Chairman of the Board Micky Arison provided an update to Carnival Corporations’ operational status today. In a letter addressed to shareholders, the former President and CEO of the company provided insight into the company’s operating and financial status.
Amongst other things, Micky Arison discusses the success Carnival Corporation has seen in the past period. Although there have been challenges, with 65,000 crew members back to work and 1.2 million guests having sailed already, there is no denying a successful restart.
One crucial part of the duties of the chairman of the board is to ensure the confidence for investors to look at Carnival as an investment opportunity. And indeed, over the last two years, many people have been turning away from the cruise industry due to the effects of COVID-19.
In his letter to shareholders, Micky Arison is quick to bring out the many positives that have come out of the last two years. Not in the least a leaner and younger fleet.
“Our decision to accelerate the exit of 19 ships as part of our fleet optimization strategy resulted in a more efficient fleet overall and lowered our planned capacity growth to approximately 2.5% compounded annually from 2019 through 2025, down from 4.5% annually pre-COVID-19. We achieved a unit cost benefit from the removal of these less efficient ships from our fleet which will grow from the delivery of the larger and more efficient ships.”
“Upon returning to full operations, nearly 15% of our capacity will consist of these recently delivered, larger and more efficient ships which we believe will expedite our return to profitability and improve our return on invested capital.”
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Currently, eight out of the nine brands in Carnival’s portfolio are operational. The only one not operating is P&O Australia. By the end of 2021, the company had 50 ships back in operation, representing 67% of total capacity, returned 65,000 crew members to work, and carried 1.2 million guests.
By the summer, when the company traditionally makes the most money, Carnival Corporation hopes to have all ships in the fleet operational. Carnival Corporation also re-opened all of its eight owned and operated private destinations and port facilities.
Carnival Corporation’s Community Role More Important
As the only company currently operating the far more environmentally friendly LNG-powered cruise ships, there is no denying that Carnival Corporation is placing far more significant importance on its role in the community. Of course, with incidents involving environmental compliance on several of its ships in recent years, the cruise company had to take action.
Micky Arison: “As of January 13, 2022, we are operating the only six cruise ships in the world currently powered by liquefied natural gas (“LNG”), which are 20% more carbon-efficient. Upon returning to full cruise operations, our LNG efforts, our fleet optimization strategy and other innovative efforts to drive energy efficiency are forecasted to deliver a 10% reduction in unit fuel consumption on an annualized basis compared to 2019, a significant achievement on our path to decarbonization.”
Carnival Corporation is also placing importance on other areas of sustainability, such as circular economy; good health and well-being; sustainable tourism; biodiversity and conservation; and diversity, equity, and inclusion. One area of concern is, of course, climate action.
Carnival Corporation Carbon Neutral By 2050
Carnival Corporation has set the goal to be fully carbon neutral by 2050 while minimizing the use of carbon offsets. Although it is hard to see the cruise industry achieving these goals, much can be said about Carnival Corporation’s efforts.
“While there is currently no clear path to zero carbon emissions in our industry, we are working to be part of the solution. To achieve the aspiration of net-zero carbon emissions, we are partnering with key organizations to help identify and scale new technologies.”
“We have and expect to continue to demonstrate leadership in executing carbon reduction strategies. We believe our scale will support our effort to lead the industry in climate action. Our carbon emissions reduction efforts include improvements in energy efficiency, integrating alternative fuels, and investing in new technologies such as batteries and fuel cells.”
Carnival Corporation’s stock went from $71.65 in 2018 to an all-time low of $8.49 in April 2020. Since then, the company has been slowly working itself up. Yet, a lot of work remains to be done if Carnival Corporation is to come back on top once again.
As shown by Micky Arison in his letter to shareholders, the prospects will undoubtedly prove to be an incentive. However, Carnival Corporation will need to show that its intentions towards sustainability are not just words but backed by actions all the way to 2050.