Carnival Corp. will lose three more ships as it weathers a rocky return to cruising in Australia and Asia and navigates the impact of the war in Ukraine
Costa Cruises has not yet fully reopened to cruising in Asia, so Carnival Corp. has decided to sell two of the brand's smaller, less efficient ships. There are two ships, the Costa Magica and the Costa Fortuna.
The Carnival brand will sell a third ship. The AIDAvita was taken down in the summer of 2022.
Costa's vice president of sales and trade marketing said the move to sell its ships brings the line closer to pre-pandemic capacity. The line handed off the Venezia and Firenze to Carnival in 2022.
"So, while it appears to be a downsizing, it's actually a 'right size' back to the fleet level, plus some," he said.
Australia's reopening is where North America was a year ago, and Japan is close to two years behind. He said he expects the impacts of those regions to affect the deployment of guests. China still hasn't reopened to cruising.
Weinstein said he is keeping an eye on China but would rather focus on markets where its brands are doing well.
"If and when China opens up again, and opens up not just to domestic cruising but really opens up, we'll definitely look at that, but we're not relying on it." He said they weren't counting on it.
Costa's capacity outside of Asia will be back to pre-sale levels. Costa is trying to right-size and keep its deployment closer to home in its core markets in continental Europe, he said.
The company is working on a contract to sell a third ship, according to the CFO.
The company is going to shift three Costa vessels to Carnival Cruise Line. The Venezia and the Firenze will start sailing in June and June, respectively.
The instability in the region has led to uncertainty and more close-in bookings for Costa and Aida, Weinstein said, leading the lines to homeport closer to where guests live.
The full return of brands that rely on international guests has been disrupted. More than one-third of Carnival Corp. guests came from Australia, Asia and the Baltics. About 2 million people, according to Weinstein. About 40% of Costa's guests and 25% of Princess' guests are represented by that figure. Princess will source more heavily from North America.
There has been a rocky year for Carnival Corp. Although bookings have improved since Covid regulations subsided in late summer, the company reported an adjusted net loss of over $1 billion in its fourth quarter.
By the end of next year, the company expects to have half of its earnings back.
Carnival Corp.'s long-term debt increased from a year ago.
Occupancy in the fourth quarter was 19 percentage points below the previous year. Occupancy was 29 points below levels in the third quarter. The total capacity is expected to grow 3% next year.
The booking volume in the fourth quarter was close to the level of the previous year. The booking curve has grown longer across all brands.
Carnival Corp is optimistic about the increase in marketing spending. During Wave season, the company plans to use marketing and drive demand for higher prices. Carnival Corp. spent more money on advertising in the fourth quarter.
The earnings were lower than expected due to lower-than- expected passenger ticket revenue, unfavorable fuel prices and currency rates.
Costa's vice president of sales and trade marketing, Scott Knutson, commented on the specific ships in the story.
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