Cuba cruising intact, but growth will be a struggle

Cuba cruising intact, but growth will be a struggle

Cruise lines can continue sailing to Cuba under the Trump administration’s
stricter rules for travel to the country, so things could be worse for the
cruise industry.

But they could be a lot better.

Speaking during the company’s second-quarter earnings call, Carnival
Corp. CEO Arnold Donald said the cruise industry had not entirely escaped a “disruptive”
effect from President Trump’s revision of trade policy toward Cuba.

“It is disruptive in terms of investing in ports,”
Donald said. “I’m not sure we have the freedom to do that under the
current regulations.”

The limited capacity of Cuban ports to berth medium and
large cruise ships has been cited as an obstacle to further growth in cruises
to Cuba.

“As you look at it long term, we would look forward to
co-investment with Cuba, or direct investment if they would allow that,”
Donald said.

He said Cuba today is “a teeny-tiny portion of our
capacity.”

“It will be while before we can actually invest in
developing port infrastructure,” he said. “That doesn’t mean the
Cubans won’t do it themselves, though.”

Carnival Corp. said its economic vital signs are very good,
despite reporting lower second-quarter earnings.

In the three months ended May 31, Carnival had net income of
$379 million, down from $605 million in the same period a year earlier.
Carnival said it had a large gain in the previous year on fuel derivatives; net
income was higher this year when excluding that gain. Revenue rose to $3.9
billion from $3.7 billion.

Looking at cruises booked for the next three quarters,
Carnival said its occupancy is ahead of the comparable period a year earlier,
and at higher prices. The length of its booking window, a measure of how far
ahead consumers are booking cruises, is near a record, the company said.

Carnival raised its forecast of 2017 full-year adjusted net
income to between $2.61 billion and $2.68 billion. Last year, it earned $2.5
billion on a comparable basis. 

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