Carnival Corporation reroutes 12 ships to avoid Red Sea transits

The world’s largest cruise ship operator, Carnival Corporation & plc (NYSE/LSE: CCL; NYSE: CUK), says that, “given recent developments and in close consultation with global security experts and government authorities,” it has made the decision to reroute itineraries for 12 ships across seven brands, which were scheduled for Red Sea transits through May 2024.

The Red Sea transit rerouting is expected to have an adjusted earnings per share impact of $0.07 to $0.08 for full year 2024, with the vast majority of the impact in the second quarter. Carnival says it has not seen an impact on booking trends due to the Red Sea situation and has no other Red Sea transits until November 2024.

STRONG WAVE SEASON

Carnival says it has seen an “early and robust start” to the wave season (the cruise industry’s peak booking period), exceeding expectations, with bookings volumes since November hitting an all-time high. For 2024, the company continues to have the best booked position on record, with both pricing (in constant currency) and occupancy considerably higher than 2023 levels. In fact, the first half of 2024 is almost fully booked.

The company believes its continued strong bookings momentum is expected to offset the Red Sea transits rerouting impact.

In addition, Carnival announced the redemption of the outstanding $571 million, 9.875% second-priority senior secured notes due 2027, eliminating all of the remaining second lien debt outstanding. This redemption is consistent with December guidance, using its cash flow strength to reduce interest expense and leverage along its path to investment grade credit metrics.

• Carnival’s improving financials are adding to speculation that it will announce significant newbuilding orders some time, with reports in Italian media that it is already in advanced discussions with Fincantieri.