It’s been feast or famine for Carnival Corporation (CCL) (NYSE:CCL) CEO Micky Arison these days.
Last night, he was celebrating another victory by his defending NBA champion Miami Heat. That’s 20 wins in a row, for those far removed from hoops news. Feast!
This morning, he’s waking up to another Carnival calamity. Famine!
A technical issue with the Carnival Dream‘s backup emergency diesel generator finds the ship docked at its port in St. Maarten on the final leg of a week-long cruise. There were periodic interruptions to elevators and restrooms — creating another wave of passenger reports of overflowing toilet sewage on a Carnival ship — but the cruise line claims that those outages have been restored.
The story doesn’t end here, unfortunately.
Carnival Corporation (NYSE:CCL) isn’t going to chance another floating disaster. It is flying all guests home from St. Maarten. They will receive a pro-rated refund, and a 50% discount off a future cruise. Incoming passengers hoping to embark on the Dream‘s next cruise on Saturday are out of luck. Carnival is cancelling the trek, and only giving them a full refund and a 25% discount on a future seven-day sailing. It will also reimburse those nixed passengers for any non-refundable travel expenses that they have incurred.
Forget about working the cruel math on what this will mean for Carnival’s current quarter. The real problem now is that Carnival has a credibility problem.
Under normal circumstances this would present the mother of all opportunities for rival Royal Caribbean Cruises Ltd. (NYSE:RCL) and the recently public Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH). This week’s Dream mishap follows last month’s embarrassing engine fire that stalled the Carnival Triumph. Carnival’s Costa cruise line suffered the tragic grounding of Concordia last year off the Tuscan coast of Italy.