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Carnival returns to profit; travelers fear mishaps

Published on NewsOK Modified: March 15, 2013 at 4:50 pm •  Published: March 15, 2013

The company now expects revenue to be flat for the year, compared with a previous forecast for growth of 1 to 2 percent. That outlook worried investors. Carnival shares dropped 78 cents, or 2.2 percent, to close at $34.95 Friday.

Carnival's rivals have also been hurt by the lagging European economy. Summer Mediterranean cruises favored by Italians and Spaniards are suffering due to economic woes in those countries. Last month, Royal Caribbean, the world's second-largest cruise line, wrote down $413.9 million due to a substantial drop in bookings and prices in Spain because of the government's austerity measures there. Royal Caribbean also blamed residual fears from the Costa Concordia disaster for a drop in European bookings.

Executives said Carnival is doing an assessment of emergency power and redundancies across its entire fleet following the Triumph mishap. Howard S. Frank, the company's chief operating officer, didn't estimate the possible cost of improvements for analysts during a conference call Friday. "I don't see it as being enormous," Frank said.

The company refused to tell analysts how much it spent each year on safety and training.

For the quarter that ended Feb. 28, adjusted earnings were 8 cents per share. Analysts had expected 3 cents per share. Revenue rose slightly to $3.59 billion. Analysts expected $3.64 billion.

The best thing going for Carnival right now is declining fuel prices.

The cruise line paid $677 per metric ton for fuel in the first quarter, down 4 percent from the same period last year. That savings alone accounted for 3 cents per share.