Nothing unexpected - Caribbean worse, Europe better, FY guidance roughly unchanged despite weak 3Q yield forecast. Mgmt avoided elaborating on weak Caribbean pricing and rather focused too much on China/Japan.



"While the operating environment has been frustrating, our bookings trajectory is looking good and I'm thrilled to see our cost initiatives beginning to pay off. Exploiting this positive momentum will help us take our returns and our profitability to the next level."


- Richard D. Fain, chairman and chief executive officer



  • 2Q exceeded expectations; full-year 2013 guidance looking better
  • In recent weeks, competitive pricing has gotten more intense
  • Further cost controls initiative in 2014
  • 'Feels good to come to a inflection point both on revenues and expenses'
  • 2014 load factor and pricing higher YoY
  • Pullmantur new head office in Latin America
  • Cost initiatives will be on the overhead component
  • Want to achieve flat NCC ex fuel in 2014
  • 2012-2016 capacity growth will be 4% assuming no dispositions
  • Oasis and Allure of the Seas - most energy efficient ships in the world; their energy consumption is 25% better than rest of fleet; Quantum will be even more energy efficient
  • Better on board spending revs in 2Q increased 8.2% - gaming, beverage, specialty restaurants, shore excursions all performed 
  • Affinity-card accounting error in redemption of reward points:  allows cardholders to have reward points; 
  • 2nd half of year guidance:  Aggregate bookings and pricing are higher YoY. Europe doing as expected.  Pullmantur is the one lagging brand.
  • China/Japan territory dispute:  modified 30 sailings. Have increased bookings volatility.  China is 3% deployment for 2013.
  • Caribbean capacity: 25% in Q3 and 50% in Q4
  • Caribbean has been affected modestly but holding up well
  • Early patterns of 2014 are encouraging:  booked load factors are higher with slightly higher per diem
  • There will be more one-time costs in 2013
  • Retired $550 mm bond 
  • Will reduce net debt balance by $270MM in 2013
  • Grandeur of the Seas returned on July 12
  • Celebrity:  over past few months they have increased their marketing programs; good progress in cost management
  • 6 vessels left to be revitalized
  • Have refreshed slots on floor casinos

Q & A

  • Promotional environment:  overall, pretty consistent.  Has not seen acceleration in last two weeks. 
  • Europe:  largest capacity decreases are in the Med
  • Affinity's 7 cents adjustment is for past several years
  • More competitive pricing in the market, overall, not necessarily just the Caribbean
  • Mgmt refused to elaborate on North America pricing
  • Europe today vs 2008:  high single digits lower than that in 2008
  • Feel good about 1Q 2014; 2014 generally is looking good, particularly Europe
  • Capital Hill:  consumer protection dialogue yesterday; Rockefeller's proposal to close tax loophole is very preliminary

  • Had pared down Alaska expectations in April
  • Quite comfortable with resolving upcoming debt maturities - partially refinance, partially pay down
  • Australia:  capacity increases have pressured yields; market is in-line with mgmt expectations
  • Booking windows have been expanding
  • Caribbean pricing pressures - seeing changes 'on the margin', particularly in the fall (Q4)
  • Long-term capacity growth forecast - low to mid-single digits
  • Quantum bookings enthusiasm higher than when they revealed Oasis

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