Despite several unfortunate incidents at the start of 2013, Carnival Corporation has made it through the year without being a major disappointment. Thanks to smart leadership and savvy program changes, it’s minimized the effect of its rough first two quarters.
Why the year started off looking bleak
Carnival Corporation owns 10 cruise lines; one of these is Costa. The year began with the Costa Concordia half-sunk off the coast of Italy, and its captain on trial. The Triumph, Dream, Legend, and Elation from Carnival’s flagship brand also experienced problems before the close of the second quarter, ranging from fires to broken propulsion systems.
Carnival wasn’t the only trouble-plagued cruise line. The Grandeur of the Seas, owned by Royal Caribbean (NYSE: RCL ) , experienced an onboard fire in May. Thomson Cruises’ staff on the Majesty suffered a fatal accident in February. These industrywide issues were also expected to greatly decrease customer confidence in Carnival and cruising in general.
The actual financial impact
Carnival’s third-quarter net income fell 17.4% year over year. Operating costs rose across the board — but much of that came from one-time payments resulting from the accidents. The news could have been much worse in light of the rough waters Carnival navigated during 2012 and early 2013. Instead, Carnival’s making visible progress toward growth, despite year-to-date total revenue being lower than it was this time last year.
How Carnival’s New Leader Is Righting the Ship The Motley Fool