Carnival Reports 32 Percent Drop In 2Q Profit

KRISTEN A. LEE

NEW YORK (AP) — Carnival Corp. reported a better-than-expected second-quarter profit Thursday, as the cruise operator continued to cut costs and began to lift prices from bargain-basement levels.

Carnival shares jumped $1.72, or 7.5 percent, to close at $24.77 Thursday. The stock has traded between $14.85 and $42.39 during the past 52 weeks.

Increasing fuel prices, however, are weighing on Carnival's bottom line and the company lowered its full-year forecast to reflect that rising expense.

Carnival was forced to slash its prices deeply to fill ships after a sharp drop in vacation spending in late 2008 and early this year. Carnival reported that those deep discounts have driven a surge in bookings. As a result, Chairman and CEO Micky Arison said the company began "tweaking prices" higher in March.

Swine flu also cost Carnival in the second quarter. The company began redirecting ships away from Mexican ports in late April as swine flu deaths peaked in that region and fear spread that tourists could pick up the illness. Carnival said it is resuming stops in Mexico this month.