Carnival cuts outlooks on discounting

Carnival Cruises has defied tough market conditions by posting a 10 percent rise in first quarter profits on lower oil costs and higher booking volumes. However the group, the world’s largest cruise ship operator, cut its full-year outlook because of sharp discounting to fill its ships.
The Miami-based group, which has 11 brands, including P&O Cruises and Cunard Line, also lowered its guidance on net revenue yield - a key measure detailing the amount cruise companies make from their passengers after subtracting expenses.
Micky Arison, chief executive, said yields were being maintained by discounting across the group. “We had very, very strong volumes at lousy rates,” he said.

“As we had anticipated, people continue to book cruise vacations while seeking the best possible values. Though pricing is down significantly we continue to fill our ships by reaching people who might not have otherwise considered a cruise vacation.”

The group blamed the deteriorating economic conditions in the US and UK on its expected net revenue yield for the year to decrease 10-12 percent, compared to the 6-10 percent decline it was expecting before.

In November, Carnival suspended its dividend to shore up its balance sheet ahead of $3.5bn in capital expenditure planned for the year.