Why cutbacks with such high profits

[cruising cockroach]

The cruise lines need to do what the airlines have recently done: Cut capacity and raise yields (i.e., raise fares) . From what I understand, the yields are close to 0 or even negative in some cases, and profits come from pushing on-board spending.

[BruceMuzz]

Bruce, does the 2000 pax theory go for just mass market lines? Surely not all the luxury cruiselines with 250-1000 pax on their ships are unprofitable.

It's not a theory. It's reality.

It applies to nearly every small ship in the world - regardless of the market it is sold to.

Silver Sea, Seabourn, and Sea Dream have never made a penny of profit.

 

Royal Viking, Royal Cruise Line, Renaissance Cruises, Windstar, and Sea Goddess proved the hard way that small, high quality cruise ships cannot make money.

 

You can imagine how happy HAL's CEO was to get 6 additional money-losing ships (Seabourn) to add to his 9 HAL ships already losing money.

[catl331]

From that you have to put so much in reserves for repairs and the like.

Don't forget money for lawsuits when somebody drives a ship into an island! :eek:

[CtheW0rld]

Hard to drive to Rome, though, isn't it? ;)

 

planes go there. faster and cheaper, too.

[sail7seas]

Speed is not always a good thing. Sometimes leisurely is preferred. :) The ease, comfort and restfulness of a TA crossing/cruise.

[kazu]

Speed is not always a good thing. Sometimes leisurely is preferred. :) The ease, comfort and restfulness of a TA crossing/cruise.

 

Have to add a ditto here:D I'd far rather cross the ocean by ship than by plane - but sometimes a girl has to do what she has to do:)

[Hawaiidan]

Sadly there are , due to union backed laws, no possibility of us here in Hawaii traveling back and forth to the mainland. ( both Jones Act and Passenger "dis"-service Act.) Or you cruising to Hawaii one way and spending a week or two and sailing or flying back.

 

We can"t even hop a ship from Kona to Maui or Honolulu !:o

 

I would, as would many here love to skip the 5.5 hour commute in favor of the 4.5 day trip:D

 

 

I think the Fiat will be a big boon to the auto repair industry

( Fix It Again Tony)

[hypercafe]

It's not a theory. It's reality.

It applies to nearly every small ship in the world - regardless of the market it is sold to.

Silver Sea, Seabourn, and Sea Dream have never made a penny of profit.

 

Royal Viking, Royal Cruise Line, Renaissance Cruises, Windstar, and Sea Goddess proved the hard way that small, high quality cruise ships cannot make money.

 

You can imagine how happy HAL's CEO was to get 6 additional money-losing ships (Seabourn) to add to his 9 HAL ships already losing money.

 

 

I really do not like these blanket statements, I find it hard to believe Oceania is loosing money on their brand new ships, and as a company in general. It is plan to see HAL is by the condition of the ships.

[BruceMuzz]

I really do not like these blanket statements, I find it hard to believe Oceania is loosing money on their brand new ships, and as a company in general. It is plan to see HAL is by the condition of the ships.

 

I found it hard to believe that Royal Viking Line - arguably the greatest cruise line on earth - went bankrupt with those beautiful small ships, great food, and great service.

 

I found it hard to believe that Royal Cruise Line (essentially a Greek version of HAL) went bankrupt with those great small ships, incredible itineraries, and fantastic service.

 

I found it hard to believe that the family that owns Silver Sea built a brand new ship, then had to leave it tied up at a pier for over a year because they couldn't book any passengers on it. Silver sea is bleeding far more money than Seabourn.

 

I found it even harder to believe that the Brynsted family started Seabourn and operated it at a major loss for 20 years - until Mickey Arison decided to buy it and to continue operating it at a loss, while adding three more money-losing ships to the fleet.

 

I found it hard to believe that Renaissance Cruise Line failed when the Italian Government financed all their ships 100% and deferred all loan payments for 10 years. They still couldn't make a profit.

 

I was pleasantly surprised to see HAL jettison Windstar after losing money for so many years, but found it hard to believe that somebody was dumb enough to buy Windstar and plan to make a profit with it. That didn't last very long.

 

I find it even harder to believe that now somebody else is even dumber to try to re-finance Windstar and expects to make a profit.

 

I'll say it again. There is no international cruise ship in the world carrying fewer than 2,000 passengers and making a profit.

[Salacia]

Also, keep in mind that CCL pays a $1 dividend annually for each of their 779 MILLION shares of stock. ("Shares outstanding is taken from the most recently filed quarterly or annual report." ... from Yahoo Finance website.)

 

Some of those dividends go to some posters on this website.:)

 

Cheers!

 

Yes, I have received dividends as a stockholder, but please consider the stock owned by CCLCorporate Board Members (most especially Mr. Arison) - so who benefits most by the dividends? Consider also that many posters bought CCL stock on the high side, and are now underwater on their purchase.CCL Corporate Board members seem to be doing ok though.

 

Number of shares owned by Mr Arison x $1.00 per share per year... then do the math for the other CCL Board Members. Ask yourself why dividends are payed to stockholders instead of being put back to the various ships in the fleet for maintenance, salary, etc. I haven't read any past passenger's post complaining about dividends, but I have read plenty of complaints about cutbacks in staff, service, etc.

[Viesczy]

As a former financial officer, the #s that are reported are all inflated/deflated in order to guarantee as much money is kept in house as possible. That money kept in house is then paid from the top down, and never makes it down.

 

Typically you'll structure your business in a vertical fashion,

so that every step of the way you are making money w/o truly losing any money.

 

Vertical stacking, the quick version...

 

A is parent company, serviced by B for w/e, which is supplied by C for the service parts, all are staffed by D and so forth. Ideally you set up B, C, D etc to run at a net "loss". You'll realize tax breaks/returns on B/C/D, getting more back than you paid in taxes for those companies and with A the costs for B/C/D are overinflated to keep your net profit low, thusly your taxes are low on A as well. You realize a huge amount of money that is kept in house, not showing on books/paid to investors but paid to yourself.

 

The way of the world in short form.

 

Derek

[serendipity1499]

I really do not like these blanket statements, I find it hard to believe Oceania is loosing money on their brand new ships, and as a company in general. It is plan to see HAL is by the condition of the ships.

 

Take a look again..Oceania is offering 75% discounts on early bird savings in addition to last minute markdowns, which I've never seen before.. They are offering 2012 closeouts & 2013 specials & I too believe they are finding it difficult to fill all those berths..

Oceania is owned by Apollo Global Mgmt, a private equity investor which specalizes in purchasing distressed investments..AINV is trading at $7.88 a share today which is down from a high of $8.61 last year..

http://www.wikinvest.com/stock/Apollo_Investment_(AINV)/WikiChart

It would be difficult to say which investments are down now, but IMO Bruce is right about the entire cruise industry, which he has worked in for many years..

We've been on Oceania several times, & had wonderful cruises...Would hate to see them go out of business, but I'm afraid that Bruce Muzz is telling it like it is in the entire travel industry...

Not only cruise lines, but airlines, hotels & tour companies are suffering losses..

 

JMO..Cheers...Betty

[Steve Q]

Carnival Corp.'s fiscal third-quarter profit slipped as the world's largest cruise operator's cost controls and lower fuel consumption helped offset lower ticket prices.

 

For the current fiscal quarter, forecast per-share earnings of seven cents to 11 cents, below recent estimates of analysts polled by Thomson Reuters, who expected 16 cents a share.

 

The company, which runs cruise lines such as Holland America, Cunard and Carnival, has reported stronger booking volumes as it gradually recovers from negative publicity following the shipwreck of its Costa Concordia off the coast of Italy in January.

 

For the fiscal year, Carnival narrowed its per-share earnings estimate to between $1.83 and $1.87 from its prior estimate for between $1.80 and $1.90. The company said improved yield expectations and costs were offset by unfavorable changes in fuel prices and currency-exchange rates.

 

The company now expects net-revenue yields will be flat to down slightly for the year, excluding the impact of the Costa Concordia incident. Including costs, it forecast a decline of 3%. Carnival previously estimated that net-revenue yields would decline 3% to 4%, but on Tuesday said they would fall slightly, excluding its Costa cruise business.

 

Net-revenue yields are a key cruise-industry indicator that measures revenues in relation to available capacity.

 

In early afternoon trading on the New York Stock Exchange, Carnival's shares were up 2.3% at $37.86, as adjusted earnings and net-revenue-yield declines weren't as bad as expected.

 

"The pace of booking volumes remains healthy, enabling us to continue to catch up on occupancy levels, while pricing has gradually improved," said Chairman and Chief Executive Micky Arison. "Both of these trends leave us well-positioned for a recovery in cruise-ticket prices beginning in the second quarter of 2013."

 

For the rest of 2012 and first half of 2013, cumulative advance bookings, excluding its Costa business, are down from a year earlier on slightly lower prices. While cumulative advance bookings for Costa have improved, they remain below year-earlier levels.

 

Carnival has stepped up efforts to rein in costs as it struggles with commodities costs and a sluggish global economy weighs on consumer confidence. In the latest quarter, fuel prices fell 3.9% from a year earlier but were still higher than anticipated. Fuel consumption was down 2.8%.

 

For the quarter ended Aug. 31, Carnival reported a profit of $1.33 billion, down slightly from $1.34 billion a year earlier. On a per-share basis, profit was up at $1.71 from $1.69 a share, based on fewer shares outstanding in the latest period. Currency fluctuations reduced per-share earnings by nine cents from a year earlier.

 

The latest period included $136 million of unrealized gains on fuel derivatives. Excluding fuel-derivatives impacts and other items, earnings were down at $1.53 from $1.69. Carnival in June projected $1.42 to $1.46.

 

Revenue decreased 7.4% to $4.7 billion. Analysts polled by Thomson Reuters most recently projected $4.68 billion.

 

Net-revenue yields fell 5.3%, and were down 2.1% excluding Costa, an improvement over June estimates.

 

Write to Tess Stynes at tess.stynes@dowjones.com

[Typhoon1]

It's called capitalism.

[jaguarstyper]

I think the Fiat will be a big boon to the auto repair industry

( Fix It Again Tony)

Harumph! Fiat gets higher customer satisfaction numbers than every manufacturer they compete with except Toyota. They are significantly higher than every US manufacturer. They are one of the best selling brands in Europe. I bought a 500 Abarth for my daughter back in April. Its been stunningly flawless. I wish I could say the same about the VW it replaced or the Chevy her boyfriend is driving. :rolleyes:

 

OK, back on topic. I think its pretty obvious that Carnival is not making as much money as it needs to. I don't know where this 11 Billion profit number came from, but its clearly incorrect. Thanks, CNN.

[Hawaiidan]

No argument..Royal Viking is and was the finest of cruise lines ... I have ever sailed on, the best laid out and the sharpest looking.Decades ahead of anyother in scope and function..

 

Class act not since equalled.........

 

Still have a set of RVL Aquivit glasses for Skol time.....:o

 

I was invited to the RVL SUN launch in SF with Jimmy Stewart ...Sad to see all the mods done to her since she became the Princendam. Even so people rave about her.

I wonder what they would have done if they saw her before.... gone totally bonkers...

[Aruba]

I ought to know this since I too am a CCL shareholder: what was CCL's return on equity for the last fiscal year?

[kazu]

No argument..Royal Viking is and was the finest of cruise lines ... I have ever sailed on, the best laid out and the sharpest looking.Decades ahead of anyother in scope and function..

 

Class act not since equalled.........

 

Still have a set of RVL Aquivit glasses for Skol time.....:o

 

I was invited to the RVL SUN launch in SF with Jimmy Stewart ...Sad to see all the mods done to her since she became the Princendam. Even so people rave about her.

I wonder what they would have done if they saw her before.... gone totally bonkers...

 

I have seen the old pics and they were very nice. I still like the ship though - she's very classic - and even better, the crew is tremendous:)