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Carnival Triumph’s big failure: The mounting costs for Carnival Cruise Lines

Feb 14, 2013 6:09 am

Skift Take

Because of the importance of the Caribbean to U.S. cruising, the Triumph failure will most certainly hit Carnival harder than it’s Concordia disaster last year, even without the large loss of life.

— Jason Clampet

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Joe Skipper  / Reuters

Carnival Cruise Lines President and Chief Executive Officer Gerry Cahill (R) speaks as Senior Vice President Terry L. Thornton looks on at Carnival's headquarters at a news conference concerning the Carnival ship Triumph in Miami, Florida February 12, 2013. Joe Skipper / Reuters


As tugs continue to pull the fire-disabled Carnival Triumph to land, Carnival Cruise Lines said it has canceled another 12 sailings aboard the stricken vessel.

Tuesday night, the company’s president and CEO, Gerry Cahill, said only the Feb. 11 and Feb. 16 Caribbean voyages had been axed. But Wednesday afternoon, the Miami-based cruise operator said the Feb. 21 through April 13 sailings were also being canceled.

Parent company Carnival Corp. estimated that the financial hit from the canceled trips and repair costs would be eight to 10 cents per share, or $64-$80 million, for the first half of 2013.

Carnival said guests whose trips have been canceled will get a full refund of their cruise fare, non-refundable transportation costs, pre-paid shore excursions, tips, government fees and taxes. They will also be entitled to a 25 percent discount on three- to five-day cruises or 15 percent discount for six- to seven-day sailings.

The 2,758-passenger ship, which launched in 1999, is based in Galveston, where it sails four- and five-day trips to the Caribbean.

Triumph departed Thursday with 3,143 passengers and 1,086 crew. It was scheduled to return to port early Monday after a weekend stop in Cozumel, but fire broke out Sunday morning in the engine room. The cause of the blaze, which was put out by automatic systems, is still not known.

The ship lost propulsion and had to rely on emergency generator power, leaving passengers with a limited number of working bathrooms and no air conditioning. Guests have reported long lines for food and said they were forced to use bags as toilets.

Two tugs are towing the ship to Mobile, Ala., with a goal of reaching the port by Thursday. The company said Wednesday afternoon that it had dispatched a third tugboat, from Port Fourchon, La., to help. That boat was expected to get to the ship by Wednesday evening.

Carnival has lined up more than 1,500 hotel rooms in New Orleans and chartered more than 20 flights to get passengers back to Houston. Bus service directly to Houston and Galveston will also be provided. Late Wednesday, the company said it would add to the compensation it had already offered passengers aboard the disabled ship. In addition to the previously announced full refund of the trip, transportation expenses and most shipboard purchases, as well as credit for a future cruise, Carnival will give each person $500.

“We know it has been a longer journey back than we anticipated at the beginning of the week under very challenging circumstances,” said Carnival Cruise Lines President & CEO Gerry Cahill in a statement. “We are very sorry for what our guests have had to endure. Therefore, in addition to the full refund and future cruise credit already offered, we have decided to provide this additional compensation. I look forward to welcoming everyone to Mobile tomorrow and have mobilized our full resources to assist and support them as they travel home.”

In a similar case, the Carnival Splendor was set adrift in the Pacific in November 2010 after an explosion in a diesel generator. It was out of service for about three months; the company estimated the loss at $56 million.

Tim Conder, a Wells Fargo analyst, said in a note Monday that he estimated the impact from the Carnival Triumph fire could be between $40-$80 million, or five to 10 cents a share, for the quarter.

“While this incident represents a string of similar occurrences over the last several years, we believe this incident will most likely be more of a negative PR event, especially during the Wave season,” Conder wrote in the note to investors. “We believe that management will place additional efforts to better identify and install preventive measures to avoid future similar incidents and related negative PR.”
(c)2013 The Miami Herald. Distributed by MCT Information Services

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