Royal Caribbean Group, the world’s second largest cruise shipping group, said it expected a net loss in the second half of the year, but the third quarter should produce a small profit.

The second half next loss expectation is based on increases in fuel rates, interest rates and foreign exchange rates. “Based on current currency exchange rates, fuel rates and interest rates, the Group expects Adjusted Earnings Per Share for the third quarter of $0.05 - $0.25,” the company said in a statement. It did not quantify the expected second half loss.

The company expects to operate 11.6 million available passenger capacity days (APCDs) in the third quarter and generate approximately $2.9 billion - $3.0 billion in total revenue, based on current currency exchange rates.

The company does not forecast fuel rates, and fuel cost calculations are based on current at-the-pump prices, net of hedging impacts. Based on current fuel rates, the company expects approximately $319 million of fuel expense in the third quarter 2022, at an average pricing of $794 per metric ton, net of hedging.

Based on current currency exchange rates and fuel rates, the company expects Adjusted EBITDA of $700 million - $750 million in the third quarter.

Depreciation and amortisation expenses for the third quarter of 2022 are expected to be approximately $360 million.

Net interest expense for the third quarter of 2022, based on current interest rates, is expected to be in the range of $310 million - $320 million. Approximately 70% of the company's debt is tied to fixed interest rates.

 Booking volumes received in the second quarter for 2022 sailings averaged 30% above 2019 booking volumes for 2019 sailings in the corresponding period in the second quarter with even greater strength in July.

Guests are still booking their cruises closer-in compared to prior years, contributing to the better-than-expected load factors in the second quarter. In addition, cancellation activity has now returned to pre-covid levels.

As expected, load factors for sailings in the second half of 2022 remain below historical levels and are expected to finish at approximately 95% in the third quarter and reach triple digits by the end of the year. Second half 2022 sailings are booked at higher prices than 2019, both including and excluding future cruise credits (FCCs).

 While demand for the critical Europe season has been strong over the past three months, the combination of Covid-19 and the Russia-Ukraine war, has set back load factor recovery, particularly for the third quarter of 2022, where European itineraries account for about a third of overall capacity.

Because European itineraries generate higher than average pricing, the lower load factors are expected to negatively impact the comparison of fleetwide revenue per passenger cruise day in the third quarter when compared to the third quarter of 2019.

Booking volumes for 2023 have shown consistent improvement week over week and have been accelerating over the last several weeks. Pre-cruise onboard purchases continue to exceed prior years at higher prices, indicating quality and healthy future demand. As a result, all quarters are currently booked within historical ranges at record pricing.