Bookings and forward pricing have been relatively strong but no visibility on Middle East impact.



"Despite the uncertain world events that have unfolded during our peak booking period, we have experienced a solid wave season.  Ticket prices for the peak summer season remain particularly strong. The convenience and affordability of a cruise vacation continues to gain recognition as consumers discover the unrivaled experience cruising offers. As a result, long-term fundamentals for our business remain attractive in an environment where consumers increasingly value the importance of taking their holidays. [On 1Q results] Net revenue yields increased 2 percent (constant dollars) driven by a significant improvement in ticket prices for our European brands. We remained focused on managing costs and reducing fuel consumption. All of which more than offset rising fuel prices during the quarter."

- Micky Arison, Carnival Corporation & plc Chairman and CEO


  • 1Q2011 results:
    • EPS: $0.19
    • Constant dollar net revenue yields: +2% (in-line with guidance)
    • Gross revenue yields: +2.4%
    • Constant dollar net cruise costs (ex. fuel): +1% (higher than guidance of flat to +1%)
    • Fuel: +9% to $543/metric ton (vs. guidance of $526), costing $0.05 EPS
  • 2Q2011 guidance
    • Constant dollar net revenue yields: +1.5% to 2.5% (+4.5% to 5.5% on current dollar basis)
    • Constant dollar net cruise costs (ex. fuel): +2-3%
    • Fuel: $659/metric ton
      • Fuel costs for Q2: $140MM or $0.18 EPS drag
    • EPS: $0.20-0.24 (Consensus: $0.33)
  • FY2011 guidance:
    • Diluted EPS: $2.55-2.65 (above March 11 guidance of $2.50-2.60)
    • Constant dollar net revenue yields: +2.5% to 3.5% (lower than guidance of +3% to 4%)
    • Current dollar net revenue yields: +4.5 to 5.5%
    • Constant dollar net cruise costs (ex. fuel): flat to +1% (higher than guidance of -0.5% to +0.5%)
      • Slightly lower expectations in other cost categories are expected to offset the slightly higher net cruise costs guidance
    • Fuel: $631/metric ton (higher than guidance of $527/metric ton)
      • Fuel costs for FY2011: an increase of $355MM over previous guidance or +$489MM, costing $0.45 EPS.
      • However, a weaker US$ since guidance will benefit earnings by $75MM or $0.09 EPS
    • Debut of 2 ships in 2Q: AIDA Sol and Carnival Magic


  • Capacity increased 5%; EAA brands up 11% (9% coming from South America); NA brands up 2%
  • In 1Q: 4 cent benefit from cost cutting measures; 2 cent adverse effect from fuel
  • Ticket yields
    • NA brands: down because of higher Caribbean capacity;
  • Normalized on-board spend and other yields: +3%
  • 2011FY guidance:
    • Seeing inflationary pressures in crew travel, food costs, freight and other areas
    • Interest expense, taxes and depreciation are lower, which offset some of the inflationary pressures.
    • 10% change in the price of fuel for the remaining three quarters of 2011 represents a $0.22 per share impact.  With respect to FX movement, a 10% change in all currencies relative to the U.S. dollar and also for the remaining three quarters of would also impact our P&L by $0.22 per share. 
  • 2011 booking picture: occupancies are slightly lower than a year ago on a 5% increase in Cruise capacity for the next three quarters.  Ticket pricing for these bookings are nicely higher than last year.
  • North American occupancy is slightly behind last year with higher pricing.  Bookings for EAA are also slightly behind at last year at higher prices.
  • North American wave bookings have paced the increased North American capacity with solid increases in YoY pricing.  In EAA, bookings have also been higher during this wave period at approximately the same YoY prices.
  • However,  the booking pace has lagged the 8.6% capacity increase for the period
  • Middle East unrest:
    • 280 cruises had to be reset
    • $0.05 EPS adverse impact
  • 2Q guidance
    • Fleet-wide capacity: +5%, +2.9% NA, +8.6% EAA
    • Occupancy flat
    • NA brands: 55% Caribbean
    • NA pricing: higher YoY; occ. flat
    • Caribbean pricing: slightly lower than 2Q 2010
    • EAA brands: 54% European
    • EAA pricing: higher YoY
    • Fleet-wide local currency revenue yields will be higher for both NA and EAA brands.
    • European yields higher YoY but lower than originally expected due to ME unrest
  • 3Q guidance:
    • Capacity: +4.8%, +3.4% NA, +7.2% EAA
    • Pricing ahead with lower occupancies
    • NA brands: 36% Caribbean, down from 41%; 23% in Alaska; 25% in Europe
    • EAA brands: 88% European
    • Pricing for all North American brands itineraries in the third quarter is ahead of last year, with particularly higher occupancy than pricing in this year's Alaska season.
    • Caribbean pricing higher YoY, but on lower occupancies.  
    • EAA pricing is nicely ahead of last year at slightly lower occupancies. 
    • EAA bookings in the last five to six weeks have been challenging.
    • Fleetwide pricing up for both NA and EAA
  • 4Q guidance:
    • Capacity: +5.9%, +3.3% NA, +10.1% EAA
    • Pricing higher YoY, occu. lower YoY
    • NA brands: 42% Caribbean, down from 50%; 14% in Europe; 10% Asia
    • Pricing NA: higher YoY; lower occupancies
    • EAA brand: 72% European, up from 65%
    • Pricing EAA: higher YoY
    • Occupancies are lower for Europe, not surprising given the 20% increase in European brand deployment for 4Q


  • Pulled out of all North African stops in Tunisia and Morocco and Egypt.
  • Slowdown last 2 weeks: It's Ibero and Costa with heavy emphasis on North Africa and Middle East itineraries.
  • NA brands reaction to ME unrest has been "muted"
  • Still hard to judge ME impact--"too much noise"
  • Guidance: Lower occupancies to compensate for higher prices
  • FY 2011: FCF of $1BN; 2011 dividend would be $700MM
  • Board will decide any share buybacks or dividends
  • Starting process of rethinking fuel hedging program
  • NA pricing: good strength in those premium brands for longer cruises, European programs, Alaska programs and for Caribbean programs
  • Higher ticket prices could be due to strong demand for Alaska
  • Europe bookings strong despite lower occupancies
  • D&A and interest expense downward revision:
    • Some brands were aggressive about when they would put those maintenance CapEx items into service.  We saw some favorable impact in 1Q and we flowed that through for the year.  It's just a timing of when things go into service. Same reasoning for interest expense (i.e. favorable impact in 1Q)
      • Tapping commercial paper market more aggressively
  • ME unrest positively impacting Alaska? No. Strong bookings were already in place. Plus, capacity is down in Alaska.
  • Northern Europe doing well.
  • Caribbean pricing is holding up better with lower capacity in summer.
  • Costs are also higher in 2Q due to higher advertising expense, not due to rebooking trends.
    • Their cost forecasts are derived from projections from 10 Miami companies, which are usually conservative.
  • 3Q yield guidance down half a point due to Middle East
  • Comfortable with 2-3 new ships/year
  • Higher end consumer driving pricing
  • Ex ME, booking window as expected.
  • 2012 bookings are encouraging at this time
  • Caribbean pricing is strong in 4Q

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