Amidst stubborn woes reflected in the release of its second quarter results today and a depressed outlook for the rest of the year, Carnival Corp. is replacing Micky Arison as CEO after a 34-year run.
Arison, who currently serves as chairman, will remain in that role when new CEO Arnold Donald becomes CEO of Carnival Corp. July 3. Howard Frank stays on as COO.
Donald has served on the Carnival board for the past dozen years.
Arison and Carnival tried to spin the changing of the guard as a time-is-ripe kind of thing, but clearly this move comes with the world’s largest cruise company under pressure.
“I have been discussing this with the board for some time now and feel the timing is right to align our company with corporate governance best practices and turn over the reins after 34 years as CEO,” Arison said.
Good-governance advocates favor splitting companies’ CEO and chairman roles, but Carnival Corp.’s decision, which received the unanimous backing of the board, clearly went beyond the wish to reform the company’s governance structure.
Meanwhile, Carnival notched a profit increase in the second quarter, but advance bookings and pricing for the remainder of 2013, particularly at Carnival Cruise Lines, are showing a stubborn weakness.
For the second quarter, which ended May 31, Carnival Corp.’s net income rose 192% to $41 million on revenue of $3.47 billion, a 1.6% decline.
“At this time, cumulative advance bookings for the remainder of 2013 are behind the prior year at prices below the prior year levels,” Carnival stated. “Since the end of March, fleetwide booking volumes for the next three quarters, excluding Carnival Cruise Lines, are running higher than the prior year at higher prices.
The problem is at Carnival Corp.’s largest brand, Carnival Cruise Lines.
“Booking volumes for Carnival Cruise Lines during the same period are running behind the prior year at lower prices,” Carnival stated.
Carnival Corp. and the cruise industry has been reeling since a series of tragedies and blunders dating to the Costa Concordia disaster in early 2012, and continuing to what some have labeled the Carnival Triumph’s “poop cruise” several months ago.
Arison sees Carnival Corp.’s current difficulties merely as a failure to communicate.
“Our 90,000 global team members are dedicated to delivering an outstanding vacation experience to 10 million guests each year,” Arison said. “The level of quality, variety and innovation available throughout our fleet has never been greater and our guests are reaping the benefits of truly exceptional vacation values.
“We are working to more broadly communicate that message through stepped up consumer and trade marketing efforts, as well as strengthened engagement of our travel agent partners. We believe these initiatives, combined with slower supply growth, will lead to increased yields.”