Tags: Carnival | Loss | Italy | disaster

Carnival Warns Profit May Plunge 82% on Italian Disaster

Friday, 09 March 2012 10:06 AM

Carnival expects that its earnings this year could be slashed by as much as 82 percent, the cruise line said Friday, nearly three months after the tragic sinking of the Costa Concordia off the coast of Italy that left 32 dead.

Since the Concordia capsized in mid-January, Carnival said that its booking trends outside of that brand are still running behind last year, and at lower prices. Booking volumes for the Costa line during the same period are running "significantly behind." Costa nixed essentially all its marketing after the wreck, Carnival said, and has not made an overly public attempt to win back potential travelers in most markets.

Carnival Corp. posted a loss of $139 million, or 18 cents per share, for the first quarter Friday. A year ago, it earned $152 million, or 19 cents per share.

Analysts expected a loss of 7 cents per share with revenue of $3.56 billion. The Concordia was not the only public relations problem for Carnival, however. A fire broke out in the generator room of another ship, the Costa Allegra, leaving passengers without working toilets, running water or air conditioning for three days last month. The incident also occurred in a region of the Indian Ocean where pirates are known to prowl.

The first three months of the year are a critical period for the cruise industry. Referred to as "wave season," it's the time when a large number of travelers book cruises for the year. The Costa Concordia disaster took place just two weeks into the season, affecting bookings across the industry. Other major cruise operators have said their businesses are also being hurt by the Concordia incident.

Early last month, Royal Caribbean Cruises Ltd. said it's hard to determine what impact the tragedy will have on its 2012 revenue, but said the accident has already hit bookings significantly.

Unlike plane tickets or hotel rooms which are mostly booked directly through the internet, most cruises are sold by travel agents. That scattered sales approach makes it harder to gauge the impact of an accident like the Concordia

But certainly, no one in the industry has felt the impact like Carnival.

The Miami company predicted net income of between $1.40 and $1.70 per share. It previously forecast of $2.55 to $2.85 per share. Revenue for the year after expenses could fall as much as 4 percent. If the business with the sunken Italian ship is excluded, Carnival says the number would likely be flat.

Carnival operates 101 ships under several brands including Costa, Carnival, Cunard, Holland America, Princess and Seabourn.

Shares of Carnival Corp. fell 8 cents to $30.87 in early trading.


© Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

1Like our page
Friday, 09 March 2012 10:06 AM
Newsmax Media, Inc.

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved