Royal Caribbean Sees Improving Yields in 2010

Royal Caribbean Cruises Ltd., as part of an announcement that it has commenced an offering of $250 million aggregate principal amount of six-year Senior Notes, provided a business update and details of the effects of the H1N1 virus outbreak and rising fuel prices.

Overall, the company said booking volumes and pricing levels have remained stable and consistent with prior guidance.

With the exception of the Spanish market, the peak summer products are performing consistent with prior guidance, the company said. While it is still early, the trajectory of both rate and volume –especially as it relates to its newer ships- points to improving yields in 2010.

Royal Caribbean said that since it last provided guidance on April 23, 2009, the H1N1 virus outbreak and rising fuel prices have negatively impacted what otherwise would be considered a stabilizing operating environment.

On April 23, the company provided guidance of 2009 earnings per share of approximately $1.35 plus or minus $0.10 per share for every 10 percent change in fuel prices. Since then, the price of oil has risen approximately 45 percent. On June 9, the company estimated the effects of the H1N1 virus on 2009 earnings per share to be approximately ($0.22) per share.

In the prospectus supplement, the company provided further guidance that hedging and fuel cost management have mitigated the impact of increasing oil prices and that full year fuel expense would now be up only $0.12 per share at today’s prices; other income and expense for the second quarter is expected to be worse than prior guidance due mainly to foreign currency adjustments to the balance sheet and for ineffectiveness related to hedging amounting to about $0.10 per share; interest on the senior notes is expected to increase interest expense for the year by approximately $0.05 per share; fuel consumption is currently hedged at 48 percent, 50 percent and 45 percent for 2009, 2010 and 2011, respectively.