UBS’ Farley cuts Carnival estimates, reviews RCCL
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- Written by Kari Reinikainen Kari Reinikainen
- Category: Top Headlines Top Headlines
- Published: 16 January 2012 16 January 2012
The Costa Concordia accident will hurt the cruise industry, says Robin Farley cruise analyst at UBS in New York, who has lowered her estimates for Carnival Corp & plc (CCL) and placed those of Royal Caribbean Cruises Ltd (RCCL) under review.
“Today we are adjusting for the more quantifiable impact, which is the Concordia coming out of service. We are reducing our 2012 adjusted EPS estimate for CCL to $2.58 from $2.75, on $0.08 reductions directly related to the removal of the ship from CCL’s capacity and an additional $0.09 from costs related to insurance deductibles and other miscellaneous operating expenses related to the accident, as detailed above,” Farley said in a research note on 16 January.
“What's difficult to ascertain is the ongoing impact of forward bookings. While we continue to review our estimate for that forward yield impact, we think 2012 yields for CCL could potentially be reduced by as much as 2-3 percentage points, to flat to a -1% decrease for the year vs. our current estimate for ’12 yields of +2% growth, which allows room for a -10-15% yield decline in the Costa brand plus slightly weaker demand for the rest of Carnival's 9 other brands,” she continued. Carnival group sources about 37% of its passengers in Europe.
“This could further reduce our 2012 EPS estimate for CCL by an additional $0.34-$0.51. We just note this as a potential scenario while we review our yield estimates. More on this to follow,” Farley said.
Moving on to RCCL, she said: “We expect this could cause downward pressure on RCCL bookings, as well. While we review our estimates, we believe 2012 constant currency net yields for RCCL could potentially be negatively impacted by 75bp to +1.25% vs. our current +2% estimate.”
“We believe this could reduce our RCL 2012 EPS estimate by $0.20 vs. our current 2012 EPS of $2.72, though our estimates remain under review. As a rule of thumb, every 1% change to constant currency net yields is a $0.27 impact to RCL’s 2012 EPS. We look below at the EPS sensitivities across percentage decreases in RCL’s yields for the remainder of FY2012.”
“For reference, we believe RCL sources ~50% of its passengers from outside the U.S., with approximately 35-40% from Europe, though most concentrated in the UK,” she pointed out.
Costa Concordia, largest passenger vessel to have sunk, slipped towards deep water
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- Written by Kari Reinikainen Kari Reinikainen
- Category: Top Headlines Top Headlines
- Published: 16 January 2012 16 January 2012
Costa Concordia, the capsized 114,500 gross ton cruise liner of Costa Crociere, has slipped towards deep water on the rocks where it is resting, media reports say. It is by far the largest passenger vessel that has sunk by this date.
"There was a slippage of nine centimetres vertically and 1.5 centimetres horizontally. We evacuated immediately. This is something we have been worried about," Luca Cari, spokesman for the fire brigade at the island of Gigli was quoted by the Daily Telegraph website as saying.
"The vessel has reservoirs (bunkers) full of fuel, it is a heavy diesel which could sink down to the seabed, that would be a disaster,” another rescue official on the scene told Telegraph.
Earlier today, Carnival Corp & plc that owns Costa Crociere said it estimated the loss of revenue from the accident to rise in the region of $85 million to $95 million. However, it added that cost to the business e.g. in the form of fall in bookings and cancellations of already booked cruises, was impossible to estimate at this point.
Costa Concordia is by far the largest passenger vessel that has sunk. The previous record holder was the 83,673 gross ton Seawise University, which had been built in 1940 as Cunard Line’s first Queen Elizabeth, which caught fire and sank in shallow water in Hong Kong harbour in January 1972.
Almost three decades earlier, in February 1942, fire destroyed the 82,799 gross ton USS Lafayette that had started life in 1935 as Normandie of the French Line and which has been regarded as the finest ship built in the liner era.
The largest passenger vessel lost at open sea rather than in port or proximity to land was the 48,158 gross ton Britannic of the White Star Line. The ship hit a mine in the Aegean Sea while serving as a hospital ship and sank after just one year since entering service. It was the final unit of the three ships of the Olympic class.
UPDATE - Costa Concordia damage “in worst possible area”
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- Written by Kari Reinikainen Kari Reinikainen
- Category: Top Headlines Top Headlines
- Published: 16 January 2012 16 January 2012
Pictures of capsized Costa Concordia show severe damage to the hull on the port side, from midshipss towards the stern, but they do not cast light to the question has the vessel sustained damage to its bottom as well, notes Henrik Segercranz, technical editor of Cruise Business Online's sister publication Cruise Business Review. If salvage of the vessel will be attempted, it will be necessary to find out if the hull has suffered damage elsewhere too in addition to its port side.
It is also not yet known at this point if the watertight doors on board the ship had been closed in the course of the events on Friday night, he added.
A report in the Lloyds List shipping daily says that the ship is likely to be scrapped rather than salvaged and that the insurance industry expects a loss in the range of $600 million to $800 million from the accident.
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Having compared the photos of the hull damage of Costa Concordia to archieve material on the ship, our own technical editor Henrik Segercrantz comes to the conclusion that the more than 50m long puncture in the port side of the hull struck the worst possible area, involving three to four watertight compartments and damaging both the aft and forward engine rooms.
On a passenger ship two watertight areas punctured should still keep the vessel afloat, but Segercrantz stresses his analysis is very preliminary. "Area 3 in front of the machinery compartments, or area 1 behind, could have been damaged too, or there could have been problems with the watertight doors," he said.
It seems like the master made a manoeuver towards starboard when the ship hit rock, as the damage hole starts lower and ends higher nearer the waterline, indicating the ship was listing towards port while in contact with the rock. Then, as also reported, he turned the ship towards land, resulting the ship to tilt in the other direction.
As far as salvaging and repairing the vessel is concerned, this would be a big operation, if not impossible.
Segercrantz is a qualified naval architect with several years of experience in the shipbuilding industry.
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