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Royal Caribbean Q1 Earnings Plunge

May 1, 2007 By: David Eisen Travel Agent

Royal Caribbean International saw its first-quarter earnings tumble due to higher operating expenses and the acquisition of Spanish cruise and tour operator Pullmantur, the cruise line announced Tuesday. Net income fell precipitously from $119.5 million last year at the same time to $8.8 million this year. Richard Fain, Royal Caribbean's chairman and CEO, blamed continued weak demand in the Caribbean market and capacity constraint in other markets. "I think we are seeing--frankly everyone in the industry is seeing--the same type of phenomenon," said Fain. "These new markets are opening up really very quickly and I think everyone is taking advantage of it and there's limitations on how much new capacity we can add." This is contrary to what many executives have said prior, stating that new capacity, especially in Europe, can readily be absorbed. Royal Caribbean predicted soft pricing in the Caribbean would continue through spring, but that its revenue outlook for the rest of the year is on the up and up. Earnings declivity was also chalked up to the highly seasonal Pullmantur business, which is stronger in the summer months than in winter.

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