Choppy Waters Ahead For Carnival; CEO Speaks Out

DORAL (CBSMiami) - The fire-damaged Costa Allegra will never again sail for Costa Cruise lines, the subsidiary of Doral based Carnival Cruise Lines said Friday, but despite the line's problems including the sinking of the Costa Concordia Carnival CEO Mickey Arison said Costa will remain part of Carnival.

In his first interview since the Concordia smashed into rocks near the Italian island of Gigli, damaging the hull and sending it on it's side to the bottom, Arison defended his personal silence after the disaster, telling CBS4 news partner The Miami Herald that his appearance at the crash site would have been a diversion.

Arison said he didn't feel it was necessary to "get in front of a camera" after the sinking. "Obviously, I am very sorry it happened," he said. "When you have 100 ships out there, sometimes unfortunate things happen, but as I said, it was an accident."

Regarding the decision to keep Costa, despite the sinking and the fire which has cost the line two ships and untold lost business, he backed the management team in place at Costa.

"I have a lot of faith in [Costa CEO] Pier [Luigi Foschi] and his team," Arison said. "I believe they'll work their way through this. It was a terrible, terrible, terrible accident, but that's what it was."

The support comes at a time when Costa's problems are causing major issues for Carnival, the largest operator of cruise ships in the world, with more than 100 ships spanning a host of different brands.

Where last year Carnival posted $152 million in earnings for the first three months of the year, this year the impact of the Costa problems turned that into a $139 million loss.

Worse, Carnival told analysts that the company's earnings could be off by 82% compared to last year.

Bookings for Costa cruises have dropped significantly with the negative publicity and lack of advertising, and while many cruise lines have seen softer bookings because of the disasters, Carnival has felt the worst effect.

Since the Concordia capsized in mid-January, Carnival said that its booking trends, excluding Costa, are still running behind last year, despite lowering prices immediately after the accident. Booking volumes for the Costa line during the same period are running "significantly behind."

Carnival operates 101 ships under several brands including Costa, Carnival, Cunard, Holland America, Princess and Seabourn from it's Doral headquarters.

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