Home » Black Swans » Carnival Cruise Line hides costs of Costa Concordia disaster in SEC annual report filing. $CCL

Carnival Cruise Line hides costs of Costa Concordia disaster in SEC annual report filing. $CCL

Costa Concordia {Malta 2008}

Image by Marc-John Photographic via Flickr

Carnival Corporation (NYSE:CCL) released their annual report and buried the projected costs of the Costa Concordia disaster. close scrutiny of the SEC documents indicates they will take a hit between $155-million  and $175-million against fiscal 2012 net income because of the wreck of the Costa Concordia. They then make the comment that they have significantly curtailed marketing expenses since the untimely disaster. The last juicy tidbit is that management does not expect any long-term consequences from the disaster.

The manner of disclosure while technically legal is not investor friendly. Carnival management clearly wants to wipe the dodo off their shoes. Corporate management psychologically does not believe this is their fault and they want to position themselves in a no-fault zone. Very similar to the Captain who abandoned ship before passengers and crew were completely evacuated. Just do not take responsibility. The corporate culture does not reward responsibility or accountability; or so it seems.

The marketing spend curtailment could not possibly be a significant offset against the losses. If anything they will need to spend significant amounts to repair their brand. As to no long-term effects, think lawsuits, think about the problems involved in removing fuel from an unstable wreck and then think about the visuals of a partially sunken vessel.

This is a black swan event for Carnival. Carnival needs to call it for what it is.

George Gutowski writes from a caveat emptor perspective.