Carnival’s Earnings Missed Estimates as Omicron Hit

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Carnival
’s
results for its latest quarter fell short of expectations as the Omicron variant of Covid-19 hindered the postpandemic recovery in travel. Now, the cruise operator is taking a hit from Russia’s invasion of Ukraine and its effect on fuel prices.

The company (ticker: CCL) said it expects another net loss in the second quarter before returning to profit in the third. It expects a loss for the full year.

The cruise operator posted a net loss of $1.9 billion, or $1.66 a share, with revenue of $1.62 billion for its fiscal first quarter, which runs through the end of February. Both figures were considerably weaker than expected.

Analysts surveyed by FactSet expected a loss of $1.28 a share from revenue of $2.26 billion. A year earlier, Carnival reported a loss of $1.79 a share, with revenue of $26 million.

The company said the Omicron variant both hurt bookings and caused higher cancellations of existing reservations. Cruise costs in 2022 will be significantly higher than in 2019, partly due to expenses incurred by restarting fleet operations as well as inflation, it said, noting that many of those costs won’t continue in 2023. The higher costs, as well as the uncertainty around Russia’s invasion of Ukraine, including its effect on fuel prices, were having a “material impact” on its businesses, it said.

“We expect monthly adjusted Ebitda to turn positive by the beginning of the summer season as we build occupancy and return more ships to service,” CEO Arnold Donald said.

When Carnival disclosed its results for its fourth fiscal quarter, in December, it said it expected its full fleet to be back in operation this spring. It also noted that advanced bookings for the second half of 2022 and first half of 2023 were at the higher end of historical ranges and at higher prices.

Carnival said Tuesday it now expects each brand’s full fleet back in operations for its summer season, and that advanced bookings for the second half of 2022 had now dropped to the lower end of the historical range, due to the impact of the Omicron variant. Bookings for the first half of 2023 remain at the higher end.

Shares of Carnival were 1.8% lower in early trading. As of the close of trading on Monday, the stock was down 5.8% year to date, while the

S&P 500
had fallen 6.4% over that period.

Write to Callum Keown at [email protected]