Cruise holiday company hit by fuel bills

[21st March 2008]

The world’s largest cruising holiday company, Carnival Corporation, has reported first quarter earnings for 2008 down on 2007 thanks to rising fuel prices.

Carnival Corporation includes the cruise lines Princess Cruises, Cunard Line and P&O Cruises and operates 84 cruise ships in Europe, North America and Australia. Its net income for the first quarter of 2008 was $236 million, down from $283 million in the first quarter of 2007.

The figures show that even the buoyant holiday cruise industry is being affected by record fuel prices. Fuel cost Carnival $156 million in the first quarter of 2008. This was an increase of 66% on the previous year. Net and gross revenue actually increased by 6.2%, demonstrating the impact of fuel prices.

“Consistent with their historical performance, our cruise brands continued to demonstrate resiliency despite a difficult economic environment. This especially holds true in the Caribbean where there continues to be a strong rebound in pricing from last year,” says Carnival Corporation chairman and CEO, Micky Arison.

“The favourable value proposition and high guest satisfaction levels versus land-based vacations, coupled with reduced supply - as less inventory remains for sale than at this time in 2007 - continues to work in our favor during this challenging economic climate,” Arison adds.

Carnival reports that advance bookings for the rest of 2008 are ahead of last year in terms of both occupancy and pricing. As a result of strengthening euro and sterling exchange rates, the company now expects a 5.5 to 6.5 percent improvement in net revenue yields for the full year 2008.

In the second quarter of 2008 Carnival will take delivery of two new cruise ships. The 3,076 passenger Ventura will enter service with P&O Cruises from the port of Southampton, while the 2.050 capacity AIDAbella starts sailings with AIDA Cruises.

Written by: Nick Purdom

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