RCCL: Revenue up, recovery apace

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MIAMI -- Royal Caribbean Cruises, citing a faster-than expected postwar recovery, reported that second-quarter revenue rose 10.2% to $905.8 million, compared with $821.8 million a year earlier.

But net income for the quarter was $55.7 million, which was $11 million less than in second-quarter 2002.

The line attributed the revenue increase to a 15.5% capacity increase, which was partly offset by a 4.6% decrease in gross yields due to lower ticket prices and occupancy levels. At the same time, shipboard revenue increased.

Chairman and chief executive Richard Fain tied the stronger-than-expected recovery -- after a war-torn wave season -- to several factors, including "a vast untapped potential for cruise passengers;" good deployment choices, such as the repositioning of five ships in Europe after pulling them post-9/11; and the decision to broaden home ports in domestic drive destinations.

Fain cited the company's increase in capacity as its greatest challenge.

The war, he said, came at "the perfect time" to disrupt the high season, creating a 30% bookings drop. But when the war ended there was "a dramatic pick-up in business," which has been "longer and at a stronger pace than anticipated."

Booking patterns stabilized, Fain said, and close-in booking patterns are sustainable.

Fain forecast that net yields for the third quarter will be down 1% to 2%, while the fourth quarter is expected to be flat or slightly down. For the full year, the company projects yields to decline 2% to 4%.

Repercussions from the Iraq war will affect the line for the remainder of the year, Fain said. Barring any further geopolitical disruptions, however, the CEO predicted a continued recovery and a strong 2004.

To contact reporter David Cogswell, send e-mail to [email protected].

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