If the U.S. economy plunges over the fiscal cliff and consumer confidence ebbs, then Carnival Corp. may have to do a quick rewrite of the cruise company's financial guidance.
Carnival Corp. may want to throw a few politicians overboard — over the fiscal cliff, that is.
The world’s largest cruise company recently released its financial guidance for 2013, but officials sounded at wit’s end when they spoke to analysts about the difficulties of forecasting as the company cited a shorter booking window; the upcoming, high-volume Wave system, and the uncertainties of the U.S. fiscal cliff.
If Democrats and Republicans can’t make nice by the end of the year, then federal tax hikes and massive spending cuts would automatically kick in.
You could hear the frustration in Carnival COO Howard Frank’s words: “I think the best thing is to resolve the fiscal cliff, and we’ll all be happy. Even if we have to pay more taxes, let it happen already. It’s painful.”
Carnival pegged its 2013 guidance at a range of $2.20 to $2.40 per share, a 20% jump over 2012.
But, there was a big, fat, optimistic caveat in these numbers.
“Our earnings guidance for 2013 assumes that the U.S. does not go off the fiscal cliff in January and go into an economic recession during 2013,” Frank said December 20. “Hopefully, wisdom will prevail in Washington, and January will be the start of a solid 2013 Wave season.”
There’s no telling what will happen at the last moment in the fiscal cliff negotiations between President Obama and Republicans in Congress, but there has been no indication so far of a breakthrough.
Frank said Carnival feels optimistic about consumer booking patterns, pending a fiscal cliff agreement.
Keep hope alive
“So we are hopeful that once the fiscal cliff issue is resolved and we get into January and the Wave season begins, consumers will start to turn their attention to getting on with their lives and booking their cruise vacations,” Frank said.
Yes, there is always hope.
But, Carnival CEO Micky Arison conceded during the conference call with financial analysts that the fiscal cliff “continues to nag us.”
As it does most travel and other consumer businesses in the U.S.