AG Edwards: Caribbean cruise pricing weakening

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Originally posted by from Travel Weekly@ July 26, 2006
AG Edwards: Caribbean cruise pricing weakening

Ahead of Royal Caribbean’s release of second-quarter results July 27, investment firm AG Edwards said Caribbean cruise pricing continues to weaken modestly in the fourth quarter of 2006 and into the first quarter of ‘07.

In a survey of price trends of the two largest cruise lines since May, analyst Tim Conder said pricing appears weak as Carnival Cruise Lines and Royal Caribbean attempt to fill a “base level” of demand to counter continuing weakness in the Caribbean and growing consumer uncertainly.

Fuel increases again plague both brands, he said, as pre-hedging costs are up 7% since the companies last released their guidance.

AG Edwards is reducing its earnings per-share estimates on both brands. It reaffirmed its “buy” rating, but Conder said “its near-term mood is tempered.” He wrote that investors will want evidence that weak pricing in the Caribbean will stay in that region, to know the potential impact from this year’s hurricanes, and to see fuel prices stabilize.