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Swine flu throws cruise giant off financial course
Tuesday, 30 Jul, 2009
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Royal Caribbean Cruise Lines dropped into a loss in the second quarter of the year.
The company suffered a net loss of $35.1 million compared to net profit of $84.7 million in the same three months last year.
The loss was announced the day premium subsidiary Celebrity Cruises’ new ship Celebrity Equinox was named in a ceremony in Southampton yesterday (Wednesday).
Cancelled cruises due to the swine flu outbreak in Mexico in April impacted on the RCCL figures.
The impact of swine flu was “somewhat higher than originally estimated”.
This included itinerary changes and reduced demand for Royal Caribbean International vessels visiting Mexican ports; the delayed launch of Pullmantur’s Pacific Dream as a new product targeting Mexican nationals until 2010 and a significant reduction in Pullmantur’s tour capacity in Mexico.
Pullmantur’s Ocean Dream subsequently had two voyages disrupted due to an H1N1 infection among some of its crew members and the vessel saw reduced demand as a result of the publicity in Spain.
Chairman and CEO Richard Fain said: “Obviously, the economy continues to be a challenge and the impact from the publicity surrounding H1N1 has been very frustrating.
“However, the demand environment has shown remarkable stability and, with the extraordinary performance of our newest vessels and easier comparables, we look forward to improving yields in 2010.
“In the meantime, we remain vigilantly focused on cost management and liquidity.”
The company reported that summer bookings have been stable for all brands and source markets, with the exception of Spain.
“Consumers are continuing to book their vacations very close-in," said chief financial officer Brian Rice. “But we are seeing healthy volumes and have even been able to take some measured price increases for several of our peak season sailings.”
The company also reported that new bookings for the autumn have recently begun to outpace the same time last year. But load factors and pricing remain behind last year’s levels.
"Given the new booking cycle there is still uncertainty about the fall season. However, the same patterns we have seen all year seem to be developing for the fall,” Rice aid.
Commenting on the first quarter of 2010 bookings, Rice said: “With slightly more than a third of our inventory sold at levels well above where we ended the first quarter of ’09, we are encouraged that the strength of our new ships coupled with a continued stable booking environment can provide the platform for improving yields.”
The company projected that net revenue yields to decline approximately 18% in the third quarter and down approximately 14% for the full year.
by Phil Davies
Phil Davies
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