The Big Story Blog

Carnival Cruise stock pummeled over Italian wreck

Posted at 11:06 AM on January 17, 2012 by Paul Tosto

While the captain of the cruise ship Costa Concordia is taking much of the blame for the cruise ship wreck along the Italian coast, financial markets this morning are punishing the ship's owners, cruise giant Carnival Corp.

Carnival shares lost roughly 14 percent of their value this morning when markets opened, the first trading day on U.S. markets since the Costa Concordia ran aground.

Several prominent stock analysts also downgraded the company's fortunes in the wake of the wreck.

Carnival Corp. is the parent company of Costa Cruises, which operated the Costa Concordia.

Carnival on Monday told investors the wreck may cost the company nearly $100 million:

The company has insurance coverage for damage to the vessel with a deductible of approximately $30 million as well as insurance for third party personal injury liability subject to an additional deductible of approximately $10 million for this incident. The company self-insures for loss of use of the vessel.

A damage assessment review of the vessel is currently being undertaken to determine how long it will be out of service. The vessel is expected to be out of service for the remainder of our current fiscal year if not longer.

For the fiscal year ending November 30, the impact to 2012 earnings for loss of use is expected to be approximately $85-$95 million or $0.11-$0.12 per share. In addition, the company anticipates other costs to the business that are not possible to determine at this time.


About Paul Tosto

Paul Tosto

Paul Tosto writes the Big Story Blog for MPR News. He joined the newsroom in 2008 after more than 20 years reporting on education, politics and the economy for news wires and newspapers across the country.