Royal Caribbean Reveals Cost of Oasis of the Seas Drydock Accident

Oasis of the seas
File Photo: CC BY-SA 3.0

Royal Caribbean Cruises revealed this week that last month’s mishap involving the Oasis of the Seas at the Grand Bahama Shipyard will likely cost shareholders $0.25 per share in adjusted earnings.

The cruise giant on Wednesday reported record earnings in the first quarter of 2019 and updated its full year Adjusted EPS guidance to a range of $9.65 to $9.85 per share. The company says the new guidance reflects the negative impacts of $0.25 related to the April 1 incident and approximately $0.25 as a result of a stronger dollar and higher fuel prices compared to the previous guidance issued in January.

The company, however, said that the vast majority of these impacts are being offset by better first quarter results and an improved revenue outlook.

Grand Bahama Shipyard Incident

On April 1, 2019, Royal Caribbean’s Oasis of the Seas was undergoing maintenance at the Grand Bahama Shipyard when an accident with the drydock caused two construction cranes to collapse onto the stern of the ship. 

Damage to the ship was extensive, forcing it back to a dock Europe to undergo repairs. As a result, the ship was taken out of service for almost a month. Royal Caribbean said Wednesday that Oasis of the Seas is expected to return back to service for its normally scheduled May 5, 2019 sailing.

The company estimates the direct financial impact of the incident, net of insurance, will be a reduction of approximately $0.25 per share to the company’s full year Adjusted EPS, mostly driven by lost revenue.

Fuel Prices

Royal Caribbean said it does not forecast fuel prices and its fuel cost calculations are based on current at-the-pump prices, net of hedging impacts. Based on today’s fuel prices, the company has included $182 million and $707 million of fuel expense in its second quarter and full year 2019 guidance, respectively.