Carnival reroutes cruises as Red Sea tensions rise

The Carnival Radiance cruise ship at the Avalon, California, harbor on May 19, 2023.

Aaronp/bauer-griffin | Gc Images | Getty Images

Carnival announced on Tuesday that it would reroute cruise itineraries for a dozen ships scheduled to transit the Red Sea as tensions rise in the Middle East.

“Given recent developments and in close consultation with global security experts and government authorities, the company has made the decision to reroute itineraries for 12 ships across seven brands, which were scheduled to transit the Red Sea through May 2024,” the cruise line said in a press release.

Repeated attacks on vessels by Iranian-backed Houthi Rebels have forced major shipping and oil companies to divert their routes, adding days to shipping times and driving up costs.

The U.S. has responded by striking the Houthis in Yemen, but U.S. President Joe Biden admitted earlier this month the retaliation was not stopping the group. A weekend attack by Iranian-backed militants killed three U.S. service members in Jordan and also heightened tensions in the region.

Carnival expects the rerouting to affect its adjusted earnings per share by 7 cents to 8 cents in 2024. The company forecast adjusted full-year earnings per share of 93 cents, according to its fiscal fourth-quarter earnings released last month. The cruise liner is expected to release its fiscal 2024 first-quarter earnings in March.

Carnival is the latest company to announce disruptions due to the conflicts in the Red Sea. Earlier this month, Royal Caribbean and Swiss-Italian operator MSC Cruises said they would cancel trips in the region.

A spokesperson for Carnival told CNBC the cruise line or a travel advisor would directly contact customers affected by the changes.

Shares of Carnival were trading flat Tuesday. The stock is up more than 50% in the past year. While bookings have rebounded from the Covid-19 pandemic, the stock is almost 70% off its pre-pandemic high.

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