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Carnival slashes outlook on fallout from Concordia; posts wider-than-expected 1st-qtr loss
NEW YORK (AP) ' The year has barely begun, but it's already a major disappointment for the cruise industry.
It was supposed to be the year that prices stabilized following widespread discounting after the recession. But just two weeks into the year, 32 people dies when the Costa Concordia sank off the coast of Italy. Then late last month, another Costa ship ' the Allegra ' caught fire and lost power, leaving passengers without working toilets, running water or air conditioning for three days.
Costa's parent company, Carnival Corp., said Friday those incidents led it to slash its 2012 earnings expectations by 82 percent. Still, it's holding prices firm, warning that "consumers holding out for deeper than normal discounts may be disappointed."
Since the Concordia capsized in mid-January, Carnival said that its booking trends, excluding Costa, are still running behind last year, despite lowering prices immediately after the accident. Booking volumes for the Costa line during the same period are running "significantly behind."
Costa nixed essentially all its marketing after the wreck, Carnival said, and has not made a serious public attempt to win back potential travelers in most markets.
Carnival Corp. posted a loss of $139 million, or 18 cents per share, for the first quarter on Friday. A year ago, it earned $152 million, or 19 cents per share.
Revenue rose 5 percent to $3.58 billion. Analysts expected a loss of 7 cents per share with revenue of $3.56 billion.
The first three months of the year are a critical period for the cruise industry. Referred to as "wave season," it's a time when a large number of travelers book cruises for the year. The Costa Concordia disaster happened as the season was starting, and it affected bookings across the industry.
Last month Royal Caribbean Cruises Ltd. said it's hard to determine what impact the tragedy will have on its 2012 revenue, but it said the accident has already hit bookings significantly.
Unlike plane tickets or hotel rooms which are mostly booked directly by customers on the internet, most cruises are sold by travel agents, which makes it harder to gauge the impact of an accident like the Concordia wreck.
But no cruise line has felt the impact like Carnival.
The Miami company predicted net income of between $1.40 and $1.70 per share. It previously forecast $2.55 to $2.85 per share. Revenue for the year after expenses could fall as much as 4 percent. If the potential business from the sunken Italian ship is excluded, Carnival says the number would likely be flat.
Carnival operates 101 ships under several brands including Costa, Carnival, Cunard, Holland America, Princess and Seabourn.
Shares of Carnival Corp. fell 54 cents to $30.41 in midday trading. The stock lost about 16 percent in the days following the Concordia wreck, and has not recovered much from a January low of $29.36.