	5.41%
Convertible notes
Debt Instrument [Line Items]
Long-term debt, gross		$ 1,480,561,000	1,454,488,000
Convertible notes | Minimum
Debt Instrument [Line Items]
Interest rate	[2]	2.88%
Convertible notes | Maximum
Debt Instrument [Line Items]
Interest rate	[2]	4.25%
Total variable rate debt
Debt Instrument [Line Items]
Long-term debt, gross		$ 8,617,451,000	8,405,632,000
Unsecured revolving credit facilities
Debt Instrument [Line Items]
Long-term debt, gross	[3]	3,004,342,000	3,289,000,000
Maximum borrowing capacity		$ 3,200,000,000
Unsecured revolving credit facilities | Minimum
Debt Instrument [Line Items]
Current interest rate	[2],[3]	1.49%
Unsecured revolving credit facilities | Maximum
Debt Instrument [Line Items]
Current interest rate		1.89%
Unsecured revolving credit facilities | Unsecured Revolving Credit Facility Due 2024
Debt Instrument [Line Items]
Current interest rate		1.49%
Maximum borrowing capacity		$ 1,900,000,000
Facility fee		0.20%
Unsecured revolving credit facilities | Unsecured Revolving Credit Facility Due 2024 | LIBOR | Maximum
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		1.30%
Unsecured revolving credit facilities | Unsecured Revolving Credit Facility Due 2024
Debt Instrument [Line Items]
Current interest rate		1.89%
Maximum borrowing capacity		$ 1,300,000,000
Unsecured revolving credit facilities | Unsecured Revolving Credit Facility Due 2024 | Maximum
Debt Instrument [Line Items]
Facility fee		0.30%
Unsecured revolving credit facilities | Unsecured Revolving Credit Facility Due 2024 | LIBOR | Maximum
Debt Instrument [Line Items]
Debt instrument, basis spread on variable rate		1.70%
USD unsecured term loan
Debt Instrument [Line Items]
Long-term debt, gross		$ 4,904,446,000	4,002,249,000
USD unsecured term loan | Minimum
Debt Instrument [Line Items]
Current interest rate	[2]	0.61%
USD unsecured term loan | Maximum
Debt Instrument [Line Items]
Current interest rate	[2]	3.31%
Euro unsecured term loan
Debt Instrument [Line Items]
Long-term debt, gross		$ 708,663,000	705,064,000
Euro unsecured term loan | Minimum
Debt Instrument [Line Items]
Current interest rate	[2]	1.15%
Euro unsecured term loan | Maximum
Debt Instrument [Line Items]
Current interest rate	[2]	2.25%
Finance lease liabilities
Debt Instrument [Line Items]
Long-term debt, gross		$ 209,748,000	$ 213,365,000

[1] At March 31, 2021 and December 31, 2020, the weighted average interest rate for total debt was 5.78% and 6.02%, respectively.

[2] Interest rates based on outstanding loan balance as of March 31, 2021 and, for variable rate debt, include either LIBOR or EURIBOR plus the applicable margin.

[3] Includes $1.9 billion facility and $1.3 billion facility, the vast majority of which is due in 2024. Our $1.9 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.30%, which interest was 1.49% as of March 31, 2021 and is subject to a facility fee of a maximum of 0.20%. Our $1.3 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.70%, which interest was 1.89% as of March 31, 2021 and is subject to a facility fee of a maximum of 0.30%.

XML

Debt - Narrative (Details) € in Millions		1 Months Ended					3 Months Ended
		Apr. 30, 2024 USD ($)	Oct. 31, 2023 USD ($)	Oct. 31, 2022 USD ($)	Apr. 30, 2022 USD ($)	Mar. 31, 2021 USD ($) ship	Mar. 31, 2021 USD ($) ship	Mar. 31, 2021 EUR (€)
Long-Term Debt
Debt instrument, collateral amount						$ 172,700,000	$ 172,700,000
Credit card processor agreement, maximum exposure						$ 170,600,000	$ 170,600,000
Number of cruise ships | ship						59	59
Maximum borrowing capacity | €								€ 300.0
Debt covenant, monthly minimum liquidity							$ 350,000,000
Non-Export Credit Facilities
Long-Term Debt
Long-term debt						$ 4,900,000,000	4,900,000,000
Export Credit Facilities
Long-Term Debt
Long-term debt						6,300,000,000	6,300,000,000
Deferred principal payments						$ 1,150,000,000	$ 1,150,000,000
Unsecured Term Loans Guaranteed by Export Credit Agencies
Long-Term Debt
Credit agency fees, percentage of outstanding loan balance							2.97%	2.97%
RCI Holdings LLC | Subsidiaries
Long-Term Debt
Number of cruise ships | ship						7	7
Revolving Credit Facility | Unsecured Revolving Credit Facility Due 2024
Long-Term Debt
Maximum borrowing capacity						$ 1,550,000,000	$ 1,550,000,000
Extension term						18 months
Prepayment and commitment reduction, as a percentage of outstanding advances and commitments						20.00%	20.00%
Aggregate borrowing capacity						$ 1,300,000,000	$ 1,300,000,000
Line of Credit | Term Loan Facility, $700 Million
Long-Term Debt
Maximum borrowing capacity						$ 700,000,000.0	700,000,000.0
Extension term						1 year
Increase limit						$ 300,000,000.0	$ 300,000,000.0
Line of Credit | LIBOR | Term Loan Facility, $700 Million
Long-Term Debt
Debt instrument, basis spread on variable rate						3.75%
Scenario, Forecast
Long-Term Debt
Deferred principal payments, repayment period					5 years
Scenario, Forecast | Revolving Credit Facility | Unsecured Revolving Credit Facility Due 2024
Long-Term Debt
Line of credit terminated		$ 1,100,000,000		$ 200,000,000
Maximum | Contract With Customer, Liability, Up-Front Payment Arrangement
Long-Term Debt
Credit agency fees, percentage of loan amount payable							5.48%	5.48%
Minimum | Contract With Customer, Liability, Up-Front Payment Arrangement
Long-Term Debt
Credit agency fees, percentage of loan amount payable							2.35%	2.35%
Unsecured term loans | Unsecured Term Loan Agreement
Long-Term Debt
Debt instrument, face amount						$ 1,000,000,000.0	$ 1,000,000,000.0
Extension term						18 months
Prepayment and commitment reduction, as a percentage of outstanding advances and commitments						20.00%	20.00%
Long-term debt						$ 900,000,000	$ 900,000,000
Unsecured term loans | Novation Agreement
Long-Term Debt
Unsecured debt						$ 994,100,000	$ 994,100,000
Debt instrument, term						12 years
Bank financing commitment percentage						80.00%	80.00%
Percentage of premium payable						100.00%	100.00%
Unsecured term loans | Term Loan Due 2023
Long-Term Debt
Debt instrument, face amount						$ 130,000,000.0	$ 130,000,000.0
Unsecured term loans | LIBOR | Novation Agreement
Long-Term Debt
Debt instrument, basis spread on variable rate						0.96%
Unsecured term loans | Euler Hermes | Novation Agreement
Long-Term Debt
Percentage guaranteed by export credit agency						95.00%
Unsecured term loans | Scenario, Forecast | Unsecured Term Loan Agreement
Long-Term Debt
Debt terminated			$ 600,000,000		$ 300,000,000
Unsecured term loans | Maximum
Long-Term Debt
Interest rate	[1]					5.41%	5.41%
Unsecured term loans | Minimum
Long-Term Debt
Interest rate	[1]					2.53%	2.53%
Revolving Credit Facility
Long-Term Debt
Maximum borrowing capacity						$ 3,200,000,000	$ 3,200,000,000
Revolving Credit Facility | Unsecured Revolving Credit Facility Due 2024
Long-Term Debt
Maximum borrowing capacity						1,300,000,000	$ 1,300,000,000
Revolving Credit Facility | Maximum | LIBOR | Unsecured Revolving Credit Facility Due 2024
Long-Term Debt
Debt instrument, basis spread on variable rate							1.70%	1.70%
Unsecured senior notes | Senior Unsecured Notes Due 2028
Long-Term Debt
Debt instrument, face amount						1,500,000,000	$ 1,500,000,000
Proceeds from issuance						$ 1,480,000,000
Interest rate						5.50%	5.50%
Unsecured senior notes | Maximum
Long-Term Debt
Interest rate	[1]					7.50%	7.50%
Unsecured senior notes | Minimum
Long-Term Debt
Interest rate	[1]					3.70%	3.70%
Secured senior notes | Senior Secured Notes
Long-Term Debt
Debt instrument, face amount						$ 3,320,000,000	$ 3,320,000,000
Secured senior notes | Maximum
Long-Term Debt
Interest rate	[1]					11.50%	11.50%
Secured senior notes | Minimum
Long-Term Debt
Interest rate	[1]					7.25%	7.25%

[1] Interest rates based on outstanding loan balance as of March 31, 2021 and, for variable rate debt, include either LIBOR or EURIBOR plus the applicable margin.

XML

Debt - Schedule of Maturities (Details) $ in Thousands	Mar. 31, 2021 USD ($)
Debt Disclosure [Abstract]
Remainder of 2021	$ 189,207
2022	2,211,011
2023	6,251,032
2024	4,670,735
2025	4,436,340
Thereafter	3,177,350
Total	$ 20,935,675

XML

Leases - Narrative (Details) - USD ($)	3 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Lessee, Lease, Description [Line Items]
Present value of lease liabilities	$ 209,748,000
Variable lease cost	0
Port Terminal
Lessee, Lease, Description [Line Items]
Cash collateral	181,100,000
Ships | Silver Whisper
Lessee, Lease, Description [Line Items]
Present value of lease liabilities	$ 31,500,000	$ 31,500,000
Minimum | Real Estate
Lessee, Lease, Description [Line Items]
Renewal term	1 year
Minimum | Berthing Agreement
Lessee, Lease, Description [Line Items]
Renewal term	1 year
Maximum | Real Estate
Lessee, Lease, Description [Line Items]
Renewal term	10 years
Maximum | Berthing Agreement
Lessee, Lease, Description [Line Items]
Renewal term	20 years

XML

Leases - Schedule of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Lease, Cost [Abstract]
Amortization of right-of-use-assets	$ 3,744	$ 4,881
Interest on lease liabilities	310	1,933
Total lease costs	15,219	33,928
Commission, transportation and other
Lessee, Lease, Description [Line Items]
Operating lease costs	0	14,745
Other operating expenses
Lessee, Lease, Description [Line Items]
Operating lease costs	5,130	7,001
Marketing, selling and administrative expenses
Lessee, Lease, Description [Line Items]
Operating lease costs	$ 6,035	$ 5,368

XML

Leases - Schedule of Lease Terms and Discount Rates (Details)	Mar. 31, 2021	Dec. 31, 2020
Weighted average of the remaining lease term
Operating leases	9 years 10 months 24 days	7 years 9 months 18 days
Finance leases	42 years 1 month 6 days	41 years 2 months 12 days
Weighted average discount rate
Operating leases	5.25%	4.59%
Finance leases	7.02%	6.89%

XML

Leases - Supplemental Noncash Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Leases [Abstract]
Operating cash flows from operating leases	$ 5,531	$ 27,841
Operating cash flows from finance leases	310	1,933
Financing cash flows from finance leases	$ 4,305	$ 3,823

XML

Leases - Schedule of Lease Maturities (Details) $ in Thousands	Mar. 31, 2021 USD ($)
Operating Leases
Remainder of 2021	$ 96,266
2022	119,321
2023	112,718
2024	84,696
2025	77,323
Thereafter	386,342
Total lease payments	876,666
Less: Interest	(231,908)
Present value of lease liabilities	644,758
Finance Leases
Remainder of 2021	55,831
2022	23,822
2023	12,789
2024	12,529
2025	12,566
Thereafter	395,460
Total lease payments	512,997
Less: Interest	(303,249)
Present value of lease liabilities	$ 209,748

XML

Commitments and Contingencies - Narrative (Details) $ in Millions	1 Months Ended	3 Months Ended
	Aug. 31, 2019 lawsuit	Mar. 31, 2021 USD ($) berth ship	Dec. 31, 2020
Commitments and Contingencies
Ship passenger capacity berths | berth		48,030
Number of claims filed | lawsuit	2
Number of months considered to determine requirement of prepayment of debts		24 months
Cruise ships on order
Commitments and Contingencies
Aggregate cost of ships on order, not including TUI cruises on order | $		$ 12,900.0
Deposit for the purchase of ships expected to enter service | $		$ 602.5
Percentage of aggregate cost exposed to fluctuations in the euro exchange rate		70.50%	66.30%
Silversea Cruises | Cruise ships on order
Commitments and Contingencies
Number of ships under construction | ship		3
Ship passenger capacity berths | berth		2,000
Line of Credit | Minimum
Commitments and Contingencies
Debt instrument covenant, minimum percentage of ownership by a person		50.00%
Debt Securities | Minimum
Commitments and Contingencies
Debt instrument covenant, minimum percentage of ownership by a person		50.00%
Royal Caribbean International Cruise Ships | Cruise ships on order
Commitments and Contingencies
Ship passenger capacity berths | berth		28,200
Royal Caribbean International Cruise Ships | Oasis Class Ship | Cruise ships on order
Commitments and Contingencies
Number of ships under construction | ship		2
Royal Caribbean International Cruise Ships | Project Icon Ships | Cruise ships on order
Commitments and Contingencies
Number of ships under construction | ship		3
Celebrity Cruises | Edge Class Ships | Cruise ships on order
Commitments and Contingencies
Number of ships under construction | ship		2
Ship passenger capacity berths | berth		6,500

XML

Commitment and Contingencies - Capital Commitments (Details)	Mar. 31, 2021 berth
Long-term Purchase Commitment [Line Items]
Ship passenger capacity berths	48,030
Royal Caribbean International | Wonder of the Seas
Long-term Purchase Commitment [Line Items]
Ship passenger capacity berths	5,700
Royal Caribbean International | Oasis Class Ship
Long-term Purchase Commitment [Line Items]
Ship passenger capacity berths	5,700
Royal Caribbean International | Icon Class, Unnamed Ship One
Long-term Purchase Commitment [Line Items]
Ship passenger capacity berths	5,600
Royal Caribbean International | Icon Class, Unnamed Ship Two
Long-term Purchase Commitment [Line Items]
Ship passenger capacity berths	5,600
Royal Caribbean International | Icon Class, Unnamed Ship Three
Long-term Purchase Commitment [Line Items]
Ship passenger capacity berths	5,600
Celebrity Cruises | Celebrity Beyond
Long-term Purchase Commitment [Line Items]
Ship passenger capacity berths	3,250
Celebrity Cruises | Edge Class, Unnamed
Long-term Purchase Commitment [Line Items]
Ship passenger capacity berths	3,250
Silversea Cruises | Silver Dawn
Long-term Purchase Commitment [Line Items]
Ship passenger capacity berths	600	[1]
Silversea Cruises | Evolution Class, Unnamed Ship One
Long-term Purchase Commitment [Line Items]
Ship passenger capacity berths	700	[1]
Silversea Cruises | Evolution Class, Unnamed Ship Two
Long-term Purchase Commitment [Line Items]
Ship passenger capacity berths	700	[1]
TUI Cruises | Mein Schiff 7
Long-term Purchase Commitment [Line Items]
Ship passenger capacity berths	2,900
TUI Cruises | TUI Cruises, Unnamed Ship One
Long-term Purchase Commitment [Line Items]
Ship passenger capacity berths	4,100
TUI Cruises | TUI Cruises, Unnamed Ship Two
Long-term Purchase Commitment [Line Items]
Ship passenger capacity berths	4,100
Hapag-Lloyd Cruises | Hanseatic Spirit
Long-term Purchase Commitment [Line Items]
Ship passenger capacity berths	230

[1] The revenue impact from Silversea Cruises' new ships will be recognized on a three month reporting lag from when the ships enter service. Refer to Note 1. General for further information.

XML

Shareholders' Equity (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	1 Months Ended		3 Months Ended
	Mar. 31, 2021	Apr. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Dec. 31, 2020
Equity [Abstract]
Shares issued (in shares)	16.9
Common stock, par value (in dollars per share)	$ 0.01				$ 0.01
Stock price (in dollars per share)	$ 91.00
Proceeds from sale of stock	$ 1,500.0
Dividend declared (in dollars per share)			$ 0.78	$ 0.78
Common stock, dividends, per share, cash paid (in dollars per share)		$ 0.78	$ 0.78

XML

Changes in Accumulated Other Comprehensive Loss - Changes in AOCI by Component (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Changes in accumulated other comprehensive loss by component
Beginning balance	$ 8,760,669	$ 12,163,846
Ending balance	9,172,382	10,231,775
Changes related to cash flow derivative hedges
Changes in accumulated other comprehensive loss by component
Beginning balance	(650,519)	(688,529)
Other comprehensive income (loss) before reclassifications	(927)	(322,985)
Amounts reclassified from accumulated other comprehensive loss	11,229	22,380
Net current-period other comprehensive income (loss)	10,302	(300,605)
Ending balance	(640,217)	(989,134)
Changes in defined benefit plans
Changes in accumulated other comprehensive loss by component
Beginning balance	(65,542)	(45,558)
Other comprehensive income (loss) before reclassifications	9,720	(8,094)
Amounts reclassified from accumulated other comprehensive loss	743	505
Net current-period other comprehensive income (loss)	10,463	(7,589)
Ending balance	(55,079)	(53,147)
Foreign currency translation adjustments
Changes in accumulated other comprehensive loss by component
Beginning balance	(23,280)	(63,626)
Other comprehensive income (loss) before reclassifications	9,722	10,290
Amounts reclassified from accumulated other comprehensive loss	0	0
Net current-period other comprehensive income (loss)	9,722	10,290
Ending balance	(13,558)	(53,336)
Accumulated other comprehensive loss
Changes in accumulated other comprehensive loss by component
Beginning balance	(739,341)	(797,713)
Other comprehensive income (loss) before reclassifications	18,515	(320,789)
Amounts reclassified from accumulated other comprehensive loss	11,972	22,885
Net current-period other comprehensive income (loss)	30,487	(297,904)
Ending balance	$ (708,854)	$ (1,095,617)

XML

Changes in Accumulated Other Comprehensive Loss - Reclassifications (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Reclassifications out of accumulated other comprehensive loss
Interest expense, net of interest capitalized	$ (272,514)	$ (92,911)
Depreciation and amortization expenses	(310,166)	(324,330)
Other income (expense)	5,033	(32,859)
Fuel	(41,822)	(194,268)
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income
Reclassifications out of accumulated other comprehensive loss
Total reclassifications for the period	(11,972)	(22,885)
Loss on cash flow derivative hedges | Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income
Reclassifications out of accumulated other comprehensive loss
Total reclassifications for the period	(11,229)	(22,380)
Loss on cash flow derivative hedges | Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income | Interest rate swaps
Reclassifications out of accumulated other comprehensive loss
Interest expense, net of interest capitalized	(9,509)	(3,391)
Loss on cash flow derivative hedges | Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income | Foreign currency forward contracts
Reclassifications out of accumulated other comprehensive loss
Depreciation and amortization expenses	(3,781)	(3,337)
Other income (expense)	(1,291)	(1,763)
Loss on cash flow derivative hedges | Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income | Fuel swaps
Reclassifications out of accumulated other comprehensive loss
Other income (expense)	(407)	344
Fuel	3,759	(14,233)
Changes in defined benefit plans | Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income
Reclassifications out of accumulated other comprehensive loss
Payroll and related	(743)	(505)
Total reclassifications for the period	$ (743)	$ (505)

XML

Fair Value Measurements and Derivative Instruments - Estimated Fair Value (Details) - Nonrecurring - USD ($) $ in Thousands		Mar. 31, 2021	Dec. 31, 2020
Level 1
Assets:
Cash and cash equivalents	[1],[2]	$ 5,091,463	$ 3,684,474
Total Assets	[2]	5,091,463	3,684,474
Liabilities:
Long-term debt (including current portion of long-term debt)	[2],[3]	0	0
Total Liabilities	[2]	0	0
Level 2
Assets:
Cash and cash equivalents	[1],[4]	0	0
Total Assets	[4]	0	0
Liabilities:
Long-term debt (including current portion of long-term debt)	[3],[4]	23,195,196	20,981,040
Total Liabilities	[4]	23,195,196	20,981,040
Level 3
Assets:
Cash and cash equivalents	[1],[5]	0	0
Total Assets	[5]	0	0
Liabilities:
Long-term debt (including current portion of long-term debt)	[3],[5]	0	0
Total Liabilities	[5]	0	0
Total Carrying Amount
Assets:
Cash and cash equivalents	[1]	5,091,463	3,684,474
Total Assets		5,091,463	3,684,474
Liabilities:
Long-term debt (including current portion of long-term debt)	[3]	20,725,927	18,706,359
Total Liabilities		20,725,927	18,706,359
Total Fair Value
Assets:
Cash and cash equivalents	[1]	5,091,463	3,684,474
Total Assets		5,091,463	3,684,474
Liabilities:
Long-term debt (including current portion of long-term debt)	[3]	23,195,196	20,981,040
Total Liabilities		$ 23,195,196	$ 20,981,040

[1] Consists of cash and marketable securities with original maturities of less than 90 days.

[2] Inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.

[3] Consists of unsecured revolving credit facilities, senior notes, term loans and convertible notes. These amounts do not include our finance lease obligations or commercial paper.

[4] Inputs other than quoted prices included within Level 1 that are observable for the liability, either directly or indirectly. For unsecured revolving credit facilities and unsecured term loans, fair value is determined utilizing the income valuation approach. This valuation model takes into account the contract terms of our debt such as the debt maturity and the interest rate on the debt. The valuation model also takes into account the creditworthiness of the Company.

[5] Inputs that are unobservable. The Company did not use any Level 3 inputs as of March 31, 2021 and December 31, 2020.

XML

Fair Value Measurements and Derivative Instruments - Recurring (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands		Mar. 31, 2021	Dec. 31, 2020
Level 1
Assets:
Derivative financial instruments	[1],[2]	$ 0	$ 0
Total Assets	[2]	0	0
Liabilities:
Derivative financial instruments	[2],[3]	0	0
Total Liabilities	[2]	0	0
Level 2
Assets:
Derivative financial instruments	[1],[4]	72,900	108,539
Total Assets	[4]	72,900	108,539
Liabilities:
Derivative financial instruments	[3],[4]	196,293	259,705
Total Liabilities	[4]	196,293	259,705
Level 3
Assets:
Derivative financial instruments	[1],[5]	0	0
Total Assets	[5]	0	0
Liabilities:
Derivative financial instruments	[3],[5]	0	0
Total Liabilities	[5]	0	0
Total
Assets:
Derivative financial instruments	[1]	72,900	108,539
Total Assets		72,900	108,539
Liabilities:
Derivative financial instruments	[3]	196,293	259,705
Total Liabilities		$ 196,293	$ 259,705

[1] Consists of foreign currency forward contracts, interest rate swaps and fuel swaps. Refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.(5

[2] Inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.

[3] Consists of foreign currency forward contracts, interest rate swaps and fuel swaps. Refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.

[4] Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. For foreign currency forward contracts, interest rate swaps and fuel swaps, fair value is derived using valuation models that utilize the income valuation approach. These valuation models take into account the contract terms, such as maturity, as well as other inputs, such as foreign exchange rates and curves, fuel types, fuel curves and interest rate yield curves. Derivative instrument fair values take into account the creditworthiness of the counterparty and the Company.

[5] Inputs that are unobservable. No Level 3 inputs were used in fair value measurements of Other financial instruments as of March 31, 2021 and December 31, 2020.

XML

Fair Value Measurements and Derivative Instruments - Nonrecurring (Details) $ in Thousands		3 Months Ended			12 Months Ended
		Mar. 31, 2021 USD ($) ship	Dec. 31, 2020 USD ($) ship	Mar. 31, 2020 USD ($) ship	Dec. 31, 2020 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Equity method investments, impairment				$ 39,700
Total, impairment				1,100,000
Impairment and credit losses		$ (449)		$ 1,108,118
Indefinite-life intangible assets			$ 321,500		$ 321,500
Number of cruise ships | ship		59
Valuation, Income And Cost Approach
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of cruise ships | ship				2
Disposal Group, Held-for-sale, Not Discontinued Operations | Azamara
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of ships held for sale | ship			3
Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Indefinite-life intangible asset, impairment	[1]				30,800
Long-lived assets, impairment	[2]				727,063
Right-of-use assets, impairment	[3]				65,909
Equity method investments, impairment	[4]				39,735
Impairment and credit losses					1,439,715
Nonrecurring | Silversea Cruises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Silversea Goodwill, impairment	[5]				576,208
Nonrecurring | Total Carrying Amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Indefinite-life intangible asset	[1]		$ 318,700		318,700
Long-lived assets	[2]		577,193		577,193
Right-of-use assets	[3]		67,265		67,265
Equity method investments	[4]		0		0
Total			1,471,736		1,471,736
Nonrecurring | Total Carrying Amount | Silversea Cruises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Silversea Goodwill	[5]		508,578		508,578
Nonrecurring | Total Fair Value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Indefinite-life intangible asset	[1]		318,700		318,700
Long-lived assets	[2]		577,193		577,193
Right-of-use assets	[3]		67,265		67,265
Equity method investments	[4]		0		0
Total			1,471,736		1,471,736
Nonrecurring | Total Fair Value | Silversea Cruises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Silversea Goodwill	[5]		508,578		508,578
Nonrecurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Indefinite-life intangible asset	[1]		318,700		318,700
Long-lived assets	[2]		577,193		577,193
Right-of-use assets	[3]		67,265		67,265
Equity method investments	[4]		0		0
Total			$ 1,471,736		$ 1,471,736
Nonrecurring | Level 3 | Discount rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Indefinite-lived intangible assets, measurement input			13.25%		13.25%
Nonrecurring | Level 3 | Royalty fee percentage
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Indefinite-lived intangible assets, measurement input			3.00%		3.00%
Nonrecurring | Level 3 | Silversea Cruises
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Silversea Goodwill	[5]		$ 508,578		$ 508,578
Nonrecurring | Level 3 | Silversea Cruises | Weighted average cost of capital
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Goodwill, measurement input			12.75%		12.75%

[1] Amount represents the Silversea Cruises trade name which makes up the majority of our indefinite-life intangible assets, totaling $321.5 million. We estimated the fair value of our the Silversea Cruises trade name using a discounted cash flow model and the relief-from-royalty method and used a discount rate of 13.25%. Significant inputs in performing the fair value assessment for the trade name were (i) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate; (ii) the royalty rate of 3.0%; and (iii) weighted average cost of capital (i.e., discount rate). The fair value of the Silversea Cruises trade name was estimated as of March 31, 2020, the date the asset was last impaired.

[2] Impairments primarily relate to certain vessels during 2020. In addition, certain construction in progress projects generated impairments during the quarter ended September 30, 2020 and quarter ended December 31, 2020. For the vessels impaired during the quarter ended March 31, 2020, we estimated the fair value of two of our vessels using a blended indication from the income and cost approaches and the fair value of the remaining vessels was estimated primarily based on their orderly liquidation values. For the vessels impaired during the quarter ended June 30, 2020, we estimated the fair value of the vessels using a modified market approach based on the carrying values and orderly liquidation values of the vessels. For the vessels impaired during the quarter ended December 31, 2020, we estimated the fair value of the three Azamara vessels using a market approach. A significant input in performing the fair value assessments for these vessels was management's expected use of the vessels, which takes into consideration forecasted operating results. During the quarter ended September 30, 2020 and quarter ended December 31, 2020, construction in progress assets were impaired due to a reduction in scope or the decision to not complete the projects. The impairment was calculated based on orderly liquidation values. The fair value of these assets were estimated as of the date the asset was last impaired.

[3] Impairments to our right-of-use assets relate to certain of our berthing arrangements and a ship operating lease. We estimated the fair value of the berthing arrangements using estimated projected discounted cash flows and the fair value of the ship operating lease was estimated using a market approach. The fair value of the berthing arrangements was estimated as of March 31, 2020, the date these assets were last impaired. A significant input in performing the fair value assessments for these assets was our expected passenger headcount. The fair value of the ship operating lease was estimated as of December 31, 2020, the date this asset was last impaired, and significant inputs in performing the fair value assessment using the market approach for this asset were the expected rate of return and remaining lease payments.

[4] We estimated the fair value of our other than temporarily impaired equity-method investments using a discounted cash flow model. A significant input in performing the fair value assessments for these assets was forecasted operating results for these investments. The fair value of these equity-method investments was estimated as of March 31, 2020, the date these assets were last impaired. For further information on our equity method investments, refer to Note 6. Other Assets.

[5] We estimated the fair value of the Silversea Cruises reporting unit using a probability-weighted discounted cash flow model in combination with a market based valuation approach. The principal assumptions used in the discounted cash flow model were (i) the timing of our return to service, changes in market conditions and port or other restrictions; (ii) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate; and (iii) weighted average cost of capital (i.e., discount rate). The discounted cash flow model used our 2020 projected operating results as a base. To that base we added future years’ cash flows through 2030 assuming multiple revenue and expense scenarios that reflect the impact of different global economic environments for this period on the Silversea Cruises' reporting unit. We assigned a probability to each revenue and expense scenario. We discounted the projected cash flows using rates specific to the Silversea Cruises' reporting unit based on its weighted-average cost of capital, which was determined to be 12.75%. The fair value of Silversea Cruises’ goodwill was estimated as of March 31, 2020, the date the asset was last impaired.

XML

Fair Value Measurements and Derivative Instruments - Offsetting of Derivative Instruments (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Offsetting of Financial Assets under Master Netting Agreements [Abstract]
Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet	$ 72,900	$ 108,539
Gross Amount of Eligible Offsetting Recognized Derivative Liabilities	(63,789)	(80,743)
Cash Collateral Received	0	0
Net Amount of Derivative Assets	9,111	27,796
Offsetting of Financial Liabilities under Master Netting Agreements [Abstract]
Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet	(196,293)	(259,705)
Gross Amount of Eligible Offsetting Recognized Derivative Assets	63,789	80,743
Cash Collateral Pledged	71,587	57,273
Net Amount of Derivative Liabilities	$ (60,917)	$ (121,689)

XML

Fair Value Measurements and Derivative Instruments - Derivative Instruments, Interest Rate Risk, Foreign Currency Exchange Rate Risk (Narrative) (Details) $ in Thousands, € in Millions	3 Months Ended			12 Months Ended
	Mar. 31, 2021 USD ($)	Mar. 31, 2021 EUR (€)	Mar. 31, 2020 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2020 EUR (€)	Mar. 31, 2021 EUR (€)
Gains and losses from derivatives involved in hedging relationships
Derivative instrument, credit risk exposure	$ 4,800
Maximum length of time hedged in derivative contract	3 years	3 years
Percentage of debt bearing fixed interest	68.20%			64.50%		68.20%
Interest rate swaps
Gains and losses from derivatives involved in hedging relationships
Notional amount	$ 3,300,000			$ 3,400,000
Forward Contracts | Not Designated
Gains and losses from derivatives involved in hedging relationships
Notional amount	462,600
Change in fair value of foreign currency forward contracts recognized in earnings	13,500		$ 52,700
Foreign exchange contracts
Gains and losses from derivatives involved in hedging relationships
Notional amount	2,500,000			$ 3,100,000
Cruise ships on order
Gains and losses from derivatives involved in hedging relationships
Aggregate cost of ships on order, not including partner brands on order	12,900,000
Amount deposited for cost of ships on order	$ 602,500
Percentage of aggregate cost exposed to fluctuations in the euro exchange rate	70.50%			66.30%		70.50%
TUI Cruises | Forward Contracts | Designated as Hedging Instrument
Gains and losses from derivatives involved in hedging relationships
Notional amount	$ 288,000					€ 245.0
Foreign currency debt
Gains and losses from derivatives involved in hedging relationships
Carrying value of non-derivative instrument designated as hedging instrument	132,826			$ 263,031
Foreign currency debt | TUI Cruises
Gains and losses from derivatives involved in hedging relationships
Carrying value of non-derivative instrument designated as hedging instrument	$ 132,800	€ 113.0		$ 263,000	€ 215.0

XML

Fair Value Measurements and Derivative Instruments - Interest Rate Risk (Details) - Interest rate swaps	3 Months Ended
	Mar. 31, 2021 USD ($)
Fair Value Hedging
Interest Rate Fair Value Hedges [Abstract]
Long-term debt	$ 685,000,000
Fair Value Hedging | Oasis of the Seas term loan
Interest Rate Fair Value Hedges [Abstract]
Long-term debt	$ 35,000,000
Debt Fixed Rate	5.41%
Fair Value Hedging | Unsecured senior notes
Interest Rate Fair Value Hedges [Abstract]
Long-term debt	$ 650,000,000
Debt Fixed Rate	5.25%
Cash flow hedge
Interest Rate Cash Flow Hedges [Abstract]
Swap notional amount	$ 2,658,203,000
Cash flow hedge | Celebrity Reflection term loan
Interest Rate Cash Flow Hedges [Abstract]
Swap notional amount	$ 218,167,000
All-in Swap Fixed Rate	2.85%
Cash flow hedge | Quantum of the Seas term loan
Interest Rate Cash Flow Hedges [Abstract]
Swap notional amount	$ 367,500,000
All-in Swap Fixed Rate	3.74%
Cash flow hedge | Anthem of the Seas term loan
Interest Rate Cash Flow Hedges [Abstract]
Swap notional amount	$ 392,708,000
All-in Swap Fixed Rate	3.86%
Cash flow hedge | Ovation of the Seas term loan
Interest Rate Cash Flow Hedges [Abstract]
Swap notional amount	$ 518,750,000
All-in Swap Fixed Rate	3.16%
Cash flow hedge | Harmony of the Seas term loan
Interest Rate Cash Flow Hedges [Abstract]
Swap notional amount	$ 509,411,000	[1]
All-in Swap Fixed Rate	2.26%	[1],[2]
Cash flow hedge | Odyssey of the Seas term loan
Interest Rate Cash Flow Hedges [Abstract]
Swap notional amount	$ 460,000,000	[3]
All-in Swap Fixed Rate	3.21%	[3]
Cash flow hedge | Odyssey of the Seas term loan
Interest Rate Cash Flow Hedges [Abstract]
Swap notional amount	$ 191,667,000	[3],[4]
All-in Swap Fixed Rate	2.84%	[3]
LIBOR | Fair Value Hedging | Oasis of the Seas term loan
Interest Rate Fair Value Hedges [Abstract]
Swap Floating Rate: LIBOR plus	3.87%
All-in swap floating rate	4.12%
LIBOR | Fair Value Hedging | Unsecured senior notes
Interest Rate Fair Value Hedges [Abstract]
Swap Floating Rate: LIBOR plus	3.63%
All-in swap floating rate	3.83%
LIBOR | Cash flow hedge | Celebrity Reflection term loan
Interest Rate Cash Flow Hedges [Abstract]
Debt Floating Rate	0.40%
LIBOR | Cash flow hedge | Quantum of the Seas term loan
Interest Rate Cash Flow Hedges [Abstract]
Debt Floating Rate	1.30%
LIBOR | Cash flow hedge | Anthem of the Seas term loan
Interest Rate Cash Flow Hedges [Abstract]
Debt Floating Rate	1.30%
LIBOR | Cash flow hedge | Ovation of the Seas term loan
Interest Rate Cash Flow Hedges [Abstract]
Debt Floating Rate	1.00%
LIBOR | Cash flow hedge | Odyssey of the Seas term loan
Interest Rate Cash Flow Hedges [Abstract]
Debt Floating Rate	0.95%	[3]
LIBOR | Cash flow hedge | Odyssey of the Seas term loan
Interest Rate Cash Flow Hedges [Abstract]
Debt Floating Rate	0.95%	[3]
EURIBOR | Cash flow hedge | Harmony of the Seas term loan
Interest Rate Cash Flow Hedges [Abstract]
Debt Floating Rate	1.15%	[1]

[1] Interest rate swap agreements hedging the Euro-denominated term loan for Harmony of the Seas include EURIBOR zero-floor matching the hedged debt EURIBOR zero-floor. Amount presented is based on the exchange rate as of March 31, 2021.

[2] Inputs other than quoted prices included within Level 1 that are observable for the liability, either directly or indirectly. For unsecured revolving credit facilities and unsecured term loans, fair value is determined utilizing the income valuation approach. This valuation model takes into account the contract terms of our debt such as the debt maturity and the interest rate on the debt. The valuation model also takes into account the creditworthiness of the Company.

[3] Interest rate swap agreements hedging the term loan of Odyssey of the Seas include LIBOR zero-floors matching the debt LIBOR zero-floor. The effective dates of the $460.0 million and $191.7 million interest rate swap agreements are October 2020 and October 2022, respectively. The unsecured term loan for the financing of Odyssey of the Seas was drawn on March 2021.

[4] Consists of foreign currency forward contracts, interest rate swaps and fuel swaps. Refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.

XML

Fair Value Measurements and Derivative Instruments - Fuel Price Risk (Details) - Fuel Swap Agreements $ in Millions	3 Months Ended
	Mar. 31, 2021 USD ($) T t	Mar. 31, 2020 USD ($) T	Dec. 31, 2020 T t
Derivative Instruments
Discontinued cash flow hedge, nonmonetary amount	48,000	212,000
Estimated unrealized net loss associated with cash flow hedges pertaining to fuel swap agreements expected to be reclassified to earnings from accumulated other comprehensive income loss | $	$ 8.9
Other income (expense)
Derivative Instruments
Reclassification | $	$ 4.4	$ 54.9
2021
Derivative Instruments
Fuel Swap Agreements (metric tons)	284,050		385,050
Percentage of projected requirements	43.00%		40.00%
2021 | Not Designated as Hedging Instrument
Derivative Instruments
Fuel Swap Agreements (metric tons) | t	172,400		229,850
2022
Derivative Instruments
Fuel Swap Agreements (metric tons)	389,650		389,650
Percentage of projected requirements	25.00%		23.00%
2022 | Not Designated as Hedging Instrument
Derivative Instruments
Fuel Swap Agreements (metric tons) | t	14,650		14,650
2023
Derivative Instruments
Fuel Swap Agreements (metric tons)	82,400		82,400
Percentage of projected requirements	5.00%		5.00%

XML

Fair Value Measurements and Derivative Instruments - Balance Sheet (Details) - USD ($) $ in Thousands		Mar. 31, 2021	Dec. 31, 2020
Asset Derivatives
Asset Derivatives		$ 72,900	$ 108,539
Liability Derivatives
Liability Derivatives		196,293	259,705
Designated as Hedging Instrument
Asset Derivatives
Asset Derivatives	[1]	69,735	107,705
Liability Derivatives
Liability Derivatives	[1]	177,905	240,573
Notional Disclosures
Carrying Amount of the Hedged Liabilities		662,822	700,331
Cumulative amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liabilities		14,582	17,512
Not Designated as Hedging Instrument
Asset Derivatives
Asset Derivatives		3,165	834
Liability Derivatives
Liability Derivatives		18,388	19,132
Interest rate swaps | Designated as Hedging Instrument | Other assets
Asset Derivatives
Asset Derivatives	[1]	16,152	17,271
Interest rate swaps | Designated as Hedging Instrument | Derivative financial instruments
Asset Derivatives
Asset Derivatives		149	261
Liability Derivatives
Liability Derivatives		0	0
Interest rate swaps | Designated as Hedging Instrument | Other long-term liabilities
Liability Derivatives
Liability Derivatives	[1]	97,981	144,653
Foreign currency forward contracts | Designated as Hedging Instrument | Other assets
Asset Derivatives
Asset Derivatives	[1]	5,842	20,836
Foreign currency forward contracts | Designated as Hedging Instrument | Derivative financial instruments
Asset Derivatives
Asset Derivatives	[1]	30,268	63,894
Liability Derivatives
Liability Derivatives	[1]	26,903	13,294
Foreign currency forward contracts | Designated as Hedging Instrument | Other long-term liabilities
Liability Derivatives
Liability Derivatives	[1]	23,032	7,306
Foreign currency forward contracts | Not Designated as Hedging Instrument | Other assets
Asset Derivatives
Asset Derivatives		0	0
Foreign currency forward contracts | Not Designated as Hedging Instrument | Derivative financial instruments
Asset Derivatives
Asset Derivatives		1,201	0
Liability Derivatives
Liability Derivatives		4,284	160
Foreign currency forward contracts | Not Designated as Hedging Instrument | Other long-term liabilities
Liability Derivatives
Liability Derivatives		0	0
Fuel swaps | Designated as Hedging Instrument | Other assets
Asset Derivatives
Asset Derivatives	[1]	2,225	350
Fuel swaps | Designated as Hedging Instrument | Derivative financial instruments
Asset Derivatives
Asset Derivatives	[1]	15,099	5,093
Liability Derivatives
Liability Derivatives	[1]	9,135	25,203
Fuel swaps | Designated as Hedging Instrument | Other long-term liabilities
Liability Derivatives
Liability Derivatives	[1]	20,854	50,117
Fuel swaps | Not Designated as Hedging Instrument | Other assets
Asset Derivatives
Asset Derivatives		29	0
Fuel swaps | Not Designated as Hedging Instrument | Derivative financial instruments
Asset Derivatives
Asset Derivatives		1,935	834
Liability Derivatives
Liability Derivatives		13,076	18,028
Fuel swaps | Not Designated as Hedging Instrument | Other long-term liabilities
Liability Derivatives
Liability Derivatives		$ 1,028	$ 944

[1] Accounting Standard Codification 815-20 “Derivatives and Hedging.”

XML

Fair Value Measurements and Derivative Instruments - Income Statement Hedging Instruments (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Effect of derivative instruments involved in hedging on the consolidated financial statements
Fuel	$ 41,822	$ 194,268
Depreciation and amortization	310,166	324,330
Interest Income (Expense)	(267,653)	(87,377)
Other income (expense)	5,033	(32,859)
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	(11,229)	(22,380)
Interest Contracts | Interest expense, net of interest capitalized
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	(9,509)	(3,391)
Fuel swaps | Fuel
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	3,759	(14,233)
Fuel swaps | Other income (expense)
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	(407)	344
Foreign exchange contracts | Depreciation and amortization expenses
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	(3,781)	(3,337)
Foreign exchange contracts | Other income (expense)
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	(1,291)	(1,763)
Interest rate swaps | Interest expense, net of interest capitalized
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	(9,509)	(3,391)
Fair Value Hedging
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Recognized in Income on Hedged Item	2,930	(21,330)
Amount of Gain (Loss) Recognized in Income on Derivative	(552)	20,430
Fair Value Hedging | Interest Contracts | Interest expense, net of interest capitalized
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Recognized in Income on Hedged Item	2,930	(21,330)
Amount of Gain (Loss) Recognized in Income on Derivative	(552)	20,430
Fair Value Hedging | Interest Contracts | Other income (expense)
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Recognized in Income on Hedged Item	0	0
Amount of Gain (Loss) Recognized in Income on Derivative	0	0
Fair Value Hedging | Interest rate swaps | Interest expense, net of interest capitalized
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Recognized in Income on Hedged Item	2,930	(21,330)
Amount of Gain (Loss) Recognized in Income on Derivative	$ (552)	$ 20,430

XML

Fair Value Measurements and Derivative Instruments - Balance Sheet Hedging Instruments (Details) - Foreign currency debt - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2021	Dec. 31, 2020
Derivative Instruments
Carrying value of non-derivative instrument designated as hedging instrument	$ 132,826	$ 263,031
Current portion of debt
Derivative Instruments
Carrying value of non-derivative instrument designated as hedging instrument	0	43,696
Long-term debt
Derivative Instruments
Carrying value of non-derivative instrument designated as hedging instrument	$ 132,826	$ 219,335

XML

Fair Value Measurements and Derivative Instruments - Designated Cash Flow Hedges (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss on Derivatives	$ (927)	$ (322,985)
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	(11,229)	(22,380)
Derivative Instruments, Gain (Loss) Recognized in Income, Ineffective Portion and Amount Excluded from Effectiveness Testing, Net [Abstract]
Net inception fair value at January 1, 2021			$ (1,915)
Amount of gain recognized in income on derivatives for the period ended March 31, 2021	1,637
Amount of gain (loss) remaining to be amortized in accumulated other comprehensive loss, as of March 31, 2021	(993)
Fair value at March 31, 2021	(1,271)
Interest rate swaps
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss on Derivatives	43,408	(52,595)
Interest rate swaps | Interest expense, net of interest capitalized
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	(9,509)	(3,391)
Foreign currency forward contracts
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss on Derivatives	(99,581)	(100,014)
Foreign currency forward contracts | Depreciation and amortization expenses
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	(3,781)	(3,337)
Foreign currency forward contracts
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss on Derivatives	0	0
Foreign currency forward contracts | Other income (expense)
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	(1,291)	(1,763)
Fuel swaps
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss on Derivatives	0	0
Fuel swaps | Other income (expense)
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	(407)	344
Fuel swaps | Fuel
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	3,759	(14,233)
Fuel Swap
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss on Derivatives	55,246	(170,376)
Fuel Swap | Fuel
Effect of derivative instruments involved in hedging on the consolidated financial statements
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income	$ 3,759	$ (14,233)

XML

Fair Value Measurements and Derivative Instruments - Non-Derivative Net Investment (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Foreign currency debt
Net investment hedge
Amount of Gain (Loss) Recognized in Other Comprehensive Loss	$ 5,822	$ 7,489

XML

Fair Value Measurements and Derivative Instruments - Derivatives Not Designated as Hedging Instruments (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Derivative Instruments
Amount of Gain (Loss) Recognized in Income on Derivatives	$ (843)	$ (119,882)
Foreign currency forward contracts | Other income (expense)
Derivative Instruments
Amount of Gain (Loss) Recognized in Income on Derivatives	(13,498)	(52,676)
Fuel swaps | Other income (expense)
Derivative Instruments
Amount of Gain (Loss) Recognized in Income on Derivatives	$ 12,655	$ (67,206)

XML

Fair Value Measurements and Derivative Instruments - Credit Features (Details) $ in Millions	Mar. 31, 2021 USD ($) derivative
Derivative Instruments
Number of interest rate derivative hedges requiring collateral to be posted | derivative	7
Debt instrument, collateral amount	$ 172.7
Interest Contracts
Derivative Instruments
Debt instrument, collateral amount	$ 71.6

XML

Restructuring Charges - Narrative (Details) - USD ($) $ in Millions	1 Months Ended	12 Months Ended
	Apr. 30, 2020	Dec. 31, 2020
Restructuring and Related Activities [Abstract]
Percentage of workforce that was reduced or furloughed	23.00%
Severance costs		$ 28.0

XML

Restructuring Charges - Summary of Changes (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2021 USD ($)
Restructuring Reserve [Roll Forward]
Beginning balance January 1, 2021	$ 4,257
Accruals	3,468
Payments	0
Ending balance March 31, 2021	7,725
Cumulative Charges Incurred	31,421
Expected Additional Expenses to be Incurred	0
Termination benefits
Restructuring Reserve [Roll Forward]
Beginning balance January 1, 2021	4,257
Accruals	3,468
Payments	0
Ending balance March 31, 2021	7,725
Cumulative Charges Incurred	31,421
Expected Additional Expenses to be Incurred	$ 0