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March 21, 2003

War jitters hit Carnival bookings
"Our first quarter 2003 results were impacted by concerns about a war with Iraq, an uncertain worldwide economy and historically high fuel costs," says Carnival Corporation Chairman and CEO Micky Arison. "These factors created an extremely challenging environment for leisure travel businesses around the world. Despite these adversities, we had a reasonably satisfactory quarter, again demonstrating the resiliency of our cruise business."

Carnival Corporation reported net income of $126.9 million ($0.22 diluted EPS) on revenues of $1.03 billion for its first quarter ended February 28, 2003, compared to net income of $129.6 million ($0.22 diluted EPS) on revenues of $906.5 million for the same quarter in 2002.

Earnings for the first quarter of 2003 included nonoperating income of $14.7 million, resulting from net insurance proceeds of $19 million, less certain other nonoperating expenses. Earnings for the first quarter of 2002 included $5 million of nonoperating income.

Cruise revenues for the first quarter of 2003 were up 14 percent compared to the same quarter in 2002 due to an increase in capacity of 14.7 percent, partially offset by a decline in the number of guests purchasing air transportation from the company. Net revenue yields (net revenue per available lower berth day after deducting the cost of air transportation and travel agent commissions) for the quarter were approximately equal to the first quarter of last year. However, excluding the impact of an increase in capacity weighted toward the lower priced contemporary cruise products, net revenue yields for the 2003 quarter were 2 percent higher.

Cruise costs per available lower berth day were 6.3 percent higher compared to the same quarter in 2002 due primarily to increased fuel costs, the front-loading of advertising expenses into the first half of 2003 and increased insurance, environmental and security expenses. Higher fuel costs accounted for 60 percent of the increase in cost per available lower berth day.

During the first quarter of 2003, Holland America Line launched the new 1,848-passenger Zuiderdam from Fort Lauderdale, Fla., the first ship in its new Vista-class series, which offers about 85 percent of its cabins with ocean views, of which approximately 80 percent have balconies. Arison noted that the ship has been receiving rave reviews from consumers and travel agents alike, as well as receiving a premium price compared to the other Holland America ships.

Looking to the remainder of 2003, the factors which affected the first quarter are also impacting the balance of the year, particularly the second quarter. Bookings for the second quarter slowed as concerns over the war with Iraq heightened, causing a close-in booking curve and resulting in a reduction in cruise prices. Because of the Iraqi war and its impact on consumer travel, the company is not able to give specific guidance for second quarter net revenue yields, other than they are expected to be less than last year. Costs per available lower berth day are expected to rise approximately 10 to 12 percent in the second quarter compared to last year's levels due primarily to the same cost areas, which affected the first quarter of 2003.

Booking volumes for the second half of 2003 remain slightly ahead of last year's levels but not commensurate with the increase in capacity expected for the second half of the year. Pricing remains slightly below last year's levels. Because of the close-in booking pattern and the uncertain geopolitical environment, it is too early to give net revenue yield guidance for the second half of 2003. Excluding the impact of higher fuel costs, operating costs per available lower berth day in the second half of 2003 are expected to be down slightly as compared to the second half of 2002.

"Although in the short term bookings have been impacted by the external factors discussed above, we believe that the fundamental long-term drivers of the cruise industry's growth, such as favorable demographics and low penetration of the vacation market, remain intact," Arison said. "It is primarily because of these factors that we have entered into our proposed combination with P&O Princess Cruises plc," Arison noted. "Now that we are within sight of the completion of this transaction, we are particularly excited about the future prospects for the combined group and believe that our 16-month effort to combine with P&O Princess will bring enhanced value and opportunity to the shareholders and employees of both companies."

Documents regarding Carnival's dual listed company ("DLC") combination with P&O Princess were mailed to Carnival and P&O Princess shareholders this week. Extraordinary General Meetings for shareholder approval of the DLC proposal are scheduled for April 14, 2003 for Carnival shareholders and April 16, 2003 for P&O Princess shareholders. Subject to shareholder approval, Carnival expects closing of the transaction to occur shortly thereafter.

Assuming the transaction closes in April, Carnival would include P&O Princess' operations in its consolidated operating results commencing with Carnival's 2003 second quarter. The guidance provided above does not take into account the consolidation of P&O Princess.

Carnival has four new ships scheduled for delivery this year. Costa Cruises' 2,114-passenger Costa Mediterranea is expected to be delivered in May 2003, Carnival Cruise Lines' 2,974-passenger Carnival Glory and Holland America's 1,848-passenger Oosterdam in June 2003, and Costa's 2,720-passenger Costa

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