Relax - Royal Caribbean bookings hit by rival's wreck

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Royal Caribbean bookings hit by rival's wreck

Reuters | Fri, Feb 3 2012

Cruise operator says booking volumes dropped more in Europe, where media coverage of the Costa Concordia accident has been more extensive.

Royal Caribbean bookings hit by rival's wreck

Keywords

cruise

costa concordia

business

Royal Caribbean Cruises Ltd, the world's second-largest cruise operator, warned that earnings in the current quarter could fall by as much as 50 per cent as the Costa Concordia disaster off the coast of Italy caused a sharp drop-off in new cruise bookings.

Royal Caribbean shares fell as much as 5.7 per cent on Thursday morning but later pared losses to trade down 0.8 per cent at US$28.01 (S$34.93) on the New York Stock Exchange.

"We are still on track to achieve our original projections for the first quarter, but there is a high degree of uncertainty and it is difficult to judge the impact of the tragedy on the balance of the year," Royal Caribbean's chief financial officer, Brian Rice, said in the company's earnings news release.

Last month, the Costa Concordia cruise ship operated by rival Carnival Corp hit a reef off the Tuscan coast, killing 17 people. Another 15 are still missing.

Carnival cut its profit outlook for the year as a result.

Royal Caribbean said overall booking volumes from North America have fallen by low to mid-teen percentages, and dropped more in Europe, where media coverage of the accident has been more extensive.

"That is in line with what Carnival saw, and in line with what we were expecting," said Morningstar analyst Jaime Katz.

The company, whose brands include Celebrity, said it expects to earn between 10 and 20 cents a share in the first quarter.

Wall Street's forecast was for 25 cents, according to Thomson Reuters I/B/E/S.

"That's a big slice of earnings they are taking off," said Katz. Royal Caribbean had earned 42 cents a share in the same quarter last year.

The analyst also said cruise costs were up 10 per cent for the company - similar to what Carnival had reported earlier - leading to the weak forecast.

Royal Caribbean's fourth-quarter net income rose to US$36.6 million, or 17 cents a share, compared with US$31.9 million or 15 US cents a share last year. Analysts had expected 15 US cents.