Carnival Corp.’s profit skyrockets in ‘remarkable’ Q2

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The launch of Holland America’s Koningsdam was one of Carnival Corp.’s second-quarter highlights.

Driven by higher ticket prices and fuller ships, Carnival Corp. had net income of $605 million in the second quarter, up from $222 million a year earlier.

Net revenue yields rose 3.6%, significantly higher than the range of 1.5% to 2.5% in the company’s earlier forecast.

The results came despite a currency-exchange drag and fuel price increase equal to $127 million.

“This was among the most remarkable quarters in the history of the company,” said CEO Arnold Donald, citing not only the earnings but the introduction of three new flagships (Carnival Vista, Holland America Line’s Koningsdam and the AidaPrima) and the historic launch of Cuba cruises by the new Fathom brand.

Carnival’s revenue advanced slightly to $3.7 billion from $3.6 billion.

The increase in yield was a combination of a 3.5% increase in ticket prices and a 4% rise in onboard spending, CFO David Bernstein said.

Prices for Europe cruises on Carnival’s North America brands are lower although occupancies are up, Bernstein said.

Donald positioned the decision by Britain to leave the European Union as a boost for Cunard Line and P&O Cruises because their fares in the weakened pound sterling are now more competitive with land vacations abroad for British travelers.

Bernstein said every change of 10% or more in the pound’s value has an effect of about 8 cents a share, or about $60 million, on Carnival’s full-year results.

Donald said Carnival has looked at its U.K and European forecasts in light of the Brexit vote. “At this point, we have no reason to adjust anything,” he said.

Cruise stocks, including Carnival’s, were hit harder than the market in general after the British vote. After the earnings release, Carnival shares were up more than 4% but were up less than 0.25% by 11:30 am Eastern.

Asked about the future development of Fathom, Donald said that its cruises to the Dominican Republic are geared toward a “travel segment rather than cruise,” and that Carnival’s ability to access that segment is “challenging.” He said Cuba sailings on Fathom have been successful and are very strongly booked for fall, but that there are still unsold cabins on summer departures.

Could LNG controls spell trouble ahead for Aida Cruises?

AidaPrima refueling in Hamburg

Aida Cruises faces LNG challenges due to local restrictions and regulations. Its LNG-fuelled AidaPrima cannot receive this fuel at Rotterdam port, while the LNG-power supply barge used by AidaSol for cold ironing is battling bureaucracy in Hamburg.

First LNG dual-fuel cruise ship AidaPrima can use LNG in all its ports of call except for Rotterdam, where it is still awaiting approval from regulatory authorities.

Carnival (Aida Cruises’ parent company) senior vice president for maritime affairs Tom Strang, told PST at a small press gathering after a recent Cruise Lines International Association regulatory briefing: “That is a little bit more challenging, mainly because Rotterdam has a different set of regulatory requirements, as the port is right in the centre of the city.”

However, he seemed optimistic that this obstacle would soon be overcome, and pointed out that while there were a number of steps to go through to reach approval, Carnival has “a great relationship” with the Port of Rotterdam.

But challenges are also afoot in Hamburg. AidaSol is supplied with electricity when in port from an LNG power supply: Becker Marine Systems (BMS) offers electric power generated using LNG-fuelled diesel engines mounted on an unpowered barge at Hamburg’s HafenCity cruise terminal. AidaPrima is also equipped for this cold ironing.

BMS’ barge Hummel has been contributing to improved air quality in Hamburg for more than a year, BMS managing director Dirk Lehmann said in a statement.

But he said: “Due to some restrictions making the work more difficult, we are continuing to seek a mutual solution together with the relevant authorities.”

Mr Lehmann told PST’s sister publication LNG World Shipping that the most severe restrictions are due to the conditions set out in the barge’s operating permit, notably “the condition to have an expensive harbour tug with running engines on standby during energy supply for cruise ships, and the condition to move the barge back to a night-time berth outside the Hafencity area after every energy supply operation”. This last also requires tug operations.

BMS is negotiating with the authorities to try to improve this situation and Mr Lehmann’s statement showed a very clear warning and emphasised just how crucial these talks were: “This would then enable Hummel to supply environmentally friendly power to cruise ships during their layovers at port beyond the current year.”

These teething difficulties will no doubt get solved – but the cruise sector will be watching with interest as Carnival and its company Aida Cruises pioneer the use of LNG both as a fuel and for cold ironing.

Holland America’s next ship to be called Nieuw Statendam


Nieuw Koningsdam

Holland America Line said its next ship due in 2018 will be named Nieuw Statendam.

HAL officials made the disclosure at the Rotterdam christening ceremony of its latest ship, Koningsdam. Nieuw Statendam will be a sister ship to the 2,650-passenger Koningsdam.

Last year, the 1,258-passenger Statendam was transferred to the fleet of P&O Cruises Australia and renamed the Pacific Eden.

Five previous ships in HAL history have carried the Statendam name.