Carnival Shares Drop 13.5 percent After Tragic Cruise Accident
Shares of Carnival Cruise Lines plunged 13.65 percent Tuesday after the company announced it would suffer $100 million in losses related to the grounding of its Costa Concordia cruise ship on Friday night. The ship, which is owned by Carnival subsidiary Costa Cruises, went aground off the coast of Italy Friday night near the island of Giglio. As of Tuesday afternoon, the official death toll from the incident is at eleven, and more than 20 people are still missing as the ship lists on its side in the Tyrrhenian Sea.
Carnival said that it does carry insurance policies for damage to the ship and personal injury liability coverage for passengers, but will have to pay a $30 million deductible for the damage plan and a $10 million deductible on the personal injury policy. On top of that, the company will lose between $85 million and $95 million this year in lost revenue as a result of the ship not operating. The company expects the vehicle to take at least a year to repair, and expects additional costs stemming from the accident to pop up in the coming months, expenses which it cannot determine at this time.
A spokesman for Carnival explained that Friday’s accident couldn’t come at a worse time for the company, as January to March is typically the cruise industry’s peak season. The bad news spread to other major cruise operators, as well, with Royal Carribean shares slumping nearly 4 percent on fear that the accident would hinder demand across the industry. Some analysts downgraded shares of both companies, while others just downgraded Carnival.