By Granth Vanaik and Doyinsola Oladipo
(Reuters) -Cruise operator Carnival (NYSE:CCL) said on Wednesday it will probably not be sailing through the Red Sea region for the rest of this year and early next year given persistent hostilities across the key shipping route.
Even though 2024 is expected to be a record year for cruise travel, operators such as Carnival and rival Royal Caribbean (NYSE:RCL) are exercising caution as attacks by Iranian-backed Houthi militants on vessels in the Red Sea disrupt shipping in the Suez Canal, the fastest sea route between Asia and Europe.
Carnival raised its expected 2024 adjusted earnings impact from the re-routing of ships to 9 cents per share, from 7-8 cents estimated in January.
"We decided that it was time to recognize the fact that we probably won't be sailing there, and perhaps for the rest of this year and perhaps early in 2025 as well," CFO David Bernstein told Reuters in an interview. He added that no final decisions have been made.
In January, the Miami-based company re-routed itineraries for 12 ships across seven brands through May as the Houthi militant group stepped up attacks on Israeli ships or ships heading towards Israel in what they said was solidarity with Palestinians.
The company said it plans to give clear guidance in November, the start of the company's fiscal year. Five ships across three brands will be rerouted, said Bernstein.
Royal Caribbean in January also canceled two voyages to the Red Sea region, while Swiss Italian operator MSC Cruises canceled three trips due in April from South Africa and the United Arab Emirates to Europe.
Still, Carnival raised its annual profit forecast on Wednesday, anticipating a record year of bookings as it benefits from a rise in people seeking cruise vacations for the first time.
Its shares ended up 0.9% on Wednesday.