filings.toolsItem 1. Financial Statements
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Item 1. Financial Statements
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited; in millions, except per share data)
| Quarter Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Passenger ticket revenues | $ | 3,199 | $ | 2,887 | |||||||
| Onboard and other revenues | 1,339 | 1,223 | |||||||||
| Total revenues | 4,538 | 4,110 | |||||||||
| Cruise operating expenses: | |||||||||||
| Commissions, transportation and other | 606 | 572 | |||||||||
| Onboard and other | 262 | 244 | |||||||||
| Payroll and related | 329 | 313 | |||||||||
| Food | 246 | 225 | |||||||||
| Fuel | 279 | 282 | |||||||||
| Other operating | 561 | 516 | |||||||||
| Total cruise operating expenses | 2,283 | 2,152 | |||||||||
| Marketing, selling and administrative expenses | 508 | 466 | |||||||||
| Depreciation and amortization expenses | 417 | 393 | |||||||||
| Operating Income | 1,329 | 1,099 | |||||||||
| Other income (expense): | |||||||||||
| Interest income | 12 | 4 | |||||||||
| Interest expense, net of interest capitalized | (228) | (298) | |||||||||
| Equity investment income | 107 | 56 | |||||||||
| Other expense | (6) | (3) | |||||||||
| (115) | (241) | ||||||||||
| Net Income | 1,214 | 858 | |||||||||
| Less: Net Income attributable to noncontrolling interest | 5 | 4 | |||||||||
| Net Income attributable to Royal Caribbean Cruises Ltd. | $ | 1,210 | $ | 854 | |||||||
| Earnings per Share: | |||||||||||
| Basic | $ | 4.45 | $ | 3.32 | |||||||
| Diluted | $ | 4.41 | $ | 3.11 | |||||||
| Weighted-Average Shares Outstanding: | |||||||||||
| Basic | 272 | 257 | |||||||||
| Diluted | 275 | 281 | |||||||||
| Comprehensive Income (Loss) | |||||||||||
| Net Income | $ | 1,214 | $ | 858 | |||||||
| Other comprehensive income (loss): | |||||||||||
| Foreign currency translation adjustments | (9) | 6 | |||||||||
| Change in defined benefit plans | 4 | (12) | |||||||||
| Gain (loss) on cash flow derivative hedges | 181 | (31) | |||||||||
| Total other comprehensive income (loss) | 176 | (37) | |||||||||
| Comprehensive Income | 1,391 | 821 | |||||||||
| Less: Comprehensive Income attributable to noncontrolling interest | 5 | 4 | |||||||||
| Comprehensive Income attributable to Royal Caribbean Cruises Ltd. | $ | 1,386 | $ | 817 |
Certain amounts may not add due to use of rounded numbers.
The accompanying notes are an integral part of these consolidated financial statements
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited; in millions, except per share data)
| Six Months Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Passenger ticket revenues | $ | 5,942 | $ | 5,429 | |||||||
| Onboard and other revenues | 2,595 | 2,409 | |||||||||
| Total revenues | 8,537 | 7,838 | |||||||||
| Cruise operating expenses: | |||||||||||
| Commissions, transportation and other | 1,128 | 1,070 | |||||||||
| Onboard and other | 463 | 437 | |||||||||
| Payroll and related | 669 | 631 | |||||||||
| Food | 486 | 446 | |||||||||
| Fuel | 557 | 586 | |||||||||
| Other operating | 1,061 | 1,039 | |||||||||
| Total cruise operating expenses | 4,362 | 4,209 | |||||||||
| Marketing, selling and administrative expenses | 1,071 | 1,001 | |||||||||
| Depreciation and amortization expenses | 829 | 780 | |||||||||
| Operating Income | 2,275 | 1,848 | |||||||||
| Other income (expense): | |||||||||||
| Interest income | 15 | 9 | |||||||||
| Interest expense, net of interest capitalized | (477) | (721) | |||||||||
| Equity investment income | 155 | 97 | |||||||||
| Other expense | (17) | (11) | |||||||||
| (325) | (626) | ||||||||||
| Net Income | 1,950 | 1,222 | |||||||||
| Less: Net Income attributable to noncontrolling interest | 10 | 8 | |||||||||
| Net Income attributable to Royal Caribbean Cruises Ltd. | $ | 1,940 | $ | 1,214 | |||||||
| Earnings per Share: | |||||||||||
| Basic | $ | 7.17 | $ | 4.72 | |||||||
| Diluted | $ | 7.10 | $ | 4.46 | |||||||
| Weighted-Average Shares Outstanding: | |||||||||||
| Basic | 270 | 257 | |||||||||
| Diluted | 275 | 281 | |||||||||
| Comprehensive Income (Loss) | |||||||||||
| Net Income | $ | 1,950 | $ | 1,222 | |||||||
| Other comprehensive income (loss): | |||||||||||
| Foreign currency translation adjustments | (26) | 10 | |||||||||
| Change in defined benefit plans | — | (3) | |||||||||
| Gain on cash flow derivative hedges | 309 | 13 | |||||||||
| Total other comprehensive income | 283 | 20 | |||||||||
| Comprehensive Income | 2,233 | 1,242 | |||||||||
| Less: Comprehensive Income attributable to noncontrolling interest | 10 | 8 | |||||||||
| Comprehensive Income attributable to Royal Caribbean Cruises Ltd. | $ | 2,222 | $ | 1,234 |
Certain amounts may not add due to use of rounded numbers.
The accompanying notes are an integral part of these consolidated financial statements
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
| As of | |||||||||||
| June 30, | December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| (unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 735 | $ | 388 | |||||||
| Trade and other receivables, net | 431 | 371 | |||||||||
| Inventories | 247 | 265 | |||||||||
| Prepaid expenses and other assets | 785 | 670 | |||||||||
| Derivative financial instruments | 252 | 11 | |||||||||
| Total current assets | 2,450 | 1,705 | |||||||||
| Property and equipment, net | 32,351 | 31,831 | |||||||||
| Operating lease right-of-use assets | 656 | 677 | |||||||||
| Goodwill | 808 | 808 | |||||||||
| Other assets | 2,277 | 2,049 | |||||||||
| Total assets | $ | 38,542 | $ | 37,070 | |||||||
| Liabilities and Shareholders’ Equity | |||||||||||
| Current liabilities | |||||||||||
| Current portion of long-term debt | $ | 1,402 | $ | 1,603 | |||||||
| Current portion of operating lease liabilities | 84 | 74 | |||||||||
| Accounts payable | 959 | 919 | |||||||||
| Accrued expenses and other liabilities | 1,701 | 1,635 | |||||||||
| Derivative financial instruments | 48 | 90 | |||||||||
| Customer deposits | 6,379 | 5,496 | |||||||||
| Total current liabilities | 10,573 | 9,817 | |||||||||
| Long-term debt | 17,612 | 18,473 | |||||||||
| Long-term operating lease liabilities | 639 | 670 | |||||||||
| Other long-term liabilities | 358 | 375 | |||||||||
| Total liabilities | 29,182 | 29,335 | |||||||||
| 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; 301,198,157 and 297,368,235 shares issued, June 30, 2025 and December 31, 2024, respectively) | 3 | 3 | |||||||||
| Paid-in capital | 7,874 | 7,831 | |||||||||
| Retained earnings | 4,144 | 2,612 | |||||||||
| Accumulated other comprehensive loss | (519) | (802) | |||||||||
| Treasury stock (29,575,028 and 28,468,430 common shares at cost, June 30, 2025 and December 31, 2024, respectively) | (2,333) | (2,081) | |||||||||
| Total shareholders’ equity attributable to Royal Caribbean Cruises Ltd. | 9,169 | 7,563 | |||||||||
| Noncontrolling interests | 191 | 172 | |||||||||
| Total shareholders’ equity | 9,360 | 7,735 | |||||||||
| Total liabilities and shareholders’ equity | $ | 38,542 | $ | 37,070 |
The accompanying notes are an integral part of these consolidated financial statements
| ROYAL CARIBBEAN CRUISES LTD. | |||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| (unaudited, in millions) | |||||||||||
| Six Months Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Operating Activities | |||||||||||
| Net Income | $ | 1,950 | $ | 1,222 | |||||||
| Adjustments: | |||||||||||
| Depreciation and amortization | 829 | 780 | |||||||||
| Net deferred income tax expense | 4 | 5 | |||||||||
| (Gain) loss on derivative instruments not designated as hedges | (56) | 40 | |||||||||
| Share-based compensation expense | 92 | 83 | |||||||||
| Equity investment income | (155) | (97) | |||||||||
| Amortization of debt issuance costs, discounts and premiums | 46 | 51 | |||||||||
| Loss on extinguishment of debt and inducement expense | 10 | 133 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Increase in trade and other receivables, net | (51) | (16) | |||||||||
| Decrease in inventories | 17 | 6 | |||||||||
| Increase in prepaid expenses and other assets | (142) | (196) | |||||||||
| Increase in accounts payable trade | 24 | 18 | |||||||||
| Decrease in accrued expenses and other liabilities | (21) | (47) | |||||||||
| Increase in customer deposits | 883 | 934 | |||||||||
| Other, net | (57) | (15) | |||||||||
| Net cash provided by operating activities | 3,373 | 2,901 | |||||||||
| Investing Activities | |||||||||||
| Purchases of property and equipment | (1,264) | (2,382) | |||||||||
| Cash received on settlement of derivative financial instruments | 111 | 12 | |||||||||
| Cash paid on settlement of derivative financial instruments | (11) | (92) | |||||||||
| Investments in and loans to unconsolidated affiliates | (77) | (20) | |||||||||
| Cash received on loans from unconsolidated affiliates | 70 | 9 | |||||||||
| Proceeds from sale of unconsolidated affiliates | 15 | — | |||||||||
| Other, net | 10 | (21) | |||||||||
| Net cash used in investing activities | (1,146) | (2,494) | |||||||||
| Financing Activities | |||||||||||
| Debt proceeds | 730 | 4,698 | |||||||||
| Debt issuance costs | (28) | (87) | |||||||||
| Repayments of debt | (1,945) | (4,974) | |||||||||
| Premium on repayment of debt | (2) | (104) | |||||||||
| Repurchase of common stock | (241) | — | |||||||||
| Dividends paid | (348) | — | |||||||||
| Other, net | (53) | (44) | |||||||||
| Net cash used in financing activities | (1,887) | (511) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 7 | (2) | |||||||||
| Net increase (decrease) in cash and cash equivalents | 347 | (106) | |||||||||
| Cash and cash equivalents at beginning of period | 388 | 497 | |||||||||
| Cash and cash equivalents at end of period | $ | 735 | $ | 391 |
The accompanying notes are an integral part of these consolidated financial statements
| ROYAL CARIBBEAN CRUISES LTD. | |||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
| (unaudited, in millions) | |||||||||||
| Six Months Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Supplemental Disclosure | |||||||||||
| Cash paid during the period for: | |||||||||||
| Interest, net of amount capitalized | $ | 443 | $ | 621 | |||||||
| Non-cash Investing Activities | |||||||||||
| Purchase of property and equipment included in accounts payable and accrued expenses and other liabilities | $ | 61 | $ | 34 | |||||||
| Non-cash Financing Activity | |||||||||||
| Non-cash inducement on convertible notes exchange | $ | 7 | $ | — |
The accompanying notes are an integral part of these consolidated financial statements
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(unaudited; in millions)
| Common Stock | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Noncontrolling Interest | Total Shareholders' Equity | |||||||||||||||||||||||||||||||||||
| Balance at April 1, 2025 | $ | 3 | $ | 7,846 | $ | 3,139 | $ | (695) | $ | (2,333) | $ | 182 | $ | 8,142 | |||||||||||||||||||||||||||
| Activity related to employee stock plans | — | 42 | — | — | — | — | 42 | ||||||||||||||||||||||||||||||||||
| Common stock dividends, $0.75 per share | — | — | (205) | — | — | — | (205) | ||||||||||||||||||||||||||||||||||
| Convertible notes settlements | — | (14) | — | — | — | — | (14) | ||||||||||||||||||||||||||||||||||
| Changes related to cash flow derivative hedges | — | — | — | 181 | — | — | 181 | ||||||||||||||||||||||||||||||||||
| Change in defined benefit plans | — | — | — | 4 | — | — | 4 | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | (9) | — | — | (9) | ||||||||||||||||||||||||||||||||||
| Net Income attributable to noncontrolling interest | — | — | — | — | — | 5 | 5 | ||||||||||||||||||||||||||||||||||
| Other activity attributable to noncontrolling interest | — | — | — | — | — | 4 | 4 | ||||||||||||||||||||||||||||||||||
| Net Income attributable to Royal Caribbean Cruises Ltd. | — | — | 1,210 | — | — | — | 1,210 | ||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | 3 | $ | 7,874 | $ | 4,144 | $ | (519) | $ | (2,333) | $ | 191 | $ | 9,360 |
| Common Stock | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Noncontrolling Interest | Total Shareholders' Equity | |||||||||||||||||||||||||||||||||||
| Balance at January 1, 2025 | $ | 3 | $ | 7,831 | $ | 2,612 | $ | (802) | $ | (2,081) | $ | 172 | $ | 7,735 | |||||||||||||||||||||||||||
| Activity related to employee stock plans | — | 50 | — | — | — | — | 50 | ||||||||||||||||||||||||||||||||||
| Common stock dividends, $1.50 per share | — | — | (408) | — | — | — | (408) | ||||||||||||||||||||||||||||||||||
| Convertible notes settlements | — | (7) | — | — | — | — | (7) | ||||||||||||||||||||||||||||||||||
| Changes related to cash flow derivative hedges | — | — | — | 309 | — | — | 309 | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | (26) | — | — | (26) | ||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | (252) | — | (252) | ||||||||||||||||||||||||||||||||||
| Net Income attributable to noncontrolling interest | — | — | — | — | — | 10 | 10 | ||||||||||||||||||||||||||||||||||
| Other activity attributable to noncontrolling interest | — | — | — | — | — | 9 | 9 | ||||||||||||||||||||||||||||||||||
| Net Income attributable to Royal Caribbean Cruises Ltd. | — | — | 1,940 | — | — | — | 1,940 | ||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | $ | 3 | $ | 7,874 | $ | 4,144 | $ | (519) | $ | (2,333) | $ | 191 | $ | 9,360 |
The accompanying notes are an integral part of these consolidated financial statements
ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(unaudited; in millions)
| Common Stock | Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Noncontrolling Interest | Total Shareholders' Equity | |||||||||||||||||||||||||||||||||||
| Balance at April 1, 2024 | $ | 3 | $ | 7,496 | $ | 350 | $ | (617) | $ | (2,081) | $ | 174 | $ | 5,325 | |||||||||||||||||||||||||||
| Activity related to employee stock plans | — | 40 | — | — | — | — | 40 | ||||||||||||||||||||||||||||||||||
| Changes related to cash flow derivative hedges | — | — | — | (31) | — | — | (31) | ||||||||||||||||||||||||||||||||||
| Change in defined benefit plans | — | — | — | (12) | — | — | (12) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | 6 | — | — | 6 | ||||||||||||||||||||||||||||||||||
| Net Income attributable to noncontrolling interest | — | — | — | — | — | 4 | 4 | ||||||||||||||||||||||||||||||||||
| Other activity attributable to noncontrolling interest | — | — | — | — | — | (4) | (4) | ||||||||||||||||||||||||||||||||||
| Net Income attributable to Royal Caribbean Cruises Ltd. | — | — | 854 | — | — | — | 854 | ||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | 3 | 7,536 | 1,204 | (654) | (2,081) | 174 | 6,182 |
| Common Stock | Paid-in Capital | (Accumulated Deficit) Retained Earnings | Accumulated Other Comprehensive Loss | Treasury Stock | Noncontrolling Interest | Total Shareholders' Equity | |||||||||||||||||||||||||||||||||||
| Balance at January 1, 2024 | $ | 3 | $ | 7,474 | $ | (10) | $ | (674) | $ | (2,069) | $ | 175 | $ | 4,899 | |||||||||||||||||||||||||||
| Activity related to employee stock plans | — | 62 | — | — | — | — | 62 | ||||||||||||||||||||||||||||||||||
| Changes related to cash flow derivative hedges | — | — | — | 13 | — | — | 13 | ||||||||||||||||||||||||||||||||||
| Change in defined benefit plans | — | — | — | (3) | — | — | (3) | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | — | — | — | 10 | — | — | 10 | ||||||||||||||||||||||||||||||||||
| Repurchase of common stock | — | — | — | — | (12) | — | (12) | ||||||||||||||||||||||||||||||||||
| Net Income attributable to noncontrolling interest | — | — | — | — | — | 8 | 8 | ||||||||||||||||||||||||||||||||||
| Other activity attributable to noncontrolling interest | — | — | — | — | — | (9) | (9) | ||||||||||||||||||||||||||||||||||
| Net Income attributable to Royal Caribbean Cruises Ltd. | — | — | 1,214 | — | — | — | 1,214 | ||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | 3 | $ | 7,536 | $ | 1,204 | $ | (654) | $ | (2,081) | $ | 174 | $ | 6,182 |
The accompanying notes are an integral part of these consolidated financial statements
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,” “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 “Mein Schiff” 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, 2024.
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, Celebrity Cruises and Silversea Cruises (collectively, our "Global Brands"). We also own a 50% joint venture interest in TUI Cruises GmbH ("TUIC", "TUI Cruises"), which operates the German brands Mein Schiff and Hapag-Lloyd Cruises (collectively, our "Partner Brands"). We account for our investments in our Partner Brands under the equity method of accounting. Together, our Global Brands and our Partner Brands operated a combined fleet of 67 ships as of June 30, 2025. Our ships offer a selection of worldwide itineraries that call on more than 1,000 destinations in over 120 countries on all seven continents.
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 Securities and Exchange Commission 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, 2024 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 5*. Investments and Other Assets* for further information regarding our variable interest entities. 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.
Note 2**. Summary of Significant Accounting Policies**
Adoption of Accounting Pronouncements
In August 2023, the FASB issued ASU No. 2023-05, Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement. This ASU provides guidance requiring a joint venture to initially measure all contributions received upon its formation at fair value. The guidance is intended to provide users of joint venture financial statements with more decision-useful information. This ASU is effective for joint venture entities with a formation date on or after January 1, 2025 on a prospective basis. Early adoption is permitted, and joint ventures formed prior to the adoption date may elect to apply the new guidance retrospectively back to their original formation date. We adopted the new guidance effective for the fiscal year beginning January 1, 2025. The adoption of this guidance did not have a material impact to our consolidated financial statements or disclosures.
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The new guidance is intended to enhance the transparency and decision usefulness of income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. This ASU is effective for annual periods beginning after December 15, 2024 on a prospective basis with the option to apply retrospectively. We are evaluating the impact of the new guidance on disclosures to our consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosures about certain categories of expenses (including purchases of inventory, employee compensation, depreciation and intangible asset amortization) that are included in the expense captions presented on the face of the income statement, as well as disclosures about selling expenses. This new guidance is intended to provide investors with more detailed expense information in order to better understand an entity's cost structure and forecast future cash flows. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027 on a prospective basis. Early adoption and retrospective application is permitted. We are evaluating the impact of the new guidance on disclosures to our consolidated financial statements.
Note 3**. Revenue**
Revenue Recognition
Revenues are measured based on consideration specified in our contracts with customers and are recognized as the related performance obligations are satisfied.
The majority of our revenues are derived from passenger cruise contracts which are reported within Passenger ticket revenues in our consolidated statements of comprehensive income (loss). Our performance obligation under these contracts is to provide a cruise vacation in exchange for the ticket price. We receive payment before we satisfy this performance obligation and recognize revenue over the duration of each cruise, with the majority of sailings ranging from three to 14 nights.
Passenger ticket revenues include charges to our guests for port costs that vary with passenger head counts. These types of port costs, along with port costs that do not vary by passenger head counts, are included in our operating expenses. The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $318 million and $266 million for the quarters ended June 30, 2025 and 2024, respectively, and $594 million and $509 million for the six months ended June 30, 2025 and 2024, 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 cruise passengers and recognize revenue 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 millions):
| Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenues by itinerary | |||||||||||||||||||||||
| North America (1) | $ | 2,842 | $ | 2,575 | $ | 5,696 | $ | 5,265 | |||||||||||||||
| Asia/Pacific | 326 | 235 | 972 | 741 | |||||||||||||||||||
| Europe | 943 | 841 | 980 | 863 | |||||||||||||||||||
| Other regions (2) | 210 | 278 | 469 | 600 | |||||||||||||||||||
| Total revenues by itinerary | 4,321 | 3,929 | 8,117 | 7,469 | |||||||||||||||||||
| Other revenues (3) | 217 | 181 | 420 | 369 | |||||||||||||||||||
| Total revenues | $ | 4,538 | $ | 4,110 | $ | 8,537 | $ | 7,838 |
(1)Includes the United States, Canada, Mexico and the Caribbean.
(2) Includes seasonality impacted itineraries primarily in South American countries and Antarctica.
(3) 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 procurement and management related services we perform on behalf of our unconsolidated affiliates. Refer to Note 5*. Investments and 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 and six months ended June 30, 2025 and 2024, our guests were sourced from the following areas:
| Quarter Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Passenger ticket revenues: | |||||||||||
| United States | 77 | % | 79 | % | |||||||
| All other countries (1) | 23 | % | 21 | % |
| Six Months Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Passenger ticket revenues: | |||||||||||
| United States | 76 | % | 76 | % | |||||||
| All other countries (1) | 24 | % | 24 | % |
(1)No other individual country's revenue exceeded 10% for the quarters and six months ended June 30, 2025 and 2024.
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 or onboard 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. Customer deposits presented in our consolidated balance sheets include contract liabilities of $3.5 billion and $2.8 billion as of June 30, 2025 and December 31, 2024, respectively.
As of June 30, 2025, our customer deposit balance includes approximately $139 million of unredeemed future cruise credits ("FCCs"), which were mostly held by guests with bookings on sailings that were cancelled during our suspension of global cruise operations. Our FCCs are not refundable and do not have expiration dates. Based upon our analysis of historical redemption experience, we believe a portion of our FCCs are not probable of being used in future periods. Based on our current estimates, we recognized an immaterial amount of FCC breakage revenue during the quarters and six months ended June 30, 2025, and June 30, 2024. We will continue to monitor changes in redemption behavior and estimate and record revenue associated with breakage when the likelihood of the customer exercising their remaining rights becomes remote.
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.
Our credit card processing agreements require us, under certain circumstances, to maintain a reserve that can be satisfied by posting collateral. As of June 30, 2025, none of our credit card processors required us to maintain a reserve.
We have contract assets that are conditional rights to consideration for satisfying the construction services performance obligations under a service concession arrangement. As of June 30, 2025 and December 31, 2024, our contract assets were $169 million and $161 million, respectively, 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 advisor commissions and prepaid credit and debit card fees 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 advisor commissions and prepaid credit and debit card fees were $304 million and $252 million as of June 30, 2025 and December 31, 2024, respectively. Our prepaid travel advisor commissions and prepaid credit and debit card fees are recognized at the time of revenue recognition or at the time of voyage cancellation, and are reported primarily within Commissions, transportation and other in our consolidated statements of comprehensive income (loss).
Note 4. Earnings Per Share
Basic and diluted earnings per share is as follows (in millions, except per share data):
| Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net Income attributable to Royal Caribbean Cruises Ltd. for basic earnings per share | $ | 1,210 | $ | 854 | $ | 1,940 | $ | 1,214 | |||||||||||||||
| Add convertible notes interest and inducement expense | 1 | 19 | 16 | 38 | |||||||||||||||||||
| Net Income attributable to Royal Caribbean Cruises Ltd. for diluted earnings per share | 1,211 | 873 | 1,956 | 1,252 | |||||||||||||||||||
| Weighted-average common shares outstanding | 272 | 257 | 270 | 257 | |||||||||||||||||||
| Dilutive effect of stock-based awards | 1 | 1 | 1 | 1 | |||||||||||||||||||
| Dilutive effect of convertible notes | 2 | 23 | 4 | 23 | |||||||||||||||||||
| Diluted weighted-average shares outstanding | 275 | 281 | 275 | 281 | |||||||||||||||||||
| Basic earnings per share (1) | $ | 4.45 | $ | 3.32 | $ | 7.17 | $ | 4.72 | |||||||||||||||
| Diluted earnings per share (1) | $ | 4.41 | $ | 3.11 | $ | 7.10 | $ | 4.46 |
(1) Per share amounts may not calculate due to the use of rounded numbers.
There were no antidilutive shares for the quarters and six months ended June 30, 2025, and 2024, respectively, from our stock-based awards and convertible notes.
Note 5**. Investments and 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 hold equity interests in ventures related to our cruise operations. We account for the majority of these investments as either an equity method investment or a controlled subsidiary.
Our partnership with iCON Infrastructure Partners VI, L.P. ("iCON"), owns, develops, and manages cruise terminal facilities and infrastructure in key ports of call, initially including several development projects in Italy and Spain. In addition, the partnership continues to pursue additional port infrastructure developments, including future plans to own, develop, and manage an infrastructure project in the U.S. Virgin Islands.
Unconsolidated investments ("equity method investments")
We have determined that TUI Cruises ("TUIC"), our 50%-owned joint venture, which operates the brands Mein Schiff and Hapag-Lloyd Cruises, is a VIE. 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 June 30, 2025, the net book value of our investment in TUIC was $1.0 billion, primarily consisting of $983 million in equity and a loan of €47 million, or approximately $55 million based on the exchange rate at June 30, 2025. As of December 31, 2024, the net book value of our investment in TUIC was $814 million, primarily consisting of $749 million in equity and a loan of €55 million, or approximately $57 million based on the exchange rate at December 31, 2024. 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 scheduled to mature in April 2026. This loan is 50% guaranteed by TUI AG and is secured by a first priority mortgage on the ship.
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 TUIC 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.
We have determined that Grand Bahama Shipyard Ltd. ("Grand Bahama"), a ship repair and maintenance facility in which we have approximately 33% 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 and account for this investment under the equity method of accounting.
Floating Docks S. DE RL. (“Floating Docks”), our approximately 33%-owned joint venture with the other shareholders of Grand Bahama, will construct two floating drydocks, the first was delivered in June 2025 and the second is expected to be delivered in early 2026. These floating drydocks will be novated to Grand Bahama and allow it to service the entire range of cruise ships in operation and under construction, as well as much of the world’s commercial shipping fleet. We and our joint venture partners have each guaranteed 33% of certain installment payments payable by Floating Docks under the drydock and related construction contracts, which have been and continue to be contingent on the achievement of certain construction milestones, resulting in our remaining payment guarantees being immaterial as of June 30, 2025. Our investment in Floating Docks, including loans, is $102 million as of June 30, 2025.
We have determined that Floating Docks is a VIE. We have determined that we are not the primary beneficiary of Floating Docks since we believe that the power to direct the activities that most significantly impact Floating Docks' economic performance is shared between ourselves and our joint venture partners. All the significant operating and financial decisions of Floating Docks require the consent of all parties which we believe creates shared power over Floating Docks. Accordingly, we do not consolidate this entity and account for this investment under the equity method of accounting.
In June 2025, we sold one-third of our ownership interests in both Grand Bahama and Floating Docks. Our noncontrolling interests in Grand Bahama and Floating Docks were reduced from 49% and 50%, respectively, at March 31, 2025 to approximately 33% of each as of June 30, 2025. The sale did not have a material impact to our consolidated financial statements.
The following tables set forth information regarding our investments accounted for under the equity method of accounting, including the entities discussed above (in millions):
| Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Share of equity income from investments | $ | 107 | $ | 56 | $ | 155 | $ | 97 | |||||||||||||||
| As of June 30, 2025 | As of December 31, 2024 | ||||||||||
| Total notes receivable due from equity investments | $ | 158 | $ | 138 | |||||||
| Less-current portion (1) | 56 | 17 | |||||||||
| Long-term portion (2) | $ | 102 | $ | 121 |
(1)Included within Trade and other receivables, net in our consolidated balance sheets.
(2)Included within Other assets in our consolidated balance sheets.
Consolidated investments ("controlled subsidiaries")
As described above, we hold equity interests in ventures related to our cruise operations. We account for these investments as a controlled subsidiary when we determine we are the primary beneficiary.
Note 6**. Debt**
Debt consists of the following (in millions):
| Weighted Average Rate (1) | Maturities Through | As of June 30, 2025 | As of December 31, 2024 | |||||||||||||||||||||||
| Fixed rate debt: | ||||||||||||||||||||||||||
| Unsecured senior notes | 5.59% | 2026 - 2033 | $ | 9,699 | $ | 9,699 | ||||||||||||||||||||
| Unsecured term loans | 3.25% | 2027 - 2036 | 7,332 | 7,687 | ||||||||||||||||||||||
| Convertible notes | 6.00% | 2025 | 106 | 322 | ||||||||||||||||||||||
| Total fixed rate debt | 17,137 | 17,708 | ||||||||||||||||||||||||
| Variable rate debt: | ||||||||||||||||||||||||||
| Unsecured revolving credit facilities (2) | —% | 2028 / 2030 | — | 340 | ||||||||||||||||||||||
| USD unsecured term loans | 5.67% | 2026 - 2037 | 2,046 | 2,227 | ||||||||||||||||||||||
| Euro unsecured term loan | 3.28% | 2028 | 205 | 212 | ||||||||||||||||||||||
| Total variable rate debt | 2,251 | 2,779 | ||||||||||||||||||||||||
| Finance lease liabilities | 115 | 117 | ||||||||||||||||||||||||
| Total debt (3) | 19,503 | 20,604 | ||||||||||||||||||||||||
| Less: unamortized debt issuance costs | (489) | (528) | ||||||||||||||||||||||||
| Total debt, net of unamortized debt issuance costs | 19,014 | 20,076 | ||||||||||||||||||||||||
| Less—current portion | (1,402) | (1,603) | ||||||||||||||||||||||||
| Long-term portion | $ | 17,612 | $ | 18,473 |
(1) Weighted average interest rates are based on outstanding loan balance as of June 30, 2025, and for variable rate debt include either EURIBOR or Term SOFR plus the applicable margin.
(2) Advances under our unsecured revolving credit facilities accrue interest at Term SOFR plus an interest rate margin of 1.10%. Based on applicable Term SOFR rates, as of June 30, 2025, the interest rate under the unsecured credit facilities was 5.42%. We also pay a facility fee of 0.15% of the total commitments under such facility.
(3) At June 30, 2025 and December 31, 2024, the weighted average interest rate for total debt was 4.64% and 5.03%, respectively.
Unsecured revolving credit facilities
In May 2025, we amended our two revolving credit facilities, bringing our aggregate revolving credit capacity to $6.4 billion, and extended the termination date of one of the revolving credit facilities from October 2026 to October 2030. The commitments are split evenly between the two facilities and are scheduled to mature in October 2028 and October 2030. As of June 30, 2025, our unsecured revolving credit facilities were undrawn.
Convertible Notes due 2025
In March 2025, we completed a privately negotiated exchange with a limited number of holders of the 6.00% Convertible Senior Notes due 2025. The holders exchanged approximately $213 million in aggregate principal amount for approximately 3 million shares of common stock and $214 million in cash, including accrued interest. The convertible notes exchange resulted in an immaterial induced conversion expense.
Export credit facilities and agency guarantees
In July 2025, we took delivery of Star of the Seas. To finance the delivery, we borrowed a total of $1.6 billion under the committed financing agreement, resulting in an unsecured term loan which is 95% guaranteed by Finnvera plc. The unsecured term loan amortizes semi-annually over 12 years and bears interest primarily at a fixed rate of 3.76% per annum.
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. For the majority of the loans as of June 30, 2025, 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. We amortize the fees through interest expense that are paid upfront over the life of the loan. We classify these fees within Amortization of debt issuance costs, discounts and premiums 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.
Debt covenants
Our revolving credit facilities, the majority of our term loans, and certain of our credit card processing agreements, contain covenants that require us, among other things, to maintain a fixed charge coverage ratio, and limit our net debt-to-capital ratio. As of June 30, 2025, we were in compliance with our debt covenants and we estimate we will be in compliance for the next twelve months.
Annual maturities
The following is a schedule of annual maturities on our total debt, including finance leases, as of June 30, 2025 for each of the next five years (in millions):
| Year | As of June 30, 2025 (1) | ||||
| Remainder of 2025 | $ | 755 | |||
| 2026 | 2,943 | ||||
| 2027 | 2,603 | ||||
| 2028 | 3,085 | ||||
| 2029 | 1,006 | ||||
| Thereafter | 9,111 | ||||
| $ | 19,503 |
(1) Debt denominated in other currencies is calculated based on the applicable exchange rate at June 30, 2025.
Note 7**. Leases**
Operating leases
Our operating leases primarily relate to preferred berthing arrangements, real estate, and shipboard equipment which 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 June 30, 2025 and December 31, 2024. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet. We recognize lease expense for these leases on a straight-line basis over the lease term.
The company's preferred berthing agreement with Miami-Dade County ("County") includes the development plans for the County to finance the construction of a new and improved cruise Terminal G at PortMiami. The aggregate amount of the operating lease liabilities recorded for this berthing agreement was $168 million as of June 30, 2025 and December 31, 2024, respectively. There will be future remeasurements of the operating lease as the County completes several construction milestones throughout the term of the extended lease, including an expected remeasurement in 2027 or later, when the County satisfies substantial completion of Terminal G, as the minimum lease payments will increase at such time to approximately $55 million per year, with expected 3% annual increases thereafter.
For some of our real estate leases and berthing agreements, we do have the option to extend our current lease term. For those lease agreements with renewal options, the renewal periods for real estate leases primarily range from one to 10 years and the renewal periods for berthing agreements primarily 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.
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 Term SOFR 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
Our finance leases primarily relate to buildings and surrounding land located at our Miami headquarters. Finance leases are included within Property and Equipment, net and Long-term debt with the current portion of the liability included within Current portion of long-term debt in our consolidated balance sheets as of June 30, 2025 and December 31, 2024.
The Company's master lease agreement (“Master Lease”) with the County related to the buildings and surrounding land located at our Miami headquarters is classified as a finance lease in accordance with ASC 842, Leases. The Master Lease includes two five-year options to extend the lease, which we are reasonably certain to exercise. Additionally, we previously executed a modification to the Master Lease agreement to extend its expiration from 2076 to 2077 after coming to an agreement with the County on the financing plans to finalize the development of the buildings and land. The modification of the Master Lease did not change the classification of the lease. The total aggregate amount of the finance lease liabilities recorded for this Master Lease was $107 million as of June 30, 2025 and $106 million as of December 31, 2024, respectively. The development of the new campus buildings are expected to be completed in 2026, and the lease components will be recorded within our consolidated financial statements upon commencement.
The components of lease expense were as follows (in millions):
| Consolidated Statement of Comprehensive Income (Loss) Classification | Quarter Ended June 30, 2025 | Six Months Ended June 30, 2025 | |||||||||||||||
| Lease costs: | |||||||||||||||||
| Operating lease costs | Commission, transportation and other | $ | 46 | $ | 111 | ||||||||||||
| Operating lease costs | Other operating expenses | 4 | 7 | ||||||||||||||
| Operating lease costs | Marketing, selling and administrative expenses | 4 | 9 | ||||||||||||||
| Financial lease costs: | |||||||||||||||||
| Amortization of right-of-use-assets | Depreciation and amortization expenses | 1 | 1 | ||||||||||||||
| Interest on lease liabilities | Interest expense, net of interest capitalized | 2 | 4 | ||||||||||||||
| Total lease costs | $ | 57 | $ | 132 |
| Consolidated Statement of Comprehensive Income (Loss) Classification | Quarter Ended June 30, 2024 | Six Months Ended June 30, 2024 | |||||||||||||||
| Lease costs: | |||||||||||||||||
| Operating lease costs | Commission, transportation and other | $ | 42 | $ | 113 | ||||||||||||
| Operating lease costs | Other operating expenses | 4 | 7 | ||||||||||||||
| Operating lease costs | Marketing, selling and administrative expenses | 5 | 9 | ||||||||||||||
| Financial lease costs: | |||||||||||||||||
| Amortization of right-of-use-assets | Depreciation and amortization expenses | 3 | 7 | ||||||||||||||
| Interest on lease liabilities | Interest expense, net of interest capitalized | 7 | 14 | ||||||||||||||
| Total lease costs | $ | 61 | $ | 150 |
In addition, certain of our berthing agreements include variable lease costs based on the number of passengers berthed. During the quarter and six months ended June 30, 2025, we had $27 million and $86 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss), respectively, compared to $28 million and $79 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss) during the quarter and six months ended June 30, 2024, respectively. These variable lease costs are included within the balances presented above.
The weighted average of the remaining lease terms and weighted average discount rates are as follows:
| As of June 30, 2025 | As of December 31, 2024 | ||||||||||
| Weighted average of the remaining lease term in years | |||||||||||
| Operating leases | 17.89 | 17.96 | |||||||||
| Finance leases | 48.47 | 47.54 | |||||||||
| Weighted average discount rate | |||||||||||
| Operating leases | 7.22 | % | 7.23 | % | |||||||
| Finance leases | 6.93 | % | 6.90 | % |
Supplemental cash flow information related to leases is as follows (in millions):
| Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | ||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
| Operating cash flows from operating leases | $ | 140 | $ | 138 | |||||||
| Operating cash flows from finance leases | $ | 4 | $ | 14 | |||||||
| Financing cash flows from finance leases | $ | 3 | $ | 13 |
As of June 30, 2025, maturities related to lease liabilities were as follows (in millions):
| Year | Operating Leases | Finance Leases | |||||||||
| Remainder of 2025 | $ | 70 | $ | 8 | |||||||
| 2026 | 126 | 10 | |||||||||
| 2027 | 119 | 9 | |||||||||
| 2028 | 111 | 9 | |||||||||
| 2029 | 64 | 8 | |||||||||
| Thereafter | 1,004 | 490 | |||||||||
| Total lease payments | 1,494 | 534 | |||||||||
| Less: Interest | (771) | (419) | |||||||||
| Present value of lease liabilities | $ | 723 | $ | 115 |
Note 8**. Commitments and Contingencies**
Ship Purchase Obligations
As of June 30, 2025, our Global Brands and our Partner Brands have the following ships on order:
| Ship | Shipyard | Expected delivery | Approximate Berths | |||||||||||||||||
| Royal Caribbean — | ||||||||||||||||||||
| Oasis-class: | ||||||||||||||||||||
| Unnamed | Chantiers de l'Atlantique | 2nd Quarter 2028 | 5,700 | |||||||||||||||||
| Icon-class: | ||||||||||||||||||||
| Star of the Seas (1) | Meyer Turku Oy | 3rd Quarter 2025 | 5,600 | |||||||||||||||||
| Legend of the Seas | Meyer Turku Oy | 2nd Quarter 2026 | 5,600 | |||||||||||||||||
| Unnamed | Meyer Turku Oy | 3rd Quarter 2027 | 5,600 | |||||||||||||||||
| Celebrity Cruises — | ||||||||||||||||||||
| Edge-class: | ||||||||||||||||||||
| Celebrity Xcel | Chantiers de l'Atlantique | 4th Quarter 2025 | 3,250 | |||||||||||||||||
| Unnamed | Chantiers de l'Atlantique | 4th Quarter 2028 | 3,250 | |||||||||||||||||
| Mein Schiff — | ||||||||||||||||||||
| Mein Schiff Flow | Fincantieri | 2nd Quarter 2026 | 4,100 | |||||||||||||||||
| Total Berths | 33,100 |
(1) In July 2025, we took delivery of Star of the Seas.
In January 2025, we announced the launch of Celebrity River Cruises, a premium river cruise vacation. We entered into agreements for the commitment to an initial order of 10 ships with plans to sail in 2027.
In March 2025, we entered into a credit agreement for the unsecured financing of the seventh Oasis-class ship for approximately 80% of the ship’s contract price and our building contract with Chantiers de l'Atlantique became effective. Bpifrance Assurance Export, the official French export credit agency, has agreed to guarantee to the lenders 100% of the financing. The maximum loan amount under the facility is not to exceed the United States dollar equivalent of €1.7 billion, or approximately $2.0 billion based on the exchange rate at June 30, 2025. The loan will amortize semi-annually and will mature 12 years following delivery of the ship. Interest on the loan will accrue at a floating rate equal to Term SOFR + 0.85%. The seventh Oasis-class ship will have a capacity of approximately 5,700 berths.
In May 2025, we amended the credit agreement for the third Icon-class ship, Legend of the Seas, to increase the maximum loan amount by €334 million or $392 million based on the exchange rate at June 30, 2025. Interest on the incremental portion of the loan will accrue at a floating rate equal to Term SOFR plus 0.90%.
In May 2025, the conditions for effectiveness including financing on our agreement with Meyer Turku Oy to build a fourth Icon-class ship for delivery in 2027 became effective.
In June 2025, we entered into a credit agreement for the unsecured financing of the sixth Edge-class ship for approximately 80% of the ship’s contract price and our building contract with Chantiers de l'Atlantique became effective. Bpifrance Assurance Export, has agreed to guarantee to the lenders 100% of the financing. The maximum loan amount under the facility is not to exceed the United States dollar equivalent of €1.0 billion, or approximately $1.2 billion based on the exchange rate at June 30, 2025. The loan will amortize semi-annually and will mature 12 years following delivery of the ship. Interest on the loan will accrue at a floating rate equal to Term SOFR plus 0.85% per annum. The sixth Edge-class ship will have a capacity of approximately 3,250 berths.
As of June 30, 2025, the aggregate cost of our ships on order presented in the table above, not including any ships on order by our Partner Brands, was approximately $12.1 billion, of which we had deposited $1.4 billion. Refer to Note 11*. Fair Value Measurements and Derivative Instruments* for further information.
Litigation
As previously reported, a lawsuit was filed against us in August 2019 in the U.S. District Court for the Southern District of Florida (the "Court") 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, which was expropriated by the Cuban government. The complaint further alleges that we trafficked in the terminal 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.
The Court entered final judgment in December 2022 in favor of the plaintiff and awarded damages and attorneys' fees to the plaintiff in the aggregate amount of approximately $112 million. We then appealed the judgment to the United States Court of Appeals for the 11th Circuit. On October 22, 2024, the 11th Circuit issued an opinion reversing the lower court’s judgment. The plaintiff's petition for a rehearing by the full 11th Circuit was subsequently denied. The plaintiff has petitioned the United States Supreme Court for a writ of certiorari. During the fourth quarter of 2022, we recorded a charge of approximately $130 million to Other (expense) income within our consolidated statements of comprehensive income (loss) related to the Havana Docks Action, including post-judgment interest and related legal defense costs and bonding fees. Following the 11th Circuit's denial of the rehearing petition, we released approximately $124 million of the previously recorded loss contingency for the year ended December 31, 2024, recognized within Other (expense) income within our consolidated statements of comprehensive income (loss).
In addition, we are 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
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 any payments under such indemnification clauses in the past and, under current circumstances, we do not believe an indemnification in any material amount is probable.
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.
In July 2025, we closed on our acquisition of the Port of Costa Maya and adjacent land in Mahahual, Mexico for approximately $292 million. The majority of the fair value was allocated to land, net of assumed liabilities.
Note 9**. Shareholders' Equity**
Dividends
During both first and second quarter of 2025, we declared a cash dividend on our common stock of $0.75 per share, which was paid in April 2025 and July 2025, respectively. During the first quarter of 2025, we also paid a cash dividend on our common stock of $0.55 per share, which was declared during the fourth quarter of 2024.
Common Stock Repurchase Program
In February 2025, our board of directors (the "Board") authorized a 12-month common stock repurchase program for up to $1.0 billion. The timing and number of shares to be repurchased will depend on a variety of factors including price and market conditions. Repurchases under the program may be made at management's discretion from time to time on the open market or through privately negotiated transactions. During the six months ended June 30, 2025, we repurchased 1.0 million shares of our common stock under this program, for a total of $241 million in open market transactions that were recorded within Treasury stock in our consolidated balance sheets. As of June 30, 2025, we have $759 million that remains available for future stock repurchase transactions under our Board authorized program.
Note 10**. Changes in Accumulated Other Comprehensive Loss**
The following table presents the changes in accumulated other comprehensive loss by component for the six months ended June 30, 2025 and 2024 (in millions):
| Accumulated Other Comprehensive Loss for the Six Months Ended June 30, 2025 | Accumulated Other Comprehensive Loss for the Six Months Ended June 30, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | (823) | $ | 10 | $ | 11 | $ | (802) | $ | (666) | $ | (2) | $ | (6) | $ | (674) | |||||||||||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | 310 | — | (26) | 284 | 42 | (3) | 10 | 49 | |||||||||||||||||||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | (1) | — | — | (1) | (29) | — | — | (29) | |||||||||||||||||||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | 309 | — | (26) | 283 | 13 | (3) | 10 | 20 | |||||||||||||||||||||||||||||||||||||||
| Ending balance | $ | (514) | $ | 10 | $ | (15) | $ | (519) | $ | (653) | $ | (5) | $ | 4 | $ | (654) |
The following table presents reclassifications out of accumulated other comprehensive loss for the quarters and six months ended June 30, 2025 and 2024 (in millions):
| Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income | |||||||||||||||||||||||||||||||||||||||||
| Details About Accumulated Other Comprehensive Loss Components | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Affected Line Item in Statements of Comprehensive Income (Loss) | ||||||||||||||||||||||||||||||||||||
| Gain (loss) on cash flow derivative hedges: | |||||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | $ | 6 | $ | 12 | $ | 13 | $ | 25 | Interest expense, net of interest capitalized | ||||||||||||||||||||||||||||||||
| Foreign currency forward contracts | (6) | (6) | (12) | (11) | Depreciation and amortization expenses | ||||||||||||||||||||||||||||||||||||
| Foreign currency forward contracts | — | — | — | — | Other (expense) income | ||||||||||||||||||||||||||||||||||||
| Fuel swaps | — | — | — | — | Other (expense) income | ||||||||||||||||||||||||||||||||||||
| Fuel swaps | (4) | 11 | — | 15 | Fuel | ||||||||||||||||||||||||||||||||||||
| $ | (4) | $ | 17 | $ | 1 | $ | 29 | ||||||||||||||||||||||||||||||||||
Note 11**. 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 millions):
| Fair Value Measurements at June 30, 2025 | Fair Value Measurements at December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 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) | $ | 735 | $ | 735 | $ | 735 | $ | — | $ | — | $ | 388 | $ | 388 | $ | 388 | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||
| Total Assets | $ | 735 | $ | 735 | $ | 735 | $ | — | $ | — | $ | 388 | $ | 388 | $ | 388 | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term debt (including current portion of debt)(5) | $ | 18,899 | $ | 19,956 | $ | — | $ | 19,956 | $ | — | $ | 19,959 | $ | 21,325 | $ | — | $ | 21,325 | $ | — | ||||||||||||||||||||||||||||||||||||||||||
| Total Liabilities | $ | 18,899 | $ | 19,956 | $ | — | $ | 19,956 | $ | — | $ | 19,959 | $ | 21,325 | $ | — | $ | 21,325 | $ | — |
(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. We valued our senior notes and convertible notes using a quoted market price, which is considered a Level 2 input as it is observable in the market; however, these instruments have a limited trading volume and as such this fair value estimate is not necessarily indicative of the value at which the instruments could be retired or transferred.
(3) Inputs that are unobservable. The Company did not use any Level 3 inputs as of June 30, 2025 and December 31, 2024.
(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.
Other Financial Instruments
The carrying amounts of accounts receivable, accounts payable, and accrued expenses approximate fair value as of June 30, 2025 and December 31, 2024.
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 millions):
| Fair Value Measurements at June 30, 2025 | Fair Value Measurements at December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 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) | $ | 290 | $ | — | $ | 290 | $ | — | $ | 71 | $ | — | $ | 71 | $ | — | ||||||||||||||||||||||||||||||||||
| Total Assets | $ | 290 | $ | — | $ | 290 | $ | — | $ | 71 | $ | — | $ | 71 | $ | — | ||||||||||||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative financial instruments(4) | $ | 88 | $ | — | $ | 88 | $ | — | $ | 139 | $ | — | $ | 139 | $ | — | ||||||||||||||||||||||||||||||||||
| Total Liabilities | $ | 88 | $ | — | $ | 88 | $ | — | $ | 139 | $ | — | $ | 139 | $ | — |
(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. No Level 1 inputs were used in fair value measurements of other financial instruments as of June 30, 2025 and December 31, 2024.
(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 June 30, 2025 and December 31, 2024.
(4)Consists of foreign currency forward contracts, interest rate 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 June 30, 2025 or December 31, 2024, 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
Nonfinancial instruments include items such as goodwill, indefinite-lived intangible assets, long-lived assets, right-of-use assets and equity method investments that are measured at fair value on a nonrecurring basis when events and circumstances indicate the carrying value is not recoverable. There were no material nonfinancial instruments recorded at fair value as of June 30, 2025 or December 31, 2024.
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 and liabilities under master netting agreements with derivative counterparties (in millions):
| Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements | ||||||||||||||||||||||||||||||||||||||||||||||||||
| As of June 30, 2025 | As of December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | 290 | $ | (67) | $ | — | $ | 223 | $ | 71 | $ | (52) | $ | — | $ | 19 | ||||||||||||||||||||||||||||||||||
| Total | $ | 290 | $ | (67) | $ | — | $ | 223 | $ | 71 | $ | (52) | $ | — | $ | 19 | ||||||||||||||||||||||||||||||||||
| 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 | $ | (88) | $ | 67 | $ | — | $ | (21) | $ | (139) | $ | 52 | $ | — | $ | (87) | ||||||||||||||||||||||||||||||||||
| Total | $ | (88) | $ | 67 | $ | — | $ | (21) | $ | (139) | $ | 52 | $ | — | $ | (87) |
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 June 30, 2025, we had counterparty credit risk exposure under our derivative instruments of $227 million, which was 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. In certain hedges of our net investment in foreign operations and investments, we exclude forward points from the assessment of hedge effectiveness and amortize the related amounts directly into 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 highly effective is recognized in earnings.
We consider the classification of the underlying hedged item’s cash flows in determining the classification for the designated derivative instrument’s cash flows. 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. For example, 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 June 30, 2025 and December 31, 2024, approximately 93.9% and 92.3%, respectively, of our debt was effectively fixed-rate debt, which is net of our interest rate swap agreements. 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. At June 30, 2025, there were no interest rate swap agreements for fixed-rate debt instruments.
We use interest rate swap agreements that effectively convert a portion of our floating-rate debt to a fixed-rate basis to manage the market risk of increasing interest rates. At June 30, 2025 and December 31, 2024, we maintained interest rate swap agreements on the following floating-rate debt instruments:
| Debt Instrument | Swap Notional as of June 30, 2025 (in millions) | Maturity | Debt Floating Rate | Spread | All-in Fixed Rate as of June 30, 2025 | |||||||||||||||||||||||||||
| Quantum of the Seas term loan | 92 | October 2026 | Term SOFR plus | 1.30% | 3.78% | |||||||||||||||||||||||||||
| Anthem of the Seas term loan | 121 | April 2027 | Term SOFR plus | 1.30% | 3.90% | |||||||||||||||||||||||||||
| Ovation of the Seas term loan | 208 | April 2028 | Term SOFR plus | 1.00% | 3.20% | |||||||||||||||||||||||||||
| Harmony of the Seas term loan (1) | 203 | May 2028 | EURIBOR plus | 1.15% | 2.26% | |||||||||||||||||||||||||||
| Odyssey of the Seas term loan (2) | 288 | October 2032 | Term SOFR plus | 0.96% | 3.28% | |||||||||||||||||||||||||||
| Odyssey of the Seas term loan (2) | 144 | October 2032 | Term SOFR plus | 0.96% | 2.91% | |||||||||||||||||||||||||||
| $ | 1,056 |
(1)Interest rate swap agreements hedging the Euro-denominated term loan for Harmony of the Seas include EURIBOR zero-floors matching the hedged debt EURIBOR zero-floor. Amount presented is based on the exchange rate as of June 30, 2025.
(2)Interest rate swap agreements hedging the term loan of Odyssey of the Seas include Term SOFR zero-floors, Term SOFR with no floors, and Overnight SOFR.
These interest rate swap agreements are accounted for as cash flow hedges.
The notional amount of interest rate swap agreements related to outstanding debt as of June 30, 2025 and December 31, 2024 was $1.1 billion and $1.2 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 June 30, 2025, the aggregate cost of our ships on order was $12.1 billion, of which we had deposited $1.4 billion 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 and any ships on order by our Partner Brands. Refer to Note 8*. Commitments and Contingencies*, for further information on our ships on order. At June 30, 2025 and December 31, 2024, approximately 50.2% and 43.4%, 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 second quarter of 2025 and 2024 the average notional amount of foreign currency forward contracts was approximately $1.1 billion and $964 million, respectively. These instruments are not designated as hedging instruments. For the quarters ended June 30, 2025 and 2024, changes in the fair value of the foreign currency forward contracts resulted in gain (losses) of $53 million and $(5) million, respectively, which offset (losses) gains arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same periods of $(58) million and $4 million, respectively. These amounts were recognized in earnings within Other expense in our consolidated statements of comprehensive income (loss). For the six months ended June 30, 2025 and 2024, changes in the fair value of the foreign currency forward contracts resulted in gains (losses) of $55 million and $(40) million, respectively, which offset (losses) gains arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same periods of $(62) million
and $34 million, respectively. These amounts were recognized in earnings within Other expense in our consolidated statements of comprehensive income (loss).
The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of June 30, 2025 and December 31, 2024 was $3.5 billion and $2.7 billion respectively.
Non-Derivative Instruments
We consider our investments in our foreign operations to be denominated in relatively stable currencies and to be of a long-term nature. We 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 in TUI Cruises of €688 million, or approximately $808 million, as of June 30, 2025. As of December 31, 2024, we had designated debt as a hedge of our net investments primarily in TUI Cruises of €889 million, or approximately $921 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.
Changes in the fair value of fuel swaps for which cash flow hedge accounting was discontinued are currently recognized in Other expense for each reporting period through the maturity dates of the fuel swaps. For the quarters ended June 30, 2025 and 2024, we did not discontinue cash flow hedge accounting on any material amount of our fuel swap agreements.
At June 30, 2025, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2028. As of June 30, 2025 and December 31, 2024, we had the following outstanding fuel swap agreements designated as hedging instruments:
| Fuel Swap Agreements | |||||||||||
| As of June 30, 2025 | As of December 31, 2024 | ||||||||||
| Designated as hedges: | (metric tons) | ||||||||||
| 2025 | 513,050 | 1,031,449 | |||||||||
| 2026 | 1,050,150 | 786,750 | |||||||||
| 2027 | 819,048 | 364,048 | |||||||||
| 2028 | 284,099 | — | |||||||||
| Fuel Swap Agreements | |||||||||||
| As of June 30, 2025 | As of December 31, 2024 | ||||||||||
| Designated hedges as a % of projected fuel purchases: | (% hedged) | ||||||||||
| 2025 | 59 | % | 60 | % | |||||||
| 2026 | 59 | % | 44 | % | |||||||
| 2027 | 47 | % | 20 | % | |||||||
| 2028 | 16 | % | — | % | |||||||
As of June 30, 2025 and December 31, 2024, the estimated unrealized net loss associated with our cash flow hedges pertaining to fuel swap agreements that is expected to be reclassified to earnings from Accumulated other comprehensive loss within the next twelve months was immaterial. 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 millions):
| Fair Value of Derivative Instruments | ||||||||||||||||||||||||||||||||||||||
| Asset Derivatives | Liability Derivatives | |||||||||||||||||||||||||||||||||||||
| Balance Sheet Location | As of June 30, 2025 | As of December 31, 2024 | Balance Sheet Location | As of June 30, 2025 | As of December 31, 2024 | |||||||||||||||||||||||||||||||||
| Fair Value | Fair Value | Fair Value | Fair Value | |||||||||||||||||||||||||||||||||||
| Derivatives designated as hedging instruments under ASC 815-20**(1)** | ||||||||||||||||||||||||||||||||||||||
| Interest rate swaps | Other assets | 36 | 58 | Other long-term liabilities | — | — | ||||||||||||||||||||||||||||||||
| Foreign currency forward contracts | Derivative financial instruments | 212 | — | Derivative financial instruments | — | 71 | ||||||||||||||||||||||||||||||||
| Foreign currency forward contracts | Other assets | — | — | Other long-term liabilities | — | 22 | ||||||||||||||||||||||||||||||||
| Fuel swaps | Derivative financial instruments | 6 | 10 | Derivative financial instruments | 33 | 19 | ||||||||||||||||||||||||||||||||
| Fuel swaps | Other assets | 2 | 3 | Other long-term liabilities | 40 | 27 | ||||||||||||||||||||||||||||||||
| Total derivatives designated as hedging instruments under 815-20 | $ | 256 | $ | 71 | $ | 73 | $ | 139 | ||||||||||||||||||||||||||||||
| Derivatives not designated as hedging instruments under ASC 815-20 | ||||||||||||||||||||||||||||||||||||||
| Foreign currency forward contracts | Derivative financial instruments | $ | 33 | $ | — | Derivative financial instruments | $ | 15 | $ | — | ||||||||||||||||||||||||||||
| Fuel swaps | Derivative financial instruments | 1 | — | Derivative financial instruments | — | — | ||||||||||||||||||||||||||||||||
| Total derivatives not designated as hedging instruments under 815-20 | 34 | — | 15 | — | ||||||||||||||||||||||||||||||||||
| Total derivatives | $ | 290 | $ | 71 | $ | 88 | $ | 139 |
(1)Subtopic 815-20 “Hedging-General” under ASC 815.
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 millions):
| Carrying Value | ||||||||||||||||||||
| Non-derivative instrument designated as hedging instrument under ASC 815-20 | Balance Sheet Location | As of June 30, 2025 | As of December 31, 2024 | |||||||||||||||||
| Foreign currency debt | Current portion of long-term debt | $ | 69 | $ | 60 | |||||||||||||||
| Foreign currency debt | Long-term debt | 739 | 860 | |||||||||||||||||
| $ | 808 | $ | 920 |
The effect of derivative instruments qualifying and designated as cash flow hedging instruments on the consolidated financial statements was as follows (in millions):
| Derivatives under ASC 815-20 Cash Flow Hedging Relationships | Amount of Gain (Loss) Recognized in Accumulated Other Comprehensive Loss on Derivatives | |||||||||||||||||||||||||
| Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |||||||||||||||||||||||
| Interest rate swaps | $ | (3) | $ | 8 | $ | (8) | $ | 29 | ||||||||||||||||||
| Foreign currency forward contracts | 238 | (31) | 355 | (102) | ||||||||||||||||||||||
| Fuel swaps | (58) | 9 | (37) | 115 | ||||||||||||||||||||||
| $ | 177 | $ | (14) | $ | 310 | $ | 42 |
The effect of non-derivative instruments qualifying and designated as net investment hedging instruments on the consolidated financial statements was as follows (in millions):
| Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss) | ||||||||||||||||||||||||||
| Non-derivative instruments under ASC 815-20 Net Investment Hedging Relationships | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | ||||||||||||||||||||||
| Foreign Currency Debt | $ | (66) | $ | 6 | $ | (109) | $ | 22 | ||||||||||||||||||
| $ | (66) | $ | 6 | $ | (109) | $ | 22 |
The effect of derivatives not designated as hedging instruments on the consolidated financial statements was as follows (in millions):
| Amount of (Loss) Gain 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 June 30, 2025 | Quarter Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | |||||||||||||||||||||||||||
| Foreign currency forward contracts | Other income (expense) | $ | 53 | $ | (5) | $ | 55 | $ | (40) | |||||||||||||||||||||||
| Fuel swaps | Other income (expense) | 2 | — | 2 | — | |||||||||||||||||||||||||||
| $ | 55 | $ | (5) | $ | 57 | $ | (40) | |||||||||||||||||||||||||
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 June 30, 2025, our senior unsecured debt credit rating was BBB- by Standard & Poor's and Baa3 by Moody's. As of June 30, 2025, six of our ship debt interest rate derivative hedges had reached their fifth-year anniversary; however, the net market value for these derivative hedges were in a net asset position, and accordingly, we were not required to post any collateral as of such date.
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