The sudden ubiquity of the term "staycation" could hardly be seen as a positive development for the cruise-line industry -- a hunch confirmed by the first-quarter loss of $63.2 million, or 17 cents a share, posted by
Royal Caribbean Cruises
The company had turned a profit of $75.6 million, or 35 cents per share, a year earlier.
On the upside, the company bested analysts' expectations of a loss of 34 cents, sending shares soaring 10% to $12.50 in afternoon trading. An announcement earlier this month that the U.S. Leisure industry may relax Cuban travel bans could also help fuel cruise travel. Royal Caribbean's base in Miami is only 200 miles away from Havana, which would allow it to provide new Cuban trips at minimal fuel cost.
The company expects to break even or post a loss of 5 cents a share in the second quarter. Full-year earnings are expected to be about $1.35 a share.
Passenger ticket revenues fell to roughly $950 million, down from more than $1 billion a year ago. The company has been offering steep discounts in an effort to get customers on board.
Total revenue dipped to $1.3 billion from $1.4 billion.
"Obviously, we are never happy to report a loss, but I am pleased that the full year earnings outlook has not changed materially," Chief Executive and Chairman Richard D. Fain said in a statement. "Given the horrible economy, I am encouraged by a more stable revenue environment and I am proud that our people have been able to reduce expenses and deliver better than expected results."
Earlier this month rival
slashed its second-quarter and full-year outlook by about 3%. Carnival originally expected to earn between 30 cents and 32 cents a share in the second quarter and $2.10 to $2.30 for the full year. It cut those forecasts by 1 cent and 6 cents, respectively.
The guidance revision prompted Moody's to revise Carnival's credit rating to "negative" from "stable," citing the drop in demand for travel.
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