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Item 1. Financial Statements

2024-10-29 compared with 2024-07-25 · 169 added, 143 removed, 757 unchanged (29% of the section changed)

3 unchanged sentences

in millions, except per share data)

Quarter Ended June 30,

Quarter Ended September 30,

Passenger ticket revenues $ 3,471 $ 2,941

19 unchanged sentences

Net Income attributable to Royal Caribbean Cruises Ltd.

$ 1,111 $ 1,009

Earnings per Share:

10 unchanged sentences

(Loss) gain on cash flow derivative hedges ( 95 ) 20

Total other comprehensive loss ( 37 ) ( 1 )

Total other comprehensive (loss) income ( 99 ) 36

Comprehensive Income 1,016 1,047

1 unchanged sentence

Comprehensive Income attributable to Royal Caribbean Cruises Ltd.

$ 1,012 $ 1,045

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

2 unchanged sentences

in millions, except per share data)

Six Months Ended June 30,

Nine Months Ended September 30,

Passenger ticket revenues $ 8,900 $ 7,282

31 unchanged sentences

Change in defined benefit plans 3 4

Gain (loss) on cash flow derivative hedges 13 ( 27 )

Total other comprehensive income (loss) 20 ( 37 )

Loss on cash flow derivative hedges ( 82 ) ( 7 )

Total other comprehensive loss ( 79 ) ( 1 )

Comprehensive Income 2,258 1,424

6 unchanged sentences

(in millions, except share data)

June 30, December 31,

September 30, December 31,

Current assets

Cash and cash equivalents $ 418 $ 497

Trade and other receivables, net of allowances of $ 8 and $ 7 at June 30, 2024 and December 31, 2023, respectively

Trade and other receivables, net of allowances of $ 8 and $ 7 at September 30, 2024 and December 31, 2023, respectively

Inventories 265 248

5 unchanged sentences

Goodwill 809 809

Other assets, net of allowances of $ 42 and $ 43 at June 30, 2024 and December 31, 2023, respectively

Other assets, net of allowances of $ 42 and $ 43 at September 30, 2024 and December 31, 2023, respectively

Total assets $ 37,067 $ 35,131

18 unchanged sentences

500,000,000 shares authorized;

285,863,919 and 284,672,386 shares issued, June 30, 2024 and December 31, 2023, respectively)

297,343,264 and 284,672,386 shares issued, September 30, 2024 and December 31, 2023, respectively)

Paid-in capital 7,669 7,474

1 unchanged sentence

Accumulated other comprehensive loss ( 753 ) ( 674 )

Treasury stock ( 28,468,430 and 28,248,125 common shares at cost, June 30, 2024 and December 31, 2023, respectively)

Treasury stock ( 28,468,430 and 28,248,125 common shares at cost, September 30, 2024 and December 31, 2023, respectively)

( 2,081 ) ( 2,069 )

7 unchanged sentences

(unaudited, in millions)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating Activities

2 unchanged sentences

Net deferred income tax expense (benefit) 15 ( 3 )

Loss (Gain) on derivative instruments not designated as hedges 40 ( 12 )

Loss on derivative instruments not designated as hedges 8 31

Share-based compensation expense 109 79

1 unchanged sentence

Amortization of debt issuance costs, discounts and premiums 76 84

Loss on extinguishment of debt 133 44

Loss on extinguishment of debt and inducement expense 456 81

Changes in operating assets and liabilities:

(Increase) decrease in trade and other receivables, net ( 13 ) 131

Decrease in inventories 6 8

Increase in inventories, net ( 17 ) ( 18 )

Increase in prepaid expenses and other assets ( 110 ) ( 44 )

28 unchanged sentences

(unaudited, in millions)

Six Months Ended June 30,

Nine Months Ended September 30,

Supplemental Disclosure

3 unchanged sentences

Purchase of property and equipment included in accounts payable and accrued expenses and other liabilities $ 52 $ 24

Non-cash Financing Activity

Non-cash inducement on convertible notes exchange $ 104 $ —

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

2 unchanged sentences

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

Balance at July 1, 2024 $ 3 $ 7,536 $ 1,204 $ ( 654 ) $ ( 2,081 ) $ 174 $ 6,182

Activity related to employee stock plans — 29 — — — — 29

Common stock dividends, $ 0.40 per share

— — ( 108 ) — — — ( 108 )

Convertible notes settlement — 104 — — — — 104

Changes related to cash flow derivative hedges — — — ( 95 ) — — ( 95 )

5 unchanged sentences

— — 1,111 — — — 1,111

Balance at June 30, 2024 $ 3 $ 7,536 $ 1,204 $ ( 654 ) $ ( 2,081 ) $ 174 $ 6,182

Balance at September 30, 2024 $ 3 $ 7,669 $ 2,207 $ ( 753 ) $ ( 2,081 ) $ 179 $ 7,224

Common Stock Paid-in Capital (Accumulated Deficit)

2 unchanged sentences

Activity related to employee stock plans — 91 — — — — 91

Common stock dividends, $ 0.40 per share

— — ( 108 ) — — — ( 108 )

Convertible notes settlement — 104 — — — — 104

Changes related to cash flow derivative hedges — — — ( 82 ) — — ( 82 )

Change in defined benefit plans — — — 3 — — 3

Foreign currency translation adjustments — — — 10 — — 10

Purchase of treasury stock — — — — ( 12 ) — ( 12 )

3 unchanged sentences

— — 2,325 — — — 2,325

Balance at June 30, 2024 $ 3 $ 7,536 $ 1,204 $ ( 654 ) $ ( 2,081 ) $ 174 $ 6,182

Balance at September 30, 2024 $ 3 $ 7,669 $ 2,207 $ ( 753 ) $ ( 2,081 ) $ 179 $ 7,224

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

2 unchanged sentences

Common Stock Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Treasury Stock Noncontrolling Interest Total Shareholders' Equity

Balance at April 1, 2023 $ 3 $ 7,351 $ ( 1,755 ) $ ( 679 ) $ ( 2,069 ) $ 174 $ 3,025

Balance at July 1, 2023 $ 3 $ 7,407 $ ( 1,296 ) $ ( 680 ) $ ( 2,069 ) $ 177 $ 3,542

Activity related to employee stock plans — 14 — — — — 14

Convertible notes settlement — 12 — 12

Changes related to cash flow derivative hedges — — — 20 — — 20

1 unchanged sentence

Foreign currency translation adjustments — — — 11 — — 11

Net Income attributable to noncontrolling interest — — — — — 4 4

Sale of noncontrolling interest — 1 — — — — 1

Noncontrolling interest — — — — — 2 2

Dividends from noncontrolling interest — — — — — ( 5 ) ( 5 )

Net Income attributable to Royal Caribbean Cruises Ltd.

— — 1,009 — — — 1,009

Balance at June 30, 2023 $ 3 $ 7,406 $ ( 1,296 ) $ ( 680 ) $ ( 2,069 ) $ 178 $ 3,542

Balance at September 30, 2023 $ 3 $ 7,422 $ ( 287 ) $ ( 644 ) $ ( 2,069 ) $ 174 $ 4,599

Common Stock Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Loss Treasury Stock Noncontrolling Interest Total Shareholders' Equity

7 unchanged sentences

Sale of noncontrolling interest — 46 — — — 174 220

Net Income attributable to noncontrolling interest — — — — — 4 4

Noncontrolling interest — — — — — 6 6

Dividends from noncontrolling interest — — — — — ( 6 ) ( 6 )

Net Income attributable to Royal Caribbean Cruises Ltd.

— — 1,420 — — — 1,420

Balance at June 30, 2023 $ 3 $ 7,406 $ ( 1,296 ) $ ( 680 ) $ ( 2,069 ) $ 178 $ 3,542

Balance at September 30, 2023 $ 3 $ 7,422 $ ( 287 ) $ ( 644 ) $ ( 2,069 ) $ 174 $ 4,599

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

15 unchanged sentences

We account for our investments in our Partner Brands under the equity method of accounting.

Together, our Global Brands and our Partner Brands have a combined fleet of 68 ships as of June 30, 2024.

Together, our Global Brands and our Partner Brands have a combined fleet of 68 ships as of September 30, 2024.

Our ships offer a selection of worldwide itineraries that call on more than 1,000 destinations in over 120 countries on all seven continents.

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Early adoption is permitted and the amendments should be applied retrospectively to all periods presented.

We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures.

We are currently evaluating the impact of these amendments on our disclosures, but this standard update will not impact our financial condition and results of operations.

In December 2023, the FASB issued ASU No.

12 unchanged sentences

These types of port costs, along with port costs that do not vary by passenger head counts, are included in our cruise operating expenses.

The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $ 266 million and $ 226 million for the quarters ended June 30, 2024 and 2023, respectively, and $ 509 million and $ 430 million for the six months ended June 30, 2024 and 2023, respectively.

The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $ 313 million and $ 252 million for the quarters ended September 30, 2024 and 2023, respectively, and $ 822 million and $ 682 million for the nine months ended September 30, 2024 and 2023, 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.

3 unchanged sentences

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,

Quarter Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

9 unchanged sentences

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

(3) Includes revenues primarily related to cancellation fees, vacation protection insurance, casino operations, pre- and post-cruise tours and fees for operating certain port facilities.

(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.

2 unchanged sentences

Passenger ticket revenues are attributed to geographic areas based on where the reservation originates.

For the quarters and six months ended June 30, 2024 and 2023, our guests were sourced from the following areas:

Quarter Ended June 30,

For the quarters and nine months ended September 30, 2024 and 2023, our guests were sourced from the following areas:

Quarter Ended September 30,

Passenger ticket revenues:

United States 74 % 72 %

United Kingdom 8 % 10 %

All other countries (1) 18 % 18 %

Six Months Ended June 30,

Nine Months Ended September 30,

Passenger ticket revenues:

1 unchanged sentence

All other countries (1) 25 % 26 %

(1) No other individual country's revenue exceeded 10% for the quarters and six months ended June 30, 2024 and 2023.

(1) No other individual country's revenue exceeded 10% for the quarters and nine months ended September 30, 2024 and 2023.

Customer Deposits and Contract Liabilities

3 unchanged sentences

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 $ 3.4 billion and $ 2.6 billion as of June 30, 2024 and December 31, 2023, respectively.

Customer deposits presented in our consolidated balance sheets include contract liabilities of $ 2.6 billion as of September 30, 2024 and December 31, 2023, respectively.

During the pandemic we provided flexibility to guests with bookings on sailings that were cancelled by allowing guests to receive future cruise credits (“FCCs”).

As of June 30, 2024, our customer deposit balance includes approximately $ 298 million of unredeemed FCCs.

As of September 30, 2024, our customer deposit balance includes approximately

$ 253 million of unredeemed FCCs.

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 quarter and six months ended June 30, 2024.

Based on our current estimates, we recognized an immaterial amount of FCC breakage revenue during the quarter and nine months ended September 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.

6 unchanged sentences

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, 2024, none of our credit card processors required us to maintain a reserve.

As of September 30, 2024, 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, 2024 and December 31, 2023, our contract assets were $ 164

million and $ 167 million, respectively, and were included within Other assets in our consolidated balance sheets.

As of September 30, 2024 and December 31, 2023, our contract assets were $ 162 million and $ 167 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.

1 unchanged sentence

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 $ 321 million as of June 30, 2024 and $ 257 million as of December 31, 2023.

Prepaid travel advisor commissions and prepaid credit and debit card fees were $ 263 million as of September 30, 2024 and $ 257 million as of December 31, 2023.

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).

1 unchanged sentence

Basic and diluted earnings per share is as follows (in millions, except per share data):

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

1 unchanged sentence

for basic earnings per share $ 1,111 $ 1,009 $ 2,325 $ 1,420

Add convertible notes interest 19 21 38 4

Add convertible notes interest and inducement expense — 20 169 68

Net Income attributable to Royal Caribbean Cruises Ltd.

6 unchanged sentences

Diluted earnings per share $ 4.21 $ 3.65 $ 8.91 $ 5.24

T here were no antidilutive shares from our stock-based awards and convertible notes for the quarters ended June 30, 2024 and 2023.

In addition, there were no antidilutive shares for the six months ended June 30, 2024, and approximately 25,459,641 antidilutive shares for the six months ended June 30, 2023.

T here were no antidilutive shares for the quarter ended September 30, 2023, and nine months ended September 30, 2024 and 2023, compared to 14,706,077 antidilutive shares from our convertible notes for the quarter ended September 30, 2024.

Investments and Other Assets

16 unchanged sentences

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.

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, 2024, the net book value of our investment in TUIC was $ 716 million, primarily consisting of $ 642 million in equity and a loan of € 63 million, or approximately $ 68 million based on the exchange rate at June 30, 2024.

As of September 30, 2024, the net book value of our investment in TUIC was $ 820 million, primarily consisting of $ 744 million in equity and a loan of € 59 million, or approximately $ 66 million based on the exchange rate at September 30, 2024.

As of December 31, 2023, the net book value of our investment in TUIC was $ 657 million, primarily consisting of $ 566 million in equity and a loan of € 71 million, or approximately $ 79 million based on the exchange rate at December 31, 2023.

12 unchanged sentences

Floating Docks will construct two floating drydocks, with delivery dates expected in 2025 and 2026, that will be leased 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 partner have each guaranteed 50 % of certain installment payments payable by Floating Docks under the drydock and related construction contracts, which are contingent on the achievement of certain construction milestones, bringing our total payment guarantees to $ 48 million as of June 30, 2024.

Our investment in Floating Docks, including loans, is immaterial to our consolidated financial statements as of June 30, 2024.

Our investment in Floating Docks, including loans, is immaterial to our consolidated financial statements as of September 30, 2024.

We have determined that Floating Docks is a VIE.

3 unchanged sentences

In 2023, as part of the transaction with iCON, we sold our controlling interest in two Italian entities for an immaterial amount of net proceeds and recognized an immaterial gain on the sale.

We have determined that the partnership and both Italian entities are VIE's.

We have determined that the partnership and both Italian

entities are VIE's.

These entities in Italy represent development projects to own, develop, and manage cruise terminal facilities in key ports of call.

2 unchanged sentences

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,

Quarter Ended September 30, Nine Months Ended September 30,

2024 2023 2024 2023

Share of equity income from investments $ 106 $ 87 $ 203 $ 149

As of June 30, 2024 As of December 31, 2023

As of September 30, 2024 As of December 31, 2023

Total notes receivable due from equity investments $ 133 $ 105

10 unchanged sentences

Credit Losses

We reviewed our receivables for credit losses in connection with the preparation of our financial statements for the quarter ended June 30, 2024.

In evaluating our credit loss allowance, management considered factors such as historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, peer group information and prevailing economic conditions.

Our credit loss allowance as of June 30, 2024 and 2023 primarily relates to credit losses recognized on notes receivable for the previous sale of certain property and equipment of $ 42 million and $ 63 million, respectively, which were originated in 2015 and 2020.

Our credit loss allowance as of September 30, 2024 and 2023 primarily relates to credit losses recognized on notes receivable for the previous sale of certain property and equipment of $ 42 million and $ 63 million, respectively, which were originated in 2015 and 2020.

The following table summarizes our credit loss allowance related to receivables (in millions):

Six Months Ended June 30,

Nine Months Ended September 30,

Balance, beginning of period $ 49 $ 83

4 unchanged sentences

Weighted Average Rate (1)

Maturities Through As of June 30, 2024 As of December 31, 2023

Maturities Through As of September 30, 2024 As of December 31, 2023

Fixed rate debt:

2 unchanged sentences

Secured senior notes — %

2029 1,000 1,000

Unsecured term loans

5 unchanged sentences

Unsecured revolving credit facilities (2)

2026 - 2028 210 899

USD unsecured term loan

9 unchanged sentences

Long-term portion $ 18,972 $ 19,732

(1) Weighted average interest rates are based on outstanding loan balance as of June 30, 2024, and for variable rate debt include either EURIBOR or Term SOFR plus the applicable margin.

(1) Weighted average interest rates are based on outstanding loan balance as of September 30, 2024, 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 a 0.10 % credit adjustment spread plus an interest rate margin of 1.33 %.

Based on applicable Term SOFR rates, as of June 30, 2024, the maximum interest rate under the unsecured credit facilities was 6.77 %.

Based on applicable Term SOFR rates, as of September 30, 2024, the interest rate under the unsecured credit facilities was 6.28 %.

We also pay a facility fee of 0.17 % of the total commitments under such facility.

(3) At June 30, 2024 and December 31, 2023, the weighted average interest rate for total debt was 5.64 % and 6.06 %, respectively .

(3) At September 30, 2024 and December 31, 2023, the weighted average interest rate for total debt was 5.27 % and 6.06 %, respectively .

Unsecured revolving credit facilities

As of June 30, 2024 our aggregate revolving credit capacity is $ 3.7 billion of which $ 1.86 billion of the commitments are scheduled to mature in October 2026 and $ 1.86 billion of the commitments are scheduled to mature in October 2028.

As of June 30, 2024, we had undrawn capacity of $ 3.4 billion under our unsecured revolving credit facilities.

As of September 30, 2024 our aggregate revolving credit capacity is $ 3.7 billion of which $ 1.86 billion of the commitments are scheduled to mature in October 2026 and $ 1.86 billion of the commitments are scheduled to mature in October 2028.

As of September 30, 2024, we had undrawn capacity of $ 3.5 billion under our unsecured revolving credit facilities.

Debt financing transactions

In March 2024, we issued $ 1.25 billion of senior unsecured notes (the "notes") due in 2032 for net proceeds of approximately $ 1.24 billion.

In March 2024, we issued $ 1.25 billion of senior unsecured notes due in 2032 for net proceeds of approximately $ 1.24 billion.

Interest accrues on the notes at a fixed rate of 6.25 % per annum and is payable semi-annually in arrears.

The proceeds from this notes issuance, together with cash on hand, were used to redeem all of the outstanding $ 1.25 billion aggregate principal amount of 11.625 % Senior Notes due 2027.

The repayment resulted in a loss on extinguishment of debt of $ 116 million that was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) for the six months ended June 30, 2024.

In August 2024, we issued $ 2.0 billion of senior unsecured notes due in 2033 for net proceeds of approximately $ 1.98 billion.

Interest accrues on the notes at a fixed rate of 6.00 % per annum and is payable semi-annually in arrears.

The proceeds from this notes issuance were used to redeem all of our outstanding $ 1.0 billion aggregate principal of 9.25 % Senior Notes due 2029 and all of our outstanding $ 1.0 billion aggregate principal amount of 8.25 % Senior secured notes due 2029.

repayment resulted in a loss on extinguishment of debt of $ 142 million that was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) for the quarter and nine months ended September 30, 2024.

In August 2024, 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 $ 827 million in aggregate principal amount for approximately 11.4 million shares of common stock and $ 827 million in cash, including accrued and unpaid interest.

The convertible notes exchange resulted in an induced conversion expense of $ 119 million that was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) for the quarter and nine months ended September 30, 2024.

In September 2024, we issued $ 1.5 billion of senior unsecured notes due in 2031 for net proceeds of approximately $ 1.49 billion in order to repay indebtedness.

Interest accrues on the notes at a fixed rate 5.63 % per annum and is a payable semi-annually in arrears.

Concurrently, we redeemed all of our outstanding $ 700 million aggregate principal amount of our 7.25 % Senior Notes due 2030.

The repayment resulted in a loss on extinguishment of debt of $ 61 million that was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) for the quarter and nine months ended September 30, 2024.

Export credit facilities and agency guarantees

In May 2024, we took delivery of Silver Ray .

To finance the delivery, we borrowed a total of $ 507 million under the committed financing agreement, resulting in an unsecured term loan which is 95 % guaranteed by Euler Hermes.

To finance the delivery, we borrowed $ 507 million under the committed financing agreement, resulting in an unsecured term loan which is 95 % guaranteed by Euler Hermes.

The unsecured loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 4.33 % per annum.

2 unchanged sentences

The unsecured term loan amortizes semi-annually over 12 years and bears interest primarily at a fixed rate of 3.00 % per annum.

During the quarter ended June 30, 2024, we repaid $ 839 million of outstanding deferred amounts under our export credit facilities.

These repayments included both scheduled payments and an early repayment of the amortization deferral obtained on our export credit facilities in 2020 and 2021, which resulted in an immaterial loss on extinguishment of debt that was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) for the quarter and six months ended June 30, 2024.

During the second quarter of 2024, we repaid $ 839 million of outstanding deferred amounts under our export credit facilities.

Except for the term loan we incurred to acquire Silver Moon, all of our unsecured ship financing term loans are guaranteed by the export credit agency in the respective country in which the ship is constructed.

For the majority of the loans as of June 30, 2024, we pay to the applicable export credit agency, depending on the financing agreement, an upfront fee of 2.35 % to 5.48 % of the maximum loan amount in consideration for these guarantees.

For the majority of the loans as of September 30, 2024, 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 that are paid upfront over the life of the loan.

3 unchanged sentences

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, limit our net debt-to-capital ratio, maintain minimum liquidity, and under certain facilities, to maintain a minimum level of stockholders' equity.

As of June 30, 2024, we were in compliance with our debt covenants and we estimate we will be in compliance for the next twelve months.

In July 2024, we amended all of our export credit facilities to remove the stockholders' equity covenant, which has eliminated the contractual requirement for us to maintain a minimum level of stockholders' equity.

The following is a schedule of annual maturities on our total debt, including finance leases, as of June 30, 2024 for each of the next five years (in millions):

Year As of June 30, 2024 (1)

In July 2024, we amended all of our export credit facilities to eliminate the contractual requirement for us to maintain a minimum level of stockholders' equity.

As of September 30, 2024, we were in compliance with our debt covenants and we estimate we will be in compliance for the next twelve months.

The following is a schedule of annual maturities on our total debt, including finance leases, as of September 30, 2024 for each of the next five years (in millions):

Year As of September 30, 2024 (1)

Remainder of 2024 $ 717

Thereafter 10,099

(1) Debt denominated in other currencies is calculated based on the applicable exchange rate at June 30, 2024.

(1) Debt denominated in other currencies is calculated based on the applicable exchange rate at September 30, 2024.

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, 2024 and December 31, 2023.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet.

1 unchanged sentence

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 $ 167 million as of June 30, 2024 and December 31, 2023.

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.

The aggregate amount of the operating lease liabilities recorded for this berthing agreement was $ 167 million as of September 30, 2024 and December 31, 2023.

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.

9 unchanged sentences

Our finance leases primarily relate to buildings and surrounding land located at our Miami headquarters and our lease for Silver Dawn .

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, 2024 and December 31, 2023.

The Company's master lease agreement (“Master Lease”) with Miami-Dade 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 .

2 unchanged sentences

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 $ 105 million and $ 104 million as of June 30, 2024 and December 31, 2023, respectively.

The total aggregate amount of the finance lease liabilities recorded for this Master Lease was $ 106 million and $ 104 million as of September 30, 2024 and December 31, 2023, 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.

1 unchanged sentence

Due to the bargain purchase option at the end of the lease term in 2036, whereby Silversea Cruises is reasonably certain of obtaining ownership of the ship, Silver Dawn is accounted for as a finance lease.

The lease includes other purchase options beginning in year three, none of which are reasonably certain of being exercised at this time.

The aggregate amount of finance lease liabilities recorded for this ship was $ 236 million and $ 246 million as of June 30, 2024 and December 31, 2023, respectively.

On September 26, 2024, we submitted an irrevocable notice to execute the bargain purchase option and pay in full all of the outstanding aggregate principal amount of the Silver Dawn finance lease for approximately $ 232 million, which is scheduled for November 25, 2024.

The aggregate amount of finance lease liabilities recorded for this ship was $ 232 million and $ 246 million as of September 30, 2024 and December 31, 2023, respectively.

The lease payments on the Silver Dawn are subject to adjustments based on the Term SOFR rate.

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

Consolidated Statement of Comprehensive Income (Loss) Classification Quarter Ended June 30, 2024 Six Months Ended June 30, 2024

Consolidated Statement of Comprehensive Income (Loss) Classification Quarter Ended September 30, 2024 Nine Months Ended September 30, 2024

Operating lease costs Commission, transportation and other $ 38 $ 151

5 unchanged sentences

Total lease costs $ 57 $ 208

Consolidated Statement of Comprehensive Income (Loss) Classification Quarter Ended June 30, 2023 Six Months Ended June 30, 2023

Consolidated Statement of Comprehensive Income (Loss) Classification Quarter Ended September 30, 2023 Nine Months Ended September 30, 2023

Operating lease costs Commission, transportation and other $ 33 $ 128

6 unchanged sentences

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, 2024, we had $ 28 million and $ 79 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss), respectively, compared to $ 21 million and $ 59 million of variable lease costs recorded within C ommission, transportation and other in our consolidated statement of comprehensive income (loss) during the quarter and six months ended June 30, 2023, respectively.

During the quarter and nine months ended September 30, 2024, we had $ 13 million and $ 92 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss), respectively, compared to $ 13 million and $ 72 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss) during the quarter and nine months ended September 30, 2023, 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, 2024 As of December 31, 2023

As of September 30, 2024 As of December 31, 2023

Weighted average of the remaining lease term in years

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

Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023

Cash paid for amounts included in the measurement of lease liabilities:

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Financing cash flows from finance leases $ 19 $ 25

As of June 30, 2024, maturities related to lease liabilities were as follows (in millions):

As of September 30, 2024, maturities related to lease liabilities were as follows (in millions):

Year Operating Leases Finance Leases

7 unchanged sentences

Our future capital commitments consist primarily of new ship orders.

As of June 30, 2024, the dates that the ships on order by our Global and Partner Brands are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

As of September 30, 2024, the dates that the ships on order by our Global and Partner Brands are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

Ship Shipyard Expected delivery Approximate

8 unchanged sentences

Total Berths 22,650

In addition, in February 2024, we entered into an agreement with Chantiers de l’Atlantique to build an additional Oasis class ship for delivery in 2028, which is contingent upon completion of certain conditions precedent including financing.

As of June 30, 2024, 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 $ 5.7 billion, of which we had deposited $ 543 million as of such date.

In addition, during 2024, we entered into an agreement with Meyer Turku Oy and Chantiers de l' Atlantique to build a fourth Icon class ship and a seventh Oasis class ship for delivery 2027 and 2028, respectively.

Both agreements are contingent upon completion of certain conditions precedent including financing.

As of September 30, 2024, 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 $ 5.9 billion, of which we had deposited $ 619 million as of such date.

Refer to Note 11 .

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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, was expropriated by the Cuban government.

The complaint filed by Havana Docks Corporation ("Havana Docks Action") alleges it holds an interest in the Havana Cruise Port Terminal that was expropriated by the Cuban government.

The complaint further alleges that we trafficked in the terminal by embarking and disembarking passengers at these facilities.

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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 have appealed the judgment to the United States Court of Appeals for the 11th Circuit.

We believe we have meritorious grounds for and intend to vigorously pursue our appeal.

We appealed the judgment to the United States Court of Appeals for the 11th Circuit.

On October 22, 2024, the 11th Circuit issued an opinion that overturned the lower court’s judgment.

The plaintiff has the right to petition for a rehearing by the full 11th Circuit or to appeal to the United States Supreme Court.

During the fourth quarter of 2022, we recorded a charge of approximately $ 130.0 million to Other expense 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.

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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.

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 September 2024, we entered into agreements to acquire the Port of Costa Maya and adjacent land in Mahahual, Mexico for approximately $ 292 million.

The transaction is expected to close in the first half of 2025, subject to regulatory approval and customary closing conditions.

Shareholders' Equity

We did not declare any dividends during the six months ended June 30, 2024 and 2023.

During the quarter ended September 30, 2024, we declared a cash dividend on our common stock of $ 0.40 per share, which was paid on October 11, 2024.

We did not declare any dividends during the nine months ended September 30, 2023.

We were previously restricted under our export credit facilities from paying dividends.

During the quarter ended June 30, 2024, we repaid the principal amounts deferred under our export credit facilities, which eliminated the restriction on dividends and share repurchases.

During the second quarter of 2024, we repaid the principal amounts deferred under our export credit facilities, which eliminated the restriction on dividends and share repurchases.

Refer to Note 6 .

Debt for further information on the transaction.

In July 2024, our Board of Directors declared a dividend of $ 0.40 per share, payable in October 2024.

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, 2024 and 2023 (in millions):

Accumulated Other Comprehensive Loss for the Six Months Ended June 30, 2024 Accumulated Other Comprehensive Loss for the Six Months Ended June 30, 2023

The following table presents the changes in accumulated other comprehensive loss by component for the nine months ended September 30, 2024 and 2023 (in millions):

Accumulated Other Comprehensive Loss for the Nine Months Ended September 30, 2024 Accumulated Other Comprehensive Loss for the Nine Months Ended September 30, 2023

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

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Ending balance $ ( 748 ) $ 1 $ ( 6 ) $ ( 753 ) $ ( 645 ) $ ( 4 ) $ 5 $ ( 644 )

The following table presents reclassifications out of accumulated other comprehensive loss for the quarters and six months ended June 30, 2024 and 2023 (in millions):

The following table presents reclassifications out of accumulated other comprehensive loss for the quarters and nine months ended September 30, 2024 and 2023 (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, 2024 Quarter Ended June 30, 2023 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023 Affected Line Item in Statements of

Details About Accumulated Other Comprehensive Loss Components Quarter Ended September 30, 2024 Quarter Ended September 30, 2023 Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023 Affected Line Item in Statements of

Comprehensive Income (Loss)

3 unchanged sentences

Foreign currency forward contracts — — — ( 10 ) Other (expense) income

Fuel swaps — — — — Other (expense) income

Fuel swaps 3 16 17 1 Fuel

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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, 2024 Fair Value Measurements at December 31, 2023

Fair Value Measurements at September 30, 2024 Fair Value Measurements at December 31, 2023

Description Total Carrying Amount Total Fair Value Level 1 (1)

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(3) Inputs that are unobservable.

The Company did not use any Level 3 inputs as of June 30, 2024 and December 31, 2023.

The Company did not use any Level 3 inputs as of September 30, 2024 and December 31, 2023.

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

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Other Financial Instruments

The carrying amounts of accounts receivable, accounts payable, accrued interest and accrued expenses approximate fair value as of June 30, 2024 and December 31, 2023.

The carrying amounts of accounts receivable, accounts payable, accrued interest and accrued expenses approximate fair value as of September 30, 2024 and December 31, 2023.

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, 2024 Fair Value Measurements at December 31, 2023

Fair Value Measurements at September 30, 2024 Fair Value Measurements at December 31, 2023

Description Total Level 1 (1)

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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, 2024 and December 31, 2023.

No Level 1 inputs were used in fair value measurements of other financial instruments as of September 30, 2024 and December 31, 2023.

(2) Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

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(3) Inputs that are unobservable.

No Level 3 inputs were used in fair value measurements of other financial instruments as of June 30, 2024 and December 31, 2023.

No Level 3 inputs were used in fair value measurements of other financial instruments as of September 30, 2024 and December 31, 2023.

(4) Consists of foreign currency forward contracts, interest rate and fuel swaps.

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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, 2024 or December 31, 2023, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement.

Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of September 30, 2024 or December 31, 2023, 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, 2024 or December 31,2023.

There were no material nonfinancial instruments recorded at fair value as of September 30, 2024 or December 31, 2023.

Master Netting Agreements

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Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements

As of June 30, 2024 As of December 31, 2023

As of September 30, 2024 As of December 31, 2023

Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet Gross Amount of Eligible Offsetting

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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, 2024, we had counterparty credit risk exposure under our derivative instruments of $ 133 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.

As of September 30, 2024, we had counterparty credit risk exposure under our derivative instruments of $ 95 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.

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Our exposure to market risk for changes in interest rates primarily relates to our debt obligations, including future interest payments.

At June 30, 2024 and December 31, 2023, approximately 90.7 % and 83.2 %, respectively, of our debt was effectively fixed-rate debt, which is net of our interest rate swap agreements.

At September 30, 2024 and December 31, 2023, approximately 91.4 % and 83.2 %, 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.

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, 2024 and December 31, 2023, we maintained interest rate swap agreements on the following floating-rate debt instruments:

Debt Instrument Swap Notional as of June 30, 2024 (in millions) Maturity Debt Floating Rate

All-in Fixed Rate as of June 30, 2024

At September 30, 2024 and December 31, 2023, we maintained interest rate swap agreements on the following floating-rate debt instruments:

Debt Instrument Swap Notional as of September 30, 2024 (in millions) Maturity Debt Floating Rate

All-in Fixed Rate as of September 30, 2024

Celebrity Reflection term loan

13 unchanged sentences

(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, 2024.

Amount presented is based on the exchange rate as of September 30, 2024.

(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, 2024 and December 31, 2023 was $ 1.4 billion and $ 1.6 billion, respectively.

The notional amount of interest rate swap agreements related to outstanding debt as of September 30, 2024 and December 31, 2023 was $ 1.4 billion and $ 1.6 billion, respectively.

Foreign Currency Exchange Rate Risk

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We enter into foreign currency forward contracts to manage portions of the exposure to movements in foreign currency exchange rates.

As of June 30, 2024, the aggregate cost of our ships on order was $ 5.7 billion, of which we had deposited $ 543 million as of such date.

As of September 30, 2024, the aggregate cost of our ships on order was $ 5.9 billion, of which we had deposited $ 619 million as of such date.

These amounts do not include any ships placed on order that are contingent upon completion of conditions precedent and/or financing and any ships on order by our Partner Brands.

1 unchanged sentence

Commitments and Contingencies , for further information on our ships on order.

At June 30, 2024 and December 31, 2023, approximately 44.4 % and 43.5 %, respectively, of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate.

At September 30, 2024 and December 31, 2023, approximately 39.6 % and 43.5 %, 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 2024 and 2023 the average notional amount of foreign currency forward contracts was approximately $ 964 million and $ 1.3 billion, respectively.

During the third quarter of 2024 and 2023 the average notional amount of foreign currency forward contracts was approximately $ 989 million and $ 1.4 billion, respectively.

These instruments are not designated as hedging instruments.

For the quarters ended June 30, 2024 and 2023, changes in the fair value of the foreign currency forward contracts resulted in immaterial (losses) gains, which were offset by the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same periods.

These amounts were recognized in earnings within Other expense in our consolidated statements of comprehensive income (loss).

For the six months ended June 30, 2024 and 2023, changes in the fair value of the foreign currency forward contracts resulted in (losses) gains of $( 40 ) million and $ 12 million, respectively, which offset gains (losses) arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same periods of $ 34 million and $( 27 ) million, respectively.

For the quarters and nine months ended September 30, 2024 and 2023, changes in the fair value of the foreign currency forward contracts, and the remeasurement of monetary assets and liabilities denominated in foreign currencies resulted in immaterial gain (losses).

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, 2024 and December 31, 2023 was $ 2.1 billion and $ 2.9 billion, respectively.

The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of September 30, 2024 and December 31, 2023 was $ 2.1 billion and $ 2.9 billion, respectively.

Non-Derivative Instruments

1 unchanged sentence

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 primarily in TUI Cruises of € 731 million, or approximately $ 783 million, as of June 30, 2024.

We had designated debt as a hedge of our net investments primarily in TUI Cruises of € 791 million, or approximately $ 883 million, as of September 30, 2024.

As of December 31, 2023, we had designated debt as a hedge of our net investments primarily in TUI Cruises of € 648 million, or approximately $ 716 million.

6 unchanged sentences

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, 2024 and June 30, 2023, we did not discontinue cash flow hedge accounting on any of our fuel swap agreements.

At June 30, 2024, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2026.

As of June 30, 2024 and December 31, 2023, we had the following outstanding fuel swap agreements:

For the quarters ended September 30, 2024 and September 30, 2023, we did not discontinue cash flow hedge accounting on any of our fuel swap agreements.

At September 30, 2024, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2027.

As of September 30, 2024 and December 31, 2023, we had the following outstanding fuel swap agreements:

Fuel Swap Agreements

As of June 30, 2024 As of December 31, 2023

As of September 30, 2024 As of December 31, 2023

Designated as hedges:

3 unchanged sentences

2026 786,750 44,200

2027 182,049 —

Fuel Swap Agreements

As of June 30, 2024 As of December 31, 2023

As of September 30, 2024 As of December 31, 2023

Designated hedges as a % of projected fuel purchases:

2 unchanged sentences

2026 44 % 3 %

As of June 30, 2024, there was $ 36 million of estimated unrealized net gain 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 when compared to $ 21 million of estimated unrealized net loss at December 31, 2023.

2027 10 % — %

As of September 30, 2024, there was $ 38 million of 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 when compared to $ 21 million of estimated unrealized net loss at December 31, 2023.

Reclassification is expected to occur as the result of fuel consumption associated with our hedged forecasted fuel purchases.

2 unchanged sentences

Asset Derivatives Liability Derivatives

Balance Sheet Location As of June 30, 2024 As of December 31, 2023 Balance Sheet Location As of June 30, 2024 As of December 31, 2023

Balance Sheet Location As of September 30, 2024 As of December 31, 2023 Balance Sheet Location As of September 30, 2024 As of December 31, 2023

Fair Value Fair Value Fair Value Fair Value

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Non-derivative instrument designated as

hedging instrument under ASC 815-20 Balance Sheet Location As of June 30, 2024 As of December 31, 2023

hedging instrument under ASC 815-20 Balance Sheet Location As of September 30, 2024 As of December 31, 2023

Foreign currency debt Current portion of long-term debt $ 65 $ 65

4 unchanged sentences

Comprehensive Loss on Derivatives

Quarter Ended June 30, 2024 Quarter Ended June 30, 2023 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

Quarter Ended September 30, 2024 Quarter Ended September 30, 2023 Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023

Interest rate swaps $ ( 20 ) $ 23 $ 8 $ 35

5 unchanged sentences

Non-derivative instruments under ASC 815-20 Net

Investment Hedging Relationships Quarter Ended June 30, 2024 Quarter Ended June 30, 2023 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

Investment Hedging Relationships Quarter Ended September 30, 2024 Quarter Ended September 30, 2023 Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023

Foreign Currency Debt $ ( 35 ) $ 18 $ ( 13 ) $ 7

5 unchanged sentences

Gain (Loss) Recognized in

Income on Derivatives Quarter Ended June 30, 2024 Quarter Ended June 30, 2023 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

Foreign currency forward contracts Other (expense) income $ ( 5 ) $ 8 $ ( 40 ) $ 12

Income on Derivatives Quarter Ended September 30, 2024 Quarter Ended September 30, 2023 Nine Months Ended September 30, 2024 Nine Months Ended September 30, 2023

Foreign currency forward contracts Other income (expense) $ 33 $ ( 43 ) $ ( 8 ) $ ( 30 )

Fuel swaps Other income (expense) — 1 — 1

$ 33 $ ( 42 ) $ ( 8 ) $ ( 29 )

1 unchanged sentence

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.

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, 2024, our senior unsecured debt credit rating was BB+ by Standard & Poor's and Ba2 by Moody's.

As of June 30, 2024, six of our ship debt interest rate derivative hedges had reached their fifth-year anniversary;

As of September 30, 2024, our senior unsecured debt credit rating was BB+ by Standard & Poor's and Ba2 by Moody's.

As of September 30, 2024, 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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements