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'Costa by Carnival' 'right-sizes' Costa for Europe

Costa Firenze and Costa Venezia will be going under the new 'Costa by Carnival' concept in North America
Deploying a pair of Costa ships in North America under Carnival Cruise Line and Costa Luminosa's transfer to Carnival is a 'right-sizing' of Costa for Europe.

So said Arnold Donald, president and CEO of Carnival Corp. & plc, during today's earnings call, his last before moving to vice chairman in August. 

European consumer demand 'more challenged'

Addressing the Costa to Carnival ship transfers, Donald said European consumer demand for travel is more challenged now on account of macroeconomic issues trigged by COVID-19 and the war in Ukraine. Demand from North America is stronger.

'Overall, we still see strong demand in Europe, the UK in particular, and continued strength in portions of Germany,' Donald elaborated. 'We see a good market in Europe and a strong market in North America, and we're just reallocating across the brands to optimize our portfolio and maximize cash generation for the long-term.'

CFO David Bernstein said booking volumes during the second quarter for the NAA brands were more than double those in Q1, while booking volumes for the EAA brands, including Costa, were a little less than double.

China still closed

He also pointed out a big chunk of Costa's capacity in 2019 was in China. With that market closed, Bernstein continued, 'Rather than take all that capacity and put it in Europe, we created a new market for the Carnival guests which we think will expand the market here in North America, and we'll be in a much better position overall.'

Leveraging scale

'It's a great example of leveraging the scale of this corporation,' incoming Carnival Corp. CEO Josh Weinstein added. The company could have just brought the Costa ships to the US 'but this is the opportunity to leverage everything that Carnival does so well here in the United States and Canada for its guest base. By marrying that with Costa's beautiful tonnage and onboard spaces, we have the ability to ... create something really special.'

Weinstein said 'Costa by Carnival' is not a short-term concept and could be something Carnival builds on. But, for now, the plan is for two ships.