Carnival Slashes Profit Outlook on Surging Fuel Costs

The article states that attacks on oil and transport facilities in the Middle East and disruptions in the Strait of Hormuz, following the Iran war outbreak, have pushed up global oil prices. This spike particularly threatens Carnival's profits because it is the only major U.S. cruise line that typically does not hedge fuel.

U.S.-listed shares of Carnival fell nearly 5% in early trading and are down 17% year-to-date. Carnival's guidance assumes Brent crude averages $90 a barrel for April and May, $85 in Q3, and $80 in Q4, based on fuel purchased in March and early April.

Fitch Ratings' John Kempf noted that while higher fuel costs will affect Carnival, the company possesses the scale and liquidity to manage these fluctuations, supported by resilient demand. CEO Josh Weinstein confirmed double-digit booking increases for 2026, further strengthening their record booked position.

The company anticipates approximately $150 million in operational gains from higher yields and lower non-fuel costs, which will partially offset over $500 million in increased fuel expenses. Carnival also beat first-quarter revenue and profit estimates and announced a $2.5 billion share buyback.