A leaner, more profitable Carnival Corporation is likely to emerge following the COVID-19 pandemic, according to Cruise Industry News’ calculations.
One important aspect will be what now seems like the overdue removal of 18 existing ships from the fleet.
When Carnival Corporation announced earlier this week that it expects to dispose of 18 ships, eight of which have already left the fleet, it also said that the ships represent 12 percent of the company’s pre-pause capacity, but only 3 percent of operating income in 2019.
That means that the 18 ships generated only approximately $98.3 million in operating income, compared to approximately $3.2 billion for the other 87 ships (Carnival listed its fleet at 105 ships for the end of its fiscal year 2019).
Assuming that the 18 ships represented their fair share of operating costs at 12 percent, their removal prior to year’s end 2019 would have cut operating costs by approximately $2 billion, potentially resulting in operating income of approximately $5.4 billion.
Thus, according to Cruise Industry News estimates, Carnival’s operating income and net income could have been $2 billion more for 2019 if the 18 ships had left sooner, with net income of approximately $5 billion instead of $3 billion, or approximately $7.37 per share instead of $4.32 per share.
In addition, the disposed ships will be replaced by larger and more efficient tonnage that will likely command higher ticket revenues and onboard spending while incurring lower operating costs.