Carnival Corporation Ltd.

What they do

Carnival operates a portfolio of world-class cruise lines including AIDA Cruises, Carnival Cruise Line, Costa Cruises, Cunard, Holland America Line, P&O Cruises, Princess Cruises, and Seabourn. The company generates revenue from passenger ticket sales and onboard spending (e.g., dining, beverages, shore excursions, casinos). In 2025, it sunset the P&O Cruises (Australia) brand and folded its operations into Carnival Cruise Line.

Revenue drivers

• Passenger ticket revenues — Made up 64% of total revenues in the three months ended May 31, 2026, increasing 4.1% to $4.3 billion on higher capacity, ticket prices, and favorable currency.
• Onboard and other revenues — Comprised 36% of total revenues in the same period, increasing 7.4% to $2.4 billion, driven by higher guest onboard spending and capacity growth.
• North America segment — Generated $4.5 billion in total revenues in the May 31, 2026 quarter (60% ticket, 40% onboard), with ticket revenue up 2.9% and onboard revenue up 7.6%.
• Europe segment — Passenger ticket revenues were 77% of the segment's total in the May 31, 2026 quarter, with the remainder from onboard and other revenues.

Recent performance

In Q2 2026 (three months ended May 31, 2026), Carnival reported record revenues of $6.7 billion, net income of $537 million, and adjusted net income of $569 million, up over 20% year-over-year. Diluted EPS was $0.39 and adjusted EPS was $0.41, up over 15% versus the prior year despite $73 million in unfavorable fuel and currency impacts. Customer deposits reached an all-time high of $9.0 billion, up over $450 million from the prior record. Occupancy was 104% in the quarter, with capacity up 2.0%.

Strategy

Carnival aims to have each of its eight cruise lines own its space in the vacation market, leveraging brand differentiation to drive bookings and pricing power. The company is pursuing a corporate simplification by unifying its dual-listed structure into a single entity, Carnival Corporation Ltd., incorporated in Bermuda and listed solely on the NYSE. Management emphasizes cost efficiency, fuel consumption reduction (fuel per ALBD improved 5.6% in Q2 2026), and commercial execution to offset external headwinds. The company also continues to return cash to shareholders, surpassing $450 million in stock repurchases.

Risks

• Geopolitical disruptions — Prolonged conflict in the Middle East has impacted booking trends for European deployments, particularly in the Mediterranean, and could continue to affect demand.
• Fuel price volatility — Fuel prices rose nearly 30% year-over-year, negatively impacting costs and yields; any renewed disruptions could further increase fuel costs.
• Currency and regulatory costs — Fluctuations in foreign exchange rates and evolving emissions regulations (e.g., EU ETS) could adversely impact profitability; 2026 includes all in-scope emissions.
• Debt and leverage — Long-term debt stood at $23.42 billion as of May 31, 2026, requiring significant cash to service, and the company's ability to generate cash depends on many external factors.

Outlook

Management expects full-year 2026 net yields to be up approximately 3.2% (constant currency). For the remainder of 2026, the booked position is ahead of prior year at historically high prices, and the company is 93% booked for the year. Demand for 2027 and beyond is strong, with booking volumes and prices running ahead of prior year levels. The company intends to complete the proposed unification and redomiciliation in Bermuda in Q2 2026, subject to shareholder and regulatory approvals.