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Carnival struggles in Europe, does better here

Costa Concordia disaster, financial crisis take tolls elsewhere

Posted: June 25, 2012 - 12:02am
Alaska has been a bright spot for Carnival Cruise Lines so far this summer, with profits improving in the state, but hurting elsewhere. Carnival, parent company to the Carnival, Holland America and Princess Cruise Lines, is the first company to report on the summer cruise season in Alaska.  Michael Penn / Juneau Empire
Michael Penn / Juneau Empire
Alaska has been a bright spot for Carnival Cruise Lines so far this summer, with profits improving in the state, but hurting elsewhere. Carnival, parent company to the Carnival, Holland America and Princess Cruise Lines, is the first company to report on the summer cruise season in Alaska.

Carnival Cruise Lines reported plunging profits for the year’s second quarter as it continued to suffer the fallout from the Costa Concordia sinking earlier this year, but told Wall Street that it was mostly doing well in Alaska.

Carnival is the state’s and world’s largest cruise line, and also the first to report on the Alaska summer season.

Carnival reported that its profits for the quarter that ended May 31 had fallen 93 percent, to $14 million, on revenue of $3.5 billion, from the same quarter last year. Carnival made $206 million, on revenue of $3.6 billion, for the same quarter last year.

Carnival doesn’t provide specifics about its different markets or individual cruise lines, but usually offers some suggestions about where business is going well — or hurting.

This year the hurting was obvious, with Europe in economic turmoil and the sinking of the Costa Concordia, owned by Costa Cruises, one of Carnival’s European lines.

In North America, and especially in Alaska, where Carnival has 24 percent of its North American capacity, things are going somewhat better.

Net ticket yields, a measure of how much Carnival makes after costs, improved during the quarter, the company said.

“The North American brands were up 1.5 percent, driven by improved yields in the Caribbean and Alaska, partially offset by lower yields in European and other itineraries,” David Bernstein, Carnival’s chief financial officer, in a meeting with Wall Street analysts.

While company revenues were overall largely flat, the company did report that the amount passengers spend onboard ship for extras and for tours was going up, but provided no breakdown of that.

Bernstein said the increase in onboard spending is sometimes an indication of the company’s ability to improve ticket prices in the future and customers’ willingness to spend more.

“We are seeing some increases in onboard, we were very pleased,” said Howard Frank, the company’s chief operating officer. “The trend is very favorable, and I hope that is a leading indicator.”

One of the reasons Carnival’s early season reports are closely watched is that its executives generally report on what they’re expecting for the remainder of the summer. Most of the tickets for the rest of the Alaska cruise season have already been sold.

The news there is somewhat mixed. There has been a slight increase in ship capacity in Alaska, but pricing has been lower compared to last year. Also occupancies in both Alaska and Caribbean cruises are “slightly lower” than last year, Bernstein said.

Cruise ships typically sail full, even if berths have to be discounted to fill them. On Alaska and other summer cruises, children often accompany parents, putting more than two occupants in what are nominally called two-person cabins.

Alaska cruises sometimes sail at 110 percent capacity.

Other Alaska cruise lines, including Royal Caribbean, Disney and NCL report their financial results later, with varying levels of detail.

• Contact reporter Pat Forgey at 523-2250 or at patrick.forgey@juneauempire.com.

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Latitude58
14464
Points
Latitude58 06/25/12 - 06:25 am
3
8

Grateful

I'm sure Carnival is grateful to Governor Parnell for cutting their taxes in Alaska so they can pay for the ship that they sank in Europe. The residents of Alaska are happy to help cover this corporation's mistake.

chipthoma
239
Points
chipthoma 06/25/12 - 07:20 am
3
3

Thanks To Empire

The Empire and Pat Forgey do a great community service by reporting on quarterly cruise profits and trends. One aspect of this reporting is capacity. Since young kids bunk with their parents, many lines like Disney run at 110% capacity - one of every ten rooms has a child passenger. Most lines do run at 104% capacity.

When the cruise industry claims they are below 'historic highs' of passenger numbers, they don't count the kids and the extra 4-10% onboard. When you do count the kids, Alaska is easily back to 1 million cruise passengers per year. The "Arab Spring" in Egypt and N.Africa will continue the upward passenger trend here.

skirkz
6682
Points
skirkz 06/25/12 - 08:00 am
4
0

Italian rocks.

Carnival should threaten Italy with reduced sailings unless they remove those pesky rocks and reefs.

30YearResident
2687
Points
30YearResident 06/25/12 - 09:15 am
2
0

Carnival

Article is confusing...is this reporting on Carnival Corporation or Carnival Cruise Line? The first sentence references the latter however, the Line only sails one ship in Alaska.

Mama T
2396
Points
Mama T 06/25/12 - 12:27 pm
2
3

LOL 30 year...

What's the difference? Splitin hairs....
Princess, Carnival, Holland, Costa, Etc, Etc all the same corp

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