Royal Caribbean reports record earnings, but weak bookings

Royal Caribbean Cruises Ltd. (NYSE: RCL) today announced record earnings for the third quarter of 2008, but said there has been a "significant deterioration recently in new bookings due to economic and financial turmoil."

Third quarter 2008 net income rose to a record $411.9 million, or $1.92 per share, compared to $395.0 million, or $1.84 per share in 2007. Business conditions for the quarter were about as expected, but operating expenses were lower.

Net Cruise Costs per APCD increased 5.0%, and Net Cruise Costs excluding fuel per APCD decreased 2.3%, both significantly better than previous guidance. Available Passenger Cruise Days ("APCD") represent double occupancy per cabin multiplied by the number of cruise days for the period.

For the full year 2008, the company expects earnings per share to be $2.73 to $2.78, based on today's fuel prices. The company expects fourth quarter yields to decrease approximately 4% to 5%. Just over half of the decline from prior guidance is due to the stronger U.S. dollar.

The company's liquidity as of September 30 was comparable to historical levels at approximately $1.4 billion and it has financing commitments and/or financing guarantees available for all of its vessels on order.

"While we are pleased with our third quarter results, the operating environment has changed dramatically in recent weeks," said Richard D. Fain, chairman and chief executive officer. "We are focused on responding to this challenge, but it is reassuring to know that our liquidity is good, that we entered this period with a solid order book, and that we have a business model that has proven resilient during tough times."

The company noted that new bookings slowed considerably during the month of September, but have leveled off over the last couple of weeks. "As we have seen during other challenging periods, our customers are delaying their further out purchase decisions," said Brian J. Rice, executive vice president and chief financial officer. "It is too early to respond to this atmosphere in a systematic way, but we have attracted short term volume in the traditionally weak fourth quarter using discounts. Had the value of the U.S. dollar not strengthened, we would be forecasting flat yields in the fourth quarter."