Carnival Corp will shed three more ships as its weathers a rocky
return to cruising in Australia and Asia and navigates the ongoing
impact of the war in Ukraine.
Given Costa Cruises' significant presence in Asia, which has not yet
fully reopened to cruising, Carnival Corp has opted to sell two of the
brand's smaller, less efficient ships from the fleet, said Carnival Corp
CEO Josh Weinstein during the company's fiscal Q4 earnings call on
A third ship from an unnamed Carnival brand will also be sold. The company declined to release details.
"At this point, Australia's reopening is where North America was a
year ago, and Japan is closer to two years behind," said Weinstein. He
said he expects the impacts of those regions to affect deployments and
guest sourcing through the first half of 2023. Meanwhile, China has yet
to reopen to cruising.
When will China cruising return?
Asked whether Carnival Corp sees a return to China, Weinstein said he
is keeping an eye on China but would rather optimise demand and revenue
in markets where its brands are doing well.
"If and when China opens up again, and opens up not just to domestic
cruising but really opens up, we'll certainly look at that, but we're
not relying on it. We're not counting on it," he said.
If and when China opens up again, and opens up not just to domestic cruising but really opens up, we'll certainly look at that, but we're not relying on it. We're not counting on it.– Josh Weinstein, CEO, Carnival Corp
The move to sell ships will return Costa to its approximate 2019
capacity outside of Asia. The shift is an attempt to "right-size" Costa
and keeps deployments closer to home in its core markets in continental
Europe, he said.
Carnival Corp CFO David Bernstein said the company is under contract
to sell two ships and is working on a contract to sell the third.
The shedding of the ships is in addition to the three Costa vessels
the company is shifting to Carnival Cruise Line. The Luminosa began
sailing for Carnival in September, the Venezia will begin in June 2023
and the Firenze in 2024.
The Ukraine war has hurt Costa and Princess
Instability in the region around Ukraine has led to uncertainty and
more close-in bookings, namely for Costa and Aida, Weinstein said,
leading the lines to homeport closer to where guests live and to sail
These interruptions have affected the full return of brands that rely
on international guests, including Princess Cruises. In 2019, about
one-third of Carnival Corp guests from outside North America came from
Australia, Asia and the Baltics. Weinstein said that amounts to about 2
million people. That represents about 40% of Costa's guests and 25% of
Princess' guests, he said. To adjust, Princess will source more heavily
than ever before from North America, Weinstein said.
A Q4 loss and more debt, but rising bookings
Carnival Corp has had a rocky 2022. Although bookings have improved
since Covid regulations subsided in late summer and several of the
brands broke booking records for Black Friday and Cyber Monday, the
company reported an adjusted net loss of US$1.1 billion in its fiscal Q4
(the three months ending on 30 November).
The company expects it will return to 50% of 2019 earnings by mid-2023 and rival 2019 earnings by the end of next year.
Carnival Corp has US$32 billion in long-term debt, up from US$28.5 billion a year ago.
Occupancy in Q4 was 19 percentage points below 2019 levels. That was
improved over Q3, when occupancy was 29 points below 2019 levels.
Carnival Corp expects total capacity to grow 3% above 2019 levels next
The company said booking volume in Q4 neared the 2019 level. The
booking curve has lengthened across all brands and onboard revenue
continues to climb, Weinstein said.
Carnival Corp also is optimistic about its decision to increase
marketing spending to drive demand. The company not only plans to
utilise marketing during Wave season but plans to continue throughout
the year to drive demand at higher prices, Weinstein said. In Q4,
Carnival Corp spent nearly 20% more on advertising than in Q4 2019.
Patrick Scholes, a stocks analyst with Truist Securities, said the
earnings were lower than expected due to lower-than-expected passenger
ticket revenue on lower-than-expected occupancy, unfavourable fuel
prices and currency rates.
Source: Travel Weekly