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Wednesday, March 14, 2012

Carnival Considers Reducing Capacity But Reconsiders

In Carnival Corp's earning call on Friday, Carnival said they did consider whether to lay-up some of their ships to help some of their European brands operate at higher capacity levels and preserve per diems.

The idea was considered due to a number of factors:
  • High fuel prices.
  • People choosing other vacation options due the Costa Concordia incident.
  • Weakened sales in Italy and Germany.
  • European economic situation.
  • Passengers shopping for bargains when the price of everything is increasing.

In the end, the temporary lay-up of ships was decided too disruptive and Carnival Corp is not longer considering this as an option.

Carnival did decide not to return the Costa Allegra to service. The Costa Concordia has been deemed beyond economic repair for Costa. The Costa Marina was sold to South Korean cruise interests so that capacity too will be removed from the market.

This does not rule out the sale of additional, older ships but in this economic downturn, buyers are scarce. Carnival did say they were only going to entertain modest or limited newbuilding growth over the upcoming years.

The Carnival Cruise Line brand was reported to still be performing well and operating close to the levels of last year.

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