Costa Concordia seen constructive total loss, insurance claim may exceed $500 million
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- Written by Christer Gorschelnik Christer Gorschelnik
- Category: Top Headlines Top Headlines
- Published: 16 January 2012 16 January 2012
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
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- Written by Kari Reinikainen Kari Reinikainen
- Category: Top Headlines Top Headlines
- Published: 16 January 2012 16 January 2012
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
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- Written by Kari Reinikainen Kari Reinikainen
- Category: Top Headlines Top Headlines
- Published: 16 January 2012 16 January 2012
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.
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