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.
Carnival Cruise Line is progressing on the project of transforming PortMiami’s Cruise Terminal F in its largest cruise terminal in North America.
Set to open in November, the facility is being redesigned and expanded in order to serve as the homeport of Carnival’s second Excel-class ship, the Carnival Celebration.
According to Christine Duff, Carnival Cruise Line’s President, the new terminal will be ready in time for the ship’s inaugural festivities.
“We are very excited that we’ll be opening the redesigned Terminal F for Carnival Celebration’s naming ceremony,” she said during a press conference in Miami in late April.
“It’s a great way to celebrate Carnival,” Duffy added, mentioning the cruise line’s 50th-anniversary festivities.
According to her, like the new Carnival Celebration, the redesigned terminal will also get memorabilia from past Carnival ships.
When completed, Terminal F will become the third cruise terminal dedicated to Carnival operations at PortMiami.
As part of the renovations, the facility is receiving facial recognition technology and other elements which will be used to move guests through the embarkation process.
Originally signed in September 2019, the expansion agreement includes a commitment by Carnival to keep ships at Terminal F for 20 years, with the option of two additional seven-year extensions.
The LNG-powered Carnival Celebration is currently under construction at the Meyer Turku shipyard in Finland.
After being delivered later this year, the 183,900-ton cruise ship will become Carnival’s largest vessel, along with its sister ship, the 2020-built Mardi Gras.
Following a transatlantic crossing, the 5,200-guest ship is set to launch service from Miami on Nov. 21, kicking off a year-round program of weeklong Caribbean itineraries.
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