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Royal Caribbean Cruises Ltd., battered by a sharp and prolonged drop in vacation spending, said Thursday it lost less in the first quarter than expected as bookings stabilized and cruise costs declined more than anticipated.
Travelers responding to aggressive discounts boosted bookings close to the date of departure, and the company plans to keep offering the deals. But onboard spending remains weak.
Admittedly, we are providing our guests more value than we would like to these days, and pricing continues to be miserable, said Chairman and Chief Executive Richard Fain during a conference call with investors. But at least it seems to be at a miserable level that's relatively stable.
Falling fuel prices, the stronger dollar and internal cost-cutting all helped improve the results, Royal Caribbean said.
The company's shares jumped $2.35, or 20.6 percent, to close at $13.76. The stock has traded between $5.40 and $33.78 during the past 52 weeks.
Analyst Robert LaFleur with Susquehanna Financial Group said travelers are more responsive to changes in price than had been thought.
While 2009 is going to be a difficult year for (Royal Caribbean) it appears that cruise demand is proving to be more price-elastic than many investors anticipated, said LaFleur, who has a positive rating on the stock.
Royal Caribbean lost $36.2 million, or 17 cents per share, compared with a profit of $75.6 million, or 35 cents per share, a year ago.
Revenue slipped 7 percent to $1.33 billion, from $1.43 billion in the first quarter of fiscal 2008.
Analysts surveyed by Thomson Reuters forecast a wider loss of 34 cents per share on revenue of $1.31 billion.
First-quarter net yields, which reflect revenue earned by the company without some variable costs, fell 13.5 percent during the quarter.
Despite the better-than-expected results, Royal Caribbean lowered its guidance for full-year net yields and earnings to reflect soft onboard revenue and other areas of weakness.
Source: ABC NEWS
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