On June 18, 2022, the Carnival cruise ship “Sunrise” docks at Port of Miami in Miami, Florida, United States. Photo taken with a drone.Reuters/Marco Bello/File photo Obtaining license rights
Sept 29 (Reuters) – Cruise company Carnival (CCL.N) trimmed its annual loss forecast and returned to profit in the third quarter thanks to higher ticket prices and solid demand, but rising fuel costs The company’s stock fell 5% on Friday due to concerns over the issue. .
Rivals Norwegian Cruise Line (NCLH.N) and Royal Caribbean (RCL.N) also raise ticket prices but offer cheaper stays than hotels, so customers want to splurge on experiences rather than large discretionary purchases. It attracts a young customer base.
“Fear over inflation, shrinking consumer savings, student loan repayments, and other spending issues have depressed stock prices recently, but this is likely to be temporary,” Morningstar research analyst Jamie Katz said in a note. It will turn out to be something.”
“All signs point to cruising resonating with consumers.”
However, Carnival downplayed its full-year outlook, saying it expected a higher-than-expected fourth-quarter loss and would face a net impact of $130 million from higher fuel prices and unfavorable exchange rates. Ta.
We also expect costs to increase due to an 18% increase in dry dock days for maintenance and repair work in 2024.
Unlike other major cruise lines, Carnival does not hedge against oil price fluctuations.
Chief Financial Officer David Bernstein told Reuters in an interview that the company is “not thinking” about fuel hedging at this time.
Instead, Bernstein added, Carnival is looking at fuel optimization technology and itinerary enhancements to reduce fuel consumption.
Cruise demand expands
Cruise lines are benefiting from pent-up travel demand post-pandemic and travelers looking for better vacation plans. Cruise fares are currently 35 to 40 percent cheaper than leisure hotels, said Redburn Atlantic analyst Alex Brignall.
Carnival said more than 2.5 million guests took part in first-time cruises this year, first-time cruise passenger numbers soared 170% year-over-year in the quarter, quarterly revenue hit record high, and occupancy was higher than before the pandemic. It is said that it has returned to the level of
“The positions we’ve booked are by far the biggest deviations we’ve ever seen,” CEO Joshua Weinstein said. However, he added that although demand remains strong, bookings for 2024 may decline as inventories become saturated.
Carnival’s third-quarter profit was $1.07 billion, or 79 cents per share, compared with a loss of $770 million, or 65 cents per share, in the year-ago period.
Report by Juveria Tabassum. Edited by: Devika Syamnath and Shweta Agarwal
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