Carnival will find a way to get out of its rut, but it will take longer to do so if it doesn't acknowledge that it's low fares directly relate to its less-than-stellar safety issues.
The news just keeps getting worse for Carnival Corp.
Late Monday afternoon, the Miami-based cruise giant lowered its earnings forecast for the year, citing the low ticket prices that have been needed to drive cruise demand while the company had endured months of negative publicity.
The 24-ship Carnival Cruise Lines and its parent company, Carnival Corp., have taken a beating since mid-February, when fire broke out on the Carnival Triumph and left the ship without power in the Gulf of Mexico. Passengers endured days without hot water or widespread use of working toilets.
Carnival Corp. said in April it expects to pay about $700 million over the next two to three years to address concerns about backup power, fire safety and operating redundancies across its entire 101-ship fleet.
The company already lowered its 2013 forecast in March, dropping a pre-Triumph estimate of $2.20-$2.40 per share to $1.80-$2.10. Monday, Carnival said it now expects the full-year earnings to be in the range of $1.45-$1.65 a share.
Net revenue yields, or the revenue made per berth per day, are expected to decrease 2-3 percent compared to 2012, when the company was dealing with the aftermath of the Costa Concordia shipwreck.
Carnival last said it expected yields to be flat in 2013. Additional voyage cancellations and costs that were not included in the cruise operator’s last forecast are also expected to take an $80 million chunk out of earnings.
More details will be released during an earnings call late next month.
Also Monday, Carnival Cruise Lines announced that it had created a new position: vice president — nautical and safety operations.
The company hired Richard J. O’Hanlon, a former U.S. Navy rear admiral, to fill the job, effective Monday.
O’Hanlon, most recently chief operating officer of air charter company Talon Air, will oversee nautical and safety functions across the cruise line’s fleet, including bridge procedures, nautical operations and firefighting and lifesaving systems. Ship captains and other deck and bridge workers will report to him.
(c)2013 The Miami Herald. Distributed by MCT Information Services.
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Photo credit: Carnival Cruise Line's string of incidents dates back to the Carnival Splendor breakdown off the Mexican Riviera in late 2010. Here passengers hurry to transportation after the ship limped into San Diego Harbor. Paul Rodriguez / Orange County Register/MCT