Carnival’s CEO Arnold Donald Is Setting Sail By Stepping Down
Arnold Donald’s time as captain of Carnival Corporation is coming to an end after nine years of helming the ship. As one of the few Black Fortune 500 CEOs he led the company to post a record profit in 2018 before the COVID-19 pandemic jolted the cruise industry. Can Carnival stay afloat without Donald as the cruise operator adapts to post-pandemic challenges?
The Breakdown You Need To Know:
It’s been difficult for Donald to steer Carnival away from the financial Covid headwinds. The Cruise Lines International Association (CLIA) group, which includes cruise giants Princess, Carnival, and Royal Caribbean cruise lines, estimates that the suspension of cruises during the pandemic snuffed out more than $25 billion in economic activity. CultureBanx note that now as the cruise giant gradually restarts operations after a long pandemic-led hiatus it has to navigate new issues including a surge in fuel prices.
Last month, Carnival forecast a loss for a third straight year, as it grapples with soaring fuel costs. The company has said it expects the full fleets of its nine major cruise line brands to start sailing again by the end of this year.
Carnival stated that the “uncertainty given the current invasion of Ukraine, including its effect on the price of fuel, are collectively having a material impact on its business.”
Cruising Into Uncertainty:
Carnival Corporation earned $1.6 billion in revenue for the first quarter of 2022, a massive jump from $26 million in Q1 2021, when the entire industry was shut down. Recovery is still a long way away for the cruise giant which posted a $1.9 billion loss for the quarter ending on February 28. This followed a massive loss of nearly $8 billion in 2021. Currently, Carnival has liquidity exceeding $7.2 billion on its balance sheet.
We have to remember that back in 2020 the company had capital raises of $5.75 billion in junk bonds to help it survive in the short term, though the sailing was far from smooth. Carnival’s stock has fallen more than 28% year to date.
“We believe we have positioned the company well to withstand volatility on our path to profitability and have been working hard to resume operations as a stronger and more sustainable operating company, to maximize cash generation and to deliver double digit returns on invested capital over time,” Donald said during the company’s earnings call.
Josh Weinstein, Carnival’s COO, will become the next chief executive. Donald is set to become the vice chair of the company, effective August 1.