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Carnival Corporation & plc Chairman and CEO statement regarding Costa Concordia

  • Written by Teijo Niemelä
  • Category: Top Headlines

This statement is from Micky Arison, chairman and CEO of Carnival Corporation & plc, parent company of Costa Cruises.

"We are deeply saddened by the reports of additional deaths following the grounding of the Costa Concordia. On behalf of the entire Carnival Corporation & plc team, I offer our heartfelt condolences to all of those families affected by this tragedy.

Our immediate priority continues to be supporting rescue and recovery efforts and looking after our guests and crew members, along with securing the vessel to ensure there is no environmental impact. My senior management team and I have been in continuous contact with the Costa executive team in Italy and we have our senior level technical experts on the ground to provide additional support for this tragic and highly unusual incident.

While this is a terribly sad time for everyone involved, we want to recognize the tremendous efforts of Concordia's crew, who along with the Italian Coast Guard and authorities, helped to evacuate more than 4,000 passengers and crew members from the ship in very difficult conditions. And we continue to offer our deep gratitude to the Italian authorities for their support and ongoing efforts."

Costa Crociere news conference casts light on events onboard Costa Concordia on Friday

Earlier today, a press conference held in Genoa, chaired by Pier Luigi Foschi, Chairman and CEO of Costa Crociere, revealed a number of  facts concerning the  accident of Costa Concordia. As yet without being in possession of all the facts, the line did its best to explain the disaster, defend its position, and express it condolences to the families of those who had perished, Alan Lam reports.

It was confirmed that the reason for the ship to be sailing off course was because the captain wished to give his guests a better view of the shore scene and to salute the island of Giglio on Friday the 13th of January, a feast day in Catholic Italy.

The crew was aware of the captain’s intention but was powerless to interfere, as the captain is the supreme commander of the vessel. In general, the rule of the company does not allow deviation from the course; but the captain has the power to change course if he deems necessary on account of bad weather or other unfavourable sailing conditions.

Under normal circumstances, if a vessel goes off course, an alarm would sound on the bridge, unless the computerised navigation system (which is always connected to the GPS) was deliberately overridden. In this case the alarm did not go off.

It is now looking increasingly likely that this accident was largely due to a human error. A few passengers have reported that they had seen the captain drinking alcohol during dinner. The accident happened 3.5 hours after the ship set sail from Civitavecchia. During that time the captain was not always present on the bridge. He was not required to do so. But he was there at the time of the accident. It is expedient to add that, during that time, the bridge manning level was above requirement.

On the question concerning drug and alcohol, Foschi was unable to confirm either way; but he was adamant that all Costa crew, without exception, were subject to random and regular testing, and that as far as he knew Captain Francesco Schettino was not a alcohol drinker. But the master is under investigation as to whether he had left the ship prior to his responsibility concerning the evacuation procedure ended.

It was repeatedly emphasized that this was an extremely rare occurrence. “We always have safety and security in mind,” said Foschi. “We provide the highest level of training for our staff. Every other week a full safety drill takes place involving the entire crew.” He thanked the crew of Costa Concordia for doing a good job in evacuating the ship in two hours, stressing that the procedure was carried out under a set of very difficult circumstances. According to him, the crew had “responded adequately” to the disaster. Because of the severe list, the evacuation could only be carried out on one side of the vessel, which was why many passengers had to wait for more than an hour for their turn in the lifeboats. This is one area the line will be looking to improve in the future.

When questioned as to why the safety drill had not been carried out prior the accident. Foschi quoted the regulation requirement of it being carried out within 24 hours of the vessel setting sail. Despite the question, Costa Concordia had complied with this rule.

He underlined that shipping companies had to adhere to very stringent safety rules.  Costa was not only in compliance to all the international safety regulations; it went beyond them by “adopting spontaneous checks and carrying out tests.” He pointed out that he was not yet in possession of all the information to enable him to understand the entire cycle of the accident. Costa was still waiting for the content of the “Black Box” and footages from the ships cameras to be released to them by the legal authority. It would give them more information on the sequence of events leading up to the impact.

Two facts were established: Costa was able to confirm that the captain had contacted the marine department at 10.05PM on Friday night to inform them of the accident; the listing was caused by the ingress of water.

Costa Concordia was a very contemporary ship, equipped with the latest navigation system. The ship was certified by both Italian and US coastguards in accordance to the highest possible international maritime safety standards. As a part of the certification renewal audit, Costa Concordia was inspected as recently as November 2011, during a journey from Malta to Civitavecchia, and was found to be in compliance with all related safety rules.

The immediately concern after the rescue operation will be to debunker the ship and to remove her from site. There is about 2,300 tonnes of fuel onboard, including 17 tanks full of heavy fuel and four tanks full of oil. Debunker is urgently required to avoid any potential environmental disaster. There is as yet no evidence of any leakage.

Costa will face compensation and other financial issues. Foschi stated that the disaster occurred on Friday night and it was still too early to find out the extend of cancellations on future Costa cruises. He accepted that there would be negative impacts on the cruise business as a whole and Costa in particular. He hoped that this would only be a short time. Costa was a company with a good track record and, he was sure, would “emerge as strong as before.”

Yesterday, Carnival Corp & plc, which owns Costa Crociere, had published financial information relating to this accident in compliance with the stock market regulations. The group expected the damage to cost in the region of $95 million, excluding compensation. Foschi insisted that the Carnival group as a whole, and Costa in particular, had a strong balance sheet to absorb the probable expenditure.

As to whether or not the vessel is salvageable, this is still under evaluation.

On behalf of Costa Crociere, the Chairman expressed his deepest condolences to the families of those who had perished. And issued sincere apologies to its guests and crew.

Costa Concordia seen constructive total loss, insurance claim may exceed $500 million

  • Written by Christer Gorschelnik
  • Category: Top Headlines

Costa Concordia, the 114,500 gross ton cruise ship that capsized after running aground on the west coast of Italy, is likely to be declared constructive total loss, an Italian broker and industry experts say.

They believe insurance claim to be as high or higher than $500 million. Costa Crociere, which owns the ship,  has not confirmed the fate of the ship yet.

Carnival Corporation & plc, which owns Costa Crociere, said this morning that Costa Concordia will be out of service perhaps into the next financial year of the group that will start on 1 December 2012 and loss of revenue from grounding of the vessel on Friday may reach $95 million.

“A damage assessment review of the vessel is currently being undertaken to determine how long it will be out of service. The vessel is expected to be out of service for the remainder of our current fiscal year if not longer,” Carnival said.

An investigation was opened into the accident. Dutch salvage experts have been called in to assess options for removing the ship, with 2,380 tons of fuel needing to be removed first. Removal of the fuel will be done by Smit Internationale, who have offered to perform the salvage operation.

UBS’ Farley cuts Carnival estimates, reviews RCCL

  • Written by Kari Reinikainen
  • Category: Top Headlines

The Costa Concordia accident will hurt the cruise industry, says Robin Farley cruise analyst at UBS in New York, who has lowered her estimates for Carnival Corp & plc (CCL) and placed those of Royal Caribbean Cruises Ltd (RCCL) under review.

“Today we are adjusting for the more quantifiable impact, which is the Concordia coming out of service. We are reducing our 2012 adjusted EPS estimate for CCL to $2.58 from $2.75, on $0.08 reductions directly related to the removal of the ship from CCL’s capacity and an additional $0.09 from costs related to insurance deductibles and other miscellaneous operating expenses related to the accident, as detailed above,” Farley said in a research note on 16 January.

“What's difficult to ascertain is the ongoing impact of forward bookings. While we continue to review our estimate for that forward yield impact, we think 2012 yields for CCL could potentially be reduced by as much as 2-3 percentage points, to flat to a -1% decrease for the year vs. our current estimate for ’12 yields of +2% growth, which allows room for a -10-15% yield decline in the Costa brand plus slightly weaker demand for the rest of Carnival's 9 other brands,” she continued. Carnival group sources about 37% of its passengers in Europe.

“This could further reduce our 2012 EPS estimate for CCL by an additional $0.34-$0.51. We just note this as a potential scenario while we review our yield estimates. More on this to follow,” Farley said.

Moving on to RCCL, she said: “We expect this could cause downward pressure on RCCL bookings, as well. While we review our estimates, we believe 2012 constant currency net yields for RCCL could potentially be negatively impacted by 75bp to +1.25% vs. our current +2% estimate.”

“We believe this could reduce our RCL 2012 EPS estimate by $0.20 vs. our current 2012 EPS of $2.72, though our estimates remain under review. As a rule of thumb, every 1% change to constant currency net yields is a $0.27 impact to RCL’s 2012 EPS. We look below at the EPS sensitivities across percentage decreases in RCL’s yields for the remainder of FY2012.”

“For reference, we believe RCL sources ~50% of its passengers from outside the U.S., with approximately 35-40% from Europe, though most concentrated in the UK,” she pointed out.

Costa Concordia, largest passenger vessel to have sunk, slipped towards deep water

  • Written by Kari Reinikainen
  • Category: Top Headlines

Costa Concordia, the capsized 114,500 gross ton cruise liner of Costa Crociere, has slipped towards deep water on the rocks where it is resting, media reports say. It is by far the largest passenger vessel that has sunk by this date.

"There was a slippage of nine centimetres vertically and 1.5 centimetres horizontally. We evacuated immediately. This is something we have been worried about," Luca Cari, spokesman for the fire brigade at the island of Gigli was quoted by the Daily Telegraph website as saying.

"The vessel has reservoirs (bunkers) full of fuel, it is a heavy diesel which could sink down to the seabed, that would be a disaster,” another rescue official on the scene told Telegraph.

Earlier today, Carnival Corp & plc that owns Costa Crociere said it estimated the loss of revenue from the accident to rise in the region of $85 million to $95 million. However, it added that cost to the business e.g. in the form of fall in bookings and cancellations of already booked cruises, was impossible to estimate at this point.

Costa Concordia is by far the largest passenger vessel that has sunk.  The previous record holder was the 83,673 gross ton Seawise University, which had been built in 1940 as Cunard Line’s first Queen Elizabeth, which caught fire and sank in shallow water in Hong Kong harbour in January 1972.

Almost three decades earlier, in February 1942, fire destroyed the 82,799 gross ton USS Lafayette that had started life in 1935 as Normandie of the French Line and which has been regarded as the finest ship built in the liner era.

The largest passenger vessel lost at open sea rather than in port or proximity to land was the 48,158 gross ton Britannic of the White Star Line. The ship hit a mine in the Aegean Sea while serving as a hospital ship and sank after just one year since entering service. It was the final unit of the three ships of the Olympic class.