Carnival Cites Economic Uncertainty in Suspending Dividends

Carnival Corp. is suspending its dividends for the first quarter as it looks to conserve cash during the current economic uncertainty. Carnival says it intends to maintain the suspension through 2009, but will reevaluate its position throughout the year.

The move is expected to lead to savings amounting to $1.3 billion. Carnival says that the “liquidity provided by the dividend suspension gives the company the flexibility to fund its 2009 capacity growth without the need to access credit markets.” Carnival has approximately 17 new ships scheduled to be delivered by 2012, including Carnival Dream, which debuts in fall 2009.

While ticket prices have been up slightly, Carnival says that occupancy levels in the first half of 2009 are down compared to the year prior. With credit markets in a tizzy, maintaining a positive credit rating is key.

Last week, Royal Caribbean announced it had eliminated its fuel supplement for all its three brands due to “recent reductions in global fuel prices,” as has Carnival. “The recent decline in fuel prices will result in a significant benefit to the 2009 full year financial results,” Carnival says.