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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
FORM 10-Q 
(Mark One) 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from            to            
Commission File Number: 1-11884
ROYAL CARIBBEAN CRUISES LTD.
(Exact name of registrant as specified in its charter) 
Republic of Liberia
 98-0081645
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
 
1050 Caribbean Way, Miami, Florida 33132
(Address of principal executive offices) (zip code) 
(305) 539-6000
(Registrant’s telephone number, including area code) 
N/A
(Former name, former address and former fiscal year, if changed since last report) 

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.01 per shareRCLNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer
 
Accelerated filer
 
Non-accelerated filer
 
Smaller reporting company
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No  
There were 257,349,196 shares of common stock outstanding as of April 22, 2024.


























ROYAL CARIBBEAN CRUISES LTD.




PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited; in millions, except per share data)
Quarter Ended March 31,
 20242023
Passenger ticket revenues$2,542 $1,897 
Onboard and other revenues1,186 989 
Total revenues3,728 2,886 
Cruise operating expenses:  
Commissions, transportation and other498 403 
Onboard and other193 159 
Payroll and related318 310 
Food221 199 
Fuel304 302 
Other operating522 420 
Total cruise operating expenses2,056 1,793 
Marketing, selling and administrative expenses535 461 
Depreciation and amortization expenses387 360 
Operating Income750 272 
Other income (expense):  
Interest income5 15 
Interest expense, net of interest capitalized(424)(360)
Equity investment income41 20 
Other (expense) income (8)5 
 (386)(320)
Net Income (Loss)364 (48)
Less: Net Income attributable to noncontrolling interest4  
Net Income (Loss) attributable to Royal Caribbean Cruises Ltd.$360 $(48)
Earnings (Loss) per Share:  
Basic$1.40 $(0.19)
Diluted$1.35 $(0.19)
Weighted-Average Shares Outstanding:  
Basic257 255 
Diluted281 255 
Comprehensive Income (Loss)  
Net Income (Loss)$364 $(48)
Other comprehensive income (loss):  
Foreign currency translation adjustments4 (7)
Change in defined benefit plans9 4 
Gain (loss) on cash flow derivative hedges44 (32)
Total other comprehensive income (loss)57 (35)
Comprehensive Income (Loss)421 (83)
Less: Comprehensive Income attributable to noncontrolling interest4  
Comprehensive Income (Loss) attributable to Royal Caribbean Cruises Ltd.$417 $(83)



The accompanying notes are an integral part of these consolidated financial statements
1


ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
 As of
 March 31,December 31,
 20242023
 (unaudited) 
Assets  
Current assets  
Cash and cash equivalents$437 $497 
Trade and other receivables, net of allowances of $9 and $7 at March 31, 2024 and December 31, 2023, respectively
455 405 
Inventories236 248 
Prepaid expenses and other assets690 617 
Derivative financial instruments52 25 
Total current assets1,870 1,792 
Property and equipment, net30,025 30,114 
Operating lease right-of-use assets599 611 
Goodwill809 809 
Other assets, net of allowances of $43 at March 31, 2024 and December 31, 2023.
1,887 1,805 
Total assets$35,190 $35,131 
Liabilities and Shareholders’ Equity  
Current liabilities  
Current portion of long-term debt$1,643 $1,720 
Current portion of operating lease liabilities63 65 
Accounts payable876 792 
Accrued expenses and other liabilities1,236 1,478 
Derivative financial instruments47 35 
Customer deposits6,040 5,311 
Total current liabilities9,905 9,401 
Long-term debt18,876 19,732 
Long-term operating lease liabilities603 613 
Other long-term liabilities481 486 
Total liabilities29,865 30,232 
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; 285,814,489 and 284,672,386 shares issued, March 31, 2024 and December 31, 2023, respectively)
3 3 
Paid-in capital7,496 7,474 
Retained earnings (accumulated deficit)350 (10)
Accumulated other comprehensive loss(617)(674)
Treasury stock (28,468,430 and 28,248,125 common shares at cost, March 31, 2024 and December 31, 2023, respectively)
(2,081)(2,069)
Total shareholders’ equity attributable to Royal Caribbean Cruises Ltd.5,151 4,724 
Noncontrolling Interests174 175 
Total shareholders’ equity5,325 4,899 
Total liabilities and shareholders’ equity$35,190 $35,131 

The accompanying notes are an integral part of these consolidated financial statements
2


ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)
Three Months Ended March 31,
 20242023
Operating Activities  
Net Income (Loss)$364 $(48)
Adjustments:  
Depreciation and amortization387 360 
Net deferred income tax benefit (11)
Gain (loss) on derivative instruments not designated as hedges35 (3)
Share-based compensation expense45 26 
Equity investment income(41)(20)
Amortization of debt issuance costs, discounts and premiums26 30 
Loss on extinguishment of debt116 13 
Changes in operating assets and liabilities:  
(Increase) decrease in trade and other receivables, net(57)123 
Decrease in inventories12 3 
Increase in prepaid expenses and other assets(80)(78)
Increase in accounts payable trade78 57 
Decrease in accrued expenses and other liabilities(238)(261)
Increase in customer deposits729 1,103 
Other, net(48)16 
Net cash provided by operating activities1,328 1,310 
Investing Activities  
Purchases of property and equipment(242)(252)
Cash received on settlement of derivative financial instruments 5 
Cash paid on settlement of derivative financial instruments(35)(6)
Investments in and loans to unconsolidated affiliates(9) 
Cash received on loans from unconsolidated affiliates5 5 
Other, net(15)14 
Net cash used in investing activities(296)(234)
Financing Activities  
Debt proceeds2,179 705 
Debt issuance costs(19)(27)
Repayments of debt(3,107)(2,664)
Premium on repayment of debt(104) 
Proceeds from sale of noncontrolling interest 209 
Other, net(40)(7)
Net cash used in financing activities(1,091)(1,784)
Effect of exchange rate changes on cash and cash equivalents(1) 
Net decrease in cash and cash equivalents (60)(708)
Cash and cash equivalents at beginning of period 497 1,935 
Cash and cash equivalents at end of period $437 $1,227 
The accompanying notes are an integral part of these consolidated financial statements
3


ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)
Three Months Ended March 31,
 20242023
Supplemental Disclosure  
Cash paid during the period for:  
Interest, net of amount capitalized$411 $389 
Non-cash Investing Activities  
Purchase of property and equipment included in accounts payable and accrued expenses and other liabilities$44 $19 
The accompanying notes are an integral part of these consolidated financial statements
4


ROYAL CARIBBEAN CRUISES LTD.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(unaudited; in millions)


Common StockPaid-in CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive LossTreasury StockNoncontrolling InterestTotal Shareholders' Equity
Balance at January 1, 2024$3 $7,474 $(10)$(674)$(2,069)175 $4,899 
Activity related to employee stock plans— 22 — — — — 22 
Changes related to cash flow derivative hedges— — — 44 — — 44 
Change in defined benefit plans— — — 9 — — 9 
Foreign currency translation adjustments— — — 4 — — 4 
Purchase of treasury stock— — — — (12)— (12)
Net Income attributable to noncontrolling interest— — — — — 4 4 
Dividends from noncontrolling interest— — — — — (5)(5)
Net Income attributable to Royal Caribbean Cruises Ltd.— — 360 — — — 360 
Balance at March 31, 2024$3 $7,496 $350 $(617)$(2,081)$174 $5,325 


Common StockPaid-in CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive LossTreasury StockNoncontrolling InterestTotal Shareholders' Equity
Balance at January 1, 2023$3 $7,285 $(1,707)$(643)$(2,068)$— $2,870 
Activity related to employee stock plans— 21 — — — — 21 
Changes related to cash flow derivative hedges— — — (32)— — (32)
Change in defined benefit plans— — — 4 — — 4 
Foreign currency translation adjustments— — — (7)— — (7)
Purchase of treasury stock— — — — (1)— (1)
Sale of noncontrolling interest— 45 — — — 174 219 
Net Loss— — (48)— — — (48)
Balance at March 31, 2023$3 $7,351 $(1,755)$(678)$(2,069)$174 $3,026 







The accompanying notes are an integral part of these consolidated financial statements
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ROYAL CARIBBEAN CRUISES LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
As used in this Quarterly Report on Form 10-Q, the terms “Royal Caribbean,” "Royal Caribbean Group," the “Company,” “we,” “our” and “us” refer to Royal Caribbean Cruises Ltd. and, depending on the context, Royal Caribbean Cruises Ltd.’s consolidated subsidiaries and/or affiliates. The terms “Royal Caribbean International,” “Celebrity Cruises,” and "Silversea Cruises" refer to our wholly owned global cruise brands. Throughout this Quarterly Report on Form 10-Q, we also refer to our partner brands in which we hold an ownership interest, including “TUI Cruises” and "Hapag-Lloyd Cruises." However, because these partner brands are unconsolidated investments, our operating results and other disclosures herein do not include these brands unless otherwise specified. In accordance with cruise vacation industry practice, the term “berths” is determined based on double occupancy per cabin even though many cabins can accommodate three or more passengers. This Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023.
This Quarterly Report on Form 10-Q also includes trademarks, trade names and service marks of other companies. Use or display by us of other parties’ trademarks, trade names or service marks is not intended to and does not imply a relationship with, or endorsement or sponsorship of us by, these other parties other than as described herein.
Note 1. General
Description of Business 
We are a global cruise company. We own and operate three global cruise brands: Royal Caribbean International, Celebrity Cruises and Silversea Cruises (collectively, our "Global Brands"). We also own a 50% joint venture interest in TUI Cruises GmbH ("TUIC"), which operates the German brands TUI Cruises 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 have a combined fleet of 65 ships as of March 31, 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.
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, 2023 for a discussion of our significant accounting policies. The Company has changed its presentation from thousands to millions and, as a result, any necessary rounding adjustments have been made to prior period disclosed amounts.
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
Recent 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
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may elect to apply the new guidance retrospectively back to their original formation date. We are currently evaluating the impact of the new guidance on our consolidated financial statements.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU requires enhanced disclosures about significant segment expenses and other segment items and requires companies to disclose all annual disclosures about segments in interim periods. This ASU also requires public entities with a single reportable segment to provide all the disclosures required by the amendments in this ASU and all existing segment disclosures in Topic 280. The amendments in this ASU are intended to improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. 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.
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. Early adoption and retrospective application is permitted. We are currently evaluating the impact of the new guidance on our consolidated financial statements and related disclosures.
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, which generally ranges from three to 28 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 cruise operating expenses. The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $242 million and $203 million for the quarters ended March 31, 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. 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.
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Disaggregated Revenues
The following table disaggregates our total revenues by geographic regions where we provide cruise itineraries (in millions):
Quarter Ended March 31,
20242023
Revenues by itinerary
North America (1)$2,690 $2,193 
Asia/Pacific506 333 
Europe21 2 
Other regions (2)322 214 
Total revenues by itinerary3,539 2,742 
Other revenues (3)189 144 
Total revenues$3,728 $2,886 
(1)Includes the United States, Canada, Mexico and the Caribbean.
(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. 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 ended March 31, 2024 and 2023, our guests were sourced from the following areas:
Quarter Ended March 31,
20242023
Passenger ticket revenues:
United States 73 %76 %
All other countries (1)27 %24 %
(1)No other individual country's revenue exceeded 10% for the quarters ended March 31, 2024 and 2023.
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 $2.9 billion and $2.6 billion as of March 31, 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 March 31, 2024, our customer deposit balance includes approximately $317 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 ended March 31, 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.



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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 processors agreements require us, under certain circumstances, to maintain a reserve that can be satisfied by posting collateral. As of March 31, 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 March 31, 2024 and December 31, 2023, our contract assets were $166 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.
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 $293 million as of March 31, 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).
Note 4. Earnings (Loss) Per Share
Basic and diluted earnings (loss) per share is as follows (in millions, except per share data):
Quarter Ended March 31,
 20242023
Net Income (Loss) attributable to Royal Caribbean Cruises Ltd. for basic earnings (loss) per share$360 $(48)
Add convertible notes interest19  
Net Income (Loss) attributable to Royal Caribbean Cruises Ltd. for diluted earnings (loss) per share379 (48)
Weighted-average common shares outstanding257 255 
Dilutive effect of stock-based awards1  
Dilutive effect of convertible notes23  
Diluted weighted-average shares outstanding281 255 
Basic earnings (loss) per share$1.40 $(0.19)
Diluted earnings (loss) per share$1.35 $(0.19)
There were no antidilutive shares for the quarter ended March 31, 2024, compared to 30,994,718 antidilutive shares from our stock-based awards and convertible notes for the quarter ended March 31, 2023.

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.
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Effective March 31, 2023, we closed on the partnership agreement with iCON Infrastructure Partners VI, L.P. ("iCON"). This partnership will own, develop, and manage cruise terminal facilities and infrastructure in key ports of call, initially including several development projects in Italy and Spain. As part of the transaction with iCON we also sold 80% of the entity which owns our terminal at PortMiami. Refer below to equity method investments and controlled subsidiaries for further information on the transaction. In addition, the partnership will 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 GmbH ("TUIC"), our 50%-owned joint venture, which operates the brands TUI Cruises 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 March 31, 2024, the net book value of our investment in TUIC was $678 million, primarily consisting of $594 million in equity and a loan of €67 million, or approximately $73 million based on the exchange rate at March 31, 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. The loan, which was made in connection with the sale of Splendour of the Seas in April 2016, accrues interest at a rate of 6.25% per annum and is payable over 10 years. This loan is 50% guaranteed by TUI AG 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 a 40% noncontrolling interest, is a VIE. This facility serves cruise and cargo ships, oil and gas tankers and offshore units. We utilize this facility, among other ship repair facilities, for our regularly scheduled drydocks and certain emergency repairs as may be required. We have determined that we are not the primary beneficiary of this facility as we do not have the power to direct the activities that most significantly impact the facility’s economic performance. Accordingly, we do not consolidate this entity and account for this investment under the equity method of accounting.
During the second half of 2023, we formed a 50%-owned joint venture with the other 40% shareholder of Grand Bahama to operate Floating Docks S. DE RL. (“Floating Docks”). 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 $59 million as of March 31, 2024. Our investment in Floating Docks, including loans, is immaterial to our consolidated financial statements as of March 31, 2024.
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 partner. All the significant operating and financial decisions of Floating Docks require the consent of both 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.
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. At closing, 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. We have determined that we are not the primary beneficiary for either of these entities as we do not have the power to direct the activities that most significantly impact the economic performance. Accordingly, we do not consolidate these entities and account for these investments under the equity method of accounting.

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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 March 31,
20242023
Share of equity income from investments$41 $20 

As of March 31, 2024As of December 31, 2023
Total notes receivable due from equity investments$107 $105 
Less-current portion (1)18 19 
Long-term portion (2)$89 $86 
(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 part of the transaction with iCON, we sold an 80% interest in the entity which owns our terminal at PortMiami for $209 million and retained a 20% minority interest, effective March 31, 2023. We also sold a noncontrolling interest in another entity which is developing a port project in Spain for an immaterial amount. We have determined that both of these entities are VIEs, and we are the primary beneficiary as we have the power to direct the activities that most significantly impact the facility’s economic performance. Accordingly, we continue to consolidate both entities. The cash consideration received for the sale of the PortMiami terminal company, net of transaction costs, was allocated between paid-in capital and noncontrolling interest using the net book value of our investment in the PortMiami terminal, as presented in the statement of shareholders' equity.
Other Assets
Credit Losses
We reviewed our receivables for credit losses in connection with the preparation of our financial statements for the quarter ended March 31, 2024. In evaluating the 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 March 31, 2024 and 2023 primarily relates to credit losses recognized on notes receivable for the previous sale of certain property and equipment of $43 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):
Three Months Ended March 31,
20242023
Balance, beginning of period$49 $83 
Credit loss (recovery), net2 (7)
Write-offs (2)
Balance, end of period$51 $74 
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Note 6. Debt
Debt consists of the following (in millions):
Interest Rate (1)
Maturities ThroughAs of March 31, 2024As of December 31, 2023
Fixed rate debt:
Unsecured senior notes
3.70% to 9.25%
2026 - 2032$7,898 $7,899 
Secured senior notes
8.25%
20291,000 1,000 
Unsecured term loans
1.28% to 5.89%
2027 - 20356,420 6,569 
Convertible notes
6.00%
20251,150 1,150 
Total fixed rate debt16,468 16,618 
Variable rate debt:
Unsecured revolving credit facilities (2)
6.76% to 7.48%
2025 - 2028304 899 
USD unsecured term loan
6.05% to 9.95%
2024 - 20373,555 3,666 
Euro unsecured term loan
5.00% to 6.14%
2024 - 2028352 443 
Total variable rate debt4,211 5,008 
Finance lease liabilities363 369 
Total debt (3)
21,042 21,995 
Less: unamortized debt issuance costs(523)(543)
Total debt, net of unamortized debt issuance costs20,519 21,452 
Less—current portion (1,643)(1,720)
Long-term portion$18,876 $19,732 
(1) Interest rates based on outstanding loan balance as of March 31, 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 primarily at 1.33%. Based on applicable Term SOFR rates, as of March 31, 2024, the maximum interest rate under the unsecured credit facilities was 6.76%. We also pay a facility fee primarily at 0.17% of the total commitments under such facility.
(3) At March 31, 2024 and December 31, 2023, the weighted average interest rate for total debt was 5.75% and 6.06%, respectively.
Unsecured revolving credit facilities
As of March 31, 2024 our aggregate revolving credit capacity is $3.6 billion of which $1.8 billion of the commitments are scheduled to mature in October 2026, $1.8 billion of the commitments are scheduled to mature in October 2028, and the remaining $77 million of commitments are scheduled to mature in April 2025. As of March 31, 2024, we had undrawn capacity of $3.3 billion under our unsecured revolving credit facilities.
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. 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 quarter ended March 31, 2024.
Export credit agency guarantees
Except for the term loans we incurred to acquire Celebrity Flora and Silver Moon, all of our unsecured ship financing term loans are guaranteed by the export credit agency in the respective country in which the ship is constructed. For the majority of the loans as of March 31, 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
12


the fees 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, limit our net debt-to-capital ratio, maintain minimum liquidity, and under certain facilities, to maintain a minimum stockholders' equity. As of March 31, 2024, our credit facility amendments require us to prepay outstanding deferred amounts of $839 million, if we elect to pay dividends or complete share repurchases. As of March 31, 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 March 31, 2024 for each of the next five years (in millions):
Year
As of March 31, 2024 (1)
Remainder of 2024$1,390 
20252,628 
20263,045 
20272,509 
20283,267 
Thereafter8,203 
$21,042 
(1)    Debt denominated in other currencies is calculated based on the applicable exchange rate at March 31, 2024.

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 March 31, 2024 and December 31, 2023. 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 $167 million as of March 31, 2024 and December 31, 2023. There will be future remeasurements as the County completes several construction milestones throughout the term of the extended lease. The most significant of which will be for Terminal G, which will include a remeasurement of the operating lease in 2027 or later, when the County satisfies substantial completion, as the minimum lease payments will increase 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.
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Finance Leases
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 March 31, 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. The Master Lease includes two five-year options to extend the lease, which we are reasonably certain to exercise. In November 2023, we executed a modification to the Master Lease agreement to extend its expiration from 2076 to 2077 after coming to an agreement with Miami-Dade 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 $105 million and $104 million as of March 31, 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.
Silversea Cruises operates Silver Dawn under a sale-leaseback agreement with a bargain purchase option at the end of the 15-year lease term. 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 $241 million and $246 million as of March 31, 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) ClassificationQuarter Ended March 31, 2024Quarter Ended March 31, 2023
Lease costs:
Operating lease costsCommission, transportation and other$71 $55 
Operating lease costsOther operating expenses4 6 
Operating lease costsMarketing, selling and administrative expenses4 5 
Financial lease costs:
Amortization of right-of-use-assetsDepreciation and amortization expenses3 6 
Interest on lease liabilitiesInterest expense, net of interest capitalized8 8 
Total lease costs$90 $80 

In addition, certain of our berthing agreements include variable lease costs based on the number of passengers berthed. During the quarters ended March 31, 2024, and 2023 we had $51 million and $38 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss), 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 March 31, 2024As of December 31, 2023
Weighted average of the remaining lease term in years
Operating leases20.0219.43
Finance leases24.0623.92
Weighted average discount rate
Operating leases7.55 %7.53 %
Finance leases5.84 %5.83 %
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Supplemental cash flow information related to leases is as follows (in millions):
Three Months Ended March 31, 2024Three Months Ended March 31, 2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$99 $36 
Operating cash flows from finance leases8 8 
Financing cash flows from finance leases$6 $14 
As of March 31, 2024, maturities related to lease liabilities were as follows (in millions):
YearOperating LeasesFinance Leases
Remainder of 2024$84 $35 
2025101 45 
202691 39 
202772 38 
202872 37 
Thereafter1,062 684 
Total lease payments1,482 878 
Less: Interest(816)(515)
Present value of lease liabilities$666 $363 
















15


Note 8. Commitments and Contingencies
Ship Purchase Obligations
Our future capital commitments consist primarily of new ship orders. As of March 31, 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:
ShipShipyardExpected deliveryApproximate
Berths
Royal Caribbean International —
Oasis-class:
Utopia of the SeasChantiers de l'Atlantique2nd Quarter 20245,700
Icon-class:
Star of the SeasMeyer Turku Oy3rd Quarter 20255,600
UnnamedMeyer Turku Oy2nd Quarter 20265,600
Celebrity Cruises —
Edge-class:
Celebrity XcelChantiers de l'Atlantique4th Quarter 20253,250
Silversea Cruises —
Evolution-class:
Silver RayMeyer Werft2nd Quarter 2024730
TUI Cruises (50% joint venture) —
Mein Schiff 7Meyer Turku Oy2nd Quarter 20242,900
Mein Schiff RelaxFincantieri4th Quarter 20244,100
UnnamedFincantieri2nd Quarter 20264,100
Total Berths31,980
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 March 31, 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 $8.1 billion, of which we had deposited $748 million as of such date. 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, 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 plaintiff seeks 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 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. During the fourth quarter of 2022, we recorded a charge of approximately $130.0 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.
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.

16


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.
Note 9. Shareholders' Equity
Dividends
We did not declare any dividends during the quarters ended March 31, 2024 and 2023. We were previously restricted under certain of our credit facilities from paying dividends while waivers to the financial covenants within such facilities were in effect. While the waivers have now expired, in the event we declare a dividend, we will need to repay the principal amounts deferred under our export credit facilities.
Note 10. Changes in Accumulated Other Comprehensive Loss
The following table presents the changes in accumulated other comprehensive loss by component for the quarters ended March 31, 2024 and 2023 (in millions):

Accumulated Other Comprehensive Loss for the Three Months Ended March 31, 2024Accumulated Other Comprehensive Loss for the Three Months Ended March 31, 2023
 Changes related to cash flow derivative hedgesChanges in defined benefit plansForeign currency translation adjustmentsAccumulated other comprehensive lossChanges related to cash flow derivative hedgesChanges in defined benefit plansForeign currency translation adjustmentsAccumulated other comprehensive loss
Accumulated comprehensive loss at beginning of the year$(666)$(2)$(6)$(674)$(638)$(8)$3 $(643)
Other comprehensive income (loss) before reclassifications56 9 4 69 (30)4 (7)(33)
Amounts reclassified from accumulated other comprehensive loss(12)  (12)(2)  (2)
Net current-period other comprehensive income (loss)44 9 4 57 (32)4 (7)(35)
Ending balance$(622)$7 $(2)$(617)$(670)$(4)$(4)$(678)

The following table presents reclassifications out of accumulated other comprehensive loss for the quarters ended March 31, 2024 and 2023 (in millions):

 Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income 
Details About Accumulated Other Comprehensive Loss ComponentsQuarter Ended March 31, 2024Quarter Ended March 31, 2023Affected Line Item in Statements of
Comprehensive Income (Loss)
Gain (loss) on cash flow derivative hedges:  
Interest rate swaps$14 $10 Interest expense, net of interest capitalized
Foreign currency forward contracts(6)(3)Depreciation and amortization expenses
Foreign currency forward contracts (1)Other (expense) income
Fuel swaps  Other (expense) income
Fuel swaps4 (4)Fuel
 $12 $2  

17


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 March 31, 2024Fair Value Measurements at December 31, 2023
DescriptionTotal Carrying AmountTotal Fair Value
Level 1(1)
Level 2(2)
Level 3(3)
Total Carrying AmountTotal Fair Value
Level 1(1)
Level 2(2)
Level 3(3)
Assets:
Cash and cash equivalents(4)
$437 $437 $437 $ $ $497 $497 $497 $ $ 
Total Assets$437 $437 $437 $ $ $497 $497 $497 $ $ 
Liabilities:
Long-term debt (including current portion of debt)(5)
$20,156 $22,768 $ $22,768 $ $21,083 $23,700 $ $23,700 $ 
Total Liabilities$20,156 $22,768 $ $22,768 $ $21,083 $23,700 $ $23,700 $ 
(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 March 31, 2024 and December 31, 2023.
(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, accrued interest and accrued expenses approximate fair value as of March 31, 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 March 31, 2024Fair Value Measurements at December 31, 2023
DescriptionTotal
Level 1(1)
Level 2(2)
Level 3(3)
Total
Level 1(1)
Level 2(2)
Level 3(3)
Assets:        
Derivative financial instruments(4)
$173 $ $173 $ $144 $ $144 $ 
Total Assets$173 $ $173 $ $144 $ $144 $ 
Liabilities:        
Derivative financial instruments(4)
$58 $ $58 $ $66 $ $66 $ 
Total Liabilities$58 $ $58 $ $66 $ $66 $ 
(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 March 31, 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. For foreign currency forward contracts, interest rate swaps and fuel swaps, fair value is derived using valuation models that utilize the income valuation approach. These valuation models take into account the contract terms, such as maturity, as well as other inputs, such as foreign exchange rates and curves, fuel types, fuel curves and interest rate yield curves. Derivative instrument fair values take into account the creditworthiness of the counterparty and the Company.
(3)Inputs that are unobservable. No Level 3 inputs were used in fair value measurements of other financial instruments as of March 31, 2024 and December 31, 2023.
(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 March 31, 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 March 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 March 31, 2024As of December 31, 2023
Gross Amount of Derivative Assets Presented in the Consolidated Balance SheetGross 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 SheetGross Amount of Eligible Offsetting
Recognized
Derivative Liabilities
Cash Collateral
Received
Net Amount of
Derivative Assets
Derivatives subject to master netting agreements$173 $(48)$ $125 $144 $(28)$ $116 
Total$173 $(48)$ $125 $144 $(28)$ $116 
Gross Amount of Derivative Liabilities Presented in the Consolidated Balance SheetGross Amount of Eligible Offsetting
Recognized
Derivative Assets
Cash Collateral
Pledged
Net Amount of
Derivative Liabilities
Gross Amount of Derivative Liabilities Presented in the Consolidated Balance SheetGross Amount of Eligible Offsetting
Recognized
Derivative Assets
Cash Collateral
Pledged
Net Amount of
Derivative Liabilities
Derivatives subject to master netting agreements$(58)$48 $ $(10)$(66)$28 $ $(38)
Total$(58)$48 $ $(10)$(66)$28 $ $(38)

Concentrations of Credit Risk
We monitor our credit risk associated with financial and other institutions with which we conduct significant business, and to minimize these risks, we select counterparties with credit risks acceptable to us and we seek to limit our exposure to an individual counterparty. Credit risk, including, but not limited to, counterparty nonperformance under derivative instruments, our credit facilities and new ship progress payment guarantees, is not considered significant, as we primarily conduct business with large, well-established financial institutions, insurance companies and export credit agencies many of which we have long-term relationships with and which have credit risks acceptable to us or where the credit risk is spread out among a large number of counterparties. As of March 31, 2024, we had counterparty credit risk exposure under our derivative instruments of $149 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 we 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.
Cash flows from derivative instruments that are designated as fair value or cash flow hedges are classified in the same category as the cash flows from the underlying hedged items. In the event that hedge accounting is discontinued, cash flows subsequent to the date of discontinuance are classified within investing activities. Cash flows from derivative instruments not designated as hedging instruments are classified as investing activities. 
We consider the classification of the underlying hedged item’s cash flows in determining the classification for the designated derivative instrument’s cash flows. We classify derivative instrument cash flows from hedges of benchmark interest rate or hedges of fuel expense as operating activities due to the nature of the hedged item. Likewise, we classify derivative instrument cash flows from hedges of foreign currency risk on our newbuild ship payments as investing activities.
Interest Rate Risk
Our exposure to market risk for changes in interest rates primarily relates to our debt obligations, including future interest payments. At March 31, 2024 and December 31, 2023, approximately 86.3% 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 March 31, 2024 and December 31, 2023, we maintained interest rate swap agreements on the following floating-rate debt instruments:
Debt InstrumentSwap Notional as of March 31, 2024 (in millions)Maturity
Debt Floating Rate
All-in Fixed Rate as of March 31, 2024
Celebrity Reflection term loan
$55 October 2024Term SOFR plus0.40%2.88%
Quantum of the Seas term loan
184 October 2026Term SOFR plus1.30%3.78%
Anthem of the Seas term loan
211 April 2027Term SOFR plus1.30%3.90%
Ovation of the Seas term loan
311 April 2028Term SOFR plus1.00%3.20%
Harmony of the Seas term loan (1)
281 May 2028EURIBOR plus1.15%2.26%
Odyssey of the Seas term loan (2)
345 October 2032Term SOFR plus0.96%3.28%
Odyssey of the Seas term loan (2)
173 October 2032Term SOFR plus0.96%2.91%
$1,560 
(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 March 31, 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 March 31, 2024 and December 31, 2023 was $1.6 billion.
Foreign Currency Exchange Rate Risk
Derivative Instruments
Our primary exposure to foreign currency exchange rate risk relates to our ship construction contracts denominated in Euros, our foreign currency denominated debt and our international business operations. We enter into foreign currency forward contracts to manage portions of the exposure to movements in foreign currency exchange rates. As of March 31, 2024, the aggregate cost of our ships on order was $8.1 billion, of which we had deposited $748 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. Refer to Note 8. Commitments and Contingencies, for further information on our ships on order. At March 31, 2024 and December 31, 2023, approximately 44.1% 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 first quarter of 2024 and 2023 the average notional amount of foreign currency forward contracts was approximately $1.1 billion and $1.2 billion, respectively. These instruments are not designated as hedging instruments. For the quarters ended March 31, 2024 and 2023, changes in the fair value of the foreign currency forward contracts resulted in (losses) gain of $(35) million and $4 million, respectively, which offset gains (losses) arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same periods of $30 million and $(11) million, respectively. These amounts were recognized in earnings within Other (expense) income 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 March 31, 2024 and December 31, 2023 was $2.9 billion.
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 primarily in TUI Cruises of €659 million, or approximately $712 million, as of March 31, 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.
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 (expense) income 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) income for each reporting period through the maturity dates of the fuel swaps. For the quarters ended March 31, 2024 and March 31, 2023, we did not discontinue cash flow hedge accounting on any of our fuel swap agreements.
At March 31, 2024, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2026. As of March 31, 2024 and December 31, 2023, we had the following outstanding fuel swap agreements:
 Fuel Swap Agreements
 As of March 31, 2024As of December 31, 2023
Designated as hedges:(metric tons)
2024789,801 1,054,501 
2025773,700 685,400 
2026252,700 44,200 
 Fuel Swap Agreements
 As of March 31, 2024As of December 31, 2023
Designated hedges as a % of projected fuel purchases:(% hedged)
202462 %61 %
202545 %39 %
202615 %3 %

As of March 31, 2024, there was $39 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 $21 million of estimated unrealized net loss at December 31, 2023. Reclassification is expected to occur as the result of fuel consumption associated with our hedged forecasted fuel purchases.
The fair value and line item caption of derivative instruments recorded within our consolidated balance sheets were as follows (in millions):
Fair Value of Derivative Instruments
Asset DerivativesLiability Derivatives
Balance Sheet LocationAs of March 31, 2024As of December 31, 2023Balance Sheet LocationAs of March 31, 2024As of December 31, 2023
Fair ValueFair ValueFair ValueFair Value
Derivatives designated as hedging instruments under ASC 815-20(1)
Interest rate-swapsDerivative financial instruments$ 1 Derivative financial instruments$ $ 
Interest rate swapsOther assets83 75 Other long-term liabilities  
Foreign currency forward contractsDerivative financial instruments10 20 Derivative financial instruments44 9 
Foreign currency forward contractsOther assets22 44 Other long-term liabilities9 4 
Fuel swapsDerivative financial instruments42 4 Derivative financial instruments3 26 
Fuel swapsOther assets16  Other long-term liabilities2 27 
Total derivatives designated as hedging instruments under 815-20$173 $144 $58 $66 
(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 LocationAs of March 31, 2024As of December 31, 2023
Foreign currency debtCurrent portion of long-term debt$63 $65 
Foreign currency debtLong-term debt649 523 
$712 $588 

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 RelationshipsAmount of Gain (Loss) Recognized in
Accumulated Other
Comprehensive Loss on Derivatives 
Quarter Ended March 31, 2024Quarter Ended March 31, 2023
Interest rate swaps$21 $(11)