Carnival Corporation and PLC (NYSE:CCL) issued a supposed Reg FD disclosure about the financial impact of the Costa Concordia sinking. The press release went out on Martin Luther King day when markets are closed. The ship is expected to be out of commission for the rest of this fiscal year. If you look at media pictures of the ship lying on its side that’s not a surprise. What Carnival did not quantify was the impact in dollars. They did offer some information on insurance and deductibles. They also admitted that they are self-insured for loss of use. This means EPS will take a hit as a normally productive asset disappears.
Somewhere the CFO has the information as to what that ship brought in. They are chosing not to identify it.
How do you salvage a large boat of this nature. Discovery channel will probably be filming a documentary chronicling the whole sordid affair and creating a recurring PR nightmare as the cruise market is constantly reminded of the disaster.
Carnival is also silent on how the Captain and navigation crew/systems could allow such a disaster to occur. This question will be closely followed by how does Carnival manage the selection of their captains and ship officers. The Mediterranean is well known navigationally. Rock outcroppings, currents, depths and other critical navigational issues are well documented. How did this happen?
Carnival has some huge questions that need to be answered. What are they doing about it?
George Gutowski writes from a caveat emptor perspective.
- Costa CEO Blames Captain for Ship Grounding (thestreet.com)
- Costa Concordia cruise boss apologises for liner tragedy as death toll rises to six (mirror.co.uk)