Carnival puts the cost of aborting cruise at £25m

Carnival Corporation, the US cruise giant that owns the ill-fated
Aurora cruise ship, admitted the cost of scrapping the world cruise last month had spiralled by $8m (£4.2m) to $48m.

Carnival Corporation, the US cruise giant that owns the ill-fated Aurora cruise ship, admitted the cost of scrapping the world cruise last month had spiralled by $8m (£4.2m) to $48m.

The company was forced to abort the 103-day trip after it failed to fix an electrical fault with one of the ship's two main propulsion motors. It said yesterday the ship would be out of action for longer than originally envisaged, hitting the group's earnings.

The 1,700 passengers, who should have woken up in the Tahitian capital, Papeete, this morning, received a full refund and a voucher worth 25 per cent of the value of their cruise to put towards their next booking.

David Dingle, the managing director of Carnival's P&O Cruises division, said the delay meant the Aurora would not be fit to sail until 22 April. "We had hoped to have some spare time to schedule in one or two more cruises, which would have mitigated the cost of giving back all the money to passengers on the cancelled cruise," he said.

Carnival expects the cost to reduce its 2005 earnings by 6 cents per share or $48m, up from its previous estimate of 5 cents per share or $40m.

Mr Dingle refused to comment on whether the group had had any luck in claiming back any of the unbudgeted expense from its insurers. He said the affair, which turned a three-month, five-star world cruise into a 12-day alcohol fest around the Isle of Wight, had not put prospective customers off cruising.

"It has had no adverse impact whatsoever," he said, adding that bookings for Aurora's 2006 world cruise had accelerated. "Whether that's underlying demand or due to the raised awareness of cruising that Aurora caused, I don't know."

Mr Dingle said more than one-third of the passengers forced to abandon their dreams of spending this winter basking variously in South American, Australian and Caribbean sun have re-booked for next year's cruise, using their 25 per cent discount.

Carnival, which acquired the UK's P&O Princess Cruises in 2003 after a protracted hostile bid battle, said bookings during its peak booking period were running above last year's levels. Pricing is "significantly higher" it said, prompting it to predict that net revenue yield for 2005 would rise by 4 to 6 per cent, up from its previous estimate of 3 to 5 per cent growth.

Costs are also expected to rise ahead of its previously guidance, due mainly to the higher oil price, it added. The group's shares rose 13p to 3169p yesterday.

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