Royal Caribbean profit falls 44% - JamaicaObserver.com

Saturday, November 21, 2009 3:33 PM

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Royal Caribbean profit falls 44%

Wednesday, November 04, 2009

Illinois, United States - Royal Caribbean Cruises Ltd yesterday said that the recession kept passengers from booking vacations on its cruise ships during the third quarter, cutting into profit and revenue.

The company also forecast a fourth-quarter loss because of the weak economy in Florida where many of its frequent winter travellers live.

Still, the news wasn't all grim. The cruise line owner also said reservations began picking up in mid-September, although many of those trips were booked by passengers who were lured aboard by deeply discounted fares.

"While the pricing environment is still not what we'd like it to be, we're pleased to see solid growth in our order book," chief financial officer Brian J Rice said in a statement.

The company that operates Royal Caribbean International and Celebrity Cruises says it earned US$230.4 million, or US$1.07 per share, in the quarter that ended September 30. That's down 44 per cent from a year ago.

Revenue tumbled 17 per cent to US$1.76 billion.

Net yields, an industry performance measure of revenue earned without certain fluctuating costs, fell 16.5 per cent during the quarter.

Still, profit was better than expected. Wall Street analysts said Royal Caribbean, based in Miami, would earn US$1 per share on revenue of US$1.77 billion for the quarter.

Meanwhile, Royal Caribbean offered a lower-than-expected profit forecast for the rest of the year, saying it would likely lose five cents per share in the fourth quarter, while earning 70 cents for the year.

Analysts had been expecting a profit of four cents per share in the fourth quarter and a full-year profit of 74 cents.

Royal Caribbean said it expects net yields to slide as much as eight per cent in the fourth quarter, and 14 per cent for the full fiscal year. It expects the figure to continue to improve in the first quarter and through 2010.

"Like many other travel companies, we saw more strength than we expected during our peak season but have been experiencing more pricing pressure on some of our traditionally softer fall season sailings," chairman and CEO Richard D Fain said in a statement. "Overall though, the business environment is largely unchanged and stable."

Royal Caribbean shares fell US$1.04, or five per cent, to US$19.63 in pre-market trading yesterday after closing at US$20.67 in regular trading on Monday.

Largest cruise ship squeezes under Danish bridge

KORSOER, Denmark - The world's largest cruise ship cleared a crucial obstacle Sunday, lowering its smokestacks to squeeze under a bridge in Denmark.

The Oasis of the Seas - which rises about 20-storeys high - passed below the Great Belt Fixed Link with a slim margin as it left the Baltic Sea on its maiden voyage to Florida.

Bridge operators said that even after lowering its telescopic smokestacks the giant ship had less than a 2-foot (half-metre) gap.
Hundreds of people gathered on beaches at both ends of the bridge, waiting for hours to watch the brightly lit behemoth sail by shortly after midnight.

"It was fantastic to see it glide under the bridge. Boy, it was big," said Kurt Hal, 56.

Company officials are banking that its novelty will help guarantee its success. Five times larger than the Titanic, the US$1.5-billion ship has seven neighbourhoods, an ice rink, a small golf course and a 750-seat outdoor amphitheatre. It has 2,700 cabins and can accommodate 6,300 passengers and 2,100 crew members.

Accommodations include loft cabins, with floor-to-ceiling windows, and 1,600-square-foot (487-metre) luxury suites with balconies overlooking the sea or promenades.

The liner also has four swimming pools, volleyball and basketball courts, and a youth zone with theme parks and nurseries for children.

Oasis of the Sea, nearly 40 per cent larger than the industry's next-biggest ship, was conceived years before the economic downturn caused desperate cruise lines to slash prices to fill vacant berths.

It was built by STX Finland for Royal Caribbean International and left the shipyard in Finland on Friday. Officials hadn't expected any problems in passing the Great Belt bridge, but traffic was stopped for about 15 minutes as a precaution when the ship approached, Danish navy spokesman Joergen Brand said.

Aboard the Oasis of the Seas, project manager Toivo Ilvonen of STX Finland confirmed that the ship had passed under the bridge without any incidents.

"Nothing fell off," he said.

The enormous ship features various "neighbourhoods" - parks, squares and arenas with special themes. One of them will be a tropical environment, including palm trees and vines among the total 12,000 plants on board. They will be planted after the ship arrives in Fort Lauderdale.

In the stern, a 750-seat outdoor theatre - modelled on an ancient Greek amphitheater - doubles as a swimming pool by day and an ocean front theater by night. The pool has a diving tower with spring boards and two 33-foot (10-metre) high-dive platforms. An indoor theatre seats 1,300 guests.

One of the "neighbourhoods", named Central Park, features a square with boutiques, restaurants and bars, including a bar that moves up and down three decks, allowing customers to get on and off at different levels.

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