The economic meltdown of the past few months is taking a toll on the world’s biggest cruise company.
Industry leader Carnival Corporation today reported net income of $371 million for its most recent quarter, up from $358 million in the same quarter a year ago. But the better-than-expected results were tempered by a warning that the coming year is shaping up as a tough one.
“For 2009, occupancy levels for advance bookings are running behind the prior year, with ticket prices for these bookings also at lower levels,” the company said in a statement accompanying its earnings release.
The parent company of nearly a dozen lines including Carnival, Princess, Holland America, Cunard and Seabourn is one of many travel firms that were hit hard in October and November by a sharp downturn in bookings as consumers cut back drastically on spending.
On a constant dollar basis, the company now expects full year net revenue yields to decrease 6 to 10% compared to 1 to 5% in the company’s October guidance. The company says the reduction in the company’s yield guidance is due in part to the recently announced fuel supplement refund for 2009 bookings combined with a further forecasted reduction in revenues due to deteriorating economic conditions.
As a result of changes in currency exchange rates, the company forecasts an even heftier 11 to 15% decline in net revenue yields for the full year 2009 compared to 2008.
One bright spot for the cruise giant: Plunging fuel prices. While Carnival says net cruise costs excluding fuel for the full year 2009 will be higher by approximately 2% on a constant dollar basis, the continued decline in fuel prices should reduce fuel expense in 2009 by $278 million compared to our previous guidance.
Even with the drop in bookings, meanwhile, Carnival still expects to be profitable in 2009 — just less profitable than it was forecasting just a few weeks ago. The company now forecasts full year 2009 earnings per share to be in the range of $2.25 to $2.75, compared to its previous guidance range of $2.50 to $3.00.