Carnival Corp. Chairman and Chief Executive Micky Arison said the world’s largest cruise operator currently has no plans to reinstate unpopular fuel surcharges on cruise passengers — even though oil prices far exceed the level the company has said could trigger such a move.
“While we reserve the right to impose a surcharge, we have at this point no intention of doing so, based on today’s environment,” Arison, 60, said in response to a shareholder’s question at Carnival’s annual meeting Tuesday at the Biltmore Hotel in Coral Gables.
Fuel prices are currently in the range of $84 a barrel — well above the $70-a-barrel threshold Carnival has long said could prompt a return to the fuel surcharges.
Meanwhile, as the economy is recovering, cruise prices are moving upward.
Carnival Vice Chairman Howard Frank said ticket prices on bookings taken over the last nine weeks have risen 26 percent from a year earlier at Carnival’s North American brands, and they are up 6 percent for European brands. Frank called the turnaround “a very positive indication the consumer is coming back.”
Frank reiterated plans to slow fleet expansion to two to three new ships a year on average after 2012. That compares with six new ships coming in 2010, four in 2011, and three in 2012.
Carnival, which operates 11 brands around the globe, pays for its new ships out of operating cash flow — and is the only company that has the financial muscle to do so.
Slower growth will leave a lot more cash to boost the common stock dividend in the future, Frank said. Arison, one of the world’s richest men, and his family control 34.6 percent of Carnival Corp.’s shares.
In January, Carnival restored its quarterly dividend, which it had suspended in March 2009 to conserve cash during the tough economy. It declared a payout of 10 cents a share at that time, saying it expected to grow the amount over time.
Most future growth will be in Europe and Asia, where the cruise markets have more room for expansion, Frank said. Carnival’s brands command 54 percent of the North American cruise market and 45 percent of international markets.
In December 2009, Carnival placed the first new ship order the industry had seen in nearly two years. The 3,690-passenger sister ship to the Carnival Dream is scheduled to join the Carnival Cruise Lines’ fleet in 2012.
Frank said Carnival held up better than its peers during the recession.
Carnival’s profit plunged 23 percent during fiscal 2009 as it slashed cruise prices to fill its ships. But earnings at other gaming, hotel and cruise operators were hurt much more than that, Frank said.