Royal Caribbean Cruises Ltd. is expected to downsize its staff and make budget cuts, according to industry sources.
Credit Suisse Bank analyst Scott Barry said sources had confirmed that RCCL would implement "broad-based, shoreside expense reductions of up to 25%” in response to operational challenges, including skyrocketing fuel costs.
Barry said a 25% reduction in shoreside costs could deliver about $200 million in savings.
"While this target appears aggressive, we believe material savings can be achieved without impacting the customer experience," Barry wrote.
RCCL did not confirm that it was making any specific moves.
"We continuously look for ways to operate more efficiently without compromising the experience of our guests and travel agent partners," said Lynn Martenstein, RCCL's vice president of corporate communications. "Today's operating environment, with astronomical increases in fuel costs, puts even more pressure on us to find ways to control our costs. Like most companies today, we are redoubling our efforts to find savings, but we have not announced any specific actions."
According to sources, the company aims to trim payroll by 10% and is asking staff to reduce expenses.
RCCL will report second-quarter earnings next week, and the cuts are expected to be announced in advance of its earnings report.
RCCL's stock price has tumbled this year, falling from $43.96 to a low of $19.16. Wednesday's shares opened at $19.92.