Unique Cruise Solutions

Unique Cruise Solutions

The news you need to know

Home

Worldwide's News

Headlines

Industry Insider

Ports & Itineraries

On a Lighter note

Back to Menu

Back to News Menu

Cruise News for the Corporate Travel Professional

July 2013 Edition

Carnival Tries To Stay Afloat By Forcing Billionaire CEO To Step Down

Menu

Carnival the cruise line suffering through a string of high-seas catastrophes, says its long-time CEO, billionaire Micky Arison, will step down from the top job next month, though he will remain chairman.

Replacing Arison is Arnold Donald, a veteran Carnival board member. Past that, Donald had a varied career in private equity, at sweetener company Merisant (the maker of Equal and Canderel) and agriculture giant Monsanto MON +0.45%. He’ll start July 3, becoming just the second Carnival CEO in 34 years.

That Carnival made the decision to move away from Arison, the son of the company founder who started as CEO in 1979, underscores the company’s desperation to move past the problems plaguing it. The company stock is up just 4.8% in three years, compared to a 47.4% increase in the S&P 500. Carnival made $1.3 billion on $15.4 billion in sales last year–little improvement from the $1.8 billion profit on $13.2 billion in sales it booked in 2009. Nonetheless, Carnival is still a giant. It controls nearly half the world’s cruise ships, while competing with rivals like Norwegian Cruise Lines Holdings and Royal Caribbean Cruises RCL +4.81%.

Particularly at issue for Carnival are the waves of bad publicity and outright disasters in the past year, the first being the Jan. 2012 capsizing of its Costa Concordia off the Italian coast that killed at least 32 people, and then several more incidents in which Carnival ships malfunctioned and remained stranded at seas. (One even came under threat of pirate attack.) The most recent was in February, when an engine-room fire left 3,100 passengers on the Triumph with little access to food and toilets for several days.

Separately, Carnival reported its fiscal second-quarter profit tripled to $41 million, 5 cents a share, from $14 million, 2 cents a share, a year earlier. Sales fell 1.7% to $3.5 billion. Carnival, meanwhile, reiterated a lowered profit forecast for the year of $1.45 to $1.65 a share. It cut its outlook in February, blaming costs on the Triumph.

Shares of Carnival gained 1.3% to $33.68 in early morning trading.

Criticism of Arison hasn’t just come from disappointed shareholders. U.S. lawmakers in April took the opportunity to attack Arison, ranked by FORBES as the 211th richest person in the world with a $5.2 billion fortune, for relying on the Navy and Coastguard to rescue his distressed ships. Senate Commerce Committee Chairman Jay Rockefeller characterized Arison’s actions as “bloodsucking off the American people” and labeled them “treacherous and wrong.” Doesn’t help that while needing the Navy’s rescue, Carnival, registered off-shore, pays basically no taxes.

Forcing Arison to step away from the helm could allow Carnival to chart a new course. Let’s hope, for its investors’ sake, that there isn’t (another) power failure.