Carnival Corporation (NYSE:CCL)/Carnival PLC (LSE:CCL) will weigh anchor and unload a pre-Christmas trading update where analysts are concerned about rising wage and advertising costs as well as fuel volatility.
At a recent presentation for investors and analysts the FTSE 250-listed cruise operator, which owns brands including Princess Cruises, P&O Cruises, Holland America and AIDA, suggested occupancy in the fourth quarter would be down 20% compared to pre-pandemic 2019, which is 95% of current capacity, compared to the 29% disparity in the third quarter, when it was at 92% capacity.
Management are focused on optimising the fleet, with average berth numbers up around 400 compared to 2019, with an 8% "richer" cabin mix, 6% more efficient in operations costs and with 10% lower fuel consumption.
Further goals are to cut costs and cut debt organically from cash flow by managing down costs, reducing ship orders and pushing up prices, reported analysts from Jefferies who were in attendance.
As well as the recent announcement that chief executive Arnold Donald is disembarking to be replaced by the operations chief Josh Weinstein, there has been "considerable internal leadership changes", particularly in operations roles, and new presidents at five of the nice brands.
"We believe in the merits of mgmt's new strategy, to manage costs downward, push price and ultimately tackle the debt load, and we highlight that positive execution through the next cycle will be critical in surmounting Covid-related and macro headwinds," said Jefferies analyst David Katz.
For Q4, he estimates revenue of just below US$4bn and underlying losses (on the EBITDA level) of US$98mln, giving a full-year US$12.3bn top line and losses of US$1.7bn, up from US$1.9bn and a US$3.9bn loss last time.
"We increase operating costs for 4Q and beyond, mainly from wages and ad spending which consequently lowers estimates," the analyst said.
"In short, despite improving demand at elevated yields, we continue to believe that the cost environment remains complex, and increased debt/non-hedged fuel adds volatility to the earnings stream."