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Italy: New Costa incident mars recovery from fatal wreck

last update: February 29, 10:29

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Genoa, 29 Feb. (AKI/Bloomberg) - Several new incidents at Carnival Corp., owner of the Costa Concordia passenger liner that ran aground off Italy in January, are clouding the cruise operator’s recovery as peak booking season enters its final leg.

In the past week, 22 passengers of the Carnival Splendor were robbed during a land excursion in Puerto Vallarta, Mexico, and two of the company’s British ships were turned away from port in Argentina after visiting the Falkland Islands in a long- running dispute between the South American country and the U.K.

Another of Miami-based Carnival’s Italian liners, the Costa Allegra, suffered an on-board fire Feb. 27 and is being towed to the Seychelles, where it is expected to dock tomorrow. Today, the U.S. House begins hearings on cruise ship safety.

Carnival, the world’s biggest cruise operator, has dropped 12 percent since Jan. 13, when the Concordia struck rocks and partially sank, killing at least 25 people. The incident led Carnival to reduce marketing in the January to March period during which one-third of all voyages are arranged.

The publicity is “not something you need during peak booking season,” said Rachael Rothman, an analyst with Susquehanna Financial Corp. in New York. She changed her rating on Carnival shares to “neutral” from “positive” on Jan. 17 due to the potential hit to cruise bookings and prices this year. “Our issue was that you couldn’t ascertain a fair value if you didn’t know what demand would be.”

Carnival suspended the Mexico excursion and has apologized to guests, according to a statement from Vance Gulliksen, a company spokesman.

Flashlights, Bread

The company’s Genoa-based Costa Cruises has been supplying the powerless Allegra with flashlights and fresh bread, and “doing everything possible to make the situation onboard more comfortable,” according to a statement from Buck Banks, an outside spokesman for Carnival.

Prior to the Costa Concordia crash, Carnival had said that its annual earnings could rise as much as 17 percent to $2.85 a share in 2012. About $71 million in costs related to the accident, as well fuel and currency adjustments, may reduce results by as much as 51 cents a share, the company said in Jan. 30 Securities and Exchange Commission filing.

Carnival’s namesake brand and its other lines, including Princess and P&O Cruises, operate separately, Gulliksen said in an e-mail. The Concordia shipwreck has affected those lines as well as Carnival’s competitors.

Excluding Costa Cruises, fleetwide bookings declined in the mid-teens in percentage terms through Jan. 25, the most recent period for which information was available.

“The cruise industry has an outstanding historical safety record and we are fully confident in the long-term fundamentals of our business,” Gulliksen said in an e-mail.

Royal Caribbean

Bookings at rival Royal Caribbean Cruises Ltd. (RCL) fell by the low-to-mid teens afterward in percentage terms, the Miami-based company said in a Feb. 2 statement. Prior to the Concordia accident, bookings were running 5 percent ahead of 2011 levels.

“We’re in uncharted territory and our traditional models simply don’t cover events like this,” Royal Caribbean Chief Executive Richard Fain said in a conference call that day.

Carnival added 0.2 percent to $30.01 yesterday in New York and has declined 8.1 percent this year, compared with a 3.4 percent gain for the S&P 500 Index. Royal Caribbean was little changed at $28.06 and has gained 13 percent this year.

The Costa Concordia remains half submerged and on its side. Divers searching the wreckage found eight more bodies on Feb. 22, according to the Italian Civil Protection Agency. Seven people are still missing, the agency said.

Italian Claims

A total of nine employees of Costa Cruises are under probe in connection with the Concordia crash. The line is “absolutely certain” that its staff acted correctly, it said in an e-mailed statement on Feb. 22.

Italian consumer associations have started advising clients on damage claims. Codacons, an Italian consumer group that filed a suit against Carnival in Miami with New York law firm Proner and Proner on Jan. 27 for the Concordia shipwreck, said on its website yesterday that damages to passengers of the Costa Allegra have to be “adequately paid back.”

Italy is sending experts from the Coast Guard and the Transport Ministry to the Seychelles to probe the Costa Allegra accident along with local authorities and assist passengers, Ansa, an Italian news agency reported.


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