Upgrades to cost Carnival $700M
Carnival Corp. will spend up to $700 million on ship changes to make sure it doesn't have a repeat of the Carnival Triumph fire and power outage, the company said at its annual meeting last week.
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At least $300 million will be spent on the flagship Carnival Cruise Lines brand, which has been battered by media coverage and harshly criticized by an influential U.S. senator.
The response comes about two months after a fire in one engine room left the Triumph without propulsion or power to provide basic passenger amenities for five days.
Howard Frank, vice chairman of Carnival Corp., said at the meeting last week that the changes spearheaded by Carnival Cruise Lines will be adopted across the company's 101 ships.
"It's a sort of belt-and-suspenders program to make sure our ships are doubly safe," Frank said.
The investment, which will be $600 million at minimum, is equal to about half of Carnival's net income last year of $1.3 billion. Frank said the spending will help reassure potential cruisers.
"We think it's important to demonstrate to the 10 million people who sail with us each year that our ships are safe," Frank said.
"What we're trying to do here is improve comfort and guest convenience in those very rare situations when we lose propulsion," Carnival President and CEO Gerry Cahill said in an interview last week.
He reiterated that no one died or was injured in the Triumph mishap, and Carnival's basic safety is not at issue.
Cahill said the upgrades would come in three areas.
One improvement is to install the latest in water-mist fire suppression technology, which creates a larger, thicker blanket of water droplets than current systems.
Cahill stressed that the existing system functioned as designed to put out the Triumph fire. "However, we want to take advantage of the latest and most advanced generation of fire safety systems to enhance the current extensive capabilities across our fleet," he said.
A second change is to install new components that make fires less able to completely knock out propulsion. Carnival ships already have two engine rooms, which provides some redundant capacity if one is disabled.
But cables shared by the two Triumph engine rooms failed, making the redundancy moot. To reduce their vulnerability, Carnival said it will reconfigure certain engine-related electrical components, a complex process that will take months to finish. The need will vary, depending on the age and class of the ship.
Finally, Carnival will take several steps to make emergency power supplies more robust. Over the next few months, a second emergency backup generator will be retrofitted on Carnival's 24 ships.
If the main power is cut, backup power will be available not only for critical functions like bridge instruments but also for the operation of toilets, fresh water systems and elevators, Carnival said.
Once the backup generators are in position, Carnival will begin another round of improvements to build a second permanent back-up power system on each ship. When finished, those systems will support an even greater level of hotel and guest services, including expanded cooking facilities, cold storage, and Internet and phone links.
Carnival Cruise Lines accounts for about a quarter of the ships belonging to Carnival Corp., which also owns Princess Cruises, Holland America Line, Costa Cruises and Cunard Line.
Following the Triumph incident, critics in Congress emerged, calling for improvements in cruise ship reliability.
Sen. Jay Rockefeller (D-W.Va.), the chairman of the Senate Commerce Committee, who has publicly criticized Carnival for the Triumph incident, last week issued a statement saying Carnival's new upgrade program was late in coming.
"It's unfortunate that it has taken a series of terrible cruise line failures, and the scrutiny that followed, for Carnival to respond with some improvements for their passengers' safety," he said.