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Bond Market News

Carnival Forecasts 2022 Loss on Fuel Price Surge

US cruise operator Carnival Corp reported a net loss of $1.9bn in Q1, citing that the spread of the Omicron variant impacted bookings. It ended Q1 with $7.2bn of liquidity, including cash, short-term investments and borrowings available under the company’s revolving credit facility. The company forecasts a full-year 2022 loss as the Russia-Ukraine crisis has caused a surge in fuel prices. Jefferies expects in H1 2022, fuel cost will be higher 8-10% and for H2 2022, it will be 10-11% more than anticipated. Carnival CEO Arnold Donald said, “It’s certainly not the first time we’ve seen a dramatic spike in fuel prices and we are stepping up our efforts to further reduce consumption”. As more ships return to service, monthly adjusted EBITDA are expected be positive by summer this year, Carnival added. Carnival forecasts a net loss for Q2 also but as bookings improve further, it said it might return to profit in Q3. However, factors including the Russia-Ukraine crisis and its impact on crude oil prices, cost of returning ships to operations, bookings restart related expenses, implementing health and safety protocols, and returning crew members to ship, will influence on operations going forward.

Carnival dollar bonds were trading lower, its 7.875% 2027 were down over 0.63 points to 100.75 yielding 5.46%.

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