Fuel costs pushed Carnival Corp.'s second-quarter earnings down slightly, but the company reported positive revenue yields for the first time since 2008.
"The strength of our revenue and cost-control performance was once again masked by rising fuel prices," said Carnival CFO David Bernstein during a conference call with analysts. "Fuel costs [for the quarter] were 64% higher than last year, costing us $162 million."
Carnival Corp. Chairman and CEO Micky Arison said the results exceeded the company's March guidance as a result of better-than-expected revenue yields and cost reductions.
Revenue was up 10.3% for the quarter, the company said.
"We were encouraged to see revenue yields turn positive for the first time since late 2008," Arison said in a statement. "Improving revenue yields combined with an 8% capacity increase and ongoing cost-control efforts offset significantly higher fuel prices."
Net revenue yields (net revenue per available lower berth day) increased 2% during the quarter, the higher end of the company's March guidance.
Excluding fuel costs, the company's net cruise costs per available lower berth day declined 4.9% in constant dollars, better than the line expected. Including fuel, net cruise costs increased 4.2% on a constant-dollar basis.
Looking ahead, Carnival said that since March, booking volume for the second half of the year has been running slightly ahead of the previous year, and at higher prices.
Carnival COO Howard Frank said during the call that the company's North American brands were doing well.
Bookings for the Caribbean, where Carnival has significant capacity, had experienced strong volume and pricing. He said the Alaska and Europe markets were experiencing lower booking volume but with significantly higher year-over-year pricing.
Even the Mexican Riviera, Frank said, was experiencing better pricing "for the first time in a while."
"Demand for cruises has been solid, and we've managed to achieve better year-over-year pricing," he said.
Arison noted that recent instability in the stock market had not had much impact on the brands, with the higher-end brands feeling it most.
"The premium and longer, luxury cruises tend to be more affected by market volatility and gyrations," Arison said. "During the month of May we felt some of that."
The Carnival executives said European consumers had proven to be less moved than U.S. consumers by market swings and world events.
Arison added that looking ahead, the line expected the overall booking pace to continue.
"Considering the recent global economic concerns and other world events, our advance bookings are holding up reasonably well and remain in line with our expectations," Arison said. "We believe this will lead to earnings growth in both the third and fourth quarters. The summer season, which is our strongest and most important quarter of the year, is shaping up particularly well."
This report appeared in the June 28 issue of Travel Weekly.