An improved facility may likely help, but Carnival's history of tight budgets so that profits are still high while costs for passengers are low will need to be addressed if the cruise line is going to finally match safety with its size.
Carnival Corp., moving to improve safety following accidents that cost the world’s largest cruise operator tens of millions of dollars, will triple its crew- training capacity with a new facility in the Netherlands.
The company agreed to buy land in Almere for the $50 million project, scheduled to open in 2016, according to Captain Hans Hederstrom, managing director of the company’s Center for Simulator Maritime Training. The complex will have four bridge and engine room simulations, enough to accommodate all of Carnival’s 4,000 deck officers and engineers annually.
“We can increase training, spend more time on simulators and do research and development,” Hederstrom, who is based in Almere, said in a telephone interview.
Carnival has increased its focus on safety following incidents that included the shipwreck of the Costa Concordia off the Italian coast in January 2012 that killed 32 people. The company is spending $700 million to boost fire prevention measures and backup generator capacity on its ships.
Arnold Donald was named chief executive officer in June, and the company created a safety review board to monitor companywide practices and performance. Yesterday, Carnival named U.S. Navy Vice Admiral William Burke to be its chief maritime officer, with duties including oversight of maritime quality assurance and policy.
The company signed the letter of intent with Amvest Property Group for the purchase of seven acres (2.8-hectare) along the coast of the Netherlands. The new facility will add to a training center it already has in Almere.
The original facility opened in July 2009, Hederstrom said. Demand for its use by the company’s 10 cruise lines has increased in the past two years, he said.
Carnival, based in Miami, fell 1.6 percent to $34.99 at the close in New York. The shares have declined 4.8 percent this year.
Following the Concordia shipwreck, the company has endured more incidents, including a fire aboard the Carnival Triumph in February that tarnished the brand’s image with cable-news video of passengers stranded at sea. Separate mishaps have forced at least two other Carnival ships to cancel voyages and refund fares.
In addition to the direct cost of about $50 million for the Triumph incident, the Carnival line has been forced to discount prices to fill its ships. The average cost of a Carnival brand cruise is down 15 percent this quarter from a year earlier, and 9 percent for voyages scheduled for the first quarter, according to Barclays Plc.
The company lowered its 2013 earnings forecast three times, warning in September that it may lose as much as $17 million this quarter, and said its advance bookings were down through the first half of 2014.
Francesco Schettino, the Concordia’s captain, is on trial in Italy after being indicted on charges including manslaughter and abandoning the ship while many passengers were still on board. He has denied any wrongdoing, saying his actions saved lives.
Schettino didn’t receive training at the facility, Hederstrom said.
“We never saw him here,” he said.
Editors: Ben Livesey, Anthony Palazzo, John Lear. To contact the reporter on this story: Christopher Palmeri in Los Angeles at firstname.lastname@example.org. To contact the editor responsible for this story: Anthony Palazzo at email@example.com.
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Photo Credit: Passengers cheer after disembarking from the Carnival Triumph cruise ship after reaching the port of Mobile, Alabama,. Lyle Ratliff / Reuters
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