The COVID-19 outbreak has laid waste to entire sectors of the global economy, but none faster than the cruise industry. The pandemic has basically shut down the cruise-ship business, with the three largest publicly traded cruise companies suspending some, if not all, of their operations. Carnival, the world's largest cruise operator, has been at the heart of the industry's struggle against the coronavirus. COVID-19 has spread on ships across nearly half of its brands, infecting hundreds of passengers and killing others. Shares of Carnival are down more than 80% in 2020 alone, and the company said in a securities filing that it couldn't predict when any of its ships would begin to sail again or when ports would reopen. Yet, time after time, Carnival has proven resilient, despite seemingly insurmountable setbacks. The company has experienced everything from norovirus outbreaks to fires and capsizes, and it's still bounced back after every crisis. Some experts say this time it's different.

In over 30 years, it's unprecedented. We've never seen these types of warnings really ever. Stewart Chiron Cruise Industry Expert

For one thing, the government has effectively temporarily cancelled an entire industry. The State Department has advised that no American should set foot on a cruise ship. The Centers for Disease Control and Prevention, which typically issues health warnings about certain regions of the world, not forms of transportation, has warned travelers against all cruise travel worldwide. "In over 30 years, it's unprecedented. We've never seen these types of warnings really ever," said cruise industry expert Stewart Chiron. Also different this time around — unlike past viral outbreaks aboard ships — passengers have been forced to quarantine on an unprecedented scale either in their rooms on the ships or at U.S. military bases after disembarking. Carnival is rapidly hemorrhaging money, and so far, the U.S. government has made it clear that it won't be helping to bail them out. The question now: Is Carnival too big to fail?

Why Carnival keeps rebounding

Shares of the three largest publicly traded cruise line companies — Carnival, Royal Caribbean, and Norwegian — are all down more than 80% so far this year, putting the valuations of the big three at multiyear lows. Carnival and Royal Caribbean did not respond to CNBC's requests for comment, and Norwegian declined to comment. Carnival is no stranger to calamity, and when its stock price has taken a hit, it has shown it can recover. Over the years, the company has faced every disaster you can envision, from viral outbreaks, to colliding ships, flooding, and fires. But perhaps its two biggest scars are the sinking of the Costa Concordia off the Italian coast in 2012, killing 32 passengers, and an engine-room fire that left the Carnival Triumph without power for days, causing toilets to backup and human waste to overflow into rooms and hallways. That so-called "poop cruise" gripped global media.

Kyle Walsh

Carnival wasn't defeated. It sunk hundreds of millions of dollars into upgrading its systems across the fleet, and it gave the Carnival Triumph its own $200 million makeover, plus a new name. After each one of these crises, Carnival's stock mostly rebounded. Lately, things haven't been looking quite as good for Carnival's stock. It has been steadily declining since 2018 and began 2020 at a lower share price than in 2016. On Tuesday, Carnival announced it would suspend dividend payments. Credit rating agency S&P downgraded Carnival on March 13 and says it's continuing to monitor the company for further downgrades.

The fundamentals

Despite the onslaught of bad news, Carnival still dominates the market. It is the world's largest cruise operator, accounting for nearly 50% of all cruise passengers. It also enjoys a stronger balance sheet than its rivals. Until the outbreak of COVID-19, sales for Carnival had been strong, rising every year since 2015, and up more than 10% from fiscal year 2018 to 2019. That's nearly double the revenue of Royal Caribbean and more than three times Norwegian's sales in fiscal year 2019. Net profit also dwarfs the competition, though the company has been struggling to maintain growth. Carnival's long-term viability ahead of the outbreak was also promising. As of the end of fiscal year 2019, Carnival's debt-to-equity ratio, a measure used to help evaluate a company's risk, was 45.3%, which is considered a good balance between what it owes and what it owns. Compare that to its two chief rivals. Norwegian and Royal Caribbean's debt-to-equity ratios are around 100%. Both took on a lot of debt, at a time when debt was cheap, which may prove difficult to pay back during a rough patch like this. Carnival has its own debt payments coming due, not to mention the fresh injection of new debt it took on last week, and the $4.8 billion it's committed to spending on new ships in 2020. On top of the $518 million in cash it already had on hand, Carnival tapped its entire $3 billion credit facility, and it is trying to raise over $6 billion in stock and debt. However, Carnival said it needs about $1 billion a month to keep operating, according to an April 3 securities filing. Getting credit investors on board comes at great cost to the company. The bulk of this new financing is from bonds paying investors 11.5%, an interest rate typically seen in the junk bond market. "The cost of financing was particularly onerous, given this is an investment-grade entity with a substantial amount of collateral coverage," said John McClain, a portfolio manager at Diamond Hill Capital. "Its collateral coverage is 86 vessels, plus intellectual property, with a net book value north of $28 billion. Historically, this would give a huge amount of confidence."

The future

Some have compared the current plight of the cruise industry to that of the airlines, when the government closed airports following the September 11 terrorist attacks in the U.S. Travel demand tanked, and several major American airlines declared bankruptcy, despite receiving federal aid. For the moment, it doesn't look as though the U.S. government will be coming to the rescue of any of the major cruise lines. The $2 trillion relief package excludes companies which are not incorporated in the U.S. and don't have significant operations in and a majority of its employees based in the U.S. Carnival, for example, is headquartered in Miami, its shares trade on the NYSE, but it is actually incorporated in Panama. Cruise lines also tend to hire foreign workers who don't always fall under the protection of American minimum wage requirements. Industry experts think that, unlike past outbreaks, COVID-19 will fundamentally alter the cruising model.

An image of Carnival Splendor cruise ship at the Overseas Passenger Terminal in Circular Quay on March 22, 2020 in Sydney, Australia. Izhar Kahn | NurPhoto | Getty Images