Meyer Turku has always been at the forefront of new technologies, Tim Meyer, CEO, said to Cruise Industry News, noting that the yard built the first LNG-fueled passenger vessel, the Viking Grace and that its sister yard in Papenburg delivered the first LNG-fueled cruise ship.
“It is important to understand that every time we build a prototype, we set very ambitious targets for GHG emissions and fuel consumption so that the new ship becomes more efficient. That becomes part of our building contract with most customers and, of course, by reducing the fuel consumption, we also lower our customers’ operating costs.
“Over the years, we have been introducing new technologies in our newbuilds, such as, for example, podded propulsion; air lubrication to reduce the hull’s resistance in the water; advanced wastewater treatment, ballast water treatment, and more, which eventually have become building standards for the cruise industry.
“Now, we are focusing on HVAC, which is a large energy consumer,” Meyer continued. “It is not necessary to cool down all the public rooms all the time, when there are no people present, for example, or staterooms when people leave.
“There is also the ventilation and exhaust from the galleys that used to run around the clock. We are now optimizing this, so it is only running when there is cooking going on.”
In addition, Meyer Turku is looking to develop a carbon-neutral cruise ship concept by 2025, working with suppliers, universities and research organizations, as well as the state of Finland.
“This is a very important effort and will be key to our success going forward,” Meyer said. “On one hand you have the ship itself, on the other hand, you have the shipyard, and then we have our network and supply chain that can be optimized.
“A cruise ship is like a small city; you have everything from water production to wastewater treatment and so on. The goal is to have all these systems working together as efficiently as possible, and with AI (artificial intelligence) we will be able to do just that.
“Another pillar is our people, so we are also focused on creating new competencies within the yard, looking at how we are working and developing new ideas for methods and procedures.”
As a shipbuilder, Meyer said the company can literally build anything. However, the key is that it must make sense.
“When you have a ship such as the Viking Grace running between Stockholm and Turku, then it makes sense to operate on LNG, as long as you have a fixed route. But if you have a cruise ship sailing all over the world that may not work if LNG cannot be bunkered. So, you have to adapt the product.
“The big question is what fuels will be available and where they will be available,” Meyer continued.
“Another factor that plays in is the energy density of marine fuels. Diesel oil has the most energy per litre; methanol has only half as much, LNG a little less than methanol; liquefied ammonia, liquid organic hydrogen carriers and liquefied hydrogen even less.”
Thus, future fuels could impact the design and general arrangement of future ships, tank space and bunkering frequency.
“What do zero emissions mean,” Meyer asked rhetorically. “Does it mean no exhaust only or does it also mean no sound and no vibrations? What is important for us is to look at different aspects, not only the cruise ships themselves but also the supply chain. Germany, for example, is studying how to make steel production more sustainable. As a shipyard, we cannot do all of this but work as partners with our suppliers.
“We have to look at the whole picture, and if you compare to what people do on land, let’s say they drive their car, heat their homes, prepare food, go to the theatre and so forth. If you add all that up on a per capita basis, I think cruise ships will come out quite well.”
Contrary to land-based hotels and resorts, there is no waste of energy on a cruise ship, according to Meyer, who said that is a challenge the shipbuilder has been tackling for years and continues to look for new solutions.
Carnival Corporation has provided its third quarter 2022 business update.
Key Highlights:
U.S. GAAP net loss of $770 million and an adjusted net loss of $688 million for the third quarter of 2022.
Adjusted EBITDA for the third quarter of 2022 was over $300 million, turning positive for the first time since the resumption of guest cruise operations and marking a significant milestone.
Revenue increased by nearly 80% in the third quarter of 2022 compared to second quarter 2022, reflecting continued sequential improvement.
Occupancy in the third quarter of 2022 increased 15 percentage points from the prior quarter.
Since the announcement of the company’s relaxed protocols in mid-August, aligning the company towards land-based vacation alternatives, booking volumes for all future sailings are considerably higher than strong 2019 levels.
The third quarter of 2022 ended with $7.4 billion of liquidity, including cash and borrowings available under the company’s revolving credit facility.
Carnival Corporation & plc’s Chief Executive Officer Josh Weinstein commented: “The well-being of the Caribbean region, Florida and other states still in the path of Hurricane Ian is very important to us. On behalf of Carnival Corporation, I would like to extend our deepest concern for those affected by Hurricane Ian and Fiona, some of whom are our own employees, travel agent partners, destination communities and loyal guests.”
Weinstein noted: “During our third quarter our business continued its positive trajectory, achieving over $300 million of adjusted EBITDA and reaching nearly 90% occupancy on our August sailings. We are continuing to close the gap to 2019 as we progress through the year, building occupancy on higher capacity and lower unit costs.”
Weinstein continued: “Since announcing the relaxation of our protocols last month, we have seen a meaningful improvement in booking volumes and are now running considerably ahead of strong 2019 levels. We expect to further capitalize on this momentum with renewed efforts to generate demand. We are focused on delivering significant revenue growth over the long-term while taking advantage of near-term tactics to quickly capture price and bookings in the interim.”
Weinstein added: “With a transformed fleet, an unmatched portfolio of well-recognized brands, unparalleled scale in an under-penetrated industry and an incredibly talented global team, we have the ability to drive durable revenue growth through pricing improvements over time. We believe this will provide significant free cash flow and accelerate our return to strong profitability and investment grade credit ratings.”
Third Quarter 2022 Results and Statistical Information
Revenue increased by nearly 80% in the third quarter of 2022 compared to the second quarter of 2022, reflecting continued sequential improvement. For the cruise segments, revenue per passenger cruise day (“PCD”) for the third quarter of 2022 decreased compared to a strong 2019.
Onboard and other revenue per PCD for the third quarter of 2022 increased significantly compared to a strong 2019.
PCDs for the third quarter of 2022 were 17.7 million, representing a 55% increase from the prior quarter.
Occupancy in the third quarter of 2022 increased 15 percentage points from the prior quarter.
Available lower berth days (“ALBD”) for the third quarter of 2022 were 21.0 million, which represents 92% of total fleet capacity, increasing from 74% in the second quarter of 2022.
Adjusted EBITDA for the third quarter of 2022 was over $300 million, turning positive for the first time since the resumption of guest cruise operations and marking a significant milestone.
Total customer deposits were $4.8 billion as of August 31, 2022, approaching $4.9 billion as of August 31, 2019, which was a record third quarter. New bookings during the third quarter of 2022 primarily offset the historical third quarter seasonal decline in customer deposits (a $0.3 billion decline in the third quarter of 2022 compared to a $1.1 billion decline for the same period in 2019).
Guest Cruise Operations
Weinstein said: “With our return to guest cruise operations essentially complete, we are now relentlessly focused on driving top line growth and returning to strong profitability. We believe the strategic changes we have already made to our fleet resulting in a younger and more efficient fleet, coupled with our recent portfolio optimization efforts including COSTA by CARNIVAL, will provide strong tailwinds along our path to profitability.”
As of September 30, 2022, approximately 95 per cent of the company’s capacity is serving guests. The company expects eight of its nine brands will have their entire fleet serving guests by the end of the fourth quarter of 2022.
According to a press release, given Costa Cruises’ significant presence in Asia, particularly China, which remains closed to cruising, the brand continues to evaluate deployment options and fleet optimization alternatives beyond the previously announced transfers of Costa Luminosa to Carnival Cruise Line as well as Costa Venezia and Costa Firenze to the COSTA by CARNIVAL concept.
The company’s brands continue to responsibly relax their COVID-19-related protocols aligning the company towards land-based vacation alternatives.
This generally includes greatly reduced or eliminated testing requirements and significantly broadens the demand pool by welcoming unvaccinated guests. These relaxed protocols generally became effective throughout September and are subject to local destination regulations.
The company saw a continuation of its 2022 sequential improvement in adjusted cruise costs excluding fuel per ALBD in constant currency in the third quarter of 2022 and said it expects to see continued improvement in the fourth quarter of 2022 with a low double-digit increase as compared to the fourth quarter of 2019 driven in part by higher advertising expense to drive 2023 revenue.
While the company’s year-to-date adjusted cruise costs excluding fuel per ALBD during 2022 have benefited from the sale of smaller-less efficient ships and the delivery of larger-more efficient ships, this benefit is offset by a portion of its fleet being in pause status for part of the year, restart related expenses, an increase in the number of dry dock days, the cost of maintaining enhanced health and safety protocols, inflation and supply chain disruptions. The company anticipates that many of these costs and expenses will end in 2022.
Given the seasonality of its business, the company expects a net loss and breakeven to slightly negative adjusted EBITDA for the fourth quarter ending November 30, 2022. Having achieved over $300 million in adjusted EBITDA in the third quarter, the company anticipates positive adjusted EBITDA for the second half of 2022 despite the seasonality of its business and the increasing investment in advertising to drive yields in 2023. Additionally, on a year-over-year basis, the company expects an improvement in adjusted EBITDA and occupancy, with occupancy returning to historical levels during 2023.
Bookings
Booking volumes for all future sailings during the third quarter of 2022 saw a continuation of the accelerated booking volumes during the second quarter of 2022, closing the gap to strong 2019 levels. Since the announcement of the company’s relaxed protocols in mid-August, aligning the company towards land-based vacation alternatives, booking volumes for all future sailings are considerably higher than strong 2019 levels. (The company’s current booking trends will be compared to booking trends for 2019 sailings as it is the most recent full year of guest cruise operations.)
Cumulative advance bookings for the fourth quarter of 2022 are below the historical range and at lower prices, primarily due to future cruise credits (“FCCs”), as compared to 2019 sailings.
Cumulative advance bookings for the full year 2023 are slightly above the historical average and at considerably higher prices, as compared to 2019 sailings, normalized for FCCs.
Financing and Capital Activity
During the third quarter of 2022, the company completed a $1.15 billion public equity offering of its common stock. The company expects to use the net proceeds from the offering for general corporate purposes, which could include addressing 2023 debt maturities. In addition, the company invested $0.5 billion in capital expenditures, repaid $0.4 billion of debt principal and incurred $0.4 billion of interest expense, net during the quarter. The company ended the third quarter of 2022 with $7.4 billion of liquidity, including cash and borrowings available under the revolving credit facility.
Additionally, the company exchanged $339 million in aggregate principal amount of its outstanding Convertible Senior Notes due 2023 (the “Existing Notes”) for the same amount of Convertible Senior Notes due 2024, extending maturities at the existing rate of 5.75%. The New Notes have the same initial conversion price as the Existing Notes, representing no dilution to shareholders at scheduled maturity versus the Existing Notes, the same coupon and no upfront cost to the company.
The Carnival Luminosa set sail today for the first time with her new livery and funnel.
Under the command of Captain Adriano Binacchi, Carnival Luminosa departed her Palermo, Italy, dry ock to head to Dubai where the ship’s crew will soon join and get to know their new home before heading to their final Australian destination.
“We’ve been anticipating the day where we could see Carnival Luminosa sail the open seas with our new hull design and updated funnel, and it’s even more special than we imagined,” said Captain Binacchi. “Now, she’s on her way to what truly makes a Carnival cruise vacation special – getting our crew on board! With Luminosa’s uniqueness and our team members who make everyone feel at home, this ship is truly going to deliver a new level of fun that our guests have not experienced before.”
Today also marks the first time Carnival Luminosa is sailing with its new Bahamian flag. The ship was officially registered last week with the Bahamas Maritime Authority (BMA). Carnival Luminosa will sail from Brisbane to a variety of seasonal itineraries from Nov. 6, 2022, to April 13, 2023, offering something for everyone, before repositioning for seasonal service from Seattle to Alaska next May, including some exotic, first-time-for-Carnival destinations.
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