In the wake of the high-profile fire aboard the 70,367-ton, 2,040-passenger Ecstasy, Carnival Corp. has confirmed earlier rumors that repairs would take far longer and be far more costly than originally announced. The ship will be out of service and undergoing repairs at Virginia-based Newport News Shipbuilding until Sept. 11 (15 cruises canceled, versus the originally announced three), with an impact on earnings of $24 million (versus the original estimate of $6 million).
The Ecstasy fire and other factors are expected to reduce Carnival’s third-quarter earnings by $12 million, or two cents per share. In addition to the Ecstasy expense, there is a $9 million write-off related to accounting procedures, and two counterbalancing gains, one of approximately $9 million from the sale of the company’s interest in Carnival Hotels & Casinos, the other from the issuance of 18.5 million common shares by Airtours to buy Direct Holidays (see related story) resulting in a net gain of $12 million and a dilution of Carnival’s interest in Airtours from 27 to 26 percent.
Fire Impact
While the media’s saturation coverage of the fire has obvious negative-publicity implications, the long term impact is expected to be negligible. Carnival Corp. COO Howard Frank said the Ecstasy incident has had no discernible effect on booking patterns for other Carnival ships and that he expects the event will have no long-term effect on the line’s business.
A total of 48 crew members were treated for smoke inhalation after the fire and did not require hospitalization; an additional 14 were hospitalized, 10 of those for smoke inhalation, with three admitted and released the following day. Eight passengers required medical assistance following the fire, with two admitted to the hospital. Ship damage included smoke and water damage to aft cabins; fire damage to the aft sections of several decks – mooring deck four in particular – with buckling of steel floors from heat, and loss of propulsion after propulsion cabling was burned through and the port steering room sustained heat damage. After repairs were made to the propulsion system in Miami by ABB, the ship sailed for Newport News on July 24.
According to Jack Finnegan, cruise line contact at Newport News, the yard was awarded the contract on July 23 over two competitors. “We sent a group of around 20 people to ride up with the ship and begin repairs en route,” he said.
Meanwhile, in Miami, Carnival continued efforts to accommodate passengers of the fire-affected cruise as well as subsequent canceled cruises.
Passengers aboard the July 20 sailing were given a full refund, a free three- or four-night cruise, and emergency accommodations, with Carnival handling all return flight arrangements (and incurring any penalties). For those on canceled cruises through Sept. 11, Carnival is offering a full refund, plus 50 percent off any cruise of seven nights or less.
Carnival was also fielding complaints by passengers who reportedly claimed their luggage had been rifled through and valuables stolen. According to the Carnival spokesperson, “We don’t believe any crewrnembers did anything they weren’t supposed to. You have to understand, crew were searching cabins in the damaged section of the ship wading in water using flashlights, retrieving stuff to the best of their abilities.” The spokesperson said passengers are being given every opportunity to file claims forms, and refunds were being sent out expeditiously.
Nevertheless, at least one lawsuit has already been filed in connection with the Ecstasy fire.
Investigation Continues
The investigation of the fire’s cause by the National Transportation Safety Board (NTSB) and U.S. Coast Guard is expected to continue for up to 12 months. Carnival’s theory is that the fire resulted from welding work on a laundry room machine which ignited lint in a ventilation shaft, which subsequently sparked a fire on the mooring deck. Yet according to the initial NTSB report, the two welders in the laundry room said they had not yet begun welding when the fire started. The NTSB did report that “some evidence of fire was detected” in the laundry’s vent system and “investigators are still looking for potential ignition sources” and that they are testing the laundry machine for evidence of welding. In addition, NTSB investigators boarded two other Carnival ships to inspect the laundry areas for “educational” purposes.
The NTSB/Coast Guard investigation will also delve into the captain and crew’s actions during the emergency. It was reported that some of the Ecstasy’s passengers actually watched live TV shots of the fire in their cabins before an announcement was made to don life jackets. Captain Vittorio Sartori said the initial fire alarm sounded at 5:10 p.m., while a spokesperson said passengers were alerted to a “situation on the aft deck” 10 minutes later. The Coast Guard radioed the Ecstasy after being alerted to the fire by onlookers from nearby vessels at 5:45, but was told by Sartori that the fire was under control. At 6:15 the Captain requested help, and firefighters from Coastal Tug & Barge and the Coast Guard had the fire under control within the next two hours.
