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Carnival Q2 loss but cash from operations turns positive, bookings climb

Carnival Corp. & plc narrowed its net loss as cash from operations turned positive in the second quarter and revenues and occupancies rose.

Booking volumes doubled since the first quarter in what Carnival called an extended wave season.

Adjusted net loss was $1.9bn, or $1.61 per share, lower than Wall Street's forecast of a $1.08/share loss, and US GAAP net loss was $1.8bn. Revenues were $2.4bn, under the $2.6bn consensus.

Still, the $2.4bn was nearly a 50% increase from Q1, reflecting continued sequential improvement. Revenue per passenger cruise day decreased slightly compared to a strong 2019.

69% occupancy, 'significant' onboard spending

Occupancy reached 69%, up from 54% in Q1. Available lower berth days were 16.7m, or 74% of total fleet capacity, increasing from 60% in the first quarter.

Onboard and other revenue per passenger cruise day increased 'significantly' compared to a strong 2019.

Customer deposits were up $1.4bn to $5.1bn as of May 31, up from from $3.7bn on Feb. 28.

Carnival brand sees near 110% occupancy in Q3

Carnival Cruise Line achieved consistently positive adjusted EBITDA beginning in March, said Arnold Donald, president and CEO of Carnival Corp. & plc, and the brand expects Q3 occupancy to approach 110%.

91% of capacity in service

As of June 24, 91% of the company's capacity is in guest cruise operation. Five of the company's nine brands now have their entire fleets in service.

Bookings outlook

Q2 booking volumes for all future sailings were nearly double the volumes during Q1 and the best quarterly booking volumes since the beginning of the pandemic. Bookings for second half 2022 sailings, since the beginning of April, have been higher than 2019 levels.

Carnival said this reflects a previously expected extended wave season.

While cumulative advance bookings for the second half are below the historical range, the company's booked position is consistent with its expected improving occupancy levels. Cumulative advance bookings for the second half are at lower prices, with or without future cruise credits, normalized for bundled packages, compared to 2019.

Cumulative advanced bookings for the full year 2023 continue to be both at the higher end of the historical range and at higher prices, with or without FCCs, normalized for bundled packages,  compared to 2019.

Q3 and full year losses expected

Carnival expects positive adjusted EBITDA but a net loss in Q3 and a net loss for the full year. Occupancy is forecast returning to historical levels in 2023.

23 ships exit

Last week Carnival announced the removal of another smaller, less efficient ship, AIDAvita, bringing the total planned removal to 23 older vessels since the beginning of the pandemic.

'Upon returning to full operations, nearly a quarter of our capacity will consist of newly delivered ships, expediting our return to profitability,' Donald said,

Booking volumes for all future sailings during the second quarter of 2022 were nearly double the booking volumes during the first quarter of 2022; the company notes these were its best quarterly booking volumes since the beginning of the pandemic, albeit still below 2019 levels.

$7.5bn liquidity

The quarter ended with $7.5bn of liquidity.

Donald to Weinstein transition

'With cash from operations turning positive and the company heading in the right direction, now is the time to transition leadership to the next generation,' said Donald, who is moving to vice chairman Aug. 1, succeeded by Josh Weinstein, who joined today's earnings call for the first time. 

It is Donald's last earnings call. 

He said Weinstein 'has the skill set ideally suited to take this company forward, including strong operating experience and in-depth industry knowledge cultivated over the past two decades. I am confident our positive momentum will continue under Josh's leadership and I remain confident in the long-term future of our company.'