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Carnival reroutes cruises as Red Sea tensions rise

The Carnival Radiance cruise ship on the Avalon, California, harbor on May 19, 2023.

Aaronp/bauer-griffin | Gc Images | Getty Images

Carnival announced on Tuesday that it could reroute cruise itineraries for a dozen ships scheduled to transit the Red Sea as tensions rise within the Middle East.

“Given recent developments and in close consultation with global security experts and government authorities, the corporate has made the choice to reroute itineraries for 12 ships across seven brands, which were scheduled to transit the Red Sea through May 2024,” the cruise line said in a press release.

Repeated attacks on vessels by Iranian-backed Houthi Rebels have forced major shipping and oil firms to divert their routes, adding days to shipping times and driving up costs.

The U.S. has responded by striking the Houthis in Yemen, but U.S. President Joe Biden admitted earlier this month the retaliation was not stopping the group. A weekend attack by Iranian-backed militants killed three U.S. service members in Jordan and likewise heightened tensions within the region.

Carnival expects the rerouting to affect its adjusted earnings per share by 7 cents to eight cents in 2024. The company forecast adjusted full-year earnings per share of 93 cents, in keeping with its fiscal fourth-quarter earnings released last month. The cruise liner is predicted to release its fiscal 2024 first-quarter earnings in March.

Carnival is the newest company to announce disruptions as a consequence of the conflicts within the Red Sea. Earlier this month, Royal Caribbean and Swiss-Italian operator MSC Cruises said they might cancel trips within the region.

A spokesperson for Carnival told CNBC the cruise line or a travel advisor would directly contact customers affected by the changes.

Shares of Carnival traded flat Tuesday. The stock is up greater than 50% up to now 12 months. While bookings have rebounded from the Covid-19 pandemic, the stock is nearly 70% off its pre-pandemic high.

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