CCL 2Q REPORT CARD

In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance.

 

 

OVERALL:  SLIGHTLY WORSE: Lower fuel and a weak Europe was already priced in but a less robust outlook on North America in 2H 2012, which we addressed with Alaska in "2012 MARCH CRUISE PRICING MATRIX" (4/12/2012), is disappointing. 

  • FY 2012 GUIDANCE
    • SLIGHTLY BETTER:  The midpoint of guidance was raised from $1.55 to $1.85, driven mainly by lower fuel expense.  The guidance band has been reduced from 30 cents to 10 cents.
  • 2Q GUIDANCE
    • BETTER:  better revenue yields (higher booking volumes) and better controls on net cruise costs resulted in a 12 cent beat. 
  • 3Q GUIDANCE
    • WORSE:  For NA brands, CCL lowered the NA pricing outlook with Alaska and Europe having a greater impact.  EAA brand pricing is also weaker across all itineraries.
  • 4Q GUIDANCE
    • WORSE:  Higher capacity, lower pricing across the board relative to March guidance
  • COSTA FY 2012 OPERATING LOSS
    • SAME:  $100 million loss is expected for the Costa brand.  Higher occupancy offset lower deeper price cuts.
  • AIRFARE
    • SAME:  higher airfares to North America resulted in lower itinerary prices
    • "Higher airfares between North America and Europe have been a challenge"
  • UK/GERMANY IMPROVING DEMAND
    • SAME: UK and Germany revenue yields continue to hold up reasonably well
    • "Our U.K. brands are holding up relatively well as compared to our Continental European brands. We have recently seen ...improving trends in Germany so we're hopeful that we have finally turned the corner there."
  • GOOD CLOSE-IN PATTERNS
    • SLIGHTLY WORSE:  Q2 close-in bookings were good but they are incentivizing more going into Q3 as they have more capacity to sell than historically
  • AIDA COMING BACK
    • SAME:  AIDA is picking up more booking momentum and maintaining pricing.
    • [AIDA] "I think they're starting to see business come back. But there will be some level of hit because... in order to fill close-in, they've had to take pricing down a little bit."
  • EX COSTA ONBOARD YIELD
    • BETTER:  CCL raised onboard guidance by almost 1%, relative to March guidance

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