Cruises steer clear of Red Sea, Carnival to take charge on shifting itineraries

Carnival Splendor cruise ship was at anchor in Cabo San Lucas, tendering it

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It’s smooth sailing for Carnival Corporation (NYSE:CCL) with the company reporting its best bookings on record and the first half of the year nearly fully booked just one month into 2024.

The promising start of the year is expected to offset any drag from rerouting ships around the Red Sea. Taking into account recent developments in the region, and after consultations with global security experts, Carnival (CCL) is rerouting itineraries for 12 ships across seven brands through May 2024.

The shift will likely cost the cruise operator $0.07 to $0.08 per share in 2024 with Q2 taking the brunt.

The impact from the Red Sea appears to be limited to Carnival (CCL) with Royal Caribbean Cruises (RCL) and Norwegian Cruise Line Holdings (NCLH) operating little to no routes through the region.

Based on light Red Sea exposure and continued strong demand, BofA Securities continues to expect strong Q4 results for Royal Caribbean (RCL) and keeps its Neutral rating for the stock. Royal Caribbean (RCL) reports Q4 results Feb 1 with the Seeking Alpha EPS consensus estimate at $1.13 and revenue expected to be $3.36B.

Roy Walsh

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