Carnival Company & plc (NYSE: CCL) Q2 2022 earnings name dated Jun. 24, 2022
Company Individuals:
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Josh Weinstein — Chief Operations Officer
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Analysts:
Steven Wieczynski — Stifel Monetary Corp. — Analyst
Robin Farley — UBS — Analyst
Jaime Katz — Morningstar, Inc. — Analyst
C. Patrick Scholes — Truist Gear Finance Corp. — Analyst
James Hardiman — Citigroup — Analyst
Daniel Politzer — Wells Fargo Securities — Analyst
Assia Georgieva — Infinity Analysis — Analyst
Presentation:
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Good morning, and welcome to our Enterprise Replace Convention Name. I’m Arnold Donald, President and CEO of Carnival Company & plc. I’m joined at present telephonically by our Chairman, Micky Arison, who’s in Europe; and right here with me in Miami, David Bernstein, our Chief Monetary Officer; Beth Roberts, Senior Vice President, Investor Relations; and as a part of our beforehand introduced transition, our Chief Operations Officer, Josh Weinstein. Thanks all for becoming a member of us this morning.
Now earlier than I start, please notice that a few of our remarks on this name might be forward-looking. Subsequently, I need to refer you to the cautionary assertion in at present’s press launch. That is my remaining enterprise replace as CEO. Whereas very disappointingly, our share value sadly displays the present market circumstances, I’m nonetheless very happy with all that the staff has completed over the past 9 years. I’m particularly happy with how nicely we’ve got collectively overcome what appeared like insurmountable obstacles at instances these previous couple of years.
And I stay very enthusiastic about our future. With money from operations now turning optimistic, we’ve got reached an inflection level and, in actual fact, turned the nook and are headed on a optimistic trajectory. I’m not solely enthusiastic about, I’m additionally very assured in the way forward for our firm, and I’m trying ahead to its steady success. I strongly consider on this staff and we’re having fun with a clean transition. As Vice Chairman, far and away, my primary accountability might be to assist Josh and his administration staff as they work to construct on the present momentum.
Josh is a confirmed govt. He’s nicely revered all through the corporate. He served in key management roles. He’s pushed robust enterprise outcomes throughout his tenure. And he performed an integral half in tuning the corporate via the worldwide pandemic. Josh’s thorough understanding of our trade, of our operations and our enterprise technique places him in a powerful place to guide the subsequent part of our firm’s journey. Along with his imaginative and prescient, depth and core values really aligned with people who characterize our firm, I can not consider anybody higher fitted to this function than Josh.
Now turning to our enterprise outcomes. It’s reinforcing to see the continued power and demand for cruise. We’re aggressively, but thoughtfully, ramping as much as full operations, with over 90% of the fleet now in service. And on the similar time, we’re driving occupancy greater on these ships which were crusing and we’re targeted on enhancing pricing in comparison with pre-COVID ranges.
As we had indicated, for the 20 ships that restarted over the past quarter, occupancy has been deliberately constrained. That stated, occupancy elevated from 54% final quarter to 69% this quarter, whereas we additionally elevated obtainable capability by 25%. Now the mixture drove an over 60% sequential enchancment in passengers carried. Actually, we carried over 1.6 million company this previous quarter. And partly within the month of June, we’re already approaching 80% occupancy and, once more, on even greater capability.
Now what makes that much more spectacular is we had been in a position to obtain that in an surroundings of uncertainty, given incessantly altering protocols, together with people who had been much more restrictive than these in broader society and that had been much more restrictive than these discovered even in different parts of the journey and leisure sector. Whereas fortunately, vaccination and check necessities are beginning to calm down given the advance within the state of the virus, we proceed, nonetheless, to face constraints within the pool of potential company attributable to ongoing necessities in a variety of locations. But, we’ve got been in a position to make very significant progress.
As you understand, the CDC just lately lifted the testing necessities for reentry into the U.S. for air journey which, going ahead, clearly removes among the friction from our North American manufacturers deployment in each Europe and attributable to Canadian embarkation Alaska. Often requiring an extended period flight, these itineraries are sometimes related to longer lead instances. Consequently, we count on the actual profit to be realized in 2023 and past.
Importantly, buyer deposits elevated by $1.4 billion within the second quarter, topping $5 billion. Now we’ve got seen a continued improve in specific demand, and we count on to see that demand proceed to construct as protocols are additional relaxed and as society turns into more and more comfy managing the virus. Regarding the specter of international recession, whereas not recession-proof, our enterprise has confirmed to be recession-resilient again and again.
As we’ve got seen in prior cycles, even in downturns, employed individuals take holidays. And that’s much more true in at present’s surroundings the place individuals prioritize spending on experiences over spending on issues. Cruise stays an particularly interesting trip possibility throughout downturns due to its compelling worth proposition relative to land-based alternate options. Additionally, there’s pent-up demand for journey globally which is a robust tailwind.
At present, we’re seeing success for close-to-home cruises, with many sailings reaching occupancy at or above 100%, the place company understand far much less friction than with worldwide embarkations. Actually, our Carnival Cruise Line model, crusing its total fleet, is anticipated to succeed in practically 110% occupancy throughout our third quarter. We additionally noticed an enchancment in new-to-cruise company within the second quarter, and we’ve got begun to ramp up our promoting efforts selectively to assist assist attracting first-time cruisers.
Regarding pricing. We stay targeted on enhancing value via subsequent yr. We’re targeted on optimizing the occupancy whereas preserving long-term pricing. On this present surroundings of journey restrictions and well being protocols the place we’ve got coast unavailability, we use OPay channels and restricted promotions to capitalize on near-term demand. We’re constructing on our aggressive fleet optimization efforts. Given challenges in elements of Europe, we’ve got reallocated capability to capitalize on markets the place there’s stronger demand.
Actually, we simply introduced an particularly inventive strategy that we expect holds nice promise-, the launch of Costa by Carnival. With Costa by Carnival, we deliver the atmosphere and great thing about Italy to Carnival Cruise Line company. Costa Venezia, Costa Firenze, each newly launched and each spectacular, might be managed by Carnival Cruise Line, catering to Carnival’s visitor base starting within the spring of ’23 and 2024, respectively.
This new idea will provide a novel expertise for Carnival company to decide on enjoyable, Italian model whereas capitalizing on Costa’s stunning Italian design components. Deployment for Venezia might be introduced shortly and can characterize a brand new itinerary possibility for Carnival company. Individually, we additionally introduced the switch of Costa Luminosa to the Carnival model starting in November 2022 catering to Australian company. Now with these modifications, the Carnival model will replenish capability which were faraway from current ship exits and contribute to handle development for the model.
These new and differentiated product choices allow us to capitalize on demand amongst Carnival Cruise Line company and strengthen return on invested capital throughout our portfolio. As well as, we proceed to additional optimize our fleet and have introduced a removing of an extra smaller, much less environment friendly ship, bringing the whole to 23 ships to be faraway from the fleet since 2019. The accelerated removing of those much less environment friendly ships, coupled with the supply of 9 bigger, extra environment friendly ships delivered since 2019 fosters greater revenues over time via a 7 share level improve within the mixture of premium priced balcony cabins and a fair higher platform for onboard income alternatives in addition to producing a 6% discount in ship stage unit prices, excluding gasoline, moderating the results of inflation and enabling us to ship extra income to the underside line.
Upon returning to full operations, practically 1 / 4 of our capability will include newly delivered ships, expediting our return to profitability and enhancing our return on invested capital. Furthermore, subsequent yr, our capability development in comparison with 2019 is concentrated in manufacturers with our highest returns. Regarding current gasoline costs, we proceed to aggressively handle our gasoline consumption. Upon reaching full fleet operations, we anticipate that we’ll obtain an additional 10% discount in unit gasoline consumption and 9% discount in carbon depth as in comparison with 2019.
With our proactive efforts to scale back gasoline consumption, we truly peaked our carbon footprint in 2011, and that’s regardless of an over 30% improve in capability anticipated via 2023. Actually, we’ve got reaffirmed and strengthened our carbon depth discount objectives for 2030 and are on an accelerated path to attain them via our fleet optimization efforts, investing in initiatives that drive vitality effectivity, designing energy-efficient itineraries and investing in port and vacation spot initiatives.
In the course of the quarter, Carnival Cruise Line broke floor on an thrilling new vacation spot challenge, Carnival Grand Bahama Cruise port. This vacation spot is anticipated to open in late 2024 and can provide company a uniquely Bahamian expertise with many thrilling options and facilities. Now this personal visitor expertise vacation spot will be part of Princess Cay, Half Moon Cay, Grand Turk, Mahogany Bay, Amber Cove and Cozumel, securing our robust foothold within the Caribbean. Actually, we profit from a complete of 9 owned or operated personal locations and port services, together with terminals in Santa Cruz de Tenerife and Barcelona.
Once more, I consider we’ve got operationally reached an inflection level and we’re not off course with money from operations turning optimistic this quarter. Now we have a powerful liquidity place of $7.5 billion and have already managed our debt maturity towers down via 2024. Now we have 91% of the fleet now working and at enhancing occupancy ranges, which bodes nicely for future money era.
And whereas so far, vacationers understand uncertainty and friction continues to be a headwind as protocols develop into much less restrictive and society continues to develop into more and more extra comfy managing the virus, we count on to see demand proceed to construct, as we’ve got already seen with the power for Carnival Cruise Strains closer-to-home cruises. The engaging worth proposition relative to land-based alternate options, which is even higher at present, and the continued power in onboard revenues ought to assist foster an excellent surroundings for pricing and may assist to speed up our momentum going ahead.
As soon as once more, I don’t have the phrases to adequately convey how personally rewarding and galvanizing the dedication, the dedication, the inventive ingenuity and the outstanding execution of our Carnival staff, shipboard and shoreside all over the world has been. And that, in fact, contains our Chairman, Micky Arison, and the remainder of our Board of Administrators. Within the face of regularly altering obstacles and constraints, in an surroundings of steady and excessive uncertainty, our international staff of tens of hundreds efficiently tackled problem after problem after problem, honoring our dedication to our highest precedence of compliance, environmental safety and the well being, security and well-being of everybody whereas stewarding the shareholders’ property and positioning us for excellent success over time. I merely can’t thank them sufficient and it’s really a privilege and an honor to work with them.
Thanks additionally to our valued company. Their loyalty to our 9 world-leading manufacturers and the numerous letters and calls of assist are so deeply appreciated. Thanks to our journey agent companions, who’re extra important than ever and serving to to ship the good story of our cruise. Thanks to our dwelling port and vacation spot communities who’ve stood by us all through these challenges, amongst different contributions offering vaccines and lobbying for workable protocols.
Thanks to our suppliers and different many stakeholders who stood by us and labored arduous to satisfy our wants whereas dealing with challenges of their very own. And naturally, thanks to our shareholders, our bondholders, the banks, the export credit score companies for continued confidence in us and for ongoing assist. We’re certainly poised for an incredible future due to the efforts and contributions of so many.
With that, I wish to take the chance to introduce Josh and provides him the prospect to say a couple of phrases earlier than turning the decision again to David. Josh?
Josh Weinstein — Chief Operations Officer
Thanks, Arnold. And thanks once more to Micky and your entire Board of Administrators for this nice alternative. I strongly consider in our firm and our capacity to create happiness by delivering unforgettable and much-needed holidays for our company. This want is much more vital within the present surroundings given the stresses of the previous two years and the worth that all of us place on shared experiences with family and friends.
Now we’re uniquely positioned to ship on this via our 9 main cruise manufacturers, every with a give attention to assembly their particular company’ wants and desires. We plan on renewing our efforts to make sure every model obtain readability of positioning and successfully reaches their audience. This, alongside offering cruise experiences that actually resonate with their distinct visitor base, will assist every model optimize its yield and development aspirations to drive income.
We additionally count on to capitalize on our revitalized fleet, our continued portfolio optimization efforts and our unparalleled vacation spot footprint, significantly within the Caribbean and Alaska. As well as, we’ve got an thrilling sustainability street map that underlies all of our efforts. What additionally provides me great confidence is our decided and resilient staff all over the world. They’ve confirmed time and time once more for the final 2.5 years that they’ll completely obtain something they usually do it whereas staying true to Carnival Company’s collective values and optimistic tradition. All of it will assist us speed up revenues and returns, drive sturdy earnings development and enhance the steadiness sheet.
As you stated, Arnold, we’re clearly at an inflection level and have a vivid future forward. I’m trying ahead to placing the views I’ve gained right here in my 20 years in a number of roles to work for the advantage of our shareholders and our many different stakeholders.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Thanks, Josh. We’re trying ahead to your management. David?
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Thanks, Arnold. I’ll begin at present with a overview of visitor cruise operations, together with a abstract of our second quarter money move. Subsequent, I’ll contact on our 2024 obligatory auditor rotation. Then I’ll present an replace on reserving tendencies and end up with adjusted EBITDA expectations and our present monetary place. Turning to visitor cruise operations. In the course of the second quarter 2022, we restarted 20 further ships, leading to 74% of our complete fleet capability in visitor cruise operations for the entire of the second quarter. This was a considerable improve from 60% in the course of the first quarter 2022.
As of at present, 91% of our fleet capability is in visitor cruise operations. We had been happy to see that the second quarter 2022 income elevated by practically 50% in comparison with first quarter 2022, reflecting continued sequential enchancment. For the second quarter, occupancy was 69% throughout the ships in service, a big improve from the 54% within the first quarter. We had been inspired by the very close-in demand we skilled in the course of the second quarter for the second quarter, leading to practically double the close-in occupancy positive factors in second quarter 2022 versus second quarter 2019, a development we had anticipated.
Income per passenger day for the second quarter 2022 decreased barely from a powerful 2019. As Arnold indicated, we’re targeted on optimizing occupancy whereas preserving long-term pricing. Nevertheless, let’s not neglect the influence as a result of future cruise credit score, or FCC as they’re extra generally known as, which price us a few share factors in second quarter 2022 versus second quarter 2019. Excluding the influence of FCC’s income per passenger cruise day, the second quarter would have been greater than a powerful 2019.
As soon as once more, our onboard and different income per diems had been up considerably within the second quarter 2022 versus second quarter 2019, partly as a result of bundled packages in addition to onboard credit utilized by company from cruises canceled in the course of the previous. Now we have just lately expanded our bundled bundle providing given their reputation. The brand new bundled choices require us to make modifications to the accounting allocation. In consequence, within the third quarter, you will notice extra of the income left in ticket, until allotted to onboard, impacting the onboard and different income per PCD comparisons for the third quarter as in comparison with the second quarter.
Simply one more reason so as to add to the listing of the explanation why the easiest way to evaluate our efficiency is by reference to our complete cruise income metrics. On the associated fee aspect, our adjusted cruise price with out gasoline per Accessible Decrease Berth Day, or ALBD as it’s extra generally known as, for the second quarter 2022 was up 23% versus second quarter 2019. The rise in adjusted cruise price with out gasoline per ALBD is pushed by basically 5 issues: First, the price of a portion of the fleet being in pause standing. Second, restart-related bills for 20 ships. Third, 24 ships being in dry dock in the course of the quarter, which resulted in over double the variety of dry-dock days in the course of the second quarter versus the second quarter 2019. Fourth, the price of sustaining enhanced well being and security protocols. And eventually, inflation.
Keep in mind that as a result of a portion of the fleet was in pause standing in the course of the second quarter and the upper variety of dry-dock days, we unfold prices over much less ALBDs. The primary half of 2022 had an unusually massive variety of ships in dry dock as a part of our resumption of cruising ramp-up, optimizing our dry-dock schedule whereas the ships aren’t in service and making certain that the ships had been nice and work nice after they welcome their first guess again on board. Nevertheless, the second half 2022 dry-dock schedule seems to be extra regular by historic requirements. We anticipate that many of those prices and bills driving adjusted cruise prices with out gasoline per ALBD greater will finish throughout 2022 and won’t reoccur in 2023.
Because of all the above, we count on to see a big enchancment in adjusted cruise prices, excluding gasoline per ALBD, from the primary half of 2022 to the second half of 2022, with a mid-teens improve anticipated for the complete yr 2022 in comparison with 2019. Subsequent, I’ll present a abstract of our second quarter money move. We ended the second quarter 2022 with $7.5 billion in liquidity versus $7.2 billion on the finish of the primary quarter. The change in liquidity in the course of the quarter was pushed basically by 6 issues: First, adverse adjusted EBITDA of roughly $900 million attributable to our ongoing redemption of visitor cruise operations, an enchancment from the primary quarter.
Second, our funding of $500 million in capital expenditures. Third, $200 million of debt principal funds. And fourth, $400 million of curiosity expense in the course of the quarter. All of which was greater than offset by a $1.4 billion improve in buyer deposits in the course of the quarter, together with the $1 billion principal quantity of senior unsecured notes we issued final month. Now I’ll contact on our 2024 obligatory auditor rotation. I wished to take a second to elucidate our state of affairs as it is rather totally different from most publicly listed corporations exterior the U.Okay. and the EU. Carnival plc, our U.Okay. publicly listed firm, which is a part of our dualistic firm construction, is topic to U.Okay. regulation which requires obligatory auditor rotation.
Subsequently, PricewaterhouseCoopers, or PwC as they’re extra generally known as, have to be modified as Carnival plc’s auditor for the fiscal 2024 audit on the newest. Subsequently, we carried out a aggressive RFP course of for the impartial audit of Carnival plc in addition to the consolidated entity, Carnival Company & plc. Because of the just lately accomplished RFP course of, yesterday, our Board of Administrators appointed Deloitte as the corporate’s impartial auditor for fiscal 2024. We accomplished the RFP course of within the first half of 2022 to make sure an orderly transition of non-audit companies for the rest of 2022 and to make sure independence by Deloitte in 2023, as required underneath U.Okay. regulation.
Earlier than I proceed, I wish to add that the Board of Administrators and administration of Carnival Company & plc wish to thank PricewaterhouseCoopers for its continued service as the corporate’s impartial auditor. Now let’s have a look at reserving journey. The upper March weekly reserving volumes we talked about on our final enterprise replace continued all through the quarter. This resulted in reserving volumes for all future sailings in the course of the second quarter 2022 being practically double the reserving volumes in the course of the first quarter 2022. Second quarter 2022 reserving volumes for all future sailings had been the very best quarterly reserving volumes we’ve got seen because the starting of the pandemic, though they had been nonetheless beneath the 2019 stage.
I’m completely satisfied to report that reserving volumes because the starting of April for the second half of 2022 sailings have been greater than 2019 stage. All of this displays the beforehand anticipated prolonged wave season. And as I stated earlier than, we had been very inspired by the close-in demand we skilled in the course of the second quarter for the second quarter, leading to practically double the closing occupancy achieve in second quarter 2022 versus second quarter 2019, a development we had anticipated. Whereas the cumulative ebook place for the second half of 2022 is beneath the historic vary, we consider we’re nicely located with our present second half 2022 ebook place given present reserving quantity, coupled with closer-in reserving patterns.
We proceed to count on that occupancy will construct all through 2022 and return to historic ranges in 2023. Pricing on our cumulative ebook place for the second half of 2022 was decrease, with or with out FCC, normalized for bundled packages as in comparison with 2019 crusing. For the complete yr 2023, our cumulative superior ebook place continues to be on the greater finish of the historic vary and at greater costs, with or with out FCC, normalize for bundled packages as in comparison with 2019 sailings. This can be a nice achievement given pricing on bookings for 2019 sailings is a tricky comparability as that was a excessive watermark for historic yield.
In the course of the second quarter 2022, we as soon as once more elevated our promoting expense in comparison with the primary quarter 2022 in anticipation of our full fleet being in visitor cruise operations and our 8% capability improve for 2023 versus 2019. Second quarter 2022 was the primary time because the pandemic that promoting expense was above 2019 stage.
I’ll end up with our adjusted EBITDA expectations and our present monetary place. Everyone knows that reserving tendencies are a number one indicator of the well being of our enterprise. With improved current reserving tendencies main the way in which, driving buyer deposits greater, optimistic adjusted EBITDA is clearly inside our sights. Adjusted EBITDA over the primary half of 2022 was impacted by restart-related spending and dry-dock bills as 34 ships, practically 40% of our fleet, had been in dry dock in the course of the first half of fiscal 2022.
For the third quarter, with over 90% of our capability again in visitor cruise operations and occupancy percentages constructing, we count on ship stage money contribution to develop. In consequence, we count on adjusted EBITDA to be optimistic for the third quarter 2022 which, after all the pieces we’ve been via, might be one thing price celebrating. With EBITDA turning optimistic, extra liquidity than final quarter, debt maturity towers which were nicely managed via 2024, we’ve got already refinanced a portion of our 2023 maturities and we’ll do the remaining over time.
And now I’ll flip the decision again over to Arnold.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Thanks, David. Operator, please open the decision to questions.
Questions and Solutions:
Operator
Thanks [Operator Instructions]. Our first query comes from the road of Steven Wieczynski with Stifel. Please go forward.
Steven Wieczynski — Stifel Monetary Corp. — Analyst
Yeah, hey guys. Good morning. Arnold, congratulations, and it was an incredible run. So thanks in your service. So first query could be across the reserving patterns, which clearly listed below are persevering with to strengthen. Nevertheless, I suppose, traders are going to, at this level, primarily based on the place your inventory is, they’re going to look previous reserving — present reserving patterns they usually’re going to give attention to what may come subsequent given an unsure macro backdrop.
And I suppose my query is, how would you guys assault a slowdown in bookings or load components? Prior to now, you’d have sometimes reduce costs with a purpose to preserve load components excessive. However this time round, in the event you do see bookings sluggish, do you assume you guys and your friends will be capable of keep extra disciplined on the pricing aspect of issues, so the restoration wouldn’t be as steep on the opposite aspect?
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
A few fast feedback. To start with, I wouldn’t touch upon what the others would do. You possibly can speak to them straight. For us, we’ve got, as we’ve been hit with totally different variants and invasion of Ukraine and different issues and bringing extra capability on board, we’ve needed to take into account all of that. And at this time limit, largely we’ve got carried out all the pieces in thoughts of attempting to maintain our pricing robust going ahead as a result of we expect that’s the appropriate transfer proper now.
The optimistic factor right here is that there’s pent-up demand. And so even when there was a worldwide recession, the fact is we’re, as I stated in my feedback, recession-resilient traditionally. And this time, if there was a recession, there’s great pent-up demand, which up to now wasn’t essentially the case as a result of it’s been a few years the place individuals haven’t been in a position to journey the way in which they wished to. So a mix of issues. One is we’re naturally considerably recession-resilient. Now we have added tailwind of pent-up demand. And sure, we’re targeted on doing what we are able to to finally drive the money we want however, on the similar time, do in a way the place we are able to keep pricing power. David could have a remark.
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Sure. Only one factor I’d add to that. Keep in mind, Steve, not each recession is identical. And we’re presently in a really robust labor market. And on condition that, if individuals have jobs they usually really feel comfy of their jobs, they’re more likely to want a trip. And bear in mind, holidays are not a luxurious, they’re a necessity in at present’s world. So I feel we’ll do very nicely. As Arnold stated, we’re recession-resilient and we’ll do very nicely in a recessionary surroundings.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
After which there’s — we’ll see if a recession comes proper now. Financial savings are actually excessive. As David identified, employment charges are actually low. And so there’s financial power in the intervening time. We’ll see what occurs.
Steven Wieczynski — Stifel Monetary Corp. — Analyst
Okay. Bought you. After which second query, I suppose, in all probability for you, David, across the current debt elevate. And we bought a whole lot of questions from traders about why you guys would exit and lift debt north of 10% and perhaps what drove you. Or perhaps there was an underlying cause as to why you needed to elevate debt at these ranges. And I suppose from right here, the query goes to be, what’s the alternative shifting ahead to refinance? Or perhaps there’s sufficient probability to refinance given the place charges are at this level?
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Yeah. So in the event you — as I stated on the final convention name, we had been trying to, over time, refinance the $3 billion of 2023 maturities, and we had been targeted on that. And we took a glance and we consider that we’re in a rising rate of interest surroundings. And so we did exit and we raised $1 billion at 10.5%. It was a problem available in the market, no one may have predicted what would occur within the general market. However what’s fascinating is regardless of the market backdrop, we had been in a position to elevate $1 billion inside the value speak that we wished on that day and we felt superb about that.
We’re trying to do $2 billion to refinance the remaining portion, as I stated in my notes, over time. However we’re simply averaging in. Should you have a look at it at present, rates of interest are greater than they had been a month or so in the past once we truly did our bond providing. So I’d say that we had been in an excellent place. We be ok with what we did. And we’ll look to refinance the opposite $2 billion over the following months forward. And we’re simply averaging in. Take note, regardless of, I’ll say, including 10.5%, in the event you have a look at our portfolio of debt, our common rate of interest at present is 4.5%. So we’ve carried out an incredible job managing the entire portfolio. And this is only one minor piece within the portfolio.
Steven Wieczynski — Stifel Monetary Corp. — Analyst
Okay, nice. Thanks guys. Actually respect it. Better of luck Arnold.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Thanks Steve.
Operator
Subsequent query from the road of Robin Farley, UBS. Please go forward.
Robin Farley — UBS — Analyst
Nice. Thanks. Arnold, greatest needs, since that is the final earnings name you’ll be becoming a member of it for. Good luck with all the pieces.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Thanks Robin.
Robin Farley — UBS — Analyst
I had a query on occupancy. I feel traders type of wrestle with how a lot of the decrease occupancy is form of short-term, just like the Omicron cancellations in Q1 and new ships going into service at decrease ranges. And the way a lot — in different phrases, to attempt to type of see the trail demand there, I’m wondering in the event you may give us a bit little bit of coloration on form of the sequential construct in occupancy via Q2, I do know you usually wouldn’t give that stage of element and/or perhaps one thing along with your visibility on Q3, which I feel usually you’d be 80% to 90% booked by now. And simply type of are you seeing, for ticket value relative to ’19 and occupancy, with that stage of visibility, I don’t know in the event you can remark a bit extra particularly.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Yeah, you wager, Robin. I’ll have David share some particulars. However the overarching remark could be that we’ve got actual power in occupancy. And we had some deliberately constrained occupancy as we introduced ships on again on-line due to protocols somewhere else and so forth. We additionally had some remoted conditions the place we’re shifting crew round briefly as we had been staffing up with crew and constrained capability for these causes as nicely.
However general, our occupancy — however our occupancy charges, as we shared, have actually improved over time right here. And as we talked about, the Carnival model is 110% occupancy within the third quarter. So we’ve got extra capability crusing and occupancy is rising properly. And because the world continues to calm down and develop into comfy managing the virus and restrictions are relaxed, we see issues shifting extra into the course of the Carnival model the place issues are extra normalized regardless that they nonetheless have some restrictions proper now. David?
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Sure. So in the course of the second quarter, I imply, the variance between the months, it went from 67% to 71%, which is why we wound up general with that 69% occupancy for the quarter. So — and as Arnold stated, we’re approaching 80% for the month of June. And with reserving tendencies good, we proceed to construct. So — however be mindful, that as I had indicated, we began 20 ships within the second quarter. And naturally, there are a variety of cruises, we’re early on, we constrain occupancy to make sure we observe and the company have a good time. And so we construct on these ships, and you’ll see the advantage of that once we bought to June. So we really feel superb concerning the general development. It’s optimistic. Shifting in the appropriate course. And we do count on to see an enhancing development within the third quarter and into 2023.
Robin Farley — UBS — Analyst
Okay, nice. Thanks. And perhaps simply as a follow-up query on the expense commentary. You place — you talked about a whole lot of form of buckets about pause standing, ship restart prices, dry dock, all of these as being a part of that 23% improve. And I do know you talked about that can enhance considerably by year-end. I’m wondering in the event you may quantify a bit little bit of how a lot of that improve was simply inflation in well being and security. In different phrases, the opposite components all being considerably short-term, the pause standing, the restart price, the dry dock, how a lot of these form of 23 factors are — go away mechanically simply by having your — the fleet again in service? Simply so we are able to take into consideration type of the place you could possibly get to by the tip of the yr by way of expense per passenger per se.
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Yeah. I feel the easiest way so that you can — you are able to do your personal quantification and it’s fairly simple. If you concentrate on, we had been form of 24% up per ALBD for the primary half. And all it’s important to do is in the event you’re mid-teens for the complete yr, you possibly can again into the place we had been for the second half, taking out the pause standing, the restart, the dry docks. As a result of I did say that the dry docks within the again half of the yr had been going to be form of extra regular like by way of the variety of dry-dock days. So in the event you again into the quantity, you’ll be capable of see the place we’re for the again half of the yr, which is a greater reflection general than the primary half. Now there’s nonetheless noise in that as a result of provide chain disruption and different issues. And we’re working actually arduous to handle that down. And we’ll try this. So — however that’s in all probability the easiest way to again into it.
Robin Farley — UBS — Analyst
And I do know that that easy common would get you to type of a mid-single digit for the second half. However I suppose I used to be questioning by type of the tip of the yr, actually fascinated with 2023, that’s how I used to be on the lookout for form of what items would perhaps go to.
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
I perceive. And I’m not able to provide price steering for 2023 at this level. However I used to be simply attempting to provide you some directional. You possibly can see what the again half is, and we’ll handle via all of these gadgets successfully over the subsequent six months. And like I all the time say, we hope to do higher. However at this level, it might be untimely for me to provide you price steering.
Robin Farley — UBS — Analyst
Okay. Understood. Thanks very a lot. Thanks.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Thanks Robin.
Operator
Our subsequent query comes from the road of Jaime Katz with Morningstar. Please go forward.
Jaime Katz — Morningstar, Inc. — Analyst
Hello. Good morning. Thanks for taking my query. I’d be involved in listening to the way you guys are seeing variations between home and worldwide customers, significantly due to this transition of Costa ship, perhaps being this rebranding with Carnival and whether or not or not that’s signaling something?
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Yeah, I feel simply usually, clearly, Europe in some ways is extra challenged from shopper demand standpoint because it pertains to journey to an extent than North America. And what you’re seeing within the transfer with Costa by Carnival and the switch of the Luminosa in Australia to Carnival is a part of a rightsizing of Costa for what we see as a European surroundings which has sophisticated not solely by COVID and macroeconomic circumstances, considerably triggered by invasion of Ukraine, but in addition the invasion of Ukraine. And so all of these issues are impacting the European market sector.
So we’re reallocating to manufacturers which have stronger demand, which might be in a stronger place. That’s one of many stunning issues, our property are cell. So — however general, we nonetheless see robust demand in Europe. And there are parts of Europe, the U.Okay. particularly. Additionally we see some persevering with power in parts of Germany and what have you ever. And so we see an excellent market in Europe, a powerful market in North America. And we’re simply reallocating throughout the manufacturers to optimize our portfolio and maximize the money era and place us for the long run.
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
If I can construct on that a bit bit. I did need to level out, so we talked about our bookings within the second quarter practically doubling the — what they had been within the first quarter. So the NAA manufacturers had been a bit bit over double than the EA manufacturers, which incorporates Costa, we’re a bit bit lower than double ebook, I imply all the pieces is not off course. There’s good, stable, robust demand in all of the manufacturers. However the NAA manufacturers are doing, from a reserving development perspective, a bit bit higher than the EA manufacturers.
I’d additionally wish to level out, add to Arnold’s feedback, about Costa by Carnival. As a result of be mindful, a giant chunk of Costa’s capability in 2019 was in China. And so with that market in the meanwhile closed, we quite than take all of that capability and put it in Europe, we created a brand new market in direction of the Carnival company which we expect will develop the market right here in North America and we’ll be in a significantly better place general. So we really feel superb about all of our manufacturers and the course and we’re managing it appropriately as you could possibly see, what Arnold talked concerning the strikes of the ships.
Jaime Katz — Morningstar, Inc. — Analyst
Okay. After which David, I don’t assume it was explicitly famous, however up to now, I feel you guys had pointed to 2023 EBITDA above 2019 ranges. And do you continue to really feel just like the enterprise is monitoring in the appropriate course to attain that?
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
So I stated that fairly a variety of instances. I feel we’re — what I’ve all the time stated is we’ve got the potential for EBITDA to be higher in 2023 than 2019. That one massive wildcard, in fact, is the value of gasoline which has risen fairly a bit in the previous couple of months. So simply preserve that in thoughts. However there’s, with the occupancy enhancing over time, there actually is that potential.
Jaime Katz — Morningstar, Inc. — Analyst
Thanks.
Operator
Our subsequent query comes from the road of Patrick Scholes with Truist. Please go forward.
C. Patrick Scholes — Truist Gear Finance Corp. — Analyst
Hello. Good morning everybody. Arnold, greatest needs as nicely.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Thanks Patrick.
C. Patrick Scholes — Truist Gear Finance Corp. — Analyst
Thanks. Nicely, first query is, are you able to remark in your potential willingness to promote manufacturers to — a number of manufacturers to assist shore up the steadiness sheet?
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Nicely, we’re very happy with our portfolio of manufacturers. Having stated that, our job is all the time to maintain an open thoughts and do what’s greatest for the shareholders. And so we’d completely, once more, consider any and all choices. However we’re solely going to do what is smart for the shareholders given our projections of alternative given the portfolio we’ve got.
C. Patrick Scholes — Truist Gear Finance Corp. — Analyst
Okay. Honest sufficient. After which my second query is a little bit of a clarification on among the textual content within the earnings launch the place you famous that cumulative superior bookings for the second half of ’22 are actually beneath the historic vary, which suggests — clearly it was lowered from the earlier the place you stated it was at decrease finish. Particularly, you famous right here, this place is according to its anticipated enhancing occupancy ranges for the second half of ’22. Are you able to clarify a bit bit extra what that final phrase means? I’m not fairly understanding what you imply by according to anticipated enhancing occupancy ranges.
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Yeah. So what we had been attempting to — sure, what we’re simply attempting to say there’s, like Arnold indicated, that within the month of June, in his ready remarks, he stated occupancy was approaching 80%. And so what we had been attempting to say is although we had been beneath the historic vary, we do count on, due to the closer-in nature of the reserving patterns, to see occupancy within the again half of 2022 to be greater than the 69% within the second quarter. And that’s all we had been actually attempting to point to individuals with that assertion.
C. Patrick Scholes — Truist Gear Finance Corp. — Analyst
Okay. Thanks for the clarification.
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Positive.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Thanks Patrick.
Operator
Subsequent query from the road of James Hardiman with Citi. Please go forward.
James Hardiman — Citigroup — Analyst
Hey, good morning. Thanks for taking my questions. And Arnold, I wished to reiterate congratulations and good luck with what’s subsequent. Needed to hone in a bit bit on among the pricing commentary, significantly the income per passenger cruise day. I feel you stated that quantity was down a bit bit. There was some — a bit little bit of an FCC headwind there. However I feel that very same quantity was up north of seven% within the final quarter.
Clearly, there’s this rising concern that the trade goes to wish to push value a bit bit to fill these ships. Possibly converse to that concept. As we proceed to replenish the ships within the third quarter and past, ought to we count on that pricing quantity to go down, down additional? After which clearly, we’re going to get again to a few of that FCC influence. However form of excluding that piece, how ought to we take into consideration income per passenger cruise day as we proceed to boost occupancy?
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
So — okay. I feel, general, Arnold in his notes talked about the truth that we had been targeted on maximizing occupancy whereas preserving value in the long run. And so we’re very eager on that. We did improve promoting expense within the second quarter for that goal to create extra demand. We’re seeing extra first timers. We had talked about the truth that we noticed a big enchancment in first timers. So what we’re attempting to do right here is we’re constructing in direction of historic occupancy ranges in 2023 with higher pricing. As we indicated, the pricing for 2023 is up.
However with the shorter reserving window and using OPay channels and using restricted promotions, we’re driving occupancy within the brief time period with a purpose to optimize the EBITDA and the money move from operations of the enterprise. So whereas I’m not ready to provide you steering on the third and fourth quarter gross income per PCD, which, by the way in which, in the event you simply take into consideration the third quarter, one of many issues to recollect is we hope to have a whole lot of youngsters on board within the third quarter.
And people thirds and fourths can even usually, they add to the income, they add to the underside line. However they can even on a per PCD foundation be decrease than the decrease berths, each for the ticket and the onboard. The youngsters don’t usually spend as a lot on board both. However we’re completely satisfied to have all of them on board. So there are components in there that it’s important to take into account as you concentrate on the development per PCD from third to fourth quarter and past.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
And with the rise in occupancy that we skilled within the second quarter, even with additionally the capability improve we had within the second quarter, if you normalize the FCCs, our pricing didn’t decline.
James Hardiman — Citigroup — Analyst
That’s actually useful coloration. And perhaps you already answered this to some extent, but when I form of zoom out right here for a minute. Traditionally, the trade has largely used this value to fill paradigm. And I feel with a few of these metrics, the priority is that we’ll return to that. We had been — pre-pandemic, we had been — it appeared like in a greater place, pondering extra about long-term pricing alternative. Possibly converse to if there’s been any change in your philosophy pre pandemic to now simply given the significance of filling up these ships and attending to optimistic free money move.
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
So one of many issues that it’s important to take into consideration in all of that is, over time, we’re already seeing it, however we — the protocol friction is decreasing. Only recently, they dropped — the U.S. dropped the testing necessities for individuals to get again into the U.S. from worldwide locations. And we’re seeing — we’re beginning to see the power for us to scale back our protocols and scale back the friction. And I feel that can deliver again individuals from the sidelines and can create further demand which can permit us to get higher occupancy at a greater value. So directionally, with extra first timers approaching board and the diminished protocols, we really feel superb concerning the future over the subsequent few quarters in 2023.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
And be mindful, as you monitor all of this, that there are combine points in right here, too. Simply portfolio combine and general model positioning in addition to particular itinerary — itineraries obtainable and what have you ever. So the common value is, there’s a whole lot of noise in that. And the general — the message we’re sending and what we’re experiencing is an encouragement of a powerful market coming again, pent-up demand and us rigorously managing that, thoughtfully managing it, as we create the money and on the similar time place the enterprise nicely for the longer term.
James Hardiman — Citigroup — Analyst
That’s actually useful coloration. Thanks each.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Thanks.
Operator
Subsequent query from the road of Dan Politzer, Wells Fargo. Please go forward.
Daniel Politzer — Wells Fargo Securities — Analyst
Hey, good morning everybody. And Arnold, better of luck. And Josh, congratulations on the brand new place. So I had a query on buyer deposits and the way we should always take into consideration this for the remainder of the yr. Clearly, it was very robust within the second quarter. I imply, there’s sometimes a decline sequentially. So simply as we take into consideration money move for the remainder of the yr and the way buyer deposits move via, is it protected to say that the third quarter ought to — will not be going to be money move optimistic or — simply on condition that there’s that sequential decline? Or given the extent that you simply guys proceed to get better by way of your bookings and operations, the third quarter may proceed to be money move optimistic?
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
In order that’s an incredible query and we’ve been attempting to reply that. I’ll let you know that within the final — because the finish of Might, buyer deposits have continued to extend. They’re up a couple of hundred million {dollars}. In order that no less than directionally within the final — what has it been, 3.5 weeks, that’s the place we’re at. Usually, in the course of the third quarter, there’s a discount as a result of we attain the seasonal excessive peak on the finish of Might. However there are offsetting components this yr that we’d count on to see. With extra ships coming again on-line and better occupancies, that ought to mitigate any regular seasonalization. Whether or not it fully mitigates it or not, it’s very arduous for me to foretell at this level. However there are some mitigating components to the conventional seasonalization of buyer deposits.
Daniel Politzer — Wells Fargo Securities — Analyst
Yeah. Yet another fast one, if I may simply squeeze it in. On simply the newer cruise product, a whole lot of your fleet has been refreshed. To what extent have you ever been in a position to seize that pricing? Sometimes, the newer product will get a premium value however that is type of a bizarre surroundings. Have you ever been in a position to seize that? And if that’s the case, any type of metrics or a strategy to quantify that?
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Yeah. It’s very arduous to inform. I imply we have a look at so many issues, however.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
There’s so many variables proper now.
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
So many variables proper now, it’s simply very, very troublesome to inform in a comparability going again to 2019. So we have a look at the whole, we handle it appropriately. I’ll let you know, these new ships are performing very nicely, excessive ranges of occupancy, producing vital money flows. And as we transfer ahead, I believe that we will proceed to generate a premium there. Arnold indicated practically 1 / 4 of our fleet might be new in 2023 or newly delivered.
The typical age of our fleet, consider it or not, I feel I stated this earlier than perhaps on one of many earlier calls, however from 2019 to 2023, regardless of the passage of 4 years, the common age of our fleet went down one yr. In order that we’ve bought a whole lot of new capability which ought to assist very nicely each on the income aspect and on the associated fee aspect from an effectivity perspective and higher gasoline consumption. So we’re very excited concerning the future and delivering memorable trip experiences to in all probability 14 million individuals in 2023 as we go for historic occupancy ranges.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Operator, we’ll take extra query. Let’s make it an excellent one for Josh. Go forward.
Operator
Our subsequent query comes from the road of Assia Georgieva, Infinity Analysis. Please go forward.
Assia Georgieva — Infinity Analysis — Analyst
Good morning. Arnold, you’ll be missed. However Josh, very completely satisfied that you simply obtained this nice place accountability and triple promotion. So I do have an excellent query for you, hopefully. With the Costa by Carnival idea, that’s clearly one thing that may be a long-term fixture. We’re not simply shifting ships round for the subsequent two or three years. Do you consider that that is one thing that may very well be expanded?
And does the Costa gasoline play any function by way of what ships would possibly truly proceed to affix the brand new idea? LNG deliveries have been considerably troublesome, I suppose, in Europe. We had points with Costa in South America final winter season. So how do you see the event of the idea? And what are the important thing parameters that may truly play into it?
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
I’m going to have Josh touch upon the general model positioning and stuff as we go ahead. However actual shortly on the LNG gasoline query. LNG, as you understand, is the cleanest burning fossil gasoline. It provides us a 20% discount in carbon emissions, and so on. However the shifts are twin, to allow them to additionally burn MGO. And in order that, unto itself, wouldn’t influence the way forward for the Costa model. We’ll burn LNG every time it is smart to take action, which we expect would be the majority of the lifetime of the ships. However there are occasions the place we’ll clearly decide to burn MGO. However by way of the Costa by Carnival positioning, it’s a brand new idea, and I’ll let Josh share his ideas on it. Go forward, Josh.
Josh Weinstein — Chief Operations Officer
Only one factor to make clear. Clearly, the 2 ships that we’re speaking about which might be going underneath this Costa by Carnival umbrella aren’t LNG ships. In order that clearly didn’t enter into our mindset in any respect. So simply to reiterate Arnold’s level. And with respect to the positioning, I feel this can be a nice instance of leveraging the size of this company. As a result of what we may have carried out is taken these ships, new stunning ships, solely underneath the Costa identify and attempt to introduce them into the North American market on a standalone foundation.
However that is truly the chance to leverage all the pieces that Carnival does so nicely right here in the US and Canada for its visitor base. So by marrying that together with Costa’s stunning tonnage and onboard experiences, we’ve got the power to marry that up and make a greatest go of making one thing actually particular. So the brief reply is, we completely count on this to achieve success and we don’t have a look at this as one thing brief time period. However ideally, it is going to be one thing that works and we are able to construct upon.
Assia Georgieva — Infinity Analysis — Analyst
Okay. So presently, no additional plans. Clearly, you’ve made plans for 2023 and 2024. In order that’s loads of time and capability coming within the two ships. So at this level, it’s too early to debate whether or not this may develop into form of a mini model by itself.
Josh Weinstein — Chief Operations Officer
Yeah. I feel let’s attempt it out with two ships, after which we’ll see how we do. However that’s it for now.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
So, thanks, everybody. Go forward. Go forward. I’m sorry. Okay. Thanks, everybody. Actually respect it. And looking out ahead to listening to those as we go ahead and listening to the good information coming from Josh and our staff. So thanks all very a lot, and have an incredible day.
Operator
[Operator Closing Remarks]
