8-KOther Events

CARNIVAL CORP 8-K Report (Oct 23, 2001)

Filed October 23, 2001For Securities:CCL

Summary

Carnival Corporation's (CCL) 8-K filing on October 23, 2001, provides a somber update on the impact of the recent terrorist attacks on its business. The company reports a significant negative effect on operating results, with new booking levels dropping substantially in the immediate aftermath of September 11th, coupled with higher-than-expected cancellations. While there has been a slight improvement in booking levels in early October, they remain below prior year levels and cancellations persist. Looking ahead, Carnival anticipates a decline in net revenue yields for both the fourth quarter of fiscal 2001 and the full fiscal year 2002. This is attributed to lower pricing and occupancy rates driven by reduced demand and a shift in consumer booking behavior towards closer departure dates. The company also disclosed a potential exposure related to a $114.5 million sale of the ship Nieuw Amsterdam in October 2000, as the buyer, American Classic Voyages (AMCV), has filed for Chapter 11 bankruptcy protection. Carnival holds an $80 million first preferred ship mortgage on this vessel and is engaged in discussions regarding its return or disposition.

Key Highlights

  • 1Negative impact on operating results due to recent terrorist attacks and subsequent actions.
  • 2New booking levels fell to 50-60% of expected levels post-September 11th, with high cancellations.
  • 3Booking levels improved to over 75% of prior year levels in early October 2001, but cancellations remain elevated.
  • 4Expects lower net revenue yields for Q4 fiscal 2001 due to reduced prices and occupancy.
  • 5Fiscal 2002 outlook is uncertain, with significantly lower cumulative booking volumes and average prices compared to the prior year.
  • 6Potential $80 million exposure from a mortgage on the Nieuw Amsterdam ship due to the buyer's (AMCV) Chapter 11 bankruptcy filing.

Frequently Asked Questions

In the ten days following September 11, 2001, Carnival's new booking levels dropped to 50% to 60% of expected levels, and cancellations increased significantly. While there was some improvement in early October 2001, with bookings reaching over 75% of prior year levels, cancellations remained higher than expected.

Carnival anticipates that fiscal 2002 net revenue yields will be below fiscal 2001 levels. This is due to a slowdown in booking volumes, an increase in cancellations, lower pricing on bookings, and a shift in consumer booking patterns towards closer departure dates. The company notes that it is too early to definitively estimate the full impact on fiscal 2002 operating results.

Carnival sold the Nieuw Amsterdam ship to a subsidiary of AMCV in October 2000 for $114.5 million. AMCV filed for Chapter 11 bankruptcy protection on October 19, 2001, and announced it would cease operations. Carnival holds an approximately $80 million first preferred ship mortgage on this vessel and is currently in discussions with AMCV regarding its return or disposition.

Management currently believes that the long-term fundamentals of the cruise travel business remain unchanged, despite the near-term impairment in demand. However, the company cautions that due to the unprecedented nature of recent events, there can be no assurance that this will continue to be the case.