S&P flips Carnival view to positive

S&P said it changed its outlook for Carnival Corp. to positive from negative and affirmed its B issuer rating.

“Carnival's 2023 booked position provides sufficient revenue visibility to support significant improvement in credit measures this year. Carnival raised its full-year, constant-currency net revenue per passenger cruise day (PCD) guidance by 2.5 percentage points on its recent second-quarter earnings call. The company made this adjustment based on its strong pricing and a continued acceleration in bookings.

“Carnival's cumulative advanced booked position for the remainder of 2023 is at higher ticket prices in constant currency compared with 2019 (despite the loss of St. Petersburg as a marquee destination) and a booked occupancy position near the high end of the historical range,” the agency said in a press release.

More than 90% of Carnival’s 2023 capacity is booked “However, we expect EBITDA to lag 2019 because of a significant increase in fuel expense, inflationary pressures, and lower occupancy compared with 2019. Nevertheless, our forecasted EBITDA should support Carnival's 2023 leverage improving to around 7x under our current base-case assumptions and below our 7.5x downgrade threshold,” S&P noted.

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