Carnival Corp. looks to move past woeful 2012

By Tom Stieghorst
Anemic economies are creating doubts about 2013, even as cruise lines hope for a strong Wave season to start the year, Carnival Corp. officials said in discussing 2012 results.

The world's largest cruise operator said profits fell 32%, to $1.3 billion, in 2012, a year Carnival Corp. Chairman and CEO Micky Arison labeled the most challenging in the company's history.

Revenue fell to $15.4 billion, from $15.8 billion.

Carnival's brands are still recovering from the Costa Concordia disaster, with cumulative advance bookings for 2013 running behind the prior year at slightly lower prices.

First-quarter business, almost all booked by now, will yield per-cabin revenues 2% to 3% lower than a year earlier.

Carnival will "lap" the Jan. 13 anniversary of the Concordia next month, and from there it forecasts a sequentially better recovery in each quarter.

"Hopefully, January will be the start of a strong 2013 Wave season," Vice Chairman Howard Frank said.

A troubling sign, however, is that bookings in Great Britain and Germany, two strong markets in a relatively weak Europe, are being made closer to sailing. Britain typically has the longest booking window of any country, Arison said.

"Clearly the German economy weakened in the second half of the year," he said.

Carnival is also eyeing the Baltic Sea and other Northern European areas, where competitors have added capacity that could affect results from what are historically the highest-yielding cruises in Europe.

In North America, tax and spending questions are weighing on U.S. travel decisions, Frank said. Assuming the nation doesn't go off the "fiscal cliff" and into recession, Carnival expects to make between $1.71 billion and $1.86 billion next year.

A bright spot is China, where Costa Cruises achieved a profit for the first time since it began operations there in 2006. "By the end of the first quarter, we should have more deployment announcements in that region," Arison said.

Already, plans call for Princess Cruises to operate a ship for several months in Japan next year. The Carnival Spirit will continue cruising in 2013 from Australia, where it is deployed year-round.

In China, the Costa Victoria sailed a full year in 2012 and will be joined by the 2,680-passenger Costa Atlantica next summer.

Carnival has cut fuel costs 24% since 2005, but it still expects to burn 3.3 million tons of fuel next year at an average price of $692 a ton.
Arison said a lot of time is spent on itinerary decisions that sacrifice higher yields for fuel savings. About half of Carnival's projected fuel savings in 2013 will come from itinerary changes, he said.

Carnival, which recently ordered new ships for Carnival Cruise Lines and Holland America Line, didn't encourage the idea it would order more.

"We believe the growth rate of the industry needs to slow, and that's what we're doing," Arison said. "We're building two to three ships a year."
This page is protected by Copyright laws. Do Not Copy. Purchase Reprint
blog comments powered by Disqus

View Comment Guidelines

Please upgrade your Flash Player.
Please upgrade your Flash Player.

Travel Weekly Poll

Voices

  • Consumer media discover that travel agents do exist

    "Contrary to some thoughts, travel agents do exist ... We are usually able to get clients better prices, and we know we can see that clients have better experiences. And as our personal motto is: Our Service Travels With You."

    More»

TW Index: Most Active Stocks

Latest Top News:
Caribbean
Europe
Travel Weekly is on Facebook
Viewpoints For Travel Agents
Travel Weekly Topics