Cruise Stocks stumbled Monday amid a broader market rout after an appeals court handed down a decision that will temporarily keep in place pandemic restrictions on the industry.
The U.S. Court of Appeals for the 11th Circuit on Saturday reversed a ruling that sided with a Florida lawsuit challenging the Centers for Disease Control and Prevention’s ability to place restrictions on the industry.
The 2-1 decision came hours before the lower court’s ruling was to go into effect and amid the spread of the Covid delta variant. The number of new cases in the U.S. is rising, particularly among states with low vaccination rates.
Shares of Carnival Cruises fell 5.7% closing at $19.72, Royal Caribbean fell 3.98% closing at $69.51 and Norwegian Cruise Line fell 5.45% closing at $21.87. The S&P 500 index was down 1.6%.
Airline and hotel stocks also fell despite recent increased demand in travel, as the market reacted to the spread of the Covid delta variant, now the dominant strain in the U.S.
Last month, a federal judge sided with Florida, deciding that the CDC did not have the authority to prevent the resumption of cruises or govern cruise sailings in, out or within the state. Florida Attorney General Ashley Moody, a Republican, filed the lawsuit in April seeking to lift restrictions on the cruise industry that have been in place since March 2020.
Shares of the three cruise operators have been falling in recent weeks, despite making gains earlier this year as cruises began to resume operations.
Shares of Carnival Cruises have fallen more than 37% from the stock’s 52-week high of $31.52, which it reached on June 8. The stock is down more than 9% year to date, putting its market cap at nearly $23 billion.
Royal Caribbean stock has fallen nearly 30% from its 52-week high of $99.24, which it reached on Feb. 25. The stock is down nearly 8% this year putting the cruise operator’s market cap at nearly $18 billion
Norwegian Cruise Line stock has fallen nearly 37% from its 52-week high of $34.48, which it reached on March 4. The stock fell more than 14% this year putting its market cap at more than $8 billion.
At the height of the pandemic, there were several high profile outbreaks aboard cruise ships, prompting the CDC to impose strict guidelines on the industry. The cruise industry was among one of the last sectors to return to pre-pandemic operations as the CDC recently allowed cruises to begin sailing again, with strict health protocols.
On Friday, Canada announced it will allow cruises to resume at the beginning of November, moving up its original date from February 2022.
Last week, Norwegian Cruise Line sued Florida’s surgeon general to end the state’s vaccine passport ban, which prevents businesses from requiring customers to show proof of vaccination. In its complaint, the cruise operator claimed the ban hurts its ability to enforce CDC guidelines and prevent the spread of the virus onboard its ship and could force it to cancel upcoming cruises.
Norwegian’s first sailing from the U.S. is scheduled for Aug. 7 and its first sailing from Florida is set for Aug. 15.
Royal Caribbean and Carnival Cruises have resumed sailings from U.S. ports, even allowing unvaccinated passengers aboard Florida ships, but unvaccinated passengers are required to purchase travel insurance to cover Covid-related costs.