Carnival Corporation, the world’s largest cruise company operating a total of nine brands and nearly 100 cruise ships, is warning investors of the expected costs from the ongoing security issues in the Red Sea. While the company has said it entered 2024 with the best-booked position on record and has not seen a drop in bookings, they are warning of a nearly 10 percent impact on earnings due to the rerouting of ships away from the Red Sea this spring.
The cruise company is now saying that a total of 12 of its cruise ships across seven brands will be rerouting between now and May 2024 to avoid the Red Sea. They did not detail how the reroutings will impact all of the cruises. The company has ships positioned in South Africa, the Indian Ocean, and the Middle East that normally would have made cruises through the Red Sea as they return to Europe for summer season cruises. In addition, several of the brands are currently operating longer or world cruises that would include the Red Sea as the final leg of the voyage.
Costa Crociere, the Italian brand mostly marketed in Europe, recently announced that it would be canceling a planned repositioning cruise from Dubai to Italy on the Costa Toscana (185,000 gross tons). The cruise ship which accommodates more than 5,300 passengers had been due to depart Dubai in mid-March. The ship will now be making the circle around Africa to reach the Mediterranean for its summer season.
AIDA, the brand based in Germany, reported it was forced to cancel the transit voyages of AIDAbella, AIDAblu, and AIDAprima in the spring of 2024. A company spokesperson said, “The three ships will sail directly to their summer homeports in Europe without passengers. In the interest of the safety of guests and crew, this is the only responsible course of action.”
The rerouting around Africa for the ships will mean the cruises ships will be without revenue for up to six weeks in some cases with not only the repositioning cruises canceled but in some cases cruises before or after the repositioning to accommodate the time required for the Africa trips. For the world cruises, it is unclear what the lines will do as it would potentially add time to the trip and there are few ports on the west coast of Africa prepared to handle large cruise ships. Another Carnival brand, Princess Cruises in a statement to CNN said its world cruise underway on Island Princess (91,600 GT) was being rerouted to visit ports in Australia and then travel to South Africa before sailing to the west coast of Africa. “The Red Sea rerouting is expected to have an adjusted earnings per share impact of $0.07 to $0.08 for the full year 2024, with the vast majority of the impact in the second quarter,” the corporation is warning investors. In December, Carnival Corporation had forecast FY 2024 earnings at $0.93 per share. With approximately 1,273 million shares outstanding the financial impact of the spring rerouting is in the range of $90 to $100 million for the corporation.