Q3 2021 Carnival Corp & Carnival PLC Business Update Call

[music].

Good morning, everyone.

Welcome to our business update conference call I'm, Arnold Donald President and CEO of Carnival Corporation and plc.

Today, I'm joined telephonic lead by our Chairman Micky Arison, as well as David Bernstein, Our Chief Financial Officer, and Beth Roberts Senior Vice President Investor Relations.

Thank you all.

All for joining us this morning.

Before I begin please note that some of our remarks on this call will be forward looking therefore, I must refer you to the cautionary statement in today's press release.

We are absolutely thrilled to be back doing what we do better.

Bring an amazing memorable.

Vacation experiences to our guests.

Our team members are overjoyed to be back onboard and it shows our guests are having a phenomenal time.

Onboard revenue was sprayed guests are off the charts and our net promoter scores have been exceptionally strong.

I've had the pleasure of busy in a number of.

Shifts in recent weeks both here in the U S and abroad and I can tell you the ship looks spectacular and the crew has an amazing energy there.

There's such an incredible spirit onboard.

Our protocols have been working well beginning with the seamless embarkation experience and have enabled us to build occupancy.

Big level at a significant pace.

We returned more ships to service.

Our brands executed extremely well in this initial phase of a return to serve particularly given our significant restrictions on international travel.

Bring our ability to offer a normal content rich deployment options.

As well as the operating requirements in certain jurisdictions that limit our normally high occupancy levels.

Our itinerary planners came up with creative deployment alternative a marketing department made them accessible with little investment are you a manager's priced them appropriately to achieve occupancy targets very closely.

Close them and coupled them with bundled packages to drive exceptionally strong revenue onboard.

And despite all of the additional protocol.

Crude deliberate and amazing guests experience the combination of which enabled us to deliver cruise vacations at scale, while producing significant cash.

Cash from these restricted voyages.

Now, while we normally don't disclose this level of information we try to find a way to give you a sense of why we're viewing the restart is hugely successful.

Enthusiasm about guests and crew and the unprecedented net promoter scores.

It became.

[laughter] complicated because most of our boys just Wildcats Roe positive.

Program that could not be compared to 2019 and in most cases, when normally be priced lower than the 2019 alternatives.

So for example in the U K, we're only able to offer senior cruises without any ports of call and that's all.

All version of a vacation.

Which were not comparable in ticket prices to peak season, Mediterranean or Baltic sailings offered in the summer of 2019.

That said, even with occupancy limitations. These cruises generated cash while stakeholders. They supported a return for our workforce.

And they took definitely served GAAP, resulting in high satisfaction levels.

Now at Carnival cruise line, where we were able to offer more comparable at generation for 2019, our revenue per Dms were up 20% compared to 2019, and that's inclusive of the impact of incentives from previous cancellation.

And that's despite the quota and nature of the bookings.

In fact carnival cruise lines restarted more shifts out of the United States than any other cruise brand and still achieve occupancy above 70%.

All of which combined to generate an even greater cash.

She clearly carnival cruise line as a brand that continues to outperform.

While the Delta Varian and its corresponding effect on consumer confidence has certainly created a myriad of operating challenges for us to navigate the near term and has left with some booking volatility in August.

Date, it has not had a significant impact.

<unk> on our ultimate plan to return our full fleet to guests operations in the spring of 2022.

On our last quarterly business update we said that we expected the environment to remain dynamic and it's certainly half of.

Of course agility has been a key strength of ours over the.

Last 18 months, and we continue to aggressively manage to optimize given the ever changing landscape and.

In fact, while by design, we're not yet at a 100% occupancy we have individuals' tailings with over 4000 go.

To date, we have carried over half a million guests. This.

Youre already.

And on any given day, we are now successfully carrying around 50000 golf and expect that number to continue to rise as we introduce more capacity and as we increase occupancy over the coming months.

The Delta Varian has clearly impacted our protocols, which will continue to evolve.

Based on the local environment there.

In markets like the U S, where case counts are higher we've taken swift actions to reinforce our already strong protocols.

As additional testing requirements and indoor mass requirements with all U S ceilings operating under the CDC vaccination required.

Our protocols.

Charles go above and beyond the terms of the conditional sell water.

A much more rigorous than comparable land based alternatives.

Again.

Our highest responsibility.

And therefore, our top priority is always compliant.

Environmental protection and the health and safety.

Well being of everyone our guests.

And the communities, we touch and serve and of course, our Carnival family, our team members' shipboard and shore side.

The Delta Varian has also created some disruption in our supply chain impacted.

Impacted the timing of opening for some destinations.

And created a heightened level of uncertainty that has been reflected in the broader travel sector and in our own booking trends.

We quickly adjusted our deployment to push out the start date on a few select voyages.

Some of our more exotic winter deployments like our popular world cruises, we rebuild guests out of 'twenty.

In 'twenty three departures.

Effectively we've managed down near term capacity to optimize the current environment, yes, as we indicated we would.

The modifications, we've made to the pace of the rollout of our fleet will optimize our cash position in the near term.

Looking forward, we continue to work towards.

Full operations in the spring.

In time part of important summer season, where we make the lion's share of our operating profit.

Of course, we have ample liquidity to see us through to full operation and we can continue with a prudent focus on cash management to ensure we have flexibility under a multitude of scenarios.

The current environment, while choppy has improved dramatically since last summer and it should improve even further by next summer if the current trend of vaccine rollout and advancements in therapies continues for instance in markets like the U K, where vaccination rates are already higher consumer confidence remains strong.

And we are seeing strong momentum.

So far we even though the resumption of the guests cruise operations.

71 ships through next spring NAFTA class eight about nine brands.

We're evaluating the remaining shifts through next spring with a continued focus on maximizing future cash flow while delivering.

<unk> a great guest experience in a way that serves the best interests of public health.

Importantly, even at this very early stage of our rollout.

Our ships are generating positive cash flow.

Based on our current rollout, we expect cash from operations for the whole company to turn positive at some point early.

Early next year.

Looking forward, we believe we have the potential to generate higher EBITDA in 2023 compared to 2019, given despite a modest growth rate.

Additional capacity in our improved cost structure.

Further insight into the booking trends we are well.

Well positioned to build on our solid book position and intentionally constrained capacity for the remainder of 2021 and into the first half of 2022.

With the existing demand and limited capacity, we are focused on maintaining price even recently with heightened uncertainty from the delta variant affecting travel.

Decisions broadly we continue to maintain price.

We have also opened bookings earlier for cruises in 2020, three and we're achieving those early bookings with strong demand and good pricing.

And based on that the stuff, we've begun to launch 'twenty 'twenty four sailing even earlier.

In fact.

These efforts contributed to the $630 million increase in guests deposit.

Our long term, yes deposits and that's deposits on bookings beyond 12 months.

Three times historical levels.

Driven in part by our proactive efforts to open more inventory for sale.

In outer years.

Now, we expect GAAP deposits to continue to grow through the restart as we return more shifts the service and as we build occupancy level.

Again, these favorable trends continue despite dramatically reduced advertising expense.

We continue to focus our efforts on our lower cost channels.

Like direct marketing to our sizable past guest database of over 40 million guests.

And earned media as we build on our multiple new ship launches and restart newsworthy.

Of course, and most importantly, we are delivering on our guest experience word of mouth remains the number one reason.

Then people take their first crews and as I mentioned, our net promoter scores are well above historical levels across our shifts that have returned to service so far.

During the quarter, we furthered our strong track record of responsibly managing the balance sheet, we completed two refinancing transactions among other efforts resulting in.

A meaningful reduction in annual interest expense.

We have many more opportunities for refinancing ahead and are working through them at an aggressive pace.

Also importantly, we have continued to make advancements in our sustainability efforts last week, we published our 11th annual sustainability report sustainable from.

Ship to shore, which can be found on our sustainability website www dot carnival sustainability dot com.

In the report we build on the achievement of our 2020 goals by sharing more details on our 2030 goals that I was 2050 aspiration.

The report shows additional.

Or light on the six focus areas that will guide our long term sustainability vision, including.

Climate action.

Circling economy that waste reduction.

Stable tourism health and wellbeing diversity equity and inclusion.

And biodiversity and conservation.

Now these areas.

In line with the United Nations Sustainable development goals.

Climate action as a top sustainability focus area.

We are committed to de carbonization, and we aspire to be carbon neutral by 2050.

As we have previously shared despite 25% capacity growth since that time our absolute.

Absolute carbon emissions peak in 'twenty, 11th and will remain below those levels.

We are working toward transitioning our energy needs to alternative fuels and investing in new low carbon technologies.

Now because of the pause and yachts cruise operations, the 'twenty 'twenty sustainability performance measure.

Measures are not comparable to prior year data.

That said there is a lot of valuable information on the progress we've made in our sustainability journey. Despite what was an incredibly challenging year.

We were clearly among the most impacted companies by COVID-19, and I'm very proud of all we've accomplished collectively.

<unk> to sustain our organization through these challenging times.

Including all we did file a loyal guests all we did for other many stakeholders and all we did for each other within our Carnival family.

In many regards I believe our collective response to the pandemic is strong testimony.

The money for the sustainability of our company.

For that I again express my deepest appreciation to all Carnival team members, both shipboard and shore side, who consistently went above and beyond.

I'm very humbled by the dedication I've seen these past 18 months of course, we.

We couldnt have done it without the overwhelming support from all of you who are listening on this call all of our stakeholders.

Once again thank.

Thank you to our valued go thank.

Thank you to our travel agent partners.

Thank you so all of the many communities and governments that facilitated getting our crews vaccinated.

Thank you to our <unk>.

Players in our other many stakeholders.

And of course, thank you to our investors for your continued confidence in us and for your ongoing support.

We continue to move forward in a very positive way throughout the pause we've been proactively managing to resume operations as an even.

A strong operating company.

Our strategic decision to accelerate the exit up 19 ships left us with a more efficient and effectively and it's lowered our capacity growth to roughly 2.5% compounded annually from 2019 through 2025, and that's down from 4.5% pre COVID-19.

We've.

We've opportunistically rebalance our portfolio through the ship exits as well as the future ship transfer any modification to our newbuild schedule.

To optimize our asset allocation maximize cash generation and improve our return on invested capital.

While our capacity growth is constrained we will be.

Some of the exciting roster of new ships spread across our brands, enabling us to capitalize on the pent up demand and drive even more enthusiasm and excitement around our restart plan.

And we will achieve a structural benefits of unit cost in 2023 as we introduce these new.

New larger more efficient ships, coupled with the 19 ships, leaving the fleet, which were among our least efficient.

With the aggressive actions, we've already taken and optimizing our portfolio and reducing capacity.

We're well positioned to capitalize on pent up demand and to emerge a leaner more efficient.

Benefit reinforcing our global industry, leading position, we have secured sufficient liquidity to see us through to full operation.

Once we return to full operations, our cash flow will be the primary driver to return to investment grade credit over time.

Creating greater shareholder value.

Company.

You for your support.

And we can't wait to welcome everyone back on board.

With that I'll turn the call over to David.

Thank you Anna I'll start today with a review of our guests cruise operations, along with our third quarter monthly average cash burn.

Then I'll provide an update on booking trends and finish up with some insights into our refinancing activity.

Turning to guidance cruise operation.

So great to be talking about operations again.

We started the quarter with just five ships in service.

During the third quarter, we successfully restarted ships.

Brand.

We ended the quarter with 35%.

Capacity in service.

Our plans call for another 27 ships to restart gets cruise operations during the fourth quarter.

And the month of December.

So on new year's day, we anticipate celebrating with 55 ships or nearly 65% of our fleet capacity back in service.

For the third quarter occupancy was 54% across the shifts in service.

Our brands executed extremely well.

Occupancy did improve month to month through the quarter and in the month of August occupancy reached 59% from 39% in June and 51% in July.

I can see for our North American brands.

<unk> reflects our approach are vaccinated cruises, which for the time doing it does limit the number of families with children under 12 that can scale with them.

I can see for our European brands reflects capacity restriction, such as social distancing requirements for our Continental Europe.

The brand and the thousand person cap per sailing for some of the quarter in the U K.

For the full third quarter.

North American brands occupancy was 68% while for Europe team brands occupancy was 47%.

Revenue per passenger.

Your cruise day.

Third quarter, 2021 increase compared to a strong 2019.

The current constraints on itinerary offerings, which did not include many of the higher yielding destination rich itinerary offered in 2019.

It's Arnold.

They indicated our guests are having a nominal times and our net promoter scores have been incredibly strong as always happy guests seem to translate into improved onboard revenue.

<unk> Board and other revenue premiums were up significantly in the third quarter 2020.

One versus the third quarter 2019 in part due to the bundled packages as well as onboard credits utilized I guess from cruises canceled during the part.

We had great growth in onboard and other premiums on both sides of the Atlantic.

Increases in bar casino.

No shop Spa and Internet led the way on board.

Over the past two years, we have offered and our guests have chosen more and more bundled package option.

And again, we will see the benefit of these bundled packages in onboard and other revenue.

During the third quarter 2021.

As a result of these bundled packages the line between passenger ticket revenue and onboard revenue seems to be blurry.

For accounting purposes, we allocate that total price paid by the gap between the two categories.

Therefore, the best way to judge our performance is by reference to our total cruise revenue metrics.

As we previously guided the shifts in service during the third quarter were in fact cash flow positive.

They generated nearly $90 million of ship level cash country.

Contribute ship.

This was achieved with only a two months U S based restart during the third quarter as our North American brands began guests cruise operations in early July we expect the ship level cash country bhushan to grow over time as more ships returned to service.

And as we build on our occupancy percentages.

For those of you who are modeling our future results I did want to point out that due to the cost of a portion of our fleet being in pause status during the first half of 2022.

Restart related expense.

Spenders.

And the cost of maintaining enhanced health and safety protocols.

We are projecting ship operating expenses in 2022 for available lower birthday.

A L E D. As it is more commonly called to be higher than 2019. Despite.

The benefit we get from the 19th smaller less efficient ships, leaving the fleet.

Remember that because a portion of the fleet will be in pause added during the first half we are spreading costs over less <unk>.

We do anticipate that most of these costs and expenses.

We'll end with 2022 and will not reoccur in fiscal 2023.

Now, let's look at our monthly average cash burn rate.

For the third quarter 2021, our cash burn rate was $510 million per month, which was better than our previous.

<unk> guidance and was in line with the $500 million per month for the first half of 2021.

The improvement versus our guidance was due to the timing of capital expenditures, which are now likely to occur in the fourth quarter.

And some other small working capital changes.

With the timing of certain capital expenditures now shifting to the fourth quarter. The company expects its monthly average cash burn rate for the fourth quarter to be higher than the monthly average rate for the first nine months of the year.

Other good news positive factors impacting the fourth quarter.

Our restart expenditures to.

To support not only the 22 ships that will restart during the fourth quarter, but also the additional ships that will restart in the first quarter of 2022.

Along with the significant increase in dry dock days during the fourth quarter driven by the <unk>.

Historically annual.

All of these expenditures have been anticipated and given the announced restart many of them are now occurring in the fourth quarter.

Also during the fourth quarter, we are forecasting positive cash flow from the 50 ships that will have guests cruise operations.

Patients during the quarter and <unk> for the fourth quarter are expected to be $13.0 million, which is approximately 47% of our total fleet capacity.

Now turning to booking trends.

Our booking volumes for the all future cruises during the third.

Third quarter, 2021, well higher than booking volumes during the first quarter.

That trend continued over the first couple of months of the third quarter, such that we expected the third quarter, which ended higher booking levels than the second quarter, but we did manage to achieve that because of lower.

Lower booking volumes in the month of August when the Delta variant impacted travel and leisure bookings generally.

The impact on bookings in August with mostly seen on near term sailing.

However, the impact quickly stabilized in the month of August and in recent weeks, we have started to see.

See a welcome uptick in booking volume.

Our cumulative advanced book position for the second half of 2022 is ahead of a very strong 2019 and is that a new historical high.

Pricing on our second half 2022 book position.

Is higher than pricing on bookings at the same time for 2019 sailings driven in part by the bundled pricing strategy for a number of our brands, but excluding the dilutive impact of future cruise credits or more commonly known as FCC.

If we were to include.

The dilutive impact of future cruise credits pricing on our second half 2022 book position is now in line with pricing at the same time for 2019 sailings.

This improved position as a result of positive pricing trends, we have seen during the third quarter.

<unk>. This is a great achievement given pricing on bookings for 2019 sailings is a tough comparison and that was the high watermark for historical yield.

Finally, I will finish up with some insights into our refinancing activity.

We are focused.

<unk> from pursuing refinancing opportunities to extend maturities and reduced interest expense.

To date through our debt management efforts, we have reduced our future annual interest expense by over $250 million per year.

And we have completed Cumulus.

Cumulative debt principal payment extension of approximately $4 billion, improving our future liquidity position.

The 4 billion dollar extension results from three things.

The July refinancing of 50% of our first lien notes or to.

$2 billion.

Second the completion of the European debt holiday amendments, which deferred $8.0 billion of principal payments.

The deferred principal payments will instead be made over a five year period beginning in April 2022.

And third the extension of.

A $300 million bilateral loan with one of our banking partner.

As we look forward given how supportive the debt capital market investors and commercial banks have been we will be pursuing additional refinancing opportunities to meaningfully reduce our interest expense and extend our maturities.

Charities overtime.

And now I'll turn the call back over to Arnold.

David.

Please open the call for questions.

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One moment please for the first question.

And our first question is from the line of Steve <unk> with Stifel. Please go ahead.

Hey, guys. Good morning, good morning, Good morning, David.

Well.

So Arnold in your prepared remarks you.

I think I heard this right, but you talked about how youre expecting 2020, Three's EBITDA should be higher than 2019, EBITDA and I you know look I understand theres, new net capacity in there that's going to help drive part of that EBITDA.

But can you also help us maybe think about at a higher level.

But some of your longer term assumptions.

In order to get to that EBITDA level, meaning how are you guys thinking about whether it's.

The pricing environment load factors.

Anything else you would point out that the good kind of bridge that gap.

Sure I'll make some comments and then David a chance as well Hum.

Each by 20.

'twenty three.

And if things continue to trend the way they're going.

Hopefully we will have as you mentioned additional capacity was.

The exciting new shifts more inflation, we've got some cost.

Infrastructural improvements coming out later.

Was that a cost structure.

We're more efficient on the ships most of them are you standpoint.

Well as an operating standpoint.

In addition to that we expect to be back yet your occupancy levels are more comparable to historical or potentially even better given.

Given the fact that while there will be.

Some capacity growth at that point in the industry is going to be well below the capacity growth that would've occurred absent the pandemic.

David any additional comments, yeah, I'd just point out a few things.

So you know the 19 ships.

Between the 19 ships that left the fleet, which.

Arnold indicated our smaller less efficient ships and all the new capacity come again, we certainly have a much richer richer cabin mix onboard the vessels. There's I think we had indicated the cabin the balcony cabin mix was about six percentage points higher.

So that does.

The opportunity to generate more revenue to.

The combination of the ships, we said before those leaving the fleet in the Newbuild give us a <unk>.

Unit cost at the ship operating level, a 4% reduction on the fuel consumption just the change.

And the fleet that I described is 3%.

In total it is a 10% capacity increase net of the shifts that left the fleet. So with all of the pent up demand and all of the things the revenue management things.

Bundled packages that we're offering which is driving onboard revenue.

<unk> and.

And everything else, we're doing we feel as Arnold said that we have the opportunity for stronger EBITDA in 2023 compared to 2019.

Okay, Great. That's great color. Thanks, guys and then second question is.

We start to think about 2022.

Is there any way for you to help us think about.

How how 'twenty two is sold at this point I guess, what I'm trying to understand is how much of your capacity is actually available for sale at this point and then how you think about opening up more capacity for 22 without ultimately impacting your pricing ability.

Go ahead, David Yes, now happy too.

So for all intents and purposes I think in most cases, we have announced the restart date for 71 ships out of the 95 that will be in the fleet in the spring of 2022.

But even.

Even though ships, where we have not announced the restart date in most cases.

We have cleared the inventory for the dates that we don't expect to sale.

And we are only selling at this point the dates that we do anticipate sailing we just have not made a formal announcement.

On the remaining 24 ships, but those will be forthcoming in the days and weeks ahead.

So what is out there today more or less give or take there may be some changes.

<unk> been on the margin, but more or less what's out there today is what we are selling we talked about the back half.

Half of the year being at a new historical high in terms of the booked position and we were very pleased with that people are booking further out and so where we're seeing the benefit of that the first half of the year. The only reason we didn't give a detailed year over year.

Year comparison of 22 versus <unk> 19 is because it is a bit of an apples and oranges comparison.

While we are very pleased and look at the first half of the year and for the voyages that were selling we feel they are at the high end of the historical booking curve.

The reason for the apples and oranges comparison is in the first half we're not running most of the world cruises and all of the long exotic voyages and they <unk>.

Tend to book much further out because they are much longer. So if we gave you the numbers that would be an apples and oranges comparison, but.

But it is fair to say that we feel very comfortable with the.

The pricing and the book position for the first half of 2022.

But when Steve.

In the prepared comments.

We will have.

But we're planning.

The coal Creek on time.

The summer season, where we are.

Bulk low profit so.

The second half of 'twenty two.

So being a golf course.

Go ahead, you end up revenue.

On it.

Dave If you if you just.

47% of our capacity.

We.

We will be sailing in the I should say of our.

Capacity will be sailing in the fourth quarter.

We ended the calendar year.

We said with nearly 65% of our capacity. So you know during the first half of the year, we're going to go from somewhere around 60%.

On December one up to a 100% at the end of the first half. So you can begin to see that the first half of the year is going to be somewhere in between that depending on the exact ramp up of the capacity.

But to be clear, so if I'm going to make this up so.

Lets take lets take.

A random lets take the carnival conquest, I'm going to make a ship up here.

For the second half of next.

The second half of next year are you selling 100% of that capacity today or are you still.

Are you still kind of holding back some of that capacity because you don't want to try to get up to that.

100% level and hopefully that makes sense.

And we're not for future voyages out there because obviously.

We're nowhere near selling out yet.

Obviously, if we did we would have under priced it.

We're not restricting the capacity that we're selling for the back half of 'twenty.

2022.

Look I think to us.

Got you all right. Thanks, everyone. Thank.

Thank you guys I appreciate it thanks, thanks for the color.

Thanks, Matt.

Our next question is from the line of Robin Farley with UBS. Please go ahead.

Great. Thank.

I wanted to.

Clarify your commentary on the expenses I know you mentioned some expenses next year, obviously, it would not be recurring the capacity out of service the restart costs.

And then maybe the piece of it that is would be that you know enhanced protocols. So if.

If you looked at only the period.

Where everything is operating and so the restart expense would not be in there and then.

The burn of ships out of service.

For that period forward and then I guess this would also mean for 2023.

Is it fair to say that your expense per passenger cruise day would be below 2019 levels. When you exclude those sort of one.

Time restart costs.

Well so.

Oh go ahead, Dave I was hoping to go ahead.

So.

When you when you exclude all of those costs and looking to 2023 I mean, we had indicated that the benefit of the change in fleet was on the ship operator.

Operating expenses with 4% per <unk>.

We also have found efficiencies shore side as well and so there are cost efficiencies.

That we have.

We were also as the whole world is we are seeing some inflation.

We're working hard to mitigate all of that inflation.

We don't see it.

Nearly as much as people in the United States in terms of the the labor given.

Our employment base comes from nearly 150 countries around the world onboard our ships. So we have a much more.

We have an opportunity there and so we're working hard but I'd be hesitant to give guidance on 2023 cost structure.

I think it's just fair to say to give you all the pieces that are out there.

And then we'll we'll give guidance as we get closer.

Okay.

Okay.

That's helpful. So would you venture whether for 2020 to weather the short side efficiencies would offset.

You know inflation and enhanced protocols just for the for 'twenty. Two if you exclude the he get pass through the restart expenses.

I'd be hesitant to give.

Guidance at this point clearly the short side efficiencies.

Will flow through.

And since we're still working through.

All of the details relating to in sourcing and making changes in mitigating some of the inflationary costs I'd be hesitant to give guidance, but you can be.

Is that we've got people focused on those items.

The optimize the situation.

Great helpful. Thank you and then.

My other question is just to clarify the commentary on price for next year. If we're just looking at the second half when it's a little more comparable and then you said you know excluding the.

Sure. It's a cruise credit discounts that pricing is about in line with 2019 levels I just wanted to make sure I understood. When you gave your earlier commentary about how you know there is more bundling now so more of what is being booked now for second half compared to 2019 has more of sort.

Onboard expense rate kind of in the ticket price because of the bundling if if I'm understanding your commentary and so I guess I just want to clarify when you are seeing price in line with 2019, it's that sort of you have that's after you've allocated some of the bundled ticket price to onboard or.

Some of them, sorry, I guess I'm, just trying to think about how.

We've tried to normalize it and do some level of allocation.

To be an apples to apples comparison.

Okay perfect. Thank you very much thanks.

Thanks Robyn.

Yeah.

Our next question is from the line of Ben Chaiken with Credit Suisse. Please go ahead.

Hey, How's it going.

Good morning Beth.

Good morning, Hey, you're at risk of getting overly granular, but I'll try it anyway. If you think about the profitability of the ships if you.

Our profitability of the ships coming online in your new capacity over the next couple of years. So next two or three years, and then compare that to the remaining legacy fleet obviously excluding.

The 19 disposed of ships is there any way to ballpark compare those those two kind of like sets of assets, whether its margins EBITDA revenue premiums.

Think about the fact that something that anecdotally talked about an industry, but.

That didn't make sense I can try it differently or we can take it offline.

We have made big bomb about.

<unk> done it for the new ship relative to the fleet. So maybe you might want to go to Jan.

Okay.

Liam perspective.

If you just look at the unit cost for a <unk>.

Our new ships coming in they tend to be 15% to 25% lower on a unit basis than the existing fleet and from a fuel consumption perspective, we're talking more like 20.

Cost, 35% more fuel efficient on a unit basis.

So we do see the enhanced profitability.

And when you start adding in of course, the better cabin mix the more opportunity for onboard revenue because there are more.

Five public space in the larger ships.

So all of that does bode well.

For an improved return on the new ships versus the existing fleet.

Okay cool that up that makes sense I appreciate it.

Is that opening.

Our next question is from the line of Jamie Katz with Morningstar. Please go ahead.

Good morning, Thanks for taking my question.

Sure. Good morning are starting to be deployed do you have a little bit more visible.

Lenny.

Capex demand over the next year or two that you'd be willing to share with us I mean, I know we have the cat that the cash burn, but it would be helpful to hear the difference between maybe capex and opex going forward.

Yes.

Can share with you our capex.

Visit projections with without a doubt so looking at 2022.

I'll give you the two pieces of Capex.

The non new build Capex, we're projecting about 1 billion and a half and the Newbuild is $9.0 billion. So it's about six.

<unk> plan in total keep in mind, you remember that most of the new build is financed with the export credits that are already committed.

In 2023.

The non new build we're forecasting about <unk>.

So about 1 billion and a half and the Newbuild is two points.

<unk> hundred 11 billion for a total of $4 two.

So we are expecting an increase in capex in 'twenty, two and 'twenty three from where we are today in 'twenty, one, but we're not expecting to go back pre Covid, we had probably indicated.

A.

Steady state Capex of call it $2 billion.

Non new build Capex and we do believe we will probably get back there at some point in the future but in the next two years, our best guess at this point is about 1 billion and a half.

Okay, and then just going back to Robin's question.

Sort of a bundling I'm curious whether you guys are thinking that the bundling behavior or something thats more secular so overtime.

It's going to remain that the pricing component is less important than it was historically and that the onboard component is more important than it was historically and I'm not sure if there's anything to read into that.

No.

A new secular trend or transitory.

Yeah again, I think we have nine brands.

A lot of variability across the brands.

And so we bundle and he's been around a while and it's not a new thing.

But there has been a.

But recent trends.

Yes seem to prefer to have certain aspects.

Aspects of their experience bundled.

So there has been an increase.

In some aspects of that.

Whether that's an ongoing trend.

Probably book, we're going to stay flexible and dynamic.

More than you have the guests what they want.

And I think one of the <unk> that can add to what Arnold. So what are the benefits of the bundle package I mean, it gives the consumer a choice and any choices you give the consumer.

Creates hopefully more demand and better pricing in the long run, but you know keeping.

Keep in mind that when somebody bundles.

<unk>.

When somebody pays for like their drink package and their internet ahead of time.

Well first of all of that of course benefits the agent because they get a commission on the whole package. So definitely does make the traveler.

Now make us happy, but when the people get on board, they really have a fresh wallet.

And because they've already paid for certain items. So they have a fresh wallet, they're starting over again and we believe that with the fresh wallet. It does incentivize more onboard spend in total.

<unk>. So we would expect our onboard to be higher in the long run as a result of the bundling and we did see it in the third quarter I mean the onboard.

And other per Dms were up significantly compared to 2019.

And so some of that is the fresh wallet of people.

Total being onboard.

Thank you that's helpful.

Thank you.

Yeah.

Yeah.

Our next question is from the line of Asia, George <unk> with Infiniti Research. Please go ahead.

Hi, Good morning, guys, how you think.

People have been doing a great job and probably very happy to be so busy which we started so congratulations.

My question is related.

Yes, again, Arnold our and I think that what you've done has been fantastic and yeah. Good luck so at the.

Yeah.

My question was it a little more in terms of sourcing and destinations.

With the ships going back to warmer climates, including the Caribbean during the winter months do you find any difficulties in terms of getting international passengers.

And are these especially from Europe with more stringent entry requirement into the U S and secondly, Australia.

Australia seems to continue.

Continues to be a wild card, even though it's a small market relatively speaking in terms of the capacity you have there, but it's also somewhat.

Passenger market during winter.

Yes, Australia, the unemployed Martin for certain on that.

Travel restrictions.

Absolutely play a part in.

So what we can do.

Occupancy ultimately.

An encouraging sign.

Somewhat.

Things continue to loosen up things continue to improve you can see in the UK where.

There's good momentum.

Momentum.

Further ahead on that some nations et cetera.

In the U S recently made an announcement.

One of the world.

Hotels.

Hotels from Europe.

And starting in November, but all of those things the near term are impacting us where certain and they will continue to evolve.

No you are absolutely Australia will open will be very excited.

We're excited about that and ready to take full advantage of it and our team over there is working.

Booking.

And then on Covid and so on in anticipation that you definitely will open but.

But the world is just processing itself through this pandemic.

And as we said and as I've said in the remarks earlier.

So it's choppy, but there's movement forward.

And the Molson.

As Gordon thing is that there is pent up demand.

People are very interested in the cruise experience not just repeat cruise scores, but we're seeing lots of them new to brand and new cruisers on booking and so that's a positive sign but we do have to get to the point that we.

Most of them get there.

There is kind of back to some kind of a normal where people are afraid to travel.

And if I can just add if I yeah, Yeah, let me ask Tony Damon.

In terms of your question about <unk>.

Europeans traveling to the United States for the Caribbean the winter season.

We will go keep in mind, we have multiple brands.

And our European brands.

Essentially our home porting in other places in the Caribbean. So you know I I don't remember everything Homeport I mean piano in the U K I think home ports out of Barbados.

And Hudson I, either in other places in the Caribbean They choose home ports, where there is great airlift from their home countries. So most of the Europeans who are coming to the Caribbean are going on our European brands.

And going somewhere in the Caribbean to embark on their vessel.

And kind of the North American brands, which are sailing out of the United States. The overwhelming majority of their guests probably.

North American sailing on board ships in the winter time so.

It's you know.

Travel restrictions are easing people are starting to be able to come on I won't repeat everything that.

So probably already now.

But it's not as big of an issue for US is given the structure of where people start their cruises.

I think the Comporting point that you've made are is great and I should have thought about that.

And the second question.

Our yield.

<unk> management guys.

Are probably working very hard because now they have even more you know the levers are.

To work with so in addition to trying not to underprice in yet reaching occupancy levels were.

<unk> is a shipboard level at least a we're getting a cash benefit here.

Has there been any change any.

Restrictions in terms of occupancy or is it more a you know a continuation of what you've been doing for decades trying to get the best price.

Where we've intentionally.

Record occupancy for a host of reasons Hum some related and because again with the brands all over the place in terms of.

So some just to be in compliance.

Some places others together, a ramp up too because we have new quota.

Yep Yep Yep.

The cool experience with it and experience with the guests to make sure. We work on the quotes and some you know an artifact of the <unk>.

Compliance measures, whether it's physical distancing in Europe.

Other requirements.

So at this point, yes, that's been intentional constraint.

But as we said.

Where we have like normal cruises and the Caribbean.

Vaccinated cruises are Budd.

You know Carnival brand has.

Been at 70% occupancy, which is fantastic given the number of ships.

We had another Coca Cola and.

We intentionally tap.

So as we begin to open up more.

Obviously.

Yield management folks.

We'll have to sharpen their.

Hum.

So, let's say pills who's got somebody uses pencils anymore.

There are people more.

And go to work on it but.

That.

We have good momentum.

It's very disciplined.

We have manage the timing of it.

Restarts with some chips you know thinking through these matters.

And so there's a very proactive and to date, well managed though relaunch them, giving us an opportunity.

They have scrubbed on pricing going forward.

Well the whole process is obviously well above my pay grade so I still use pencils. Thank you.

My questions and did not tired me in yield management not good enough for that.

Thank you guys. Good luck.

Thank.

Opportunity.

Uh huh.

Our next question is from the line of Brent on tour with J P. Morgan. Please go ahead.

Yes.

Hey, good morning, everybody. Thanks for taking my questions.

David Good morning, David I was wondering if you could maybe give us Europe.

Are you on how bookings cadence progressed throughout delta, but just focused on.

Sailings for the second half of 'twenty, two and then if there was a wobble at all how did the industry respond to that in terms of pricing.

Yeah. So.

Your view you know as I said in my prepared remarks.

The impact in August.

The Delta variant.

On bookings was really much more of a near term phenomenon in terms of call. It. The next you know.

<unk>.

So months, maybe nine months of bookings.

The further out you go it is really hard to even spot.

Thing wish a delta varian trend in the booking patterns. So the the second half remained strong and throughout the month of August.

And you know in terms of pricing I think Arnold said this in his notes.

In his prepared remarks, you know, we all believe that the Delta variant people would.

We would get past this and so our view was to maintain price and.

And two to make sure that we optimized revenue in the long run not just bookings during the month of August we still have plenty of time. Since we're ahead, we still have plenty of time to.

To fill the ships to the occupancy levels, we're targeting.

And the fourth quarter and for the first half of 2022.

So we are holding price and we're in a good position.

Excellent. Thanks for that and then as a follow up I know you're targeting cash flow casual from operations breakeven sometime early in 'twenty, two and I know.

For both of you have a specific month on that which we can appreciate I'm. Just curious what are you assuming in that for.

Customer deposit inflows if anything more.

There'll be elevated at that time, and so I'm just curious what's baked in for that.

Well, you know customer deposits at the.

You didn't have the third quarter were $4.0 million.

Last two quarters they did increase.

Our expectation is that they will continue to increase.

Of course, you know.

In a steady state environment remember that the overwhelming majority of the customer deposits at any.

And time are the final payments for the next three months of cruises.

<unk> has the capacity for the next three months continues to build towards the 100%.

Next spring you should see an increase in customer deposits over.

<unk> as we continue to get more and more final payments keep.

Keep in mind like for the fourth quarter, we only have 47% of the capacity in service.

So there is only half of probably the final payments that you would see come next may.

So.

Over time, we'll continue to see an increase.

Driven by that factor and that should be a positive cash flow inflow to us.

Over that timeframe.

Okay, but maybe to ask it a different way do you need.

Elevated customer deposit inflows to breakeven on cash flow from operation.

You used in the first half of next year.

EBITDA.

Well also breakeven in the early part of 2022 so.

If I gave you that hopefully.

And since you are quite yeah, that's helpful, Brad and a much more direct way.

[laughter].

<unk> alright, great. Thanks, guys and best of luck.

Thank you.

Okay.

Our next question is from the line of Stephen Grambling with Goldman Sachs. Please go ahead.

Hey, thanks for taking the questions.

Could you just talk about the pricing and booking dynamic.

Between what you saw on Carnival versus maybe some of the other brands specifically looking at second half of 'twenty two as itineraries normalized did you see any difference more recently in close in bookings that may inform how that trajectory could evolve.

I would say yes.

To begin with we see strength across.

M at the <unk>.

The portfolio.

Hum.

Very encouraging to us, but go ahead, David with any specific comments you might want to make.

For the back half of 'twenty two I mean is there any let's say all the brands are strong things are going well.

So we're getting back to sort.

Normalized comparison of full itinerary, a full breadth of itineraries across the whole fleet.

And so we feel very good about that as I said the back half of 2022 was.

At a historical high.

And we saw great trends.

Sort of in all brands and in both sides of the Atlantic So Theres nothing particular to note there.

Closer in.

Some of that is just a function of itineraries in marketplaces.

But we are seeing good occupancy and.

<unk> and across all the brands.

I gave you the occupancy figures for the third quarter clearly the European brands had more capacity restrictions in the third quarter.

The UK restrictions go away.

But the.

And then Europe social distancing.

Frictions remain at least for part of the quarter.

So.

Theres nothing worth, noting I think we're seeing good.

Comparisons in good booking trends across all the brands there are small differences, but some of that also has to do with.

Rosemary length.

Between the different brands in the marketplaces.

Well, it's a great question operator I'm sorry go ahead. This will be the last question good one.

I I may have missed this but I was I was wondering if you had any way you can quantify the potential kind of sustained structural cost increases that you have from some.

The health actions.

And as you mentioned there was some supply chain disruption. So I'm wondering if you can help frame kind of the level of.

No inflation, you might be seeing whether it's in labor commodities. Thanks.

Real quick well I'll make a general comment I think from a.

Sustainable.

Some of the standpoint, a lot of.

Protocols the startup called so close will go away a lot of protocol cost will also go away because all the time.

The protocols.

Be required.

Once we get to.

Point, whereas only protocol Cogs.

Or.

We'll call them the understood thousands.

Versus per ship versus millions of dollars per chip or whatever.

And again, we suspect that goes will reduce over time as well.

Yeah.

Agree with Arnold and I will tell you I'm reluctant at this point to try to.

Hum pegged this because there's so many moving parts and variables and so many things were working on that you know when we get closer we'll have much better clarity.

But theres a lot of opportunity out there for us and you can be sure we're working hard to maximize those opportunities in every way.

Every supplier and in every item, we source as well as the labor and other things so.

Well, we'll give you more guidance as time goes on.

But just recognize we're clearly focused on this on an ongoing basis.

And thank you everyone.

They really really appreciate.

Your support and ongoing interest in <unk>.

We're very excited.

To be having the results we're having at this point. Thank you so much.

Thank you everybody to have it.

That does conclude the conference call for today we.

We see your participation and ask that you. Please disconnect your lines.

Okay.

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Thank you.

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Yes.

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Okay.

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Okay.

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Yeah.

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[music].

Good morning, everyone.

So our business update conference call.

Arnold Donald President and CEO of Carnival Corporation and plc.

Today, I'm joined telephonic lead by our chairman Micky Arison as well.

Good Barnes, our Chief Financial Officer, and Beth Roberts, Senior Vice President Investor Relations.

Thank you all for joining us this morning.

Now before I begin please note that some of our remarks on this call will be forward looking.

Therefore, I must refer you to the cautionary statement in today's press release.

We are absolutely thrilled to be back doing what we do bill delivering an amazing memorable vacation experiences to our guests.

Our team members are overjoyed to be back onboard and it shows I guess are having a phenomenal time.

Onboard revenue was great guests are off the.

And our net promoter scores have been exceptionally strong.

I've had the pleasure of visiting a number of ships in recent weeks both here in the U S and abroad and I can tell you the ship looks spectacular and the crew has an amazing energy there.

There is such an incredible spirit onboard.

Oh.

Charter calls have been working well beginning with the seamless embarkation experience and have enabled us to build occupancy levels at a significant pace as we return more ships to service.

Our brands executed extremely well in its initial phase of a return to serve.

Particularly given a significant restriction.

On international travel hampering, our ability to offer a normal content rich deployment options.

As well as the operating requirements in certain jurisdictions that limit out normally high occupancy levels.

Alright January planners came up with creative deployment alternative our marketing department.

Stricture them accessible with little investment.

Oh managers priced them appropriately to achieve occupancy targets very close them.

Coupled them with bundled packages to drive exceptionally strong revenue onboard.

And despite all the additional protocol.

Our crude delivered an amazing guest experience.

Made the combination of which enabled us to deliver cruise vacations at scale, while producing significant cash from these restricted voyages.

Now, while we normally don't disclose this level of information we try to find a way to give you a sense of why we're viewing the restart it's hugely successful.

Barry.

All of our guests and crew and the unprecedented net promoter scores.

It became complicated because most of our voyages while cash flow positive a program that could not be compared to 2019 and in most cases would normally be priced lower than the 2019 alternatives.

So for example in the U K, we're only able to offer things like this without any ports of call and that's the algorithm the vacation.

Which were not comparable in ticket prices peak season, the Mediterranean or Baltic sailings operating in the summer of 2019.

That said, even with the occupancy limitations.

These cruises generated cash for all stakeholders, they supported a return for our workforce.

And they successfully serve GAAP, resulting in high satisfaction levels.

Now at Carnival cruise line, where we were able to offer more comparable <unk> for 2019, our revenue per Dms were up 20.

Patients as compared to 2019, and that's inclusive of the impact of incentives from previous cancellation.

And that's despite the quote the nature of the bookings.

In fact carnival cruise lines restarted more ships out of the United States than any other cruise brand.

Bill achieved occupancy.

Eight above 70%.

All of which combined to generate an even greater cash contribution.

Clearly carnival cruise line as a brand that continues to outperform.

While the Delta Varian and its corresponding effect on consumer confidence has certainly created a myriad of operating challenges for us to navigate.

With the near term and has led to some booking volatility in August.

To date it has not had a significant impact on our ultimate plan to return our full fleet to get the operations in the spring of 2022.

On our last quarterly business update we said that we expected.

Navigate to remain dynamic and it's certainly have.

Of course agility has been a key strength of ours over the last 18 months and we continue to aggressively manage to optimize given the ever changing landscape.

In fact, while by design, we're not yet at 100% occupancy we have.

Then by individual failings with over 4000 go.

To date, we have carried over half a million guests this year already.

And on any given day, we have now successfully carrying around 50000 golf and expect that number to continue to rise as we introduce more capacity and as we increase occupancy.

Over the coming months.

The Delta Varian has clearly impacted our protocols, which will continue to evolve based on the local environment.

In markets like the U S, where Cape counts are higher we've taken swift actions to reinforce our already strong protocol.

Such as additional testing requirements and indoor masterwork.

Wireless with all U S daily operating under the CDC vaccination required.

Our protocols go above and beyond the terms of a conditional sale of water in a much more rigorous than comparable land based alternatives.

Again.

Our highest responsibility.

Therefore.

<unk> top priority is always compliant and.

Environmental protection and the health safety and.

Well being of everyone our gas the people in the communities, we touch and serve and of course, our carnival family our team members' shipboard and shore side.

The Dell.

Our guidance has also created some disruption in our supply chain.

<unk> the timing of opening for thumb destination.

And created a heightened level of uncertainty that has been reflected in the broader travel sector and in our own booking trends.

We quickly adjusted our deployment to push out the start date on a few select.

Delta voyages.

With some of our more exotic one of the appointments like our popular world cruises, we rebuild guests out 'twenty 'twenty three departures.

Actively we've managed down near term capacity to optimize the current environment, yes, as we indicated we would.

Modifications, we've made to the pace of the rollout.

So like what fleet will optimize our cash position in the near term.

Looking forward, we continue to work towards resuming full operations in the spring.

In time for our important summer season, where we make the lion's share of our operating profit.

Of course, we have ample liquidity to see us move to.

Full operation.

And we can continue with a prudent focus on cash management to ensure we have flexibility under a multitude of scenarios.

The current environment, while choppy has improved dramatically since last summer and it should improve even further by next summer if the current trend of vaccine rollout antibody.

Asthma therapy continues for instance in markets like the UK, where vaccination rates are already higher consumer confidence remains strong and we are seeing strong momentum.

So far we even though the resumption of the guests cruise operations or 71 ships through next spring NAFTA class eight about.

And Eventbrite.

We're evaluating the remaining shifts through next spring with a continued focus on maximizing future cash flow, while delivering a great guest experience in a way that serves the best interests of public health.

Importantly, even at this very early stage of our rollout our ships.

Nine rating positive cash flow.

Based on our current rollout, we expect cash from operations for the whole company to turn positive at some point early next year.

Looking forward, we believe we have the potential to generate higher EBITDA in 2023 compared to 2019 given.

Or just spiked a modest growth rate.

Additional capacity in our improved cost structure.

As further insight into the booking trends, we are well positioned to build on our solid book position and intensely constrained capacity for the remainder of 2021 and into the first half of 2022.

What they.

And demand and limited capacity, we are focused on maintaining price even recently with heightened uncertainty from the delta variant of <unk>.

I think travel decisions broadly we continue to maintain price.

We have also opened booking earlier for cruises in 2023, and we're achieving those early bookings with.

Existing demand and good pricing.

Based on that the stuff, we've begun to launch 'twenty 'twenty four sailing even earlier.

In fact, these efforts contributed to the $630 million increase in guests deposit.

Our long term, yes deposits deposits on bookings.

Strong 12 months.

Our three times historical levels.

And in part by a proactive effort to open more inventory for sale in outer years.

Now, we expect GAAP deposits to continue to grow through the restart as we return more shifts the service and as we build occupancy level.

Again.

Beyond favorable trends continue despite dramatically reduced advertising expense.

We continue to focus our efforts on lower cost channels like direct marketing to our sizable past guest database of over 40 million guests.

And earned media as we build on our multiple new ship launches.

Maybe start newsworthy.

Of course, and most importantly, we are delivering on our guest experience word of mouth remains the number one reason people take their first crews and as I mentioned, our net promoter scores are well above historical levels across our shifts that are returned to service so far.

During the quarter.

And we furthered our strong track record of responsibly, managing the balance sheet.

We completed two refinancing transactions among other efforts, resulting in a meaningful reduction in annual interest expense.

We have many more opportunities for refinancing ahead and are working through them at an aggressive pace.

Also importantly.

We have continued to make advancements in our sustainability efforts last week, we published our 11th annual sustainability report sustainable from ship to shore, which can be found on our sustainability website www dot carnival sustainability dot com.

In the report we build on the achievement of our.

May 'twenty go by sharing more details on our 2030 goals that are 2050 aspiration.

The reports shed additional light on the six focus areas that will guide our long term sustainability vision, including climate action.

Growing economy that waste reduction sustained.

<unk>, 20th Tourism health, and wellbeing diversity equity and inclusion and biodiversity and conservation now these areas align with the United Nations sustainable development goals.

That action is a top sustainability focus area.

We are committed to de carbonization, and we aspire to be.

Sustain a neutral by 2050.

As we have previously shared despite 25% capacity growth since that time, our absolute carbon emissions peaked in 2011 and will remain below those levels.

We are working toward transitioning our energy need to alternative fuels and invest.

Carbon new low carbon technology.

Now because of the pause in yachts cruise operations. The 'twenty 'twenty sustainability performance measures are not comparable to prior year data.

That there is a lot of valuable information on the progress we've made in our sustainability journey. Despite what was.

Betsy incredibly challenging year.

We were clearly among the most impacted companies by COVID-19, and I'm very proud of all we've accomplished collectively.

Zane our organization through these challenging times.

Including all we did file a loyal guests all we did borrow other many stakeholders.

I think we did for each other within our Carnival family.

In many regards I believe our collective response to the pandemic is strong testimony to the sustainability of our company.

That I again express my deepest appreciation to all Carnival team members, both shipboard and shore side.

And distantly went above and beyond.

I'm very humbled by the dedication I've seen these past 18 months of course, we couldn't have done it without the overwhelming support from all of you who are listening on this call all of our stakeholders.

Once again, thank you to our valued guests.

Who called travel agent partners. Thank you. So all of the many communities and governments that facilitated getting our crews vaccinated bank.

Thank you to our suppliers and our other many stakeholders.

And of course, thank you to our investors for your continued confidence in us.

And for your ongoing support.

We continue to move forward in a very positive way throughout the path, we've been proactively managing to resume operation as an even stronger operating company.

Our strategic decision to accelerate the exit up 19 ships left us with a more efficient and effectively and it's lowered our capacity growth to roughly.

A half percent compounded annually from 2019 grew 2025, and that's down from four and a half or so pre COVID-19.

We've opportunistically rebalance our portfolio through the ship excellence as well as the future ship transfer any modification to our newbuild schedule.

To optimize our asset allocation.

To maximize cash generation and improve our return on invested capital.

While capacity growth is constrained we will benefit from an exciting roster of new ships spread across our brands, enabling us to capitalize on the pent up demand and drive even more enthusiasm and excitement around our restart.

And we will achieve a structural benefit to unit costs in 2023, as we introduce these new larger more efficient ships, coupled with the 19 ships, leaving the fleet, which were among our least efficient.

With the aggressive actions, we've already taken optimizing our portfolio and reducing capacity.

Our plan, we are well positioned to capitalize on pent up demand and to emerge a leaner more efficient company.

Reinforcing our global industry, leading position.

We have secured sufficient liquidity to see us through to full operation.

Once we return to full operations, our cash flow will.

<unk> primary driver to return to investment grade credit overtime create.

Creating greater shareholder value.

Again.

Thank you for your support.

And we can't wait to welcome everyone back on board.

With that I'll turn the call over to David.

Thank you Anna I'll start.

B the kick off with a review of our guests cruise operations, along with our third quarter monthly average cash burn rate.

Then I'll provide an update on booking trends and finish up with some insight into our refinancing activity.

Turning to gas cruise operation.

Starting to feel so great to be talking about operations again, we.

We started the quarter with just five ships in service.

During the third quarter, we successfully restarted ships across eight of our brands.

We ended the quarter with 35% of our peak.

<unk> in service.

Our plans call for another 27 ships to restart gets cruise operation during the fourth quarter and the month of December.

So on new year's day, we anticipate.

Celebrating with 55 ships or nearly 65% of our fleet capacity back in service.

For the third quarter occupancy was 54% across the shifts in service.

Our brands executed extremely well.

Occupancy did improve month to month through the quarter and in the month of August occupancy reached 59% from 39% in.

Yeah.

And 51% in July.

I can see for our North American brands reflects our approach are vaccinated cruises, which for the time being done to limit the number of families with children under 12 that can scale with them.

Occupancy for our European brands.

Julian flex capacity restriction, such as social distancing requirements for our continental European brands and as a thousand person cap per sailing for some of the quarter in the U K.

For the full third quarter.

North American brands occupancy was 68% while.

And through a European brand Occupancies with 47%.

Revenue per passenger cruise days.

Third quarter, 'twenty, 'twenty, one increase compared to a strong 2019.

The current constraints on itinerary offerings, which did not include many of the higher.

Forwarding destination rich itinerary offered in 2019.

As Arnold indicated our guests are having phenomenal times and our net promoter scores have been incredibly strong as always happy guests seem to translate into improved onboard revenue.

Your email or onboard and other revenue premiums were up significantly in the third quarter 2021 versus the third quarter 2019 in part due to the bundled packages as well as onboard credits utilized by guests from cruises canceled during the part.

We had great growth.

Having bought another pretty hands on both sides of the Atlantic.

Increases in bar Casino shop.

Internet led the way on board.

Over the past two years, we have offered and our guests have chosen.

More and more bundled package option.

It.

Now again, we will see the benefit of these bundled packages in onboard and other revenue as we did during the third quarter 2021.

As a result of these bundled packages the line between passenger ticket revenue and onboard revenue.

To be blurry.

For accounting purpose.

We allocate the total price paid by the gap between the two categories. They have for the best way to judge our performance is by reference to our total cruise revenue metrics.

As we previously guided the shifts in service during the third quarter were in fact cash flow positive.

Purposes.

They generated nearly $90 million of shipped level cash contribution.

This was achieved with only two months U S based restart during the third quarter as our North American brands began guests cruise operation in early July we expect.

Contact level cash country version to grow over time.

Ships returned to service and as we build on our occupancy percentage.

For those of you who are modeling our future result, I did want to point out that due to the cost of a portion of our fleet.

The ship that is during the first half of 2022.

Restart related expenses.

And the cost of maintaining enhanced health and safety protocols.

We are projecting ship operating expenses in 2022 per available lower birthday.

A L.

Hum as it is more commonly called to be higher than 2019, despite the benefit we get from the 19th smaller less efficient ships, leaving the fleet.

Remember that because a portion of the fleet will be impart added during the first half we are spreading costs over lessons.

Danielle D D.

We do anticipate that most of these costs and expenses will end with 2022 and will not reoccur in fiscal 2023.

Now, let's look at our monthly average cash burn rate.

For the third quarter 2021.

Less our cash burn rate was $510 million per month, which was better than our previous guidance and was in line with the 500 million per month for the first half of 2021.

The improvement versus our guidance was due to the timing of capital expenditures, which are now likely.

One to occur in the fourth quarter.

And some other small and working capital changes.

With the timing of certain capital expenditures now shifting to the fourth quarter. The company expects its monthly average cash burn rate for the fourth quarter to be higher than the monthly average rate for the first.

Likely nine months of the year.

Other good news is positive factors impacting the fourth quarter a restart expenditures.

To support not only the 'twenty two shafts that will restart during the fourth quarter, but also the additional ships that will restart in the first quarter of 2022.

<unk> along with a significant increase in dry dock days during the fourth quarter driven by the restart schedule.

All of these expenditures have been anticipated and given the announced restart many of them are now occurring in the fourth quarter.

Also during the.

Personal quarter, we're forecasting positive cash flow from the 50 ships that will have guests cruise operations during the quarter and a L. P. D for the fourth quarter are expected to be $13.0 million, which is approximately 47% of our total fleet capacity.

Now turning to booking trends.

Our booking volumes for the all future cruises during the third quarter 2021, well higher than booking volumes during the first quarter.

That trend continued over the first couple of months of the third quarter, such that we expected the third quarter with.

The higher booking levels in the second quarter, but we did manage to achieve that because of the lower booking volumes in the month of August when the Delta there is impact and travel and leisure bookings generally impact on bookings in August with mostly seen on near term tailing.

However.

And any impact quickly stabilized in the month of August and in Europe.

Recent weeks, we have started to see a welcome uptick.

In booking volumes are.

Cumulative advance book position for the SEC.

And half of 'twenty 'twenty. Two is ahead of a very strong 2019 and is that a new historical.

Ever.

Pricing on our second half 2022 book position is higher than pricing on bookings at the same time for 2019, failing driven in part by the bundled pricing strategy for a number of our brands, but excluding the dilutive impact of future cruise.

So hot or more commonly known as S. He sees.

If we were to include the dilutive impact of future cruise credits pricing on our second half 2022 book position is now in line with pricing at the same time for 2019 failing.

This improvement.

Credit issue as a result of positive pricing trends, we have seen during the third quarter.

This is a great achievement given pricing on bookings for 2019 sailings is a tough comparison and that was the high watermark for historical yield.

Finally.

I will finish up with some insight into our refinancing activity.

We are focused on pursuing refinancing opportunities to extend maturities and reduced interest expense.

Today through our debt management efforts, we have reduced our future annual interest.

<unk>.

By over $250 million per year.

We have completed cumulative debt principal payment extension of approximately $4 billion, improving our future liquidity position.

The 4 billion dollar extension results from three things.

First since.

July refinancing are 50% above first thing you know for $2 billion.

Second the completion of the European debt holiday amendments, which deferred $8.0 billion of principal payment.

The deferred principal payments will instead be made over a five.

Thanks for that period.

Living in Haynesville 2022, and.

And third the inks.

Pension another $300 million bilateral loan with one of our banking partner.

As we look forward.

And how supportive the debt capital market investors and commercial banks and then we will be pursuing additional recently.

Nine years, and seeing opportunities to meaningfully reduce our interest expense and extend our maturities over time.

And now I'll turn the call back over to Arnold.

Thanks, David Operator, please open the call for questions.

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One moment please for the first question.

And our first question is from the line of Steve Wise and ski with Stifel. Please go ahead.

Yeah, Hey, guys good morning.

Putting arnaud if tomorrow named David doing well.

So Arnold in your prepared remarks you.

I think I heard this right, but you you talked about how you're expecting 2020, three's EBITDA should be higher than 2019, EBITDA and I you know look I understand theres, new net capacity in there that's going to help drive part of that EBITDA, but.

Good morning can you also help us maybe think about at a higher level.

Now what some of your longer term assumptions are in order to get to that EBITDA level, meaning no. How are you guys thinking about whether it's a you know the pricing environment load factors.

Anything else you would point out that they could kind of bridge that gap.

Sure I'll make some comments and then give David a chance as well Hum.

Each by 'twenty three you know again, if things continue to trend the way they're going.

Should have the full suite all will have as you mentioned additional capacity was you know the.

Adding a new shifts more efficient we've got some cost inflation.

Functional improvement some would come out leaner and better.

Better cost structure, Oh, we're more efficient on the ships most of them are you standpoint, as well as operating standpoint. In addition to that we expect to be back at you know occupancy levels are more comparable.

Christopher historical or potentially even better given the fact that while there will be some capacity growth at that point in the industry is going to be well below the capacity growth that would've occurred absent the pandemic I'm going to David any additional comments, yeah, I just point out a few things.

So the 19 ships between the 19 ships that left the fleet, which Arnold indicated our smaller less efficient ships and all the new capacity coming in we certainly have a much richer richer cabin mix onboard the vessels that I think we had indicated that cabot in the balcony.

So you know the next was about six percentage points higher.

So that does give us the opportunity to generate more revenue.

The combination of the ships, we said before those leaving the fleet in the Newbuild.

Hey, you got unit cost at the ship operating.

Can he kept below a 4% reduction on the fuel consumption just the change in the fleet that I described at 3% in total it is at 10% capacity increase net of the ships that left the fleet.

So with all of the pent up demand and all of the things of revenue management.

Letting the.

Bundled packages that we're offering which is driving onboard revenue.

And everything else, we're doing we feel as I said that we have the opportunity for stronger EBITDA in 2023 compared to 2019.

Okay, great that.

That's great color. Thanks, guys and then second question you know as we start to think about 2022.

Is there any way for you to help us think about.

How you know how 'twenty two is sold at this point I guess, what I'm trying to understand is how much of your capacity is actually available for sale at this point and then how you think about opening up.

Is the capacity for 'twenty, two you know without ultimately impacting your pricing ability.

So go ahead, David Yeah, no happy to.

For all intents and purposes I think in most cases, we have announced the restart take 470.

But more ships out of the 95 that will be in the fleet in the spring of 2022, but even those ships whoever you have not announced the restart date in most cases, we have cleared the inventory for the data that we don't expect to fail and.

When you're only selling at this point the dates that we to anticipate sailing we just have not made a formal announcement on the remaining 24 ships, but those will be forthcoming in the days and weeks ahead.

So what is out there today more or less give or take there maybe.

And dangerous I'm, a little bit on the margin, but more or less what's out there today is what we're selling we talked about the back half of the year being at a new historical high in terms of the book position and we were very pleased with that people are booking further out.

Something that so where we're seeing the benefit of that the first half of the year. The only reason we didn't give a detailed year over year comparison of 22 versus 19 is because it is a bit of an apples and oranges comparison, you know while we are very pleased and look at the.

And half of the year and for the voyages that were selling are we feel you know they're at the high end of the historical booking curve that the reason for the apples and oranges comparison is in the first half we're not running most of the world cruises and all belonged exotic voyages and they.

Firsthand to book much further out because theyre much longer. So if we gave you the numbers that would be an apples and oranges comparison, but it is fair to say that we feel very comfortable with the.

The pricing and the book position for the first half of 2022.

But.

But I said in our prepared comments, we will have but we're planning to have.

As you know the whole clique on in time for them.

The summer season, where we make the bulk of our profit so for the second half of 'twenty two.

We're looking for.

Being equal of course.

Steve.

On it Steve.

If you if you just you know week, 47% of our capacity.

Will be sailing in the ER.

Yeah, a lot of capacity will be sailing in the fourth quarter.

We ended the calendar year.

And we said with nearly.

65% of our capacity. So you know during the first half of the year. We're gonna go from somewhere around 60% on December 1st up to 100% at the end of the first half. So you can begin to see that the first half of the year is going to be somewhere in between that.

Singing on the exact ramp up of the capacity.

But to be clear so if I'm gonna make this up so if you know lets take lets take a random lets take the carnival conquest I'm going to make a ship up here you know for the second half of next lets you know, let's look at the second half of next year are you selling 100%.

The pad capacity today or are you still are you still kind of holding back some of that capacity because you don't want to try to get up to that 100% level and hopefully that makes sense.

And now we're we're not for future voyages out there because obviously.

You know, we're nowhere near selling.

Of them, yet obviously, if we did we would've underpriced it we're not restricting the capacity that we're selling for the back half of 2022.

There's never going to us.

Got you all right. Thanks Leland.

Thank you got it I appreciate it thanks, Mike Thanks for the color.

Stay safe.

Our next question is from the line of Robin Farley with UBS. Please go ahead.

Thank you.

Wanted to.

Clarify your commentary on expenses I know you mentioned some expenses next year, obviously would not be recurring the capacity out of service the restart costs.

And.

And then maybe the piece of it that is would be that you know enhanced protocols. So if.

If you looked at only the period, where everything is operating and so you then restart expense would not be in there and then the fairness of ships out of service.

For that period forward and then I guess this would also mean for 2023.

Is it fair to say that your expense per passenger cruise days would be below the 2019 levels. When you exclude those sort of one time restart costs.

Well, so where I get Oh go ahead, there, but that's all going to go ahead.

So.

When you when you exclude all of those costs and looking to.

For 2023, I mean, we had indicated that the benefit of the change in plea was on the ship operating expenses with 4% per a L E D.

We also have found efficiencies shore side as well and so there are cost efficiencies that.

That way we are.

We were also you know as the whole world is we are seeing some inflation.

We're working hard to mitigate all of that inflation.

We don't see it.

Nearly as much as people in the United States in terms of the the labor given.

You know our employee.

Blended base comes from nearly 150 countries around the world onboard our ships. So we have a much more of an opportunity there and so we're working hard but I'd be hesitant to give guidance on 2023 cost structure.

I think it's just fair to say to give you all the pieces.

<unk> that are out there and then you know, we'll we'll give guidance as we get closer.

Okay.

Okay.

That's helpful too would you venture whether for 2022, whether the shore side efficiencies would offset.

He you know inflation and enhanced protocols just for the for 'twenty.

22, if you exclude the he get pass through the restart expenses.

I would be hesitant to give guidance at this point clearly the short side efficiencies.

Will flow through.

And since we're still working through.

All of the details relating to in sourcing.

And making changes in mitigating some of the inflationary costs I'd be hesitant to give guidance, but you can be sure that we've got people focused on those items are to.

To optimize the situation.

Okay great helpful. Thank you and then.

My other question is just to clarify the commentary.

Harry on pace for next year.

We're just looking at the second half when it's a little more comparable and then you said you know excluding the feature crews kind of discounts that pricing is about in line with 2019 levels I just wanted to make sure I understood. When you gave your earlier commentary about how you know there is more bundling now so more of.

Weddings booked now for second half compared to 2019 has more of sort of some of the onboard expense rate kind of in the ticket price because of the bundling if I'm understanding your commentary until I guess I just want to clarify when you are seeing price in line with 2019 is that sort of.

You have that's after you've allocated some of the bundled ticket price to onboard or.

Sorry, I guess I'm, just trying to think about how come that way, we've tried to normalize it and do some level of allocation to be an apples to apples comparison.

Okay perfect.

Perfect. Thank you very much thanks.

Thanks Robyn.

Our next question is from the line of Ben Chaiken with Credit Suisse. Please go ahead.

Hey, How's it going.

Good morning, Matt.

Good morning, Hey at risk.

Could getting overly granular.

Try it anyway, if you think about the profitability of the ships. If you think about the profitability of the ships coming online in your new capacity over the next couple of years. So whenever the next two or three years, and then compare that to the remaining legacy fleet obviously excluding.

You know the 19 disposed of ships.

Is there any way to ballpark compare those those two kind of like sets of assets, whether its margins EBITDA revenue premiums like that's something that anecdotally talked about industry, but.

That didnt make sense I can try a different way or we can take it offline no. We have we tell them about the overall benefit.

A mood should relative to the fleet. So maybe you might want it.

So it will come up.

From a cost perspective.

If you just look at the unit cost for a in the AR, our new ships coming in they tend to be 15% to 25% lower on a unit.

That basis than the existing fleet and from a fuel consumption perspective, where we're talking more like 25% to 35% more fuel efficient on a unit basis. So.

We do see the enhanced profitability.

And when you start adding in of course, the better cabins.

GAAP and Max either more opportunity for onboard revenue because there are more.

There's more public space in the larger ships. So all of that does bode well for.

And an improved return on the new ships versus the existing fleet.

Okay cool that that makes sense I appreciate it.

That's all for me.

Our next question is from the line of Jamie Katz with Morningstar. Please go ahead.

Good morning, Thanks for taking my question.

Sure.

Good morning, I was starting to be to play do you have a little bit more visibility on the capex demand over the next year or two that you'd be willing to share with us I mean, I know we have the cat that the cash burn, but it would be helpful to hear the difference between maybe capex and opex going forward.

We can share with you our capex projections with without a doubt so looking at 2022.

And I'll give you the two pieces of Capex.

The non new build Capex, we're projecting about 1 billion and a half.

And the Newbuild is $9.0 billion. So it's about $6 billion in total keep in mind, you remember that most of the Newbuild is financed with the export credits that are already committed.

In 2023.

The non new build we're forecasting about.

Also about a 1 billion and a half and the Newbuild is $9.0 billion for a total of four point too.

So we are expecting an increase in capex in 'twenty, two and 'twenty three from where we are today in 'twenty, one, but we're not expecting to go back up pre COVID-19.

We had probably indicated.

A sort of a steady state capex of call it $2 billion.

Non new build Capex and we do believe we will probably get back there at some point in the future but in the next two years, our best guess at this point is about 1 billion and a half.

Okay.

Okay, and then just going back to Robin's question on bundling I'm curious, whether you guys are thinking that the bundling behavior or something that's more secular so overtime.

It's going to remain that the pricing component is less important than it was historically and that the onboard component is more important than it was historically.

Shortly and I'm not sure if there's anything to read into that but.

No.

A new secular trend or transitory.

Yeah again, I think we have nine brands you know a lot of variability across the brands.

And so we bundle and he's been around a while.

While it's not a new thing.

But there has been a more recent trend that guests seem to prefer.

Certain.

Aspects of their experience bundled and so there has been an increase.

In some aspects of that.

Whether that's an ongoing trend.

You know probably book, we're going to stay flexible and dynamic and give the guest what they want.

And I think one of the kind of God, if I can add to what Arnold set what are the benefits of the bundled package I mean, it gives the consumer a choice and any choices you give the consumer.

Creates hopefully more demand.

And better pricing in the long run, but you know keep in mind that when somebody.

Bundles.

You know when somebody pays for like their drink package and their internet ahead of time.

Well first of all that of course benefits the agents because they get a commission.

Mission on the whole package, so definitely does make the travel agents happy, but when the people get on board they really have a fresh wallet.

And because they've already paid for certain items. So they have a fresh wallet, they're starting over again.

And we believe that with the fresh while it does.

Incentivize more onboard spend in total so we would expect our onboard to be higher in the long run as a result of the bundling and we did see it in the third quarter I mean, the onboard and other premiums were up significantly compared to 2019.

And so some of that is the fresh wallet of people getting onboard.

Thank you that's helpful.

Thank you.

Okay.

Our next question is from the line of Asia, George Uva with Infiniti Research. Please go ahead.

Good morning, guys. How you think you have been doing a great job and are probably very happy to be so busy which we started so congratulations I have a mic.

My question is related.

Yes, again, Arnold I think that what you've done has been fantastic and.

Yeah.

So at the end of the year.

My question was it a little more in terms of sourcing and destinations with the ships going back to warmer climates, including the Caribbean during the winter months do you find any difficulties in terms.

Terms of getting international passengers, especially from Europe with more stringent entry requirements into the U S and secondly.

Australia seems to continue.

Continues to be a wildcard, even though it's a small market relatively speaking in terms of the capacity you have there.

But it's also somewhat important market during winter.

Okay.

Yes, Australia, the board Martin for certain and the travel restrictions.

Absolutely playing a part in terms of what we can do.

With occupancy ultimately.

An encouraging sign as things continue to loosen up things continue to improve.

You can see in the U K, where no that's good.

Momentum.

Further ahead on that some nations et cetera.

So in the U S recently made an announcement.

Fully aware of.

Let them.

Hotels from Europe come in and starting in November, but all of those things. The near term are impacting of course, certain and they will continue to evolve.

No you are absolutely Australia will open well will be there.

I'm excited about that and ready to take full advantage of it and our team over there is working.

Booking cruises going forward and so on in anticipation that.

They will open.

But the world is just processing itself through this pandemic.

As we said and as I've said in the remarks early on the prepared remarks.

Choppy, but there's movement forward.

And the most important thing is that there is pent up demand you know people are very interested in the cruise experience not just repeat cruise scores, but we're seeing lots of.

New to brand and a new cruisers on booking and so that's a positive sign but we do have to get.

To the point that we will get there, where there's kind of back to some kind of a normal where people are free to travel.

And if I can just add if I yeah, Yeah, let me ask David.

In terms of your question about.

Pete Europeans traveling to the United States for the.

Caribbean Winter season, So you know keep in mind, we have multiple brands.

And our European brands, essentially our home porting in other places in the Caribbean. So you know I don't remember everything Homeport I mean piano in the UK I think home ports out of Barbados.

Betas.

And costs and I either in other places in the Caribbean, They choose home ports, where theres great airlift from their home countries. So most of the Europeans who are coming to the Caribbean are going on our European brands and going somewhere in the Caribbean.

Ian to embark on their vessel the North American brands, which are sailing out of the United States. The overwhelming majority of their guests probably.

North American sailing on board ships in the winter time so.

It's.

Travel restrictions are easing people are starting to be able to.

To come I won't repeat everything that you've probably already now.

But it's not as big of an issue for US is given the structure of where people start their cruises.

I think the Comporting point that you've made are is great and I should have thought about that.

And the second question your yield management guys are.

Are probably working very hard because now they have even more you know the levers are.

To work with so in addition to trying not to underprice in yet reaching.

<unk> occupancy levels were at a shipboard level at least a we're getting a cash benefit.

Has there been any change any.

Restrictions in terms of occupancy or is it more of a continuation of what.

You've been doing for decades.

<unk> trying to get the best price.

We've intentionally.

Brett good occupancy for a host of reasons.

Some related and kind of again with the brands all over the place in terms of jurisdictions. So some just to be in compliance.

Some cases others.

Together with a ramp up to because they have new protocols will have to get.

The cool experience with it and experience with the guests to make sure we work on in the courts and some you know an artifact of the compliance measures, whether it's physical distancing in Europe.

No other requirements.

So at this point, yes.

Yes, theres been intentional constraint, but as we've said.

Where we have like normal cruises and the Caribbean.

It's vaccinated cruises, but.

You know carnival brand as well.

At 70% occupancy, which is fantastic given the number of ships that have been.

Coca Cola.

And we intentionally tapped that.

As we begin to open up more.

Obviously.

Ill management folks.

We'll have to sharpen their.

Hum.

I was going to say it pencils go nobody uses pencils anymore.

Their keyboards more.

Oh and go to work on it but it's.

We we have good momentum.

It's very disciplined.

We have manage the timing of it.

Starts with some chips you know thinking through these matters.

And so is this a very proactive and today well managed though right.

Relaunch I'm, giving us an opportunity to have strength in pricing going forward.

Well the whole process is obviously well above my pay grade so I still use benefits. Thank you.

My questions and they're not tired me in yield management not good enough for that anymore.

Okay.

Hey, guys. Good luck.

Thank you.

Uh huh.

Our next question is from the line of Brent on tour with J P. Morgan. Please go ahead.

Okay.

Hey, good morning, everybody. Thanks for taking my questions. So David good morning.

David I was wondering if.

If you could maybe give us your view.

On how bookings cadence progressed throughout delta, but just focused on sale.

Sailings for the second half of 'twenty, two and then if there was a wobble at all how did the industry respond to that in terms of pricing.

Yeah. So you know as I said in my prepared remarks.

The impact in August.

The Delta variant.

On bookings was really much more of a near term phenomenon in terms of call. It the next.

You know six months, maybe nine months of bookings.

The further out you go it is really hard to even spot would distinguish delta varying trend in the booking patterns. So that the second half will remain strong and throughout the month of August.

And you know in terms of pricing I think Arnold said this in his notes.

In his prepared remarks.

We all believe that the Delta variant people would.

We would get past this and so our view was you know to maintain price.

And two to make sure that we optimized revenue in the long run.

Not yet bookings during the month of August we still have plenty of time since we're ahead.

We'll have plenty of time to.

To fill the ships to the occupancy levels, we're targeting.

For both the fourth quarter and for the first half of 2022 so.

So we are holding price and we're in a good position.

Excellent. Thanks for that and then as a follow up I know you're targeting cash flow cash flow from operations breakeven sometime early in 'twenty two.

And I know that you didn't give a specific month on that which we can appreciate I'm. Just curious what are you assuming in that for.

Customer deposit inflows, if anything or it.

It might still be elevated at that time, and so I'm just curious what's baked in for that.

Yeah, well you know customer deposits.

At the end of the third quarter were $4.0 million.

The last two quarters they did increase.

Our expectation is that they will continue to increase.

Of course, you know.

Steady state environment remember that the overwhelming majority of the customer deposits at.

At any point in time or the final payments for the next three months of cruises. So has the capacity for the next three months continues to build towards the 100% next spring you should see an increase in customer deposits over.

Over time, as we continue to get more and more final payments.

Keep in mind like for the fourth quarter, we only have 47% of the capacity in service.

So there is only half of probably the final payments that you would see come next may.

So.

So you will continue to see an increase.

Driven by that factor and that should be a positive cash flow inflow to us.

Over that timeframe.

Okay, but maybe to ask it a different way do you need.

Elevated customer deposit inflows to break even on cash flow.

Income operations in the first half of next year.

EBITDA.

Well also breakeven in the early part of 2022 so.

I'll give you that hopefully.

And since you are quite yeah, that's helpful, Brad and a much more direct way.

Uh huh.

Alright, great. Thanks, guys and best of luck.

Thank you.

Okay.

Our next question is from the line of Stephen Grambling with Goldman Sachs. Please go ahead.

Hey, thanks for taking the questions.

Could you just talk about the pricing and booking.

<unk> dynamics between what you saw on Carnival versus maybe some of the other brands specifically looking at second half of 'twenty two as itineraries normalized did you see any difference more recently in close in bookings that may inform how that trajectory could evolve.

I would say you'd begin where we see strength across.

Brian the portfolio.

And.

That's very encouraging to us but go ahead, David with any specific comments you might want to make.

For the back half of 'twenty two I mean is there any let's say all the brands are strong things are going well, it's all the we're getting back to.

Have a normalized comparison of full itinerary, a full breadth of itineraries is across the whole fleet.

And so we feel very good about that as I said the back half of 2022 was.

At a historical high.

And we saw great.

So it's in all brands and in both sides of the Atlantic So Theres nothing particular to note there.

Closer in.

Some of that is just a function of itineraries in marketplaces.

But we are seeing good occupancy and.

Trends across all the brands.

I gave you the occupancy figures for the third quarter clearly the European brands had more capacity restrictions in the third quarter.

UK restrictions go away.

But the.

Continental Europe social.

And seeing restrictions remain at least for part of the quarter.

So there's.

Theres nothing worth, noting I think we're seeing good.

Comparisons in good booking trends across all the brands there are small differences, but some of that also has to do with.

This itinerary length.

Between the different brands in the marketplaces.

Great question, Operator, I'm sorry go ahead this will be the last question good one.

Well I I may have missed this but I was I was wondering if you had any way you can quantify the potential kind of sustained structural cost increases that you.

Some of the health actions.

And as you mentioned there was some supply chain disruption. So I'm wondering if you can help frame kind of the level of inflation.

Inflation, you might be seeing whether it's in labor or commodities. Thanks.

Yeah real quickly I'll make a general comment I think from a.

So.

The well cost standpoint, a lot of.

Protocols startup called so close will go away a lot of protocol costs will also go away because all the time.

Protocols won't be required.

Once we get to Europe.

Point, where it's only protocol Cogs.

Sustaining and then.

The hundreds of thousands you know.

Versus per ship versus millions of dollars per chip or whatever.

Again, we suspect that goes will reduce over time as well.

Yeah, I agree with Arnold and I will tell you I'm reluctant at this point to try to.

<unk>.

Pegged this because there's so many moving parts and variables and so many things were working on.

That when we get closer we'll have much better clarity.

But there's a lot of opportunity out there for us and you can be sure we're working hard to maximize those opportunities in every.

He with every supplier in and every item, we source as well as the labor and other things so.

Well, we'll give you more guidance as time goes on.

But just recognize we're clearly focused on this on an ongoing basis.

And thank you everyone.

Way, we really really appreciate them.

Your support and ongoing interest in <unk>.

We're very excited.

To be having the results we're having at this point. Thank you so much.

Thank you everybody to have it.

Yeah.

That does conclude the conference call for today.

Thank you for your participation and ask that you. Please disconnect your lines.