With its full fleet sailing as of May, Carnival Cruise Line is helping lead the comeback for Carnival Corporation.
The brand is expected to operate at 110 per cent occupancy for the all-important summer season, according to Arnold Donald, president and CEO of Carnival Corporation.
“Carnival Cruise Line, our largest brand, achieved consistently positive adjusted EBITDA beginning in March. Carnival Cruise Line also became our first brand to sail its entire fleet in May and is expecting occupancy to approach 110 per cent during our third quarter,” he said.
Donald, on the company’s second-quarter and business update call, noted these “close-to-home” cruises, where guests perceive far less friction travelling than going abroad.
With a strong North American cruise market, Carnival is pivoting to add more capacity in the form of two redeployed Costa Cruises vessels under the Costa by Carnival umbrella. The Costa Venezia will sail from New York starting in 2023 while the Costa Firenze will homeport in California beginning in 2024.
Cash from operations is turning positive and the company has turned the corner of its recovery trajectory, according to Carnival Corporation CEO Arnold Donald, who spoke on today’s second-quarter business update call with analysts.
“We are aggressively ramping up to full operations, driving higher occupancy on our ships, and focused on increasing revenues,” Donald said.
Bookings are expected to continue to improve during the rest of the year and reach historical levels in 2023, according to David Bernstein, executive vice president and CFO. He also said that there is the potential that EBITDA will be greater in 2023 than it was in 2019. The wild card is the cost of fuel. The target for 2023 is to carry 14 million guests.
Contributing to the recovery will also be fleet optimisation, reallocating ships to the strongest markets, such as introducing the new Costa by Carnival brand in North America.
Donald noted that European markets are in many ways more challenging than North America from a consumer standpoint as it relates to travel and added that moving Costa ships was also about right-sizing the Italian brand. A big chunk of Costa’s capacity has been in China, he said, and with that market closed, it made more sense to expand the strong North American market than to put all that capacity in Europe.
Bernstein added that North America and Europe are headed in the right direction, but that the company’s North American brands are doing better than their European counterparts.
As for other headwinds, such as the impact of the recession, Donald said the industry is resilient, offering a strong value proposition and that people feel entitled to their vacations. In addition, there is a tailwind of pent-up demand, he added, and the relaxing of health protocols is also expected to attract more people who may have been on the sidelines.
As for any other allocation moves, Donald said: “We are very pleased with our portfolio of brands but will always have an open mind to do what makes sense for our shareholders.”
He also said that since 2019, the company has shed 23 less efficient ships while adding nine larger, more efficient ships, including more premium-priced staterooms, while reducing operating expenses, including fuel, on a per available guest day basis.
The global cruise industry’s restart is continuing to move forward in May, as 347 cruise ships are expected to sail, according to the May edition of the Cruise Ships in Service Report by Cruise Industry News.
That is a big gain of ships from April, when 300 ships were in service, compared to 264 in March, and just 47 ships in May 2021.
Of the 347 ships set to cruise in April, they represent some 82 cruise brands and just over 550,000 berths.
Royal Caribbean International continues to be the biggest brand in service and will have 25 ships sailing in May, including welcoming back the Ovation of the Seas in Alaska and the Rhapsody of the Seas in the Mediterranean.
Carnival Cruise Line will complete its restart with its 23-ship fleet sailing, with the Splendor relaunching operations on May 2 for her 2022 summer program in Alaska.
Norwegian Cruise Line will welcome back the Sun, sailing out of Seattle to Alaska, and the Spirit, which is starting service as well on May 7.
Other highlights include the Royal and Crown Princess relaunching revenue sailings, and the AIDAaura, which cruises from Hamburg on May 7.
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