26 June 2009

Carnival Corp sees bookings rise

The world’s largest cruise combine has reported improved booking levels for the summer peak.

Carnival Corporation said booking volumes since March for the second half of 2009 are running 26% ahead of last year.

"Although booking levels for the remainder of the year are still behind, the higher booking volumes have enabled the company to close the gap to approximately three percentage points from last year's levels," a statement said.

But prices for these bookings are at "substantially lower" levels.

The outlook came as the company reported net profit of $264 million on revenues of $2.9 billion for the second quarter to May 31.

This was down on net profit for the second quarter of 2008 of $390 million on revenues of $3.4 billion.

Chairman and CEO Micky Arison said operating results in the period were better than the company's March guidance due primarily to lower than expected net cruise costs and better than expected pricing on late bookings.

This was partially offset by higher fuel prices and the impact from disruption to its Mexican cruises in response to the U.S. Centers for Disease Control (CDC) recommendations against non-essential travel to Mexico due to the April swine flu alert which reduced second quarter earnings by approximately $0.03 per share.

Arison said: "We were pleased with the quarterly operating results in light of the current economic environment.

"During the quarter, our operating companies remained focused on reducing costs which is expected to continue through the remainder of the year."

A variety of energy conservation programs resulted in a six per cent reduction in fuel consumption during the quarter which helped to mitigate some recent fuel price increases.

"During the quarter, we also made great strides on our strategic initiatives to better position the company for the future," Arison said.

Carnival continued to expand its global presence in the second quarter through the deployment of a second vessel in China, and the delivery of AIDA Cruises' 2,050-passenger AIDAluna; Costa Cruises' 2,260-passenger Costa Luminosa and 2,990-passenger Costa Pacifica.

The company also entered into $1.7 billion of financing since the first quarter, including a euro 550m loan from the European Investment Bank to help finance Costa's new build program.

This is the first time the EIB has provided capital to the cruise sector.

"Since the start of the year we have completed more than $2.8 billion in financing at very favourable rates, which clearly demonstrates our ability to access capital in very difficult credit markets," Arison said.

He added: "As we have progressed throughout the year, booking volumes have continued to accelerate with less discounting, as consumers have come to recognise the extraordinary value proposition our cruise vacations represent."

However, based on current spot prices for fuel, forecasted fuel costs for the full year have increased $233 million, the company said.

"Higher forecasted fuel prices and the impact of the CDC travel advisory have reduced 2009 earnings by approximately $0.40 per share, but the midpoint of our guidance was reduced by only $0.15 per share as a result of strengthening yields in other deployments, favourable currency movements and lower costs," Arison said.

by Phil Davies