Carnival Reduces Earnings Forecast After Crippled Triumph Ship

Friday, 15 Mar 2013 09:57 AM

 

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The world's largest cruise line has suffered through a series of high-profile mishaps, yet passengers continue to book vacations, albeit at a slower pace.

Carnival Corp., earned $37 million, or 5 cents per share, in its first quarter. That compares with a loss of $139 million, or 18 cents per share, a year earlier. But its forecast for the year came in below analyst's predictions. Its shares fell more than 3 percent in morning trading.

The company had been offering sales to help attract passengers after an engine fire last month crippled the Carnival Triumph, leaving 4,200 people stranded for five days without working toilets or power. This week, two more of its ships had mechanical problems, ruining the vacations of thousands of more travelers.

On Thursday, the company ended the voyage of the Carnival Dream after the ship's backup emergency diesel generator failed, causing problems with elevators and toilets. Instead of continuing back to Florida, Carnival was forced to charter airplanes to fly home the ship's 4,300 passengers.

The Dream's next trip, which was supposed to start Sunday, was also canceled. All of the passengers on that voyage will receive a refund for the cruise and airfare.

Late Thursday, the company announced another ship — the Legend— was also having mechanical problems and would skip its stop at the Cayman Islands, heading straight to its final stop in Tampa, Fla. instead.

Vacationers have been wary about booking cruises ever since the Costa Concordia — also owned by Carnival — sank off the coast of Italy in January 2012. Passengers have returned to the seas, but only thanks to deep discounts.

In its earnings release Friday, the Miami-based company said advance bookings for 2013 are behind the same point a year earlier. The company also blamed Europe's economic problems for its inability to raise prices. The company runs cruises under 10 brands including Holland America, Princess, Cunard and Seabourn.

For the quarter which ended Feb. 28, adjusted earnings were 8 cents per share. Analysts had expected 3 cents per share. Revenue rose slightly to $3.59 billion. Analysts expected $3.64 billion.

However, it is the full-year outlook that worries Wall Street.

Carnival had predicted in December that revenue would rise in 2013 by 1 to 2 percent. On Friday, it said that is now expects revenue to be flat.

Carnival's stock was down $1.28, or 3.6 percent, to $34.45 in morning trading.

© Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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