Carnival Corp cuts profit forecast

By Phil Davies

Carnival Corp cuts profit forecastThe world’s largest cruise conglomerate Carnival Corporation last night cut its profit forecast for the second half of the year.

The US-based cruise giant blamed lower net yields and the cancellation of cruises by its main Carnival Cruise Lines brand, which has suffered from a series of problems with its ships.

The line slashed prices in the UK by up to 40% last month following the announcement of a £500 million fleet-wide operational review in the wake of an engine fire which left Carnival Triumph (pictured) stranded in the Gulf of Mexico in February and technical faults on some of its other ships.

Carnival Cruise Lines then announced the withdrawal of its two ships from Europe in 2014, although denied this was due to the recent incidents.

Miami-based parent company Carnival Corporation said last night: “Current cruise ticket pricing for the company has driven higher booking volumes; however, at the same time, it has led to lower-than-anticipated net revenue yields which has resulted in reduced earnings guidance.”

It cut its full year earnings per share expectation to a range of $1.45 to $1.65 compared with previous guidance of $1.80 to $2.10.

The group said: “The company now expects full year 2013 net revenue yields to be down 2% to 3% compared to the previous flat yield guidance for the year.

“In addition, voyage cancellations beyond those incorporated in the company’s previous earnings guidance, as well as increased selling and administrative costs, are expected to reduce earnings by approximately $0.10 per share.”

These factors, as well as current fuel prices of $674 per metric ton and currency exchange rates of $1.30 to the euro and $1.53 to the pound, prompted the new earnings outlook.

The company, which has UK brands P&O Cruises and Cunard Line, is to announce second quarter results and more details of its 2013 full year guidance in late June.

Carnival Triumph evacuated after nearby explosions

Carnival Triumph evacuated after nearby explosions

Carnival Triumph evacuated after nearby explosionsExplosions in a US port have promoted Carnival Triumph, which was undergoing repairs nearby, to be evacuated.

Work on the 2,758-passenger ship has been on-going since an engine fire in February left it without power and drifting in the Gulf of Mexico.

Multiple explosions were reported in the port in Mobile, Alabama, caused when two fuel barges were said to have slipped their moorings.

Triumph, which was moored across the river from the incident, has many workers living on board undertaking the repairs ahead of an expected return to service on June 3.

Earlier this month the ship broke free of its moorings in Mobile and collided with a barge. A shipyard worker who was on an adjacent pier at the time was killed in the incident.

Three people were reported to be critically injured by today’s explosions, although none associated with Carnival. The fire was said to have burned out by 8am local time this morning.

Carnival fleet review to cost £500 million

Carnival fleet review to cost £500 million

By Lee Hayhurst

Carnival fleet review to cost £500 millionCarnival Corporation expects a group-wide operational review of 101 ships across ten of its brands will cost up to £500 million.

The action is being taken following an engine fire on Carnival Cruises Lines’ ship Carnival Triumphand a number of other technical faults on some of the brand’s other ships.

Carnival Cruise Lines confirmed that it will be spending more than £200 million on improvements to its back-up services across all 24 ships in the fleet in the wake of the problems.

The work, which is already underway, aims to “significantly enhance” emergency power capabilities, introduce new fire safety technology, and improve the level of operating back-up across all ships.

The company said the work will not affect scheduled itineraries, but it has already had to cancel a number of cruises on Carnival Triumph and the rebuilt Carnival Sunshine which was originally due to re-enter service at the end of the month in the Mediterranean.

The plan is the result of a comprehensive operational review, overseen by Carnival Corporation and initiated immediately after the Carnival Triumph fire in the Gulf of Mexico in February.

Carnival Corporation chairman and chief executive Micky Arison said: “The investments announced today for Carnival Cruise Lines, and those we will continue to make, will reinforce our ability to consistently deliver the customer experience that 10 million people every year have come to expect from us across our fleet of 101 ships.

“Absolutely nothing is more important than the safety and comfort of our guests and crew, and we will use the full resources of our company to meet that commitment.”

The initial increase in emergency generator power across the 24 Carnival Cruise Lines ships will be completed over “the next several months”.

An additional emergency generator will be installed on each vessel to provide for all cabin and public toilets, fresh water and lifts in the event of a loss of main power.

The line will install a second permanent back-up power system on each ship to provide an improved level of hotel and guest services if main power is lost, including expanded cooking facilities and cold food storage, as well as internet and telephone communications.

The company also pledged to invest in the “newest and most technically advanced” fire prevention, detection and suppression systems.

Carnival Cruise Lines is drafting in five outside experts to form a safety and reliability review board to “provide an additional, independent third-party perspective, drawing from deep experience across a number of relevant fields and organisations”.

“The actions by Carnival Cruise Lines will expand the availability of hotel services for the comfort of its guests in the rare instance of a shipboard event that involves the loss of main power,” the company said.

“In addition, the plan will reinforce key shipboard operating systems to further prevent a potential loss of primary power.”

Carnival Cruise Lines’ president and chief executive Gerry Cahill said: “All of Carnival Cruise Lines’ ships operate safely today. Each vessel already has effective systems in place to prevent, detect and respond to emergency situations, and we meet or exceed all regulatory requirements.

“However, by applying lessons learned through our fleet-wide operational review after the Carnival Triumph fire and by taking advantage of new technologies, we have identified areas for enhancement across our operations.”

He added: “These initiatives reflect our commitment to safe and reliable operations and an enjoyable cruising experience for the nearly 4.5 million guests who sail with Carnival Cruise Lines each year.

“Although every ship in our fleet currently has emergency back-up power which is designed to enable the continuous operation of safety equipment and some hotel services, it is our intent to significantly bolster that back-up power to support the core hotel services. With this improvement, we will better ensure guest comfort in the rare instance of a loss of main power.

“On Carnival Triumph, our fire systems were effective and our teams performed well in controlling and extinguishing the fire. However, we want to take advantage of the latest and most-advanced generation of fire safety systems to enhance the current extensive capabilities across our fleet,” said Cahill.