Carnival Cruise Lines posted a small but surprising fourth-quarter profit as it began to win back passengers after a year when its ships were seen in the news being rescued by towboats.
Carnival has had two rough years, with the Costa Concordia, which belongs to subsidiary Costa Cruises, running aground near Italy in 2012 and mechanical problems and fires this year.
The bad publicity is still hurting the company. Net income for the fourth quarter fell 29 percent to $66 million, or 8 cents per share, compared with a year earlier when it earned $93 million, or 12 cents per share.
Its adjusted profit was 4 cents per share. That was still better than the break-even result expected by analysts surveyed by FactSet.
The quarter’s results were helped by “accelerated progress in Carnival Cruise Lines’ brand recovery,” said president and Chief Executive Officer Arnold Donald in a statement. He took over after Micky Arison, who had been CEO since 1979, was replaced.
In February, a fire on the Carnival Triumph knocked out power and stranded passengers for five days in the Gulf of Mexico. Two other vessels later lost power and had to be towed as well. Dozens of future sailings were canceled as the company repaired those ships. In April, it said it would spend $300 million to add backup generators, upgrade fire safety and improve engine rooms on all of its ships.
Carnival has been using discounts to get passengers back onto its ships. It has also reached out to travel agents, started a new ad campaign and issued a hassle-free vacation guarantee.
Some of its efforts worked, as the number of passengers rose 3 percent from a year earlier. But the amount of revenue per berth, per day declined about 1 percent. The company predicted a decline of 3 percent to 4 percent for the new
Since September, booking volumes for the first three quarters of next year “are running well ahead of last year’s levels,” though at lower prices.
Revenue for the September-November quarter rose 2 percent to $3.66 billion, also better than analysts expected.
Carnival said it expects costs per berth to rise 4.5 percent to 5.5 percent compared with a year earlier because it’s spending more on advertising. It said it expects an adjusted first-quarter loss of 7 cents to 11 cents per share. Analysts had been expecting a loss of 7 cents per share.
Shares of Miami-based Carnival Corp. rose 94 cents, or 2.5 percent, to close Thursday at $38.05.
Court documents filed Tuesday indicate Carnival Cruise Lines knew about the risk of leaks from engine fuel hoses and recommended taking precautions on the ill-fated Carnival Triumph that later caught on fire at sea.
A compliance notice report sent to the Triumph one month before it departed Galveston on Feb. 7 for what was planned as a four-day cruise recommended spray shields be installed on engines’ flexible fuel hoses, according to the documents filed by Carnival Cruise Lines in federal court in Miami.
A leak from a hose on engine No. 6 led to a fire early Feb. 10 as the ship returned from a stop in Cozumel, Mexico. No one was injured, but the fire disabled the ship. More than 4,000 people aboard endured a tow to Mobile, Ala., that the plaintiffs’ attorney called a “floating hell.” Information for this article was contributed by Christopher Sherman of The Associated Press.
Business, Pages 30 on 12/20/2013