Cruise Industry

Eight down, ten to go as Carnival Corp looks to save around US $2-billion in costs

Carnival Corp has sold eight of the 18 ships earmarked for retirement from the fleet, with all eighteen of the ships being let go having now been announced.

cruise ships storm clouds

Carnival Corporation is selling at least 18 of its 105 cruise ships from across its nine cruise brands. And now that its announced which ships its retiring, we know that Carnival, Costa, and Holland America Line are taking the greatest hit.

Each of those cruise lines will lose four ships, while Princess and P&O Australia will each lose two, and P&O will lose one, leaving just one as-yet unnamed ship.

The ships being sold by Carnival Corporation:

Carnival Cruise Line

Carnival Fantasy

Carnival Imagination

Carnival Inspiration

Carnival Fascination

Costa Cruises

Costa Atlantica

Costa Mediterranea

Costa Victoria

Costa neoRomantica

Holland America Line

Amsterdam

Rotterdam

Maasdam

Veendam

Princess Cruises

Sea Princess

Sun Princess

P&O Australia

Pacific Dawn

Pacific Aria

P&O

Oceana

Carnival Cruise Line has said it will retain its remaining four Fantasy-class cruise ships, and its remaining fleet after them is less than 20 years old, suggesting none of the Spirit-class ships will be retired.

However, Costa Atlantica, a former Carnival Cruise Line ship of the Spirit-class has been sold by Costa, so the oldest of the remaining ships in this class, Carnival Spirit, might be next.

It should also be noted that Costa had announced separately earlier in the year that it would be retiring five ships, but only four have been revealed so far. However, its remaining fleet are all large, modern cruise ships of over 100,000-gross tons are delivered from 2003 onwards.

AIDA Cruises, one of the company’s largest European cruise brands, hasn’t announced any ship sales yet. It’s oldest ship is the 1996-built AIDAcara. At just 38,531-gross tons her size and age makes her vulnerable to scrapping as well.

Carnival Corp had previously announced that it would be retiring 13 of its cruise ships from across its brands, but those plans were accelerated and increased to 18 ships a few days ago as the company redoubled efforts to save money amid the global shutdown of the industry.

cruise ship Scrap

Carnival has already sold four Fantasy-class cruise ships for scrap

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Although cruises are returning in a limited capacity in Europe, and there is growing momentum to efforts to restart cruises in the United States, the industry is expected to face strong headwinds into next year.

Reduced capacity, through social distancing and lower demand, is expected to be the norm for some time, while stringent health and safety measures for passengers and crew will impact operating costs.

“In total, the 18 ships represent approximately 12 percent of pre-pause capacity and only three percent of operating income in 2019,” Carnival said, in an SEC filing.

Rotterdam

The replacement of older ships with newer vessels under construction will make Carnival Corp far more efficient

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“The sale of less efficient ships will result in future operating expense efficiencies of approximately two percent per available lower berth day (“ALBD”) and a reduction in fuel consumption of approximately one percent per ALBD,” it added.

According to calculations done by Cruise Industry News, that means the 18 ships being retired generated only approximately US $98.3 million in operating income, compared to approximately $3.2 billion for the other 87 ships.

“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 US $2 billion, potentially resulting in operating income of approximately US $5.4 billion,” it reports.

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