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Carnival Corp. Recovers in First Quarter, But Risks Remain

March 15, 2013 By: Newswire

carnival inspirationCarnival Corp. has released its results for the first quarter of 2013, and the report shows that heavy promotional pricing has improved demand, but some signals remain mixed.

Cumulative advance bookings for 2013 remain behind last year at prices roughly at last year’s levels, while booking volumes for the remainder of the year since January are running significantly higher than last year at slightly higher prices, including for the Costa Cruises brand.

“Demand for the Carnival brand appears to be stabilizing / improving with promotional pricing without negatively impacting other CCL or competitive brands in North America in the context of a very solid North American industry,” says Timothy Conder, CPA and senior analyst at Wells Fargo Securities.

“Despite considerable attention surrounding the Carnival Triumph, we had been encouraged to see booking volumes for Carnival Cruise lines recover significantly in recent weeks,” Carnival Corp. Chairman and CEO Micky Arison says in a statement. “Attractive pricing promotions, combined with strong support from the travel agent community and consumers who recognize the company’s well-established reputation and quality product offering, were driving the strong booking volumes.”

Despite the improvement, however, questions remain. Conder warns that the company will remain exposed to incident and PR risks, such as this week’s mechanical troubles with the Carnival Dream and Carnival Legend , until the company completes mechanical and comfort upgrades in 2014 and early 2015.

Additionally, Europe’s troubled economy remains a drag on the company. Conder says, “Modest collective deterioration in Europe (we will need to closely monitor the key April / May booking period for European sourced passengers) and onboard spending guidance is worrisome.”

“Booking volumes during our seasonally strong wave period have remained solid with pricing comparisons improving in recent weeks,” Arison says. “However, economic uncertainty in Europe continues to hinder yield growth.”


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By Newswire | March 15, 2013
Analyst warns that the company will remain vulnerable until mechanical upgrades are complete in 2014 or 2015.
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