Fuel Costs and Onboard Revenue Drops Stifle Carnival's Q1 Earnings

Torturous fuel prices, which cost Carnival Corp. $156 million in the first quarter 2008, and a pullback in onboard spending were two culprits leading to a 17 percent slip in profits in Q1 for the world's largest cruise operator. Carnival's net income came in at $236 million, down $47 million from the same time a year ago.

Despite many variables including a faltering dollar, lower consumer confidence and a slowing housing market, Carnival remains upbeat. "Consistent with their historical performance, our cruise brands continued to demonstrate resiliency despite a difficult economic environment," said Micky Arison, Carnival chairman and CEO. "This especially holds true in the Caribbean where there continues to be a strong rebound in pricing from last year."

Howard Frank, vice-chairman and COO, said 2008 bookings were ahead of last year, though this year's wave season was slower than 2007. "Pricing during wave season was set at higher levels," he said.

Regarding onboard spend, Arison said they were seeing less spend on their mainstream ships rather than premium or luxury. While shore excursion purchases have held steady, Arison said events such as art auctions were drawing in less revenue than in the past. (DE)

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