Carnival shares sink after profits warning

By Phil Davies

Carnival Corporation shares sunk by as much as 13% in the wake of an overnight profits warning on Monday.

The shares were down 8.6% at £22.02 in afternoon trading yesterday, the Financial Timesreported.

Numis analyst Wyn Ellis said the company’s problems had clearly affected consumer confidence and led to deep discounting.

“It is disappointing that management has left it this late in the season to issue its warning and, in our view, it has questions to answer,” he told the FT.

Karl Burns of Panmure Gordon said the decline in yields “bodes ill for the future as we think Carnival will struggle to regain pricing power”.

He added that “the market must begin to appreciate there are structural as well as cyclical challenges to the Carnival business model”.

James Hollins, Investec analyst, said: “The Carnival bull story has taken a major hit and we look for further detail at the time of Q2 results in late June.”

The negative responses followed the cruise giant saying net revenue yields will be down 2% to 3% this year as a result of cruise price cuts employed to boost booking levels.

Earnings will also be cut by 10 cents a share as a result of cruise cancellations following technical faults on a series of Carnival Cruise Lines ships.

Carnival Dream guests to be flown home from St. Maarten

UPDATED: Carnival Dream guests to be flown home from St. Maarten

By Tom Stieghorst

Carnival Cruise Lines said Thursday morning that while personnel continue to work on a "technical issue" with the Carnival Dream's backup emergency diesel generator in St. Maarten, Carnival is making arrangements to fly all guests home on a combination of charter and scheduled flights.

Carnival also has canceled the March 16 departure of the Dream.

Carnival said it has traced the technical issue to a malfunction during a regularly scheduled test of the emergency diesel generator on March 13. That led to periodic outages in elevator service and restroom services, Carnival said.

"While the ship’s propulsion systems and primary power source were not impacted, in an abundance of caution, we prefer not to sail with guests on board without an operational back up emergency generator," Carnival stated.

The Dream operates from Port Canaveral, Fla., and was on the last leg of a seven-day cruise when the problem occurred, Carnival said.

The ship did not lose power and its propulsion and primary power generators were not affected, Carnival said.

All hotel systems are functioning normally on the Dream, after periodic interruptions to elevators and toilets in the evening hours on Wednesday while the ship was docked in St. Maarten.

CNN reported on the problems, citing passengers who claimed the ship had lost power and didn't have functioning toilets. It quoted a passenger who e-mailed saying guests were not allowed to leave the ship.

In a statement, Carnival said at no time did the Dream lose power. 

Regarding restrooms, Carnival stated, "Based on the ship’s service logs and extensive physical monitoring of all public areas, including restrooms, throughout the night, we can confirm that only one public restroom was taken offline for cleaning based on toilet overflow and there was a total of one request for cleaning of a guest cabin bathroom. Aside from that there have been no reports of issues onboard with overflowing toilets or sewage."

Hotel functions were restored around 12:30 a.m. "The ship has full power but is still at dock while personnel continue to work on the technical issue," Carnival said.

Guests on the current cruise will get a refund equal to three days of the cruise, plus a 50% discount off a future cruise. Guests on the upcoming cruise will get a refund and a 25% discount off a future cruise, Carnival said.