Royal Caribbean Cruises Ltd. said a dreadful economy and the swine-flu outbreak conspired to make its second-quarter loss worse than expected as the Miami-based cruise giant lowered its profit outlook for the third quarter and full year.

Shares of Royal Caribbean sank 15 percent, or $2.48, Wednesday to close at $13.91 on the New York Stock Exchange. The shares are down 52 percent from a 52-week high of $30.35 last Aug. 11.

``Obviously the economy continues to be a challenge and the impact from the publicity surrounding H1N1 [virus] has been very frustrating,'' said Richard D. Fain, chairman and chief executive of Royal Caribbean.

Royal Caribbean, which operates ships under five distinct brands, posted a second-quarter net loss of $35.1 million, or 16 cents a share, compared to net income of $84.7 million or 40 cents a share for the year-ago period.

Revenue plunged 15 percent in the latest period to $1.35 billion from $1.58 billion a year earlier. The net yield -- a key industry measure of how much revenue is generated per passenger berth each day -- dropped 17.9 percent as the company resorted to deep discounting to lure recession-weary consumers aboard its ships.

Cruises in Alaska, which usually fetch a premium, have been particularly hard hit, and Royal said it's pleased the company previously decided to trim back its 2010 schedule there.

One bright spot, executives said, is that Royal Caribbean is attracting more European cruisers, particularly on European cruises where they account for 56 percent of passengers. However, the deep recession in Spain, where the company operates its Pullmantur line, has been a drag on results, company officials said.

`THAT DAMN FLU'

The H1N1, or swine flu virus -- which CEO Fain referred to Wednesday as ``that damn flu'' -- trimmed five cents a share from second-quarter results, as the company canceled voyages and revised itineraries to avoid Mexico where the outbreak hit this spring. Swings in foreign-currency exchange and ineffective hedging cut another 11 cents a share from quarterly results, Royal said.

The recession has tossed a wrench into the sophisticated computer models the cruise lines use to calculate how to get the top price for cruises while still filling their ships. Consumers amid the current downturn have been booking their cruises much closer to departure than they historically did, making it tricky to gauge when to discount and when to sit tight.

Royal Caribbean executives said the continued introduction of state-of-the-art ships is helping the cruise operator stimulate enthusiasm for cruising among consumers. Several company executives conducted Wednesday's conference call with Wall Street analysts from aboard the brand new Celebrity Cruises' Equinox, which was in Southampton, England, for a naming ceremony before heading off on an eight-night trip through Norway's fjords followed by a series of Mediterranean sailings.

OASIS OF THE SEAS

And in December, Royal Caribbean will launch the Oasis of the Seas, which will become the world's largest ship by a wide margin. The 220,000-ton vessel will carry 5,400 passengers and boast 16 decks. The buzz-generating ship will offer seven ``neighborhoods,'' including Central Park and Boardwalk themes.

While cruise industry analysts expect such continued innovations will position the company well for the future, the near-term remains gloomy. Blaming both the dreary economy and swine flu, Royal Caribbean lowered its earnings estimate for the third quarter to 95 cents to $1 a share and projected its full-year results will be in the range of 70 cents and 80 cents a share. That contrasts with a 2008 per-share profit of $2.68.

IMPROVEMENT SEEN

Company executives said at least demand has stabilized and they expect 2010 will bring improvements in yields -- or revenue generated per bed per day. Meanwhile, the company has tightened it belt to lower operating costs.

``I remain extremely frustrated we have not yet seen a more significant upturn in the market,'' Fain told analysts. ``We would have hoped the upturn would have begun by now.''

Join the discussion

The Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. In order to post comments, you must be a registered user of MiamiHerald.com. Your username will show along with the comments you post. Thank you for taking the time to offer your thoughts.

     Showing: Oldest first Newest first Most-recommended first Least-recommended first

@Nyx.AuthorDisplayName@ wrote on @Nyx.PostedAtTime@:

@Nyx.repliedToText@

@Nyx.replyAnswerText@

Reply to this Comment @Nyx.Recommender@ @Nyx.AbuseReporter@