Royal Caribbean blames £2m loss on Europe

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Royal Caribbean Cruises has reported a net loss of £2.35 million for the second quarter of 2012, and blamed the result on the “consistent” poor performance of the European market.

The result marked a return to the red for Royal Caribbean, which had posted a profit of £60 million in the same quarter the previous year. Since the company’s April guidance, the stronger US dollar and lower operating cost of fuel have essentially offset one another, said the company. Business remains strong in the Caribbean and Asia, however larger-than-anticipated discounting was required in Europe. More than half of the yield declines were offset by additional cost cutting measures.

The company forecasts for the third quarter would suggest further yield declines in the region of around 5%, while for full-year 2012 yields are expected to increase around 1%.

“The steady drumbeat of negative news emanating out of Europe is certainly having an impact,” said Richard D. Fain, the company’s chairman. “As a result, we are seeing pluses and minuses in the different geographical markets. North America is holding up reasonably well, Asia is a big plus, but Europe is a pretty consistent minus. Overall we have seen about a 100 basis point drop in our yield projections, but we expect to offset over half of this decline with lower spending.”

The company reported that booking trends continue to pick up pace and are now running at levels comparable to last year’s , albeit with larger discounting required in Europe to drive the bookings.

“It is hard to distinguish how much of the pressure in Europe is connected to the Costa Concordia incident and how much is due to the economic roller coaster,” said Brian J. Rice, Royal Caribbean’s executive vice president and chief financial officer. “Our sense is that the former is no longer having a major impact on our bookings especially among experienced guests.  However, the timing of the incident left a big gap during our peak booking period and filling that gap is disrupting our normal booking patterns.”

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