Royal Caribbean Ship Fire to Cut Profit by 10 Cents a Sha

Royal Caribbean Cruises Ltd., the second U.S. cruise operator to cut short a voyage after a mishap at sea, said a fire this week on the company’s Grandeur of the Seas will reduce annual profit by 10 cents a share.

Repair to the ship will take about six weeks, with the vessel expected to return to service by July 12, the world’s second-largest cruise operator said yesterday in a statement after financial markets closed.

The Grandeur of the Seas began sailing out of Baltimore this month after a $48 million renovation, according to a May 3 statement. The fire that broke out in a rear area forced the company to cut a trip short on May 27, according to the Miami-based company. Guests were flown back to Baltimore from the Bahamas, given a full refund and a 100 percent credit toward another sailing. Six future sailings were canceled.

“The extent of the financial impact was relatively high because the affected sailings were during the premium summer season,” Jason Liberty, the company’s chief financial officer, said in the statement.

The incident won’t affect the cruise line’s Ba1 credit rating, Moody’s Investors Service Inc. said today in a statement. The Grandeur of the Seas represents about 2 percent of Royal Caribbean’s capacity, Moody’s said.

Royal Caribbean rose 1.9 percent to $35.75 at 1:12 p.m. in New York after adding as much as 3.2 percent to mark the biggest intraday advance in a month. The stock had gained 3.2 percent this year through yesterday.

Cruise News

The incident is the latest of several for the cruise industry, including a fire on the Carnival Corp. ship Triumph in February that left 3,100 passengers at sea with limited food and toilet service. Earlier this year, Carnival, the world’s largest cruise operator, had to fly guests back to the U.S. from St. Maarten after an emergency generator malfunctioned on the Dream liner.

The Washington-based Cruise Lines International Association trade group released a passenger bill of rights May 22, designed to calm customer concerns.

Analysts forecast 2013 profit of $2.45 a share, the average of 19 estimates compiled by Bloomberg.

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