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Carnival sees full fleet cruising 'well before' 2022 peak summer season

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Carnival Corp. is optimistic its whole fleet will be sailing by summer 2022, at full capacity, but things could be 'a little choppy,' CEO Arnold Donald cautioned
Carnival Corp. & plc continues to expect full operations 'well before our important summer season next year,' CEO Arnold Donald said.

While it's too early to predict if the fleet will be sailing at full occupancy by then, 'We're optimistic,' Donald told anaysts during today's earnings call.

Though things could be 'a little choppy around the world,' he cautioned, due to pockets of COVID-19 and other factors.

Cash-flow break-even when? 

During the third quarter, Carnival forecasts positive cash flow from the 27 ships that will be in service, though many of those ships don't start until late in the quarter. However, cash burn will increase from the monthly average $500m during the first half due to restart expenses from the 42 vessels expected to be in service by Nov. 30, higher capital expenditures and progress payments due on newbuilds.

It's difficult to estimate when the company could be at cash-flow break-even, CFO David Bernstein said, because there are so many variables. If the full fleet is operating by spring 2022 with more normal occupancy levels, 'then we should be at significant positive EBITDA, particularly in the summer months of 2022.'

The May to August sailing period represents one-third of the calendar year but two-thirds of EBITDA, or operating profit, Bernstein noted.

In 2022, Carnival Corp. will have 95 ships in operation, counting newbuilds.

'We are focused on getting our full fleet back in operation in order to capture a great summer of 2022,' he said.

2022 pricing

Not all 2022 inventory is open to book yet, and there are capacity limitations due to social distancing requirements on cruises carrying greater numbers of unvaccinated passengers.

2022 pricing is up, in part because of bundled pricing initiatives, offset by the impact of future cruise credits. Bernstein said the FCC pricing impact is higher than the 3% estimated by an analyst during the call. Customers have rebooked from canceled 2021 sailings to 2022, protected at the 2021 rate. However, as more inventory opens for booking, the portion of rebookings will shrink as a percentage of the total.

'When all is said and done, the FCC impact is expected to be just a few percentage points on the ultimate final yield for 2022,' Bernstein said.

Annual capacity growth drops to 2.5%

Donald pointed out the exit of 19 ships will lower the company's compound annual growth rate to 2.5% from 2019 to 2025, down from 4.5% pre-COVID.

Carnival is opportunistically transferring 8,000 berths from its continental European brands to Carnival Cruise Line in order to optimize the current environment, maximize cash generation and improve return on investment.

Richer cabin mix

With older ships gone and newbuilds coming, the mix of balcony cabins will increase 6% across the fleet to make up 55% of total accommodations in 2023.

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