Carnival Sees Profit in Second Half of 2022, Shaking Off Omicron Worries 

(Bloomberg) -- Carnival Corp. shares rose after the company said it expects to be profitable in the second half of next year, countering a worse-than-expected performance in the fourth quarter and easing worries over the impact of the omicron variant on the cruise industry.

The company said it will likely report a net loss in the first half of fiscal 2022 before turning a profit in the latter six months. Carnival pointed to the resumption of guest cruise operations, which are benefiting its liquidity and financial position, according to a statement Monday.

Carnival, like other cruise line operators, has been struggling to return to normalcy amid the coronavirus pandemic. Ship operators have been operating at reduced capacity and implementing Covid-19 safeguards, such as masking and proof of vaccination for guests and crew. Monday’s comments are likely to temper concerns over the omicron variant heading into next year.

“Our cash from operations turned positive in the month of November, and we expect consistently positive cash flow beginning in the second quarter of 2022 as additional ships resume guest cruise operations,” Chief Executive Officer Arnold Donald said in the statement. “During 2021, we believe we have clearly maximized our return to service and strengthened our financial position to withstand potential volatility on our path to profitability.”

Carnival shares erased early losses and jumped as much as 5.5% in New York. The stock has been whipsawed by the virus, rising more than 40% at the recent high in June before a steep tumble. They were down 15.6% for the year through Friday.

Missed Estimates

The positive outlook offset disappointing quarterly results, as the company reported a loss of $2.31 a share for the period ended Nov. 30, missing analysts’ average projection of a $1.46 loss. Sales of $1.29 billion also fell short of the $1.53 billion consensus.

Occupancy improved to 58% in the fourth quarter from the prior three months, but that was still below expectations. Available lower berth days of 10.2 million in the quarter were below the 10.3 million analyst estimate.

The rise of the omicron variant and a winter surge in cases has brought new challenges. The company recently extended its pause on cruises in Australia until at least mid-April. The company also brought back ticket discounts at its Princess line.

Things were looking sunnier as recently as September, when Carnival said occupancy was rising steadily to 54%. Its flagship Carnival line resumed sailing last summer in Alaska and the Caribbean and the company said it planned to have 50 ships, or 61% of its total, operating by the end of November. 

The company expected its full fleet to be sailing by spring of 2022. Bookings for the second half of 2022 were at a historical high, the company said at the time.

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