Good morning, everyone, and welcome to our business update conference call. I'm Arnold Donald, President and CEO of Carnival Corporation & plc. Today, I'm joined telephonically by our Chairman, Micky Arison, as well as David Bernstein, our Chief Financial Officer, and Beth Roberts, Senior Vice President of Investor Relations. Thank you all for joining us this morning. Now, before I begin, please note that some of our remarks on this call will be forward-looking. Therefore, I must refer you to the cautionary statement in today's press release. Excitedly, we are on a path to return to full fleet operations, and we are very happy to continue to welcome our loyal guests back on board, as well as to welcome new guests.
We're working diligently to have offerings that serve all of our guests in a way that is compliant in the homeports and destinations we touch while serving the best interest of public health. So far, we've announced the resumption of operations for 42 ships across eight of our nine brands by fiscal year-end. That represents over half of our fleet capacity returning to guest cruise operations. This includes what we expect to be a very successful relaunching of cruising in the U.K. later this week with P&O Cruises Britannia, and sailing once again from the United States on Carnival Horizon over the Fourth of July. In fact, Carnival Horizon will be joined by nine other ships restarting in the United States by the end of August.
We're evaluating additional deployment options throughout the fall and winter period, with a focus on maximizing future cash flow while delivering a great guest experience in a way that, of course, serves the best interest of public health. Our highest responsibility, and therefore our top priority, is always compliance, environmental protection, and the health, safety, and well-being of our guests, of the people in the communities we touch and serve, and of course, our Carnival family, our team members shipboard and shoreside. We continue to work toward resuming operations also in Australia and Asia. While we can't predict the pace of the ramp-up to full fleet operations, we continue to expect full operations well before our important summer season next year. In the near term, we will be impacted by physical distancing requirements on a portion of our cruises, which limits our historically high occupancy levels.
Also near-term, we'll be impacted by restricted deployment options as not all of the 700 ports we visit are receiving guests just yet. As more people receive vaccines, as treatments continue to advance, and as mitigation of the spread of the virus continues, current restrictions, of course, will also evolve, and we're confident we'll eventually be able to sail without these restrictions. Throughout this pause, we have been proactively managing to resume operations as an even stronger operating company. Our strategic decision to accelerate the exit of 19 ships has lowered our capacity growth to roughly 2.5% compounded annually from 2019 through 2025. That's down from 4.5% pre-COVID-19. Moreover, we have opportunistically rebalanced our portfolio through the ship exits as well as the ship transfers and any modifications to our new build schedule.
The combination of which will transfer 8,000 berths from our continental European brands to America's favorite cruise line, Carnival Cruise Line, to optimize the current environment, maximize cash generation, and improve our return on invested capital. While overall fleet capacity growth is constrained, we will benefit from an exciting roster of new ships spread across our brands to capitalize on the pent-up demand and drive even more enthusiasm, excitement, and demand around our restart plan. Nearly every brand will soon have a new ship welcoming guests for the first time, beginning with our namesake brand, Carnival, introducing the new Mardi Gras. Now, it's no small task to successfully address the challenge of honoring the original Mardi Gras, the ship that began the advent of our corporation and has been said, the advent of modern-day cruising. But the new Mardi Gras does just that.
Recently featured on "Good Morning America," Mardi Gras has many features, including the first-ever rollercoaster at sea, BOLT. Trust me, I know from personal experience it is indeed a thrill to ride. Premium brand Holland America will introduce the new Rotterdam, sister ship to the very successful Koningsdam and Nieuw Statendam. Princess will welcome guests aboard another new MedallionClass ship, Enchanted Princess. Ultra-luxury brand Seabourn will welcome Seabourn Venture with its world-class expedition team and spectacular 360-degree view submarines. For the U.K., we enjoyed a phenomenal virtual naming ceremony for Iona. Iona's inaugural sailing will be August 7th. For Germany, we will introduce LNG-powered AIDAcosma, sister to the also highly successful AIDAnova.
For Southern Europe, Costa Firenze and LNG-powered Costa Toscana will replace the exit of several less efficient ships. We enjoy a structural benefit to revenue from these exciting new ships due to the richer mix of premium-priced balcony cabins, which will increase 6 percentage points to 55% of our fleet in 2023. We will achieve a further structural benefit to unit cost as we introduce these new, larger, more efficient ships, coupled with the 19 ships leaving the fleet, which were among our least efficient. Again, the combination of which will generate a 4% reduction in ship-level unit cost and a 3% reduction in unit fuel consumption going forward, enabling us to deliver more revenue to the bottom line.
Moreover, we've continued to find efficiencies across our existing fleet to reduce our costs further, as well as planning for streamlined shoreside operations as we ramp back up to full fleet operations. Our advertising efforts continue to evolve with heavy utilization of direct mail and other lower-cost channels such as digital and public relations-driven earned media as compared to higher-cost traditional channels. In fact, we have outstanding public relations opportunities coming up, such as the 50-year anniversary for both our namesake brand, Carnival Cruise Line, and the origin of our corporation. Also, we celebrated the 25th anniversary for our AIDA brand. AIDA initiated an exclusive cooperation with Germany's number one newspaper in conjunction with the jubilee and their return to service. The fleet stakes went viral, creating continuous news and onboard content that captured front-page news, both print and online.
Of course, we always leverage the excitement of our new builds to draw media attention. Just a couple of weeks ago, the arrival of Mardi Gras to the U.S. in Port Canaveral attracted extensive media attention. Last month, our virtual naming ceremony that I mentioned earlier for P&O UK's Iona captured record-breaking media coverage, receiving billions of media impressions, far exceeding the reach of any prior U.K. naming event. Meanwhile, despite our minimal advertising spend, we continue to experience an acceleration in booking trends globally, including capturing significant latent demand for our new sailings opening this summer. The strong initial demand has affirmed confidence in our future and indicates the potential for pricing strength over time.
Also, we see the potential for improved EBITDA in 2023 compared to 2019, driven primarily by the revenue growth from the introduction of new ships, along with the potential for higher revenue yield given pent-up demand and the benefit of a richer mix of premium cabins, coupled with structurally lower costs from the replacement of smaller, less efficient vessels with larger, more efficient vessels. At the same time, we are working aggressively to lower interest costs. I want to acknowledge here David Bernstein and our entire finance team for their very successful efforts in helping us to manage the balance sheet. As we said in our press release this morning, the company successfully refinanced a $2.8 billion term loan at an annual future interest savings of over $120 million. This is the first of many opportunistic refinances that we expect to undertake.
Importantly, we continue to make advancements in our sustainability efforts. In fact, earlier this week, we published our 2030 sustainability goals and our 2050 sustainability aspirations, which you can find in the press release issued earlier this week and online at our sustainability website, www.carnivalsustainability.com. A key focus of those sustainability efforts is our continued emphasis on the important issue of carbon emission reduction. As we previously shared, our absolute level of carbon emissions peaked in 2011. That's despite over 20% capacity growth since that time. It will remain below those levels as we capitalize on our industry-leading efforts to develop and roll out new technology. This includes examples such as shore power. Over 40% of our fleet is capable of plugging in while in port and liquefied natural gas.
We have 11 LNG ships either currently in the fleet or under construction, which will power nearly 20% of our total fleet capacity by 2025. 77 of our ships are fitted with advanced air quality systems, which benefit our overall emissions profile. We will continue to aggressively explore new technologies as we work toward net zero emissions over time. During this pause, we have made continuous improvements in other environmental, social, and ESG areas. We consider food waste another important place to focus our efforts. Food production, much of which is wasted, is among the largest contributors to global warming. We've taken measures to dramatically reduce our per person food waste and have made good progress toward our initial goal of reducing our food waste by 30% by 2022.
Among many efforts to honor our commitment to reduce our impact on the environment, we are installing food waste digesters on board our fleet where needed. These units will help to mitigate the risk of any non-food waste discharge. We are honoring our commitment to diversity and inclusion. Now we already have a diverse workforce with our crew hailing from nearly 150 countries. In addition, half of our operating companies are led by women executives. We've been recognized by Forbes as America's Best Large Employers as well as America's Best Employers for Diversity and America's Best Employers for Women. We were named a Glassdoor Employees' Choice Award winner 2021, recognizing the company as one of the best places to work. We are still striving for diversity at all levels and in all areas of our greater enterprise.
Therefore, we are working proactively to engineer diversity through our recruiting and development efforts. We're also striving for greater inclusion, where every employee feels they have the opportunity to make the contribution they want to be recognized and rewarded for those contributions, and to realize their individual career aspirations. Agility has been a key strength over the last 15 months. We expect the environment to remain dynamic as we roll out our fleet while continuing to adapt to an ever-changing situation. We're working aggressively to return our fleet to guest operations as quickly as practical while still serving the best interest of public health. With the aggressive actions we've already taken, optimizing our portfolio and reducing capacity, we are well-positioned to capitalize on pent-up demand and to emerge a leaner, more efficient company, reinforcing our global industry-leading position.
We have secured sufficient liquidity to see us through to full operations. Once we return to full operations, our cash flow will be the primary driver to return to investment-grade credit over time, creating greater shareholder value. Throughout these challenging times, we have received overwhelming support. Once again, thank you to our valued guests. Thank you to our travel agent partners. Thank you to the port communities who continue to work with us to prepare for a successful restart around the world. Thank you to the governments and health agencies in numerous countries and states who have partnered with us to vaccinate so many of our thousands and thousands of crew members. Thank you to our other many stakeholders for their ongoing support.
Thank you to the dedicated members of our Carnival family, shipboard and shoreside, who have worked tirelessly to get us to this turning point in our global restart efforts. Of course, thank you to our lenders and investors for their continued confidence in us and in our future. We can't wait to welcome everyone back on board. With that, I will turn the call over to David.
Thank you, Arnold. I'll start today with an update on booking trends. I'll provide our monthly average cash burn rate, along with a summary of our second quarter cash flows, and then finish up with some insights into our financial position. Turning to booking trends, our booking volumes have been very strong given the circumstances and are clearly improving. Volumes for all future cruises during the second quarter 2021 were 45% ahead of booking volumes during the first quarter. The increase was driven by both closed-in bookings associated with the recent restart announcements, as well as strong booking volumes for 2022. This is a clear demonstration of the pent-up demand for cruises, as well as the long-term potential for the market.
Just as positive, our cumulative advanced book position for the full year 2022 is ahead of a very strong 2019, which was at the high end of the historical range. I would like to point out that our booking volumes and book positions are very encouraging given that they were achieved with minimal advertising and promotional activity. Pricing on our full-year 2022 book position is higher than pricing on bookings at the same time for 2019 sailings, driven in part by the bundled pricing strategy for a number of our brands, but excluding the dilutive impact of Future Cruise Credits, or more commonly known as FCCs. This is a great achievement given pricing on bookings for 2019 sailings is a tough comparison as it was a high watermark for historical yields.
Over the past year or so, we have offered and our guests have chosen more and more bundled package options. In the end, we will see the benefit of these bundled packages in onboard and other revenue. I just want to remind everyone that due to the pause in guest cruise operations, the company's current booking trends are being compared to booking trends for 2019 sailings and not the prior year. Let's look at our monthly average cash burn rate. For the first half of 2021, our cash burn rate was $500 million per month, which was better than the previous forecast of $550 million. The improvement was mainly due to the timing of cash received from ship sales just before the end of the second quarter and some other small working capital changes.
During the third quarter, we are forecasting positive cash flow from the 27 ships that will have guest cruise operations during the quarter. However, keep in mind that many of those ships do not begin operations until late in the quarter. As a result, the Available Lower Berth Days or ALBDs, as they are more commonly called for the third quarter, will only be 3.8 million. However, as we have previously discussed, not all these ALBDs will be sold for our third-quarter cruises. Despite the forecasted positive cash flow from guest cruise operations, we are anticipating an increase in the third-quarter monthly cash burn rate versus the first half of 2021 because of several good news positive factors. First, restart expenses are accelerating as we have announced 42 ships will be in guest cruise operations by November 30th, our fiscal year-end.
Second, capital expenditures will be higher driven by the restart, and third, we have a number of progress payments on future new builds, which are timed to be paid during the third quarter. All of these expenditures have been anticipated and given the announced restart, many of them are now occurring in the third quarter. Because of the difficulty in projecting the timing between the quarters of all the restart expenses and capital expenditures, as well as the exact amount of revenue associated with third-quarter guest cruise operations as a result of the atypical short booking window, given that these cruises were announced so close to departure, we will not be providing a forecast of the third-quarter monthly average cash burn rate.
For those of you who are trying to model our future results, don't forget that margins on these third-quarter cruises will be less than our normal margins given the lower level of occupancy that is anticipated during the third quarter. With $9.3 billion of cash and short-term investments on our balance sheet, we believe we have enough liquidity to get us back to full guest cruise operations in the spring of 2022. I'll provide a summary of our second-quarter cash flows. During the second quarter, our total cash burn was $1.5 billion, simply our monthly average cash burn rate of $500 million per month times three, and we used an additional $1 billion of cash primarily for debt principal payments. This was somewhat offset by a $300 million increase in customer deposits.
During the second quarter, customer deposits on new bookings exceeded the impact of refunds driven partially by the receipt of payments from guests for cruises sailing in the current quarter. This is a welcome milestone and truly a sign that we are now solidly on the road to full resumption of guest cruise operations. I will finish up with some insight into our financial position. As I said before, we believe we have sufficient liquidity to get us back to full guest cruise operations. We are focused on pursuing refinancing opportunities to extend maturities and reduce interest expense. During the second quarter, three European export credit agencies, SACE, Hermes, and Finnvera, provided approval in principle to Debt Holiday 2 for the deferral of approximately $1 billion of principal payments that would have otherwise been due over a one-year period.
These transactions should be completed during the third quarter. The deferred principal payments will instead be made over the five-year period following the completion of the transactions, extending the maturity profiles of these loans. I want to thank everyone involved in these transactions for the support that they have demonstrated towards the company. Last month, we repriced our $2.8 billion Term Loan B. It was an incredibly successful transaction. It was well oversubscribed, which is unusual in the Term Loan B market. The U.S. dollar portion of the Term Loan B facility now has an interest rate of LIBOR plus a margin of 3%, which is 4.5 percentage points less than the LIBOR margin was before repricing.
The euro portion of the Term Loan facility now has an interest rate of EURIBOR plus a margin of 3.75%, which is 3.75 percentage points less than the EURIBOR margin was before repricing. This was the largest repricing change of a Term Loan ever achieved by any company in the Term Loan B market and will reduce our future annual interest expense by over $120 million per year.
Clearly, this transaction is an affirmation from investors on our bright future and their confidence in our managing team. As we look forward, given how supportive the debt capital market investors and commercial banks have been, we will be pursuing additional refinancing opportunities to meaningfully reduce our interest expense and extend our maturities over time. Now I'll turn the call back over to Arnold.
Thank you, David. Operator, please open the call to questions.
Absolutely. We'll now begin the question-and-answer session. If you would like to register for a question, press the one followed by the four on your touchtone phone. You'll here a three-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, press the one followed by the three. Once again ladies and gentlemen, press the one followed by the four now to register for a question. Thank you. Our first question comes from the line of Robin Farley with UBS. Please go ahead.
Great. Thanks. Good morning. I wanted to ask about your comment on pricing for 2022 cruises being ahead, excluding Future Cruise Credits. It seems like if Future Cruise Credits are about 15% of bookings and maybe only a 20% discount on average, that it would basically be a low single-digit impact to your pricing. I guess my question is, the checks that we do are showing very strong pricing for 2022, and a lot of that's probably the bundling impacting that. If you included that sort of 3% impact or so from Future Cruise Credits, would pricing not be up versus 2019 levels for 2022?
Part B of that question is just given that you expect all ships to be in service by the spring, maybe potentially not all at 100% occupancy yet at that point, does that give you the ability to have a little more price if the lowest 10% of cabins on the ship don't get filled? Thanks.
Thank you, Robin. Good morning. I'll let David add some detail. Generally, the pricing environment, as you point out, is strong. In terms of the fleet returning, yes, we're planning to have the fleet sailing before next summer, the full fleet. Of course, we have to see what evolves around the world. There's still pockets, and large pockets, of still serious challenges with COVID-19. We'll have to see how that unfolds. We expect to have the fleet sailing in full prior to next summer, and the pricing environment is strong. David?
Yes. Robin, when you think about 2022, as Arnold said, the environment is strong. Remember, we only have a portion of 2022 on the books. The FCCs rebookings represent a meaningful part of the overall bookings for 2022. As a result of that, you're seeing that in the short term, you mentioned 3%. The number is actually larger than that impact at the moment given the number of bookings we have. The other thing to keep in mind is that there were a lot of rebookings into 2022 from 2021 as we did pause and cancel some cruises. We rebooked people at the same price in 2022. The impact for the FCCs is a bit larger than what you had indicated.
I will say, as we continue to book the remaining portion of 2022, those FCC rebookings will become a smaller and smaller portion of the total. I do expect that when all is said and done, the FCC impact will just be a few percentage points on the ultimate final yield for 2022.
No, that's very helpful. Thanks. Understanding the timing of that the FCC portion will move down as more new bookings are taken, is it reasonable to think that your pricing Because right now what you have on the books, you mentioned, is a lot of rebooked and a lot of FCC. As those portions move down as a percent of total, is it reasonable based on the strength that you're seeing in new bookings coming in that price will be ahead of 2019 levels next year?
It's early days, and we're not in a position to give guidance. As Arnold said, the pricing environment is very strong. Our brands have done a lot to raise price over time. There's a lot of pent-up demand out there, and we feel very good about our overall position. Booking volumes, as we said, have been increasing. All the signs point in the right direction, but I do think it's premature for me to give guidance at this point.
Okay. No, great. Understood. Thank you. I'll hop back in the queue for my other questions. Thanks.
Thanks, Robin.
Thank you, Ms. Farley. Up next, we have a question from the line of Steve Wieczynski with Stifel. Please go ahead, sir.
Yeah. Hey, guys. Good morning. First question would actually be a clarification. I guess, I feel like I'm hearing you guys a little bit two different ways. What I mean by that is when you guys talk about getting your full fleet back in operation by the spring of 2022, does that mean the actual number of ships in operation, or does that mean all of your ships are going to be operating at normal capacity levels? I think there's some confusion out there with a lot of investors that we are talking to.
Okay. Thanks for the question. First of all, definitely, we hope to have all of our ships in and are planning for that. We also are optimistic that we can be at capacity at that point in time. We've got many months to go here to see. We're hopeful that we'll be sailing at capacity with the full fleet.
Okay. Gotcha. Second question.
Steve, if I could add one thing.
Sure.
I will point out the fact that we have a number of voyages, different cruises out there, and keep in mind that the voyages that we have that are for vaccinated guests, there are no social distancing requirements or capacity requirements on those voyages. Just keep that in mind as you kind of round out and project the future.
Okay. Got you. Thanks, David, for that. Second question, I guess, just maybe if you can give us an update on where you guys are with the state of Florida and the governor at this point. Obviously, I think there's a little bit of confusion out there as well in terms of the way he wants the state to work versus you guys wanting most of your passengers and crew to be vaccinated. Can you just give us an update in terms of where you guys are at this point?
First of all, we're really looking forward to welcoming our guests on board. We, as you know, have had a few sailings over in Europe during this pandemic. It's really exciting for us and our people to be looking across, not only here in Florida, but we have the Vista starting on July 3rd in Galveston, the Breeze on July 15th in Galveston, Carnival Miracle in July 27th in Seattle. Mardi Gras will start sailing along with Carnival Horizon. Carnival Horizon starting on the 4th, Mardi Gras on July 31st in Florida, all of our other brands around the world. It's just a really busy time and an intense time, an exciting time. Of course, there's a lot of noise. There's lots of different jurisdictions and different perspectives on how things should go.
Where we are is that we're looking forward to welcoming our guests on board. We'll continue to be in dialogue with the governor's office. We continue to be in dialogue with the CDC. As you know, there's the court ruling that affected the conditional sail order, and that's still in place, the conditional sail order from CDC through July 18th. At this point, we were prepared to sail under that order with primarily vaccinated cruises. There will be unvaccinated people on those cruises, not 100% vaccinated. We're very optimistic and working very hard to ensure that we can try to make everyone happy. We are welcoming our guests on board Horizon on July 4th in Florida.
Okay. Gotcha. David, can I ask you one quick housekeeping question? I guess you talked about, I think you said that you're expecting 3.8 million ALBDs in the third quarter. Based on what you guys have announced today, I'm not sure you're going to answer this, but is there any way to help us think about maybe what the fourth quarter would look like as well?
Yeah, I don't have that calculation handy with me, Steve, but if you call Beth, I'm sure she can provide it to you.
Okay, great. Thanks, guys. Appreciate it.
Thank you.
Thank you for your question. Up next, we have a question from the line of James Hardiman with Wedbush Securities. Please go ahead, sir.
Hey, good morning. Thanks for taking my call.
Morning, James.
David, you sort of opened the door. Good morning. This idea that, obviously, the voyages that have 95%+ vaccinated, you don't have the social distancing requirement or the capacity requirements. If you don't have that, you do. Can you maybe walk us through, at least based on what you currently know, obviously in a fluid situation, what you expect your mix of both of those categories to be and how we should think about the occupancy ramp within ships that do not meet that vaccination hurdle?
It's very difficult to give you an exact mix of what we expect going forward because this gets into the evolution of COVID and the mitigation. We're very clear, and we're out there with all the cruises we've recently announced what each ship will be and how it will work. As we go along, we do expect things to continue to evolve and change. Everything's been evolving in a very positive way, and we're hopeful that that continues. That should put us in a better situation in the days and weeks and months ahead. Because it is difficult to project, it's very hard for me to answer that question with great detail. My expectation is that we will be able to have higher and higher occupancy levels over time.
There are a lot of projections out there that talk about potentially 70% of the globe getting vaccinated by some point in early 2022. If that's the case, a lot of these protocols potentially can start to be removed. We'll just have to see how things progress over time. As Arnold mentioned in his prepared remarks, agility has been one of the greatest things that have gotten us to this point, and we are going to have to remain agile to try to react to the circumstances moving forward.
I think I just would like to add that-
Understood. Go ahead.
I just would like to reinforce what David is saying is that things are moving in a positive direction. It's probably going to be a little choppy around the world. We're a global business. It's probably going to be a little choppy. We've said for quite some time the rest of 2021, early 2022 will be a transition period. We're on a path to getting to a great place. The world is with the various vaccines, the advancements in treatments, et cetera. It could be choppy. By 2022 and beyond, hopefully, with the advancements in science, we'll be in a position to be able to sail as one of the people asked, full occupancy and full fleet.
That's really helpful.
The second question, please.
I did. It's similarly difficult to quantify with any specificity. If I think about spring of 2022 being some return to normality, I think one of the most difficult issues in terms of valuing your company and other cruise companies is just sort of figuring out what the balance sheet looks like at that point. I guess are we any closer to figuring out when we'll get back to maybe a cash flow breakeven number? I get that there's going to be some incremental restart costs here in the near term. Is there any call you can give us any way to think about cash flow breakeven or sort of an interest expense number once we're on the other side of this?
The difficult part, remember, many variables that we just talked about. If we do get back in the spring of 2022, we have the full fleet back in operation. We're able to get to more normal type occupancy levels, we should have significant positive EBITDA, particularly in the summer months of 2022, we'll move forward from there. I feel like it's very hard to project from where we are today with 95 ships in operation next spring. We have 90 ships in our fleet today, remember, we have five more new builds coming that'll be back in service. We'll have 95 ships in operation next spring, we do expect at some point during that process to get into a positive EBITDA.
With the seasonality of our business and a lot of the other restart expenses that we mentioned, it's difficult to project the exact month where EBITDA goes positive or cash flow goes positive. We're very hopeful. The spring isn't very far away, and we're looking forward to that. Keep in mind that if you look at our historical results, everybody has always seen that the third quarter is our strongest quarter. If you actually add in the month of May, the four months May through August represent just 1/3 of the calendar year, but it represents 2/3 of our EBITDA, so our operating profit. We are focused on getting the full fleet back in service by next spring in order to capture a great summer of 2022.
Got it. I think that makes sense. Just to clarify, we should not be then, based on everything you just said, assuming that you get to that breakeven level significantly before that spring of next year. It's tough to say at this point.
Well, I wouldn't say. I'm not giving guidance because it's tough to say because of so many other factors with restart expenses and everything else involved. It is tough to say.
Okay. Fair enough. Thanks, guys.
Thank you.
Thank you for your question. Just as a note to all the audience on hand, remember, if your question has been answered, press one followed by three. Up next, we have a question from the line of Jaime Katz with Morningstar. Please go ahead.
Hi, good morning.
Hi, Jaime.
Thank you. James' question is that we have some visibility into what capital markets look like right now, you have been able to refinance some of this debt. As we think about the full year, is there a way that we should think about debt service costs if you are able to make the changes that you would like to make?
I do apologize, but you broke up for me about halfway through the question, so I do apologize if you could repeat it.
Okay.
I'm not sure why.
Sure. No problem. Since we know what debt capital markets look like right now, and the ability to refinance has been fairly easy, I guess. Is there a way that we should be thinking about debt service costs for the current year, given that you probably have some intended plans for refinancing over the last six months of 2021?
If you're talking about interest expense, the interest expense, our current forecast is $1.6 billion for 2021. Last quarter, I think I had said $1.7 billion. We do expect a decrease as a result of our refinancing efforts. I think if you look at the principal repayments, in the business update, we did give the principal repayments, but keep in mind that those principal repayments were prior to what we expect to close in the third quarter, which is the $1 billion debt deferral with the Debt Holiday 2. Those numbers will come down as well.
Right. I know the U.S. is really leading the way out of the COVID period, but if you have any color on European or Asia Pacific demand, I would love to hear that at this time. Thanks.
Just in general, in terms of the environment, obviously the U.S. is ahead of many places, although there are pockets in Europe that have done well as well with vaccines. Again, we encourage everyone to get a vaccination. It's the best way to keep yourself safe and your loved ones safe. In that regard, there is more movement here in the U.S. from an environment standpoint, collectively, although there are good pockets up in Europe and elsewhere. I'll talk about Asia and Australia, then I'll let David comment on the general booking situation abroad. Asia and Australia, in particular China and Australia, are still pretty much on lockdown when it comes to travel. We continue to be in constant dialogue with appropriate players there. Eventually it will open up, and we'll be ready to go when it does.
David, you want to give some comments on the booking environment?
I guess the best way to phrase it, we said that the 2022 book position was ahead of a very strong 2019, and that's actually the case both for our NAA brands as well as our EA brands. As Arnold indicated, we are seeing good, strong bookings on both sides of the pond as things continue to rebound.
Thank you.
Thank you.
Thank you for your question. Up next, we have a question from the line of Patrick Scholes with Truist. Go ahead.
All right. Good morning, everyone.
Good morning, Patrick.
Good morning. For the sailings in Q3 and Q4, can you give us an update on limitations on occupancy and/or what occupancy you are targeting for those ships? Thank you.
Sure. Broadly right now, as David mentioned earlier, for those sailings that are under one part of the conditional sail order for primarily vaccinated people, the way things are today, there aren't any restrictions. There's no physical distancing, et cetera. We are slowly ramping up our occupancy on sailings of that type to first of all, give our crew a chance to get oriented because we are still having enhanced protocols on board from a crew management standpoint and other things. Those cruises at that point in time can get pretty close to full occupancy by that point in time. To the extent we have cruises, and we do have some outside the U.S. and other places that are under a separate set of protocols because they have a lot of unvaccinated people on board.
There, some of their occupancies are going to be limited by the physical distancing requirements as long as they persist, and again, that can all change and evolve as community spread lessens and herd immunity increases. It's a hodgepodge, and at this point, as David already kind of referenced, it's hard to predict exactly where we're going to be on those because we have to look at the specific itineraries, the destination requirements, the home port requirements, and what the environment is at the time. Now, we're all pretty optimistic right now, and hopefully that trend will continue. Directionally, we think we'll be moving more to higher occupancy and near full occupancy. We're not forecasting at this point. David?
Okay.
Yeah, no, I think that was well said, Arnold.
Thank you.
Okay. Just, I guess, to think of as a starting point for the limited capacity that did go out last quarter, what was the occupancy on that?
It was very limited. There were like 440,000 passenger LBDs. There was one ship that started in March, there were four other ships that started in May. The occupancy improved as the quarter went on, we were seeing ships that were at 50% or above by the end of the quarter. You do have to understand the background, because I'll give you a great example. One of the ships for AIDA was sailing in the Canary Islands. The Germans that went on the ship, because of the restricted travel requirements in Germany, the people had to quarantine when they came home. Once the quarantine and the travel restrictions started to reduce, you started to see better and better occupancies and better and better cash flows on the ship.
While we did invest early on, we did see positive cash flows on the ships later in the quarter. We were very pleased with the overall experience.
We proactively managed down the occupancies early on because, again, in that case, we had extensive protocols, universal testing, enhanced medical screening, physical distancing, mask wearing, enhanced sanitation, enhanced air handling. It was a whole lot of different protocols. Initially on those, we really were pretty stringent and really capped down the occupancy on that ourselves.
We're expecting to see better occupancies as time goes on for all the reasons that we talked about.
Sure. Great. Thank you. That makes sense, and certainly good luck for sailing forward coming up. Thank you.
Thank you.
Thank you for your question. Up next, we have a question from the line of James Ainley with Citi. Please go ahead.
Yeah. Good morning, everybody. Thanks for taking my question.
Good morning.
Morning. I'm interested in just digging into your ESG commitment a bit more, the kind of 40% reduction in carbon emissions by 2030. Can you just flesh out a bit more about the tools and mechanisms you need to get there, and can you help us with what the potential cost implications might be? I'm thinking maybe you might need to buy carbon credits and things like that. Any color on that would be very helpful.
Sure. We've been on a concerted march on reduction of carbon emissions for some time. We've already effected a 30% reduction since our baseline of 2006, and we achieved that a number of different ways. From more basic things like just really being rigorous in tuning our engines and carefully planning itineraries and so on, to much more investment-required-oriented ways of new lighting schemes and technologies and handling waste and density on the ships. Of course, we made a hard commitment early, before there was even infrastructure in place on liquefied natural gas. We were the first with an LNG ship, and with our AIDA brand. We did that. Frankly, we made the commitment to do that. We weren't even sure how we were going to fuel the ship.
We had time during the construction phase and whatnot to work out a deal with Shell, and now we've got infrastructure in place. As I said, we have 11 ships in total now, either sailing or under construction. As you know, LNG is the cleanest burning fossil fuel. It also gives us a 20% smaller footprint from a carbon emission standpoint. Those are the ways we have gotten there and plan to get there. Ultimately, our goal is a net zero emission platform over time. To do that, we're going to have to have science and technology work with us in the form of better and combinations of lithium-ion battery technology, fuel cell technology, biofuels, et cetera. We are on a hard march, and we have a line of sight for the 40% reduction.
We're going to need some technology advancements to get to the net zero. I hope I answered your question.
Yeah, thanks. The LNG ships on their own, how much of that 40% reduction will come from them on their own?
Well, as I said, we're already at 30%.
Right.
As we move forward, we'll continue with new ships inherently are more efficient. Because everything is engineered from day one to be that way. The LNG ships will represent, once we get to the 11th one, about 20% of our fleet. It will be a significant contributor to us being able to achieve and hopefully beat the 40% target.
Okay, great. Thank you.
Thank you.
Thank you once again. We now have a question from the line of Greg Badishkanian from Wolfe Research. Please go ahead.
Hey, guys. It's actually Fred Wightman on for Greg.
No worries, Fred.
Hey, guys. If we think about the possibility that the full fleet is back in the water next summer, David touched on some of the seasonality considerations, just looking at the third quarter specifically. Should we expect some yield headwinds just from reduced access to international travel, or do you think that we could be in a more normalized sourcing and deployment mix by then?
We're not trying to give any guidance or anything at this point, but what I would say is that we've exited 19 ships, or will. As I said in the remarks earlier, that's a significant reduction in capacity. We are adding new ships, which we're very excited about. Therefore, we'll get to capacity comparable to what we had in 2019 eventually. The reality is that we're at a much lower growth rate as an industry and as a company than we were before with a lot of pent-up demand. Keep in mind by next spring, a lot of repeat cruisers still may not have had the opportunity to cruise again. We have a huge base of repeat cruisers across our various brands. There will still be a considerable pent-up demand that has been largely unsatisfied at that point in time.
That's the environment that we're anticipating we'll be operating in. We aren't going so far as to try to predict beyond. David, I don't know if you want to add any color.
No, the only other thing that I'll add is on travel restrictions. Travel restrictions are being reduced and changed every day. The summer of 2022, we're talking 11, 12 months away. There's a lot of opportunity as things continue to evolve and improve to see many, if not most or all of those restrictions disappear before the summer of 2022. I know I've booked my cruise in the summer of 2022. I expect to go to Turkey, Greece, and Italy, and I'm really looking forward to it and looking forward to reduced travel restrictions.
David definitely gets the friends and family premium when he sails.
Exactly.
There's no big price break for David, yeah.
Good target on that for David.
Thank you. Up next, we have a question from the line of Ali Naqvi with HSBC. Please go ahead.
Hi, thanks for taking the question. Just wanted to ask, in terms of your views on leverage longer term, would you look to deploy equity to maybe increase the pace to get to investment grade?
Real quickly, look, we have good liquidity in place now we feel to get us back to full sailing of the fleet. Cash generation is the way, and cash maximization is the way we're going to accelerate repayment of debt. We're going to do some refinancings to lower the interest burden along the way. Basically, that's the path we're on right now.
Understood. Do you have a view as to what happens to pricing when the sort of pent-up demand for cruising normalizes? Does that happen in 2023 or beyond that?
I think for our plans, as I said on the call, we were on a growth trend of 4.5% pre-COVID through 2025. With the moves we've taken and the new builds we already have coming in, we'll be at a growth rate annualized of 2.5%. That's a much lower growth rate. I think that, again, continued pent-up demand. People have spent a lot of time in isolation and lockdown. People really want to experience things. I think that's going to last a while. We're, obviously it's hard to predict the future, but we're logically optimistic that it'll be a good environment for some years coming here.
Understood. Okay.
Operator, given the time, we'll take one more question.
Thank you, sir. The final question therefore comes from the line of Sharon Zackfia with William Blair. Please go ahead.
Hi, I'm convinced you guys go in alphabetical order, so next time we can go to the Z's last first. I guess I just wanted to clarify something, David. The CapEx for the year, are you raising the expectation or is it just weighted to the second half of the year in timing?
It's weighted to the second half of the year timing. During the pause, we delayed a lot of dry docks. We have quite a few ships going into dry dock in the second half of 2021. You will see capital associated with those ships. The timing is weighted towards the second half.
Perfect. Then one other question. This may be hard to ascertain just given the bundling aspect of what's being offered, what is the appetite or what are you seeing in pre-booking for onboard spending?
The trends, when you try to dissect them, we're seeing similar trends to what we have seen historically on the onboard spend side. As you say, it's very difficult because, and I'm talking about people who are not booking the bundle packages. When you talk to the various brands around the globe, they are still pushing as they always have, other onboard packages and things associated with the cruise and no significant changes on that front.
Okay, thank you.
Okay. Thank you everyone. Really appreciate your time. It's a great feeling to have an expanded opportunity to welcome guests on board here in the coming months, and we're very excited about it. Thank you very much. Thank you, operator.
Thank you. That does conclude the conference call for today. We thank you all for your participation and ask that you please disconnect your line. Thank you once again. Have a great day, everyone.