Bloomberg News

Royal Caribbean Ship Fire to Cut Profit by 10 Cents a Share

May 30, 2013

Royal Caribbean Cruises Ltd. (RCL:US), the second U.S. cruise operator to cut short a voyage after a mishap at sea, said a fire this week on the company’s Grandeur of the Seas will reduce annual profit by 10 cents a share.

Repair to the ship will take about six weeks, with the vessel expected to return to service by July 12, the world’s second-largest cruise operator said yesterday in a statement after financial markets closed.

The Grandeur of the Seas began sailing out of Baltimore this month after a $48 million renovation, according to a May 3 statement. The fire that broke out in a rear area forced the company to cut a trip short on May 27, according to the Miami-based company. Guests were flown back to Baltimore from the Bahamas, given a full refund and a 100 percent credit toward another sailing. Six future sailings were canceled.

“The extent of the financial impact was relatively high because the affected sailings were during the premium summer season,” Jason Liberty, the company’s chief financial officer, said in the statement.

The incident is the latest of several industry incidents, including a fire on the Carnival Corp. (CCL:US) ship Triumph in February that left 3,100 passengers at sea with limited food and toilet service. Earlier this year, Carnival, the world’s largest cruise operator, had to fly guests back to the U.S. from St. Maarten after an emergency generator malfunctioned on the Dream liner.

The Washington-based Cruise Lines International Association trade group released a passenger bill of rights May 22, designed to calm customer concerns.

Royal Caribbean fell 1 percent to $34.75 in extended trading after the announcement. The stock declined 1.7 percent to $35.10 at the close in New York and has gained (RCL:US) 3.2 percent this year.

Analysts forecast (RCL:US) 2013 profit of $2.45 a share, the average of 19 estimates compiled by Bloomberg.

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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Companies Mentioned

  • RCL
    (Royal Caribbean Cruises Ltd)
    • $68.24 USD
    • -0.12
    • -0.18%
  • CCL
    (Carnival Corp)
    • $40.71 USD
    • 0.60
    • 1.47%
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