Cruise ships

Carnival replaces CEO after year of mishaps

June 25, 2013 at 11:24 AM ET

Cruise ship triumph
Jason Chambers / AFP - Getty Images
This US Coast Guard photo obtained February 12, 2013 shows the Coast Guard Cutter Vigorous small boat as it patrols near the cruise ship Carnival Triumph in the Gulf of Mexico, February 11, 2013. The Carnival Triumph lost propulsion power after an engine room fire on February 10, 2013, standing 4,200 travelers.

Following a series of high-profile mishaps and blunders that have hurt bookings over the past year, Carnival Corp. announced Tuesday that Micky Arison, who has been CEO since 1979 and is the son of Carnival co-founder Ted Arison, is being replaced by Arnold W. Donald, who has served on the company's board for the past 12 years. Arison will continue to serve as chairman of the board.

Arison came under fire during Carnival's bad publicity earlier in the year when a string of its cruise ships suffered through mechanical problems and fires. The most dramatic of them was the Carnival Triumph where passengers were stranded at sea for five days as toilets backed up and air conditioners failed. There were media reports of raw sewage seeping through walls and carpets.

Arison, who also owns the Miami Heat basketball team, took some heat of his own for attending a game while the crisis was ongoing.

The Triumph nightmare was followed up with problems on three other Carnival ships: The Elation, Dream and Legend — all which made big headlines.

Video: Three ships this week alone – and four including the Triumph, which was towed to Alabama – have all experienced problems with passengers on board. Even so, bookings are up. Carnival’s CEO plans a comprehensive review of the company’s ships. NBC’s Gabe Gutierrez reports.

None of that helped restore confidence in vacationers who are still wary after the January 2012 sinking of the Costa Concordia, also owned by Carnival Corp.

In its earnings release Tuesday, Carnival said that advance bookings for the rest of 2013 are running behind last year's levels, even at lower prices. Bookings on its namesake Carnival line are particularly weak.

Arison said in a statement that Carnival is working to market the "truly exceptional vacation values" that cruises offer through travel agents and other industry partners.

"We believe these initiatives, combined with slower supply growth, will lead to increased yields," he said. "In addition, we remain focused on reducing our fuel dependence. By year end, we will achieve a 23 percent cumulative reduction in fuel consumption since 2005 and expect our research and development efforts in fuel saving technologies to continue to bear fruit."

Those fuel-savings efforts seem to be paying off. In the quarter that ended May 31, the company saw a 14-percent drop in its fuel bill. The company spent $555 million on fuel, down from $645 million during the same quarter last year. Cruise companies, airlines and other large consumers of fuel typically make bets, called derivatives, on the price of oil to hedge again any sudden spikes. Last year, Carnival lost $145 million in the second quarter on such bets. This year, that loss was narrowed to $31 million.

During the second quarter, the company took delivery of Princess Cruises' 3,560-passenger Royal Princess, the first of a new class of ships for Princess. Additionally, Carnival Sunshine entered service in May following a $155 million modernization.

Video: Stranded passengers are flying back to the U.S. from St. Maarten today as another Carnival Cruise Lines ship cuts a trip short due to mechanical problems. NBC’s Gabe Gutierrez reports.


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