Carnival downgrades as troubles continue

Carnival downgrades as troubles continue
By admin


Carnival Corporation has played down the impact of last month's Carnival Triumph turmoil on forward bookings even as technical issues struck a further two of its vessels.

Chief executive Micky Arison insisted booking volumes for Carnival Cruise Lines have bounced back following 4200-passenger Triumph's four-day drift off the coast of Mexico after a fire struck its engine room.

But the company still downgraded its profit forecast, with heavy discounting partly to blame.

Announcing first quarter revenue of $3.6 billion, in line with the previous year and an improvement on December guidance, Arison admitted that overall cumulative advance bookings for 2013 are behind last year.

But he added that since January they are running "significantly higher" than last year at slightly higher prices.

"Despite considerable attention surrounding the Carnival Triumph, we had been encouraged to see booking volumes for Carnival Cruise Lines recover significantly in recent weeks," he said. "Attractive pricing promotions, combined with strong support from the travel agent community and consumers who recognise the company's well-established reputation and quality product offering, were driving the strong booking volumes."

However, the company now expects its full year revenue to be in line with the prior year rather than the increase of between 1% and 2% suggested in the December guidance.

It attributed the downgraded forecast to economic uncertainty in Europe and discounting for the Carnival brand, combined with lower than expected growth in onboard revenue across the group.

But the trouble is apparently not over for Carnival as Carnival Dream last week encountered a "technical issue" which saw thousands of passengers, on the last leg of a seven-day cruise, flown home from St Maarten. Many reported squalid conditions, similar to those seen on Triumph.

In another twist, a further ship, Carnival Legend, experienced problems over the weekend with its propulsion system and was forced to reduce speed and cancel one stop in the Grand Cayman Islands before arriving as scheduled in Tampa, Florida.

Despite the spate of setbacks, Arison insisted the long term outlook remains "strong".

"We expect to drive return on invested capital higher through a measured pace of capacity growth and a continued focus on fuel consumption savings," he said.

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