The world’s largest cruise operator posted its first-quarter results for 2022. Although losses for Carnival Corporation are still significant, the company also sees record onboard revenues, some 7.5% higher than the record-breaking 2019, and bookings at the highest levels since the restart of operations.
With the majority of its revenues coming from the busy summer season, the wait is on for the Carnival to bring its entire fleet online and operational for each company’s summer season. With the removal of three additional ships from its fleet, Carnival Corporation is making a leaner but stronger return post-pandemic.
First Quarter Results Looking Strong Despite Omicron
Carnival Corporations’ first-quarter results are looking strong, despite losses still running high and Omicron having a negative effect on bookings. Onboard revenue, in particular, saw significant growth to 7.5% over the record-breaking year 2019.
Omicron seems to have only affected the near-term bookings for the cruise company, while it also experienced higher cancelations due to pre-travel testing. It meant that occupancy onboard the ships ended at only 54%, still a 20% increase over the fourth quarter of 2021.
Carnival Corporation & plc President, Chief Executive Officer Arnold Donald noted: “Despite the impact of Omicron, guests carried grew by nearly 20 percent in the first quarter compared to the prior quarter, while simultaneously increasing revenue per passenger cruise day and driving an improvement in adjusted EBITDA. We expect monthly adjusted EBITDA to turn positive by the beginning of our summer season as we build occupancy and return more ships to service.”
Carnival remains financially stable, with $7.2 billion of liquidity. The company invested $400 million during the first quarter of 2022, which included payment for three of the four larger-more efficient ships expected to be delivered in 2022, including Carnival Celebration and P&O UK’s Arvia.
Carnival Corporation Leaner But More Efficient
Since Carnival Cruise Line was the first cruise line to resume operations in the United States in July of 2021, Carnival Corporation’s cruise ships have sailed with more than 2 million guests.
Arnold Donald noted: “Since resuming guest cruise operations, we delivered more than 2.2 million exceptional vacations while achieving historically high guest satisfaction scores. With 75 percent of our capacity having resumed guest cruise operations, we are well on our way back to full cruise operations and we are planning to return the balance of the fleet by our summer seasons. Achieving these operational milestones while facing headwinds including Delta and Omicron variants and changing regulations and protocols —particularly at our scale— makes the efforts of our team, ship and shore, all the more impressive.”
That’s not the only positive that Carnival Corporation can take from the past year; it has become a much leaner and more effective company by offloading 22 cruise ships and taking on six new LNG-powered cruise ships.
Donald continued: “We furthered our fleet optimization efforts by taking delivery of three larger-more efficient ships during the quarter, Costa Toscana and AIDAcosma, the company’s fifth and sixth ships powered by LNG and Discovery Princess. Upon returning to full operations, nearly 25 percent of our capacity will consist of newly delivered ships, which we believe will expedite our return to profitability and improve our return on invested capital.”
By summer of this year, Carnival expects to be fully operational for the first time in more than two years with all of its Northern Hemisphere brands, while P&O Australia will begin operations down under as well. Bookings reflect the positive feeling here.
Since the middle of January, Carnival Corporation has seen an improving trend in weekly booking volumes for future sailings. Recent weekly booking volumes have been higher than ever since the restart of guest cruise operations.
Donald: “Given the recent strengthening in booking volumes coupled with the closer-in booking patterns, we expect an extended wave season. In fact, we gained occupancy even in the month of March with fleetwide occupancy nearing 70 percent and several sailings already exceeding 100 percent.”
Situation In Ukrain Causes Uncertainty
Now COVID is seemingly retreating to the background; a different situation is now emerging, which will have a significant effect on the financial numbers for Carnival. The situation in Ukraine and the negative effect on fuel prices worldwide are expected to hurt Carnival’s liquidity and operational results.
While the addition of LNG-powered ships and the removal of 22 older efficient ships is undoubtedly having a positive effect, the company expects to see a loss for the second quarter of 2022, a profit in the 3rd quarter of 2022, yet an overall loss for 2022.
Then again, it seems unlikely that any out-of-ordinary costs such as bringing ships back into service will be a recurring issue for 2023. As it stands, there are still many hurdles for Carnival Corporation, but it is slowly working itself free from the issues brought on by the pandemic.