MIAMI (CBSMiami) – It’s not a great time to be a cruise line company if the latest financial report from Miami-based Royal Caribbean are any indication. Quarterly earnings were down a whopping 40% as bookings have been hurt by the Costa Concordia disaster, ship fires and strandings at sea.
The cruise line, based at PortMiami, said bookings are down “middle single-digits”, possibly because passengers are spooked by the high profile cruise problems. RCCL said bookings are slowly improving.
The other problem RCCL and other cruise lines face is high fuel costs. Royal Caribbean told investors their fuel costs had jumped 38 percent, a major issue because fuel is one of the biggest cost of operating a ship.
In the past when fuel prices jumped, companies tried to recover costs by imposing daily fuel surcharges, usually when oil prices jumped over $70 a barrel. While oil prices are well above that figure, RCCL and other lines have resisted imposing the surcharges again because they angered passengers and had an impact on bookings.
This means companies like RCCL are absorbing the costs, and that showed in the latest quarterly report.
“First quarter results were satisfactory given the difficult and uncertain operating environment and we continue to see gradual improvement in the demand for our great vacations,” CEO Richard D. Fain said in a statement. We did not expect the impact of the tragedy to be long term and we are seeing evidence the effects are waning.”
The Miami said it earned $47 million, or 21 cents per share, down from $78.4 million, of 36 cents per share, in the first quarter of last year. The earnings topped the 14 cents per share that analysts surveyed by FactSet forecast.
Revenue during the quarter rose 9.7 percent to $1.8 billion, in line with Wall Street expectations.