In its first-quarter earnings report, Carnival Corp. announced a net loss of $139 million, down from a $152 million net profit in the year-ago quarter.
Expenses from the Costa Concordia accident contributed to the loss, but a $173 million asset write-down for Ibero Cruises was the biggest factor. Carnival Corp. said the non-cash charge was related to goodwill and trademark impairments, primarily as a result of "slower-than-anticipated Ibero capacity growth due to the current state of the Spanish economy."
Concordia-related expenses totaled $29 million, including a $10 million insurance deductible related to third-party personal injury liability, said Carnival.
Carnival Corp. said it received an insurance claim of $515 million that "offset the write-off of the net carrying value of Costa Concordia, as the ship has been deemed to be a constructive total loss."
Also, Carnival Corp. reported a $34 million impairment charge related to the Costa Allegra, which was damaged by an engine room fire on Feb. 27 and is currently out of service.
On top of the one-time costs was a 7.5% increase in fuel expense. Carnival Corp. said first-quarter fuel prices increased 30%, to $707 per metric ton, up from $543 per metric ton.
Despite the loss of Concordia sailings, revenue for the first quarter increased 5%, to $3.58 billion.
Net revenue yields rose 2.9% (3.7% excluding Costa Cruises), which was higher than the company's December guidance. The guidance had called for a yield increase between 1.5% and 2.5%.
Carnival Corp. said 2012 results will be affected by the direct and indirect costs of the Costa Concordia incident.
"At this time, cumulative advance bookings excluding Costa for the remainder of 2012 are approximately 3 occupancy points behind the prior year with prices slightly higher than last year's levels (in constant dollars)," Carnival Corp. said.
The company said that bookings, excluding Costa, are down in the “mid-to-high single digits” from last year. Costa bookings remain significantly down, Carnival Corp. said.
COO Howard Frank said that while the Concordia accident has had a profound effect on financial results, “as time passes we are confident our business will improve.”
In continental Europe, he said, the impact of the accident on bookings has been greater and “it will take more time for those markets to return to normal.”
According to Frank, occupancy for the remaining three quarters of the year is lower for the company’s North American and Europe brands. The North American brands, however, are seeing slightly higher pricing in the Caribbean.
"Bookings were strong at the start of Wave season, but even before the [Costa Concordia accident], we had softer European pricing, and that was attributed to the economy there," he said.
Chairman Micky Arison said, "Our base of business for 2012 is solid and booking volumes have gradually improved, which we believe is a testament to consumer confidence in the cruise industry's long-standing record of exceptional safety.
"Despite the slowdown in bookings, all of our North American brands are still expecting a modest yield improvement in 2012 while our European brands, excluding Costa, are expecting to have slightly lower yields due in part to the slowing European economies. Overall, based on current pricing trends, any consumers holding out for deeper-than-normal discounts may be disappointed."
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