Q4 2021 Carnival Corp & Carnival PLC Business Update Call

Okay.

Good morning, and happy holidays, everyone.

Well, we're a business update.

Hi, Good morning, Donald President and CEO of Carnival Corporation, and plc and today I'm joined telephonic lead by our Chairman Micky Arison.

As well as by David Bernstein, Our Chief Financial Officer, and by Beth Roberts Senior Vice President Investor Relations.

Thank you all for joining us this morning.

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

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

What a difference a year.

We are clearly well on our way back full crews operations with 50 ships now serving guests as we end the fiscal year.

That's up from just one ship one short year ago.

We've already returned over 65.

New members to our shifts and resuming operations.

One 2 million and counting.

Bill.

Now we've achieved that while delivering exceptional guest experience with historically high net promoter scores.

These are strong accomplishment, especially in light of the uncertainty we see just one year ago went back patients who are not yet available and effective protocols to mitigate the spread of the virus we're steadily bulb.

Today, our team members and the vast majority of everything.

<unk> vaccines and many have received boosters.

Habits and factor protocols for Covid, 19, and its very enabling occupancy sort of progressed toward historical levels. In fact occupancy that our carnival cruise line, Brian which currently operate that generate that are most similar to its normally publish that Jerry.

Now approaching 90% and that's after the impact of the variance on near term book.

Again Carnival cruise line.

The outperformed with both occupancy and pricing strength.

Even at this early stage as a company.

Now generating meaningful cash flow at the ship level to date and growth, helping them fund startup costs with the remaining fleet.

Customer deposits have grown by over one $2 billion from the prior year level.

Book position continue to build and to strength.

Accordingly, we ended the year with $9 $4 billion of liquidity and that's essentially the same liquidity level as last year, but with significantly improved cash flow generation ahead.

<unk> mentioned ship operating cash flows and customer deposits.

Continue to build.

With 60 acreage set of our capacity now in operation and the remainder planned by spring.

Well positioned by our important summer season, where we historically have the lion's share of our operation.

Throughout 2021, we said that we expected the environment to remain dynamic and it certainly.

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

As we have demonstrated through the Delta Berry and now with Ami.

We have navigated near term operational challenges, while the variance there a corresponding effect on consumer confidence have created some near term booking volatility.

Our book position has remained resilient.

And in the case of Delta variant already recovered importantly, these variants have not had a significant impact on our ultimate plan to return our full fleet to get the operations in the spring of 2022.

It is clear we have maximize our return to service in 2021.

And we have positioned the company well to withstand the potential volatility on our path to profitability.

At the same time, we have not lost sight of our highest responsibility and therefore, our top priority, which is always complaints.

Brian Little protection, and the health safety and well being of everyone.

That's our guests.

People in the communities, we touch them.

And of course, our carnival family, our team members' shipboard and shore side.

And to that end, we've achieved many important milestones along the way in a return to service.

For example, broadening our commitment to ESG with introduction about screen 30 sustainability goals and our 2050 aspiration.

And that's building on the successful achievement of our 2020 goals.

Increase our ESG disclosure by incorporating SaaS b and Tcf the frameworks in our sustainability report.

Bolstering our compliance efforts with the addition of a new board member with valuable compliance experience. A strong addition to our board of directors and our board compliance Committee.

Improving our culture through emphasizing essential behaviors and incorporating them into our ethos training and development.

Through everyday real time feedback.

As we are already amongst the most diverse companies in the world with our global employee base, representing over 130 countries.

We're focusing our efforts on diversity and inclusion.

Three levels and in all areas of our operations.

And of course, there are many more operational milestones such as reopening our eight owned and operated private destination support facility.

Princess Cay half Moon Cay grants hurt mahogany Bay Amber Cove.

How's the mill.

On a cruise the Tenerife and Barcelona all.

All delivering an exceptionally experienced over 630000 of the $1 2 million guests since resuming operations.

Welcoming nine new more efficient ships across our world, leading brands, including Moneygram powered by LNG.

Nothing short of a game changer crowd namesake brand Carnival cruise lines.

Premium brands all of them are introduced the new Rotterdam.

Sister ship very successful call these out and new.

Princess walk in guests aboard a new medallion class ship in Chinas Princess and we'll welcome another new medallion class ship discovery process early next year.

Ultra luxury brand Seabourn welcomed seaborne venture with this world class expedition team and its spectacular 360 degree view summary.

So the U K, we successfully introduced I own them all.

So powered by LNG.

So Germany, we shortly take delivery of about six LNG powered ships I E. The top.

Shifting to the also highly successful Aida Nova.

And southern Europe.

For <unk> and LNG powered comps tough comps will replace the exit of several less efficient ships.

Now these new chip Mardi Gras I own outlets, Wisconsin have joined Eaton, Nova and passes Morocco to beat the only five and with the addition of Aida Kosmos sharply.

Only six large cruise ships in the world currently powered by LNG.

<unk>, a leading edge de carbonization efforts.

Now while the utilization of LNG is a positive step with an environment of histology is inherently 20% more carbon efficient it is not our ultimate solution.

We have announced our net zero aspiration by 2015.

There is no no net zero carbon emissions in our industry. At this time, we are working to be part of the solution.

We have and expect to continue to demonstrate leadership and executing carbon reduction strategies.

We are focused on decreasing our unit fuel consumption today, we do see even the need for carbon offsets.

Our decarbonization efforts have enabled us to peak, our absolute carbon emissions way back in 2011.

And that's despite an approximately 25% capacity growth since that time.

While today based on publicly available information. We believe we are the only major cruise operated at peak our absolute EBIT shows our entire industry is moving in the right direction.

And as a company with a 25% reduction in carbon intensity already under our belt, we are well positioned to achieve our 40% reduction goal by 2030.

We are working hard to reach that deliverable are ahead of schedule.

In addition to our cutting edge LNG upwards, we have many other ongoing efforts to accelerate de carbonization Denis.

To name just a few they include itinerary optimization.

And technology upgrades to our existing fleet at an investment of a little bit $350 million in areas, such as air conditioning waste management lighting and of course the list goes on.

We are actively increasing our shore power capabilities.

Greater than 45 to 10 of our fleet is already equipped to connect the short pump and we plan to reach at least 60% by 2030.

Now we help develop first port with short power capability for cruise ships, leading to the development of 21 ports to date and pound.

We are focused on expanding shore power to our high volume ports around the world.

That includes Miami.

Southampton, England and Hamburg, Germany.

So ultimately achieve net zero emissions over time.

Nothing in research and development partnering on project to evaluate the pilot maritime scale battery and fuel cell technology.

Working with classification Society and engine manufacturers to assess hydrogen Bethany.

Ethanol as well as violent synthetic view as future low carbon fuel options for cruise ships.

Also these efforts combined with the exit of 19 less efficient ships are forecasted to deliver upon returning to full operations.

A 10% reduction in unit fuel consumption on an annualized basis.

That's a significant achievement on our path to de carbonization.

Our strategic decision to accelerate the exit of 19 shifts.

With a more efficient and more effective fleet overall.

And it's lowered our capacity growth to roughly 2.5% compounded annually from 2019 through 2025.

Now from four and 5% annually pre Covid Wildcat.

While capacity growth is constrained we will.

We'll benefit from this exciting roster of new ships spread across our brands, enabling us to capitalize on the pent up demand and drive even more enthusiasm around a restart plan.

We enjoy a further structural benefit to revenue from these enhanced guest experiences new ships.

Due to the richer mix of premium priced balcony cabins, which will increased six percentage points to 55% of our fleet in 2023.

As we mentioned before we will also achieve a structural benefits of unit cost as we deliver these new larger more efficient ships.

Coupled with the exit of 19 less efficient ships it'll.

It'll help generate a 4% reduction in ship level unit costs going forward, enabling us to deliver more revenue to the bottom line.

Upon returning to full operations.

15% of our capacity will consist of these newly deliberate larger more efficient ships expediting, our return to profitability and improving our return on invested capital.

We are clearly resuming operations as a more efficient operating model.

And we'll use our cast votes were to reduce our leverage on our path back to investment grade credits.

Last quarter, we discussed the initial impact of the Delta there you.

We indicated we saw an impact on near term booking volumes in the month of August.

Booking volume.

Accelerated sequentially and return to pre Delta levels in November.

As we said we would we maintained price despite the disruption.

<unk>, 4% higher revenue per passenger cruise days in our fourth quarter than the fourth quarter of 2019.

In fact, the Carnival cruise line brand, where we as I mentioned are able to offer more comparable itineraries for those in 2019 experience.

Experienced its second consecutive quarter of double digit revenue growth for PC.

While improving occupancy with nearly 60% of its capacity returned to service.

Now that's a testament to the fundamental strength in demand for <unk> product, especially when you consider that this was accomplished without the benefit of a major advertiser.

We expect to build on this momentum with the brand's announcement just last week on his Thunder struck campaign.

Engineers to highlight the joy fond of Carnival cruise.

That advertising campaign is launching over the holidays, including the Activations on Christmas day.

And times square on New year's Eve and <unk>.

<unk>.

Turning is something that's very present in the news today.

We have also experienced some initial impact on near term bookings, although difficult to measure.

That said, we have a solid book position and intentionally constrained capacity for the first half of 2022.

The existing demand and limited capacity, we remain focused on maintaining price.

Bookings continue to build for the remainder of 2022 and well into 2023, and we are achieving those early booking with strong demand.

In fact pricing on our book position for the back half of 2022 improved since last quarter and that's despite the delta there.

The current environment, while choppy has improved dramatically since last summer.

And as the current trend of vaccine Rollouts and advancements in therapies continues it should improve EBIT further by next summer.

So looking forward, we remain on a path to consistently deliver cash flow from operations during the second quarter of 2022 and generate profit in the second half of 2022.

Importantly, we believe we have the potential to generate higher EBITDA in 2023 compared to 2019.

Given despite our modest growth rate additional capacity and our improved cost structure.

Throughout the pause we have been proactively managing to resume operations as an even stronger and more efficient operating.

To maximize cash generation anthos.

And to deliver double digit return on invested capital.

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.

We continue to move forward in a very positive way.

That I again express my deepest appreciation so carnival team members, both shipboard and shore side, who can.

Consistent they go above and beyond.

I am very proud of all we've accomplished collectively.

Sustain our organization through these challenging times and I am very humbled by their dedication I've seen from our teams throughout.

Of course, we couldn't have done it without the overwhelming support from all of them.

So once again.

Thank you to our valued guests.

To our travel agent partners.

Thanks.

One court and destination.

Thank you to our suppliers and other many stakeholders and of course.

Thank you to our investors for your continued confidence in us and for your ongoing support.

Once again.

We can't wait to welcome everyone back onboard.

With that I will turn the call over to Dave.

Thank you Arnaud I will start today with some color on our positive cash from operations.

Followed by a review of guests cruise operation along with a summary of our fourth quarter cash flows.

I'll provide an update on booking trends and finish up with some insights into our financial position.

Turning to cash from operations.

I am so happy to report that our cash from operations turned positive in the month of November ahead of our previous indication driven.

Driven by increases in customer deposits and other working capital changes.

We all know that booking trend are a leading indicator of the health of our business.

With solid fourth quarter booking trends, leading the way driving customer deposits higher.

Positive EBITDA is clearly within our sights.

Over the next few months.

Expect ship level cash contributions to grow as more ships returned to service and as we build on our occupancy percentage it.

However, cash from operations and EBITDA over the next few months will be impacted by restart related spending and dry dock expenses is 28 ships.

Almost a third of our fleet will be in dry dock during the first half of fiscal 2022.

Given all these factors combined we expect post monthly cash from operations and monthly EBITDA to consistently turned positive during the second quarter.

2022.

So 2022 will be a tale of two halves.

While we expect a net loss for the first half of 2022. It makes me feel so good to say, we expect the profit for the second half of 2022.

Now, let's look at guests cruise operation.

During the fourth quarter, we successfully restarted 22 shafts.

During the month of December we will restart and additional staffing ships. So we will be celebrating on new year's Eve with over two thirds of our fleet capacity in service.

Our plans call for the remainder of the fleet to restart catch cruise operations by spring.

US in a great position.

Our seasonally strong summer period.

For the fourth quarter.

Keep in C with 58% across the ships and service.

And that was a four point improvement over the 54% we achieved last quarter during the peak summer season.

The slowdown in bookings just prior to the fourth quarter from the Delta variant.

During the fourth quarter, we carried over 850000 gas, which was two and a half times the number of guests we carried in the third quarter.

Our brands executed extremely well with net promoter scores continuing at elevated levels compared to pre COVID-19 scores.

Revenue per passenger cruise days for the fourth quarter 2021 increased 4% compared to a strong 2019.

The current constraints on itinerary offering.

Once again, our onboard and other revenue per Dms were up significantly in the fourth quarter 2021 versus the fourth 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 in onboard another pretty Dms on both sides of the Atlantic.

Increases in bar Casino shop, 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 options.

In the end, we will see the benefit of these bundled packages in onboard and other revenue as we did during the second half of 2021.

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

For accounting purposes, we allocate the 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.

For those of you who are modeling our future results.

Based on our planned restart schedule for fiscal 2022.

Bailable, lower birthdays or L. B DS and say I'm more commonly called will be approximately 78 now and yet.

By quarter, the a L. P DS will be for the first quarter $14 1 million.

For the second quarter $17 8 million.

For the third quarter 23 million even.

For the fourth quarter $23 1 million.

Fuel consumption will be approximately $2 9 million metric tons.

The current blended spot price for fuel is $563 per metric ton.

I did want to point out that due to the cost of a portion of our fleet being impart status during the first half of 2022.

Restart related expenses.

Cost of maintaining enhanced health and safety protocols.

And inflation.

We are projecting net cruise cost without fuel per a L. P. D. In 2022 to be significantly 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 status. During the first half we are spreading costs over less a L. B D.

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

In addition, we expect depreciation and amortization to be $2 4 billion for fiscal 2022.

While net interest expense without any further refinancings is likely to be around $1 5 billion.

Next I'll provide a summary of our fourth quarter cash flows.

During the fourth quarter 2021 our liquidity increased by $1 6 billion to.

294 billion at the end of the fourth quarter from 7.8 billion at the end of the third quarter.

The increase in liquidity was driven by the $2 billion senior unsecured notes, we issued in October to refinance 2022 maturities.

The 360 million customer deposit increase added to the total.

This was the third consecutive quarter, we saw an increase in customer deposits.

Completion of a loan we previously mentioned supported by the Italian government.

With some debt holiday principal refund payments added another $400 million.

Working capital and other items net contributed $300 million.

All of these increases totaled $3 1 billion, which was somewhat offset by our cash burn of $1 5 billion.

Simply our monthly average cash burn rate of $510 million per month times three.

It should be noted that our monthly average cash burn rate for the fourth quarter 2021 was better than planned driven by lower capital expenditures.

Turning to booking trends are cumulative advance book position for the second half of 2022 and the first half of 2023.

At the higher end of historical ranges and at higher prices compare to 2019 with or without F. C CS, but normalized for bundled packages.

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

Booking volumes for the same period during the fourth quarter of 2021 were higher than the third quarter.

During the fourth quarter 2021 we significantly increased our advertising expense compared to the third quarter in anticipation of the full fleet being in operation in the spring of 'twenty, 'twenty, two generating demand and allowing us to improve pricing on our book position. However.

For the fourth quarter advertising expense is still significantly below our spending in the fourth quarter 2019.

Finally, I will finish up with some insights into our financial position.

What a difference a year makes except for our liquidity as Arnold indicated we entered 2022 with $9 4 billion of liquidity essentially the same liquidity level as last year, but with significantly improved cash flow generation ahead and sure.

<unk> operating cash flows and customer deposits continue to build.

Through our debt management efforts, we have refinance $9 billion to date, reducing our future annual interest expense by approximately $400 million per year and extending maturities.

Optimizing our debt maturity profile.

With our 2020 two maturities already refinance we do not have any financing needs for 2022.

However, we will pursue refinancing to extend maturities and reduced interest expense at the right time.

Given our long history of positive strong resilient and growing cash flows. Unlike many other industries.

'twenty 'twenty three our focus will shift to deleveraging driven by cash from operations.

We expect to return to investment grade credit over time, creating greater shareholder value.

And now I'll turn the call back over to Arnold. Thank you David Operator, Please open the call for questions.

Thank you.

If you would like to register a question. Please press star one four on your telephone.

You will hear a three pronged technology a request. If your question has been answered and you would like to withdraw your registration. Please press. The one followed by three once again to register a question. Please press the one four on your telephone keypad.

One moment please for the first question.

Our first question comes from Steve was in ski with Stifel. Please proceed.

Yeah, Hey, guys. Good morning end up and happy holidays.

So I just want to be clear about the near term booking pressure due to Bobby crowded is it is it fair to say that the booking pressure is really just around bookings for the first half of two.

2022, and what I'm trying to get at is you know we want to be sure that that booking weakness hasn't started to impact further out bookings and I know, it's you know, it's hard to understand which way Ami cross might go but would.

Would you expect a similar path that you witnessed around Delta meeting bookings slowed and then rebounded very quickly is that fizzled out got out of the media.

Hey, good morning, Steve and happy holidays to you, but I think.

You know we have the experience share them opening remarks about the Delta Varian.

We recovered in November it completely.

From that we'll have to see how this plays out.

You know I think the great news is it appears to date from scientists around the world and medical experts.

Well. This particular variant is highly infectious it seems to have.

Less damaging effects on people that contracted, especially those who are vaccinated and we encourage everyone to be vaccinated everybody to get their boosters.

We have very effective protocols.

And so again I think our actual performance and we had these protocols in place as you will recall, even before they were vaccines, we had effective protocols with sailings in Europe. So you know we're amongst the safest form of socializing in.

And travel that that there are and so to your question on the bookings at this point, we have not seen.

Any major impact on you know the second half 'twenty two 'twenty three bookings is hard for us to even quantify any impact. Although you know we're kind of a reflection of overall consumer behavior globally. So I'm sure. We've had some impact we do see some.

A little spike in near term.

Cruise cancellations.

But the booking patterns are strong and we have not at this point.

Seen anything and you know based on limited experience of the Delta vary and how this one seems to be playing out where we're at this time I'm not anticipating it.

I hope that answered your question.

Yeah, that's great color I appreciate that and then.

Second question is probably for David but you know David you guys have refinanced over I think it's I think you said the number is $9 billion, so far and I'm wondering.

How much more you think is available to refinance over the next six to 12 months and maybe help us understand that.

You talked about interest costs were 22 being around 1 billion and a half dollars and what that number might actually.

Look like by the time, we get to next year and I'm not trying to get more about who we're trying to give more detailed guidance that you guys. I'm just trying to understand the magnitude of of up how much more you really could go.

From here.

Sure so.

Steve The if you look at our capital structure, the biggest piece that high interest rate debt at the two L notes that we did in 'twenty 'twenty.

And those have high nines or low tens in terms of interest expense. So there is an opportunity there to do refinancing of.

Those notes and we will look for the right time to consider doing that during 2022 and that could have on that few billion dollars. That's outstanding that could lower interest expense, even further but we did give the forecast. This is what the guidance at 1.5 billion.

And depending on the timing of any refinancing and the exact interest rate on them, what we refinance them there should be a considerable amount of savings going forward and of course, you know keep in mind that as Arnold indicated we do expect that we believe we have the opportunity.

For higher EBITDA in 2023, as compared to 2019 and that should begin to drive that down in 2023, our overall debt levels and a correspondingly tried interest expense.

So it's a little premature to give guidance, but we do expect a lower interest expense in 2023.

Okay.

Okay, great. Thanks, guys appreciate it happy holidays again.

Happy holidays.

Yes.

Our next question comes from Robin Farley with UBS. Please proceed.

Great. Thank you.

On your commentary that you know pricing for second half 'twenty two has gone up over the last quarter and realizing of course that cute Q1 tied to it its still challenged.

Can you give us some color if there are affirming point sometime during Q2, where you see that sort of the near term impact sort of stopping and things being firm. You know is it from sort of may forward or is there such a yes.

Affirming point or is it a bit earlier than may potentially where where.

Where are you seeing that the.

Bookings and pricing moving up.

We are seeing the second half, but where you can kind of see that point in Q2, where it's affirming thanks.

Okay, Dave do you want to take a first shot and yeah sure no problem. So you know listen.

A lot of the the reason we're focused on the back half of the year and we've talked about the comparisons in the back half.

And also the first half of 2023 is because youre talking about apples and apples comparisons relatively speaking because the whole fleet is in operation the itineraries that we're running or [noise].

Looking you know are similar to the itineraries that we ran in 2019. So it's an apples to apples comparison and you can see what the the booking trends are the pricing trends look like if you look at the first half.

2022, remember you know this is apples and oranges.

In 2019, we had world cruises, we had longed exotic voyages hum.

Our whole fleet was in operation that's not true for the first half of 2022.

So on an apples to apples basis.

You know the comparison doesn't look nearly as good as when you get down to the detail itinerary level and at a detailed level. We're very pleased with pricing I mean, you know just to give you. Some comparisons if you look at the fourth quarter.

Our total cruise revenue yield per P. C. D was up 4% and so overall, we're very very pleased with the pricing that we're seeing them for the whole year.

It's an apples and oranges for the first half.

Okay understood. Thank you and then.

My other question.

On your commentary about expenses is very helpful. Thinking about you know there are some.

Nonrecurring higher things in 2022, and you said you know most of those won't recur in 'twenty three and IRA.

It's way too early for you to you know Kim and expense guidance number in 2023.

But is it reasonable to think that the improvement in efficiencies from having sold those 19 ships.

Expense.

Per unit savings from that would more than offset the inflation piece, which you know the inflation piece may be recurring but whereas all the other sort of restart and and in the past status. All of those expenses. Once those are gone is it reasonable to think that you were.

But the savings from those less efficient ships being gone would more than offset any inflation.

Hey, Rob Robert Thanks for the question happy holidays to you.

Obviously, we can't forecast what inflation is going to be and all of that and I know you understand that but what we can tell you is that exiting the ships and the.

The other efficiencies.

Efficiencies that we are managing to.

No as I said in my opening comments put us in a fundamentally lower cost basis.

And we'll have to see what happens with inflation and so on but but clearly whatever revenue way, but to generate and in prices look strong, though more of it will fall to the bottom line because of that but I wouldn't want to try to predict and inflation.

Or anything but we.

We know, we're coming out leaner and more efficient and it'll be better positioned than we were expecting.

<unk> to be in position to deliver more EBITDA.

And twenty-three than we did in 19.

Okay understood. Thank you Beth thank you.

Our next question comes from Jamie Katz with Morningstar. Please proceed.

Oh good morning, Thanks for taking my question.

I would like to hear a little bit about the timing of marketing spend over the course of the next year. My guess is that it might be more.

Front end loaded given.

The uncertainty around the first part and then do you have any comments on the supply chain.

That they're seeing from a procurement perspective, it would be very interesting to hear that given all of the publicity around such issues.

Thanks, Okay sure on the marketing spend first of all again.

We're very pleased with the results we've.

We've been able to enjoy especially.

With the Carnival brand, whether itineraries are more comparable to what they normally would be pre COVID-19 without any advertising are very limited.

So as we get ready for wave.

We are launching them campaigns across the brands.

In anticipation of wave are still you know less spin.

And we had say in previous years pre COVID-19, but a significant ramp up from from where we are and we're being very diligent and that's part of your fitness Louise we talked about it and looking at how to effect that spend for the greatest impact.

So we've gotten more efficient.

And the spend we believe as well so we are starting to ramp up but again you know the full fleet won't be selling until.

Sometime in the spring or whatever the opposite we're looking for bookings, though in the second half of 'twenty, two and beyond so a lot of spend is for that but.

But you know it will ramp up and judge as we go what seems to make the most sense and what's really going to drive guest behavior.

In terms of the supply chain and sourcing question, where global with source from all over the world There's lots of dynamics everywhere.

We've had you know single challenges issue challenges at times.

With provisions are procuring particular services in a particular area.

But but overall, we're able to sale.

They are a great way for the guests where the guests are having a great time them in a way that is compliant.

And very much in the best interests of public health and so we've been able to manage manage through.

Any other color you want to add David on one other point.

I think you hit the point as well.

I just did want to add one point I was on mute I apologize when Robin you asked the question about the cost I just wanted to point out to everybody that with any time, we get to 2023 remember there's four years of inflation there between 23 and 2019, so just keep that in mind.

And to the other comments and Arnold made about cost for 2023.

Thank you guys enjoy your hurdle.

I enjoy yours. Thank you.

Our next question comes from Patrick Scholes with Trust Securities. Please proceed.

Great. Thank you everyone I Wonder if you can just help me clarify sort of apples to apples on.

Your commentary.

Bookings and he said.

Advanced bookings for the second half of 'twenty two in the first half of 'twenty three are now at the higher end of historical ranges.

Previously of course, you had just talked about the.

Second half of next year, when you're talking about the advanced bookings for second half of 'twenty two in the first half of 'twenty. Three is that is that a combined 22 and 'twenty three together, whereas that for both periods separately I'm just trying to apples to apples to what you said just the single period last time that makes sense.

Yes.

Got it.

So go ahead, David go ahead, but yeah. So when we with the reason we labeled the period separately is because we looked at each individually and each one was at the higher end of that historical range. Okay.

Okay.

Visually.

Okay and then.

So we're gonna look individually I want to be clear here apples to apples you had said previously back half of next year was that a new historical high meaning.

Historical high but now it's at the higher end with that is it fair to assume that it's not the bookings for the second half of next year and not quite as high.

As you had said last quarter am I interpreting that correctly. Thank you. Yeah, you are interpreting that correctly, but by the way.

Nobody really wants to be breaking new records on the advanced booking curve, because if you Wanna properly. The goal is to maximize the pricing and maximize the revenue when the ship sails.

So historically you know if you're in that grade of book position.

It's time to raise price slow down the booking curve you don't need to be that far ahead. If I told you that we were sold out through the back half of 2022 at this moment in time. He would tell me we didn't manage it properly we left money on the table so its not shocking that.

We pulled back a little bit and we raised price and you saw a slowdown in the booking trends.

Fair enough I appreciate the color.

Color on that thank you.

Our next question comes from Ben Chaiken with Credit Suisse. Please proceed.

Hey, How's it going another apples to apples question does this forgive me does this when you guys give the forward commentary on pricing does this adjust for the 19 chips removed or is it just a gross bookings versus gross bookings previously, but that didn't make sense I can try and acquire.

Yeah.

Meaning does that capture the mix shift I guess, yeah. So essentially.

We're just looking at the fleet in 2019 that existed in haul into bookings.

And so we don't subtract out ships that left the fleet.

We're not doing consistent fleet, we're doing today's fleet versus the fleet, we had for 2019 ceiling.

So yes, there is some benefit to as Arnold said, you know the newer ships will get.

Better price point, better mix of cabins and other things and so that is benefiting the price overtime, but and they're also more cost efficient any generate significantly more EBITDA as well so.

All that you're seeing all of that flow through in the booking trends in ultimately flow through into the cash flow and P&L.

And the other thing that's out there.

Another variable our itinerary soon.

So we don't adjust for itineraries either.

Certain dietary temporary some more higher yielding than others and so on and so forth.

But those are normal variances that happen year to year.

Gotcha that totally makes sense. Thank you and then I guess just one other you guys mentioned several times bundled packages I guess are you seeing I know, we're kind of early in the.

The you know.

The return to cruise, but are you seeing passengers have an additional wallet once on board as well like are there incremental opportunities to standards.

Oh, absolutely, we're seeing them higher spending levels on board. There's no question about that you know.

In some cases, it's bundling is contributing to that.

We've always done that each brand is different and then over time, there's always been some bundling there seems to be even more of it.

No. Currently then there than there has been in the past and.

Here is that when you have these bundled packages that overall, you end up getting greater yield because there's additional spin, but right now Theres also I'm sure Justice pent up.

Demand you know where you know people are anxious to go out and experience things and have a good time and that's also showing up in onboard revenues right now which are very strong.

Gotcha. Thank you.

Our next question comes from.

George ever with Infiniti Research. Please proceed.

Good morning, I have a couple of questions I don't know if you mentioned in the prepared remarks that the Carnival brand is already at 90% occupancy which is fantastic news.

Given that we have the restart dates for all of the ships at this point, they're pretty much like so we can be hopeful that there might be upside from a higher occupancy levels should we think that the princess might be the next brand and that is getting to a levels somewhat closer to the carnival brand in Boston.

Costa.

Is that a fair way to look at it.

Have you any upside from occupancy.

Yeah. Thanks for the question.

Think first of all you know we've had a number of ships on the Carnival brand, even at 100% occupancy in and the trend. There is very good but again those itineraries are most comparable to the itineraries that existed.

Pre COVID-19 and so you are you have you know there are some itineraries.

Going on and just great execution by by the Carnival team in terms of which brand is next you know that's pretty complicated.

As we bring shifts back we don't bring them back right away anywhere near 100% occupancy and.

And so you have to look at the proportion of shifts returning to service and when they return to service and then you have to look at it. The itineraries. We also have different protocols around the world.

You know we have a number of European.

Sailings that you'll still have social distancing in a physical distancing requirements that caps the occupancy.

And the 6% to 80% range, depending on the itinerary and the ship and so on so there are a lot of variables here and we just have to see what the situation is around the speed of ramp up and we know what the required protocols are and which itineraries, we're gonna be able to bring the ships back.

Two you know with.

With the plans we have we can kind of predict but this is a very dynamic situation and has been our team has been really a you know able to adapt to it and execute well overall the trend is positive and and you know the brands will get to where they need to to be given their particular circumstances, but the true.

January overall trajectory, despite the fits and the stops and the speed bumps and potholes, sometimes so Ford and detours lowball trajectory is positive.

You gave me such a great segue into my second question, because you mentioned that synergies are probably three or four times and.

I understand up Australia, and New Zealand has basically been closed for the winter season, Karl Prentice couldn't do her lungs wedge. This summer I think partly because of Australia, and New Zealand are being such an uncertain and vacation point at this point.

And then if that's.

One thing again, it can never lease and the new LNG ships coming in custody of Derma Hep to replace Costa Smeralda in South America, because we don't have enough access to reliable access to LNG facilities would you given that you're the only cruise company lunch.

As a company that is operating LNG ships would you have to participate in building out the infrastructure at places such as Brazil for example.

Yeah I think.

Have a strong partnership.

With Royal Dutch shell in terms of LNG infrastructure and access et cetera, and then obviously we go.

Beyond that relationship to secure what we need.

But as some of.

You know when we built the first ship.

When we started building it there was no infrastructure and so we we we made a commitment you know early.

Because of our commitment on environmental front and and now we're very excited to have the six shifts with another five coming so again.

You may have to adjust in the moment here, there or whatever but overall.

We see a clear line of sight on the infrastructure to support good yielding itineraries that are exciting for I guess, you know with our LNG powered ships and then if if absolutely necessary. The ships can use alternative fuel source obviously.

But our.

Our intention and purposes.

Because we built them as LNG.

Power shifts to to use LNG.

Similar to participate further.

I'm sorry.

Yeah go ahead, yeah, you'll follow up how do we have to participate and help fund or something to that.

Establishment of an infrastructure, we don't anticipate having to we don't anticipate having to put capital in ourselves to help establish the infrastructure. We don't we think there are plenty of players in there.

Part of the business to to do that timing may be you know a little off here or there, but we don't see a need at this point for us to.

Commit our capital to building LNG infrastructure.

<unk>.

Okay, great. Thank you so much and I'm really glad to have made such a commitment.

Our environment so.

That's a great holiday season for me as well.

Thank you same to you.

Yes.

Our next question comes from Paul Golding with Macquarie Capital. Please proceed.

Thanks, So much so I had a quick question on just structural evolution of the marketplace. David I think you had mentioned earlier about the mix shift increasing a bit sequentially towards higher end state room mix and I'm wondering if that's something beyond the current order book Youre looking.

Do more long term because you see higher propensity to spend should we expect as far as thinking you know once we're in a clear yield environment should we expect just continued increase in higher end state room mix and then I have a follow up on inflation.

Sure. So you know I think what Arnold in his prepared remarks talked about I think it was <unk> five percentage point in tier five or six percentage points higher balcony cabins and and so the mix of balconies. That's I know our fleet in the future is higher than the <unk>.

Mix historically, a lot of that has to do with.

The way in which we build chips into design, new shifts we've been able to get them effective.

Effectively more balcony cabins on each and every ship, which will hopefully we believe will drive yields and satisfaction levels of our guests.

I don't think you're going to see for the ships we have on the water.

You know through 2025, that's all well said, we're beginning to start thinking about future Newbuild and we'll analyze that based off of customer trends and and desires and we'll work those into the plans and you can be sure we'll be thinking about that and making sure that we optimize our return on.

Invested capital over time as a result of.

What we do.

Great and then on the cost side as we think about your commentary on inflation.

Your your thoughts on.

2022.

Fuel costs.

Should we start thinking more about whether hedging is going to play a role here again for for your team you know versus what was previously I'm not not a robust hedging program on on your side and the fuel space.

We historically haven't hashed and.

At this point in time, if that changes, we'll let you know, but but as you know historically.

Historically, we havent as we we felt that over time.

That all takes care of itself and we have some natural hedges with the.

Portfolio, we have and no.

Revenues and costs.

Of course in different currencies around the world are you talking about fuel price hedging, but I'm, just saying other than that we really typically don't hedge.

And other than the LNG nothing meaningful on on mix shifts between bunker and NGO and going into the Q1.

I think over time.

There's no question that over time, we'll see a.

Laure.

<unk> ratio.

M G O given the fact, we're bring in.

LNG in and we have advanced air quality.

Those systems, you know on the ships et cetera, so the combination of LNG and.

The extended use of advanced air quality systems, we should see.

A lowering of the requirement soda on M. G O as we as we go forward David you want to add any additional color.

No I think that says it well my blended fuel average for 'twenty two reflected probably a 10 point drop in the NGL mix from 'twenty one to 'twenty two.

Great. Thanks, so much for that color and happy holidays.

All of this should be safe.

Okay.

Our next question comes from Ben CFO with Cleveland Research. Please proceed.

Thanks, I wanted to follow up on occupancy I think you've mentioned that August was about 59%. So it looks like it was pretty stable throughout your fiscal <unk>.

Definitely appreciate that it's a dynamic situation that you alluded to but how are you thinking about that occupancy build throughout 2022 do you anticipate it's more linear or more inflected in the second half.

Kind of what's built into the budget as it relates to your profitability assumptions.

So I'll start just with the overall comment that.

Clearly the occupancy trend is.

Really positive now when you look at the comparison you just made there are a lot of dynamics in there.

For example, we brought on as David mentioned I think in some of his comments.

22 ships or or something in and obviously when you bring the ships on theyre not initially at full occupancy.

It's all purpose as we bring them in and so that that average is down you know.

Oxy, so what we're looking at all four obviously trends are.

Where you have comparable itineraries and shifts that have been selling for a while what's happening with the occupancy on those shifts.

And that's a very positive message. So you you you have a number of things waiting for Osaka see numbers David.

Yeah. So the you know the other thing keep in mind that affected the fourth quarter was the filter variant in the month of August impacted bookings many of which what might have been for the fourth quarter and as a result of that you know we had hoped to have higher occupancy in the fall.

With quarter, but.

Yeah. It did between the Delta variance and everything else and a few itinerary changes that we had a we were very pleased with the overall 59%.

Looking forward I will say, it's very difficult to predict exactly.

Nine month or by quarter with the occupancy is going to be we're in a good position our book position and we're expecting overall the trend to be positive and to see increasing occupancies.

Our 2022.

But I think it would be premature for us to give some sort of guidance.

Okay. Operator, we have time for one more question.

We have a question from a Ryan Sundby with William Blair. Please proceed.

Yeah.

I had a question around operating procedures.

Like proof of vaccination and make your search results. So it's been a really effective tool for the industry to suddenly not here.

And I guess, given more breakthrough cases really around to call all life experiences.

Last month or so.

Is that still an effective tool going forward and when when do you need to start considering requiring a booster, which I think a market like France is not recurring.

Yeah, Hey, thanks for the question Yeah, I think overall, we continue to be informed by you know again the.

Scientists around the world and medical experts.

And of course, we continue to act and compliance whatever the rules are and the destinations in home ports.

There were operating.

But the bottom line is that you know this is a dynamic situation.

And the markets, where we are requiring vacs and required testing everywhere, we acquire vaccines in most places and we're encouraging boosters of course our crew.

Is vaccinated and over 10000 of them have already received boosters and will be continuing with that they're tested very frequently.

The crew is and then those protocols have worked in and have helped us be amongst the safest forms as I mentioned before of socializing in travel or of any of the traveler leisure sector. So.

They have worked and and they are continuing to work.

So we'll see how it plays out will follow.

And obviously it will be in compliance.

But right now we are sailing with confidence.

As you noted and you know there are going to be some cases.

There's a far lower incidence of cases right now on cruise in a society at large and we want to work to continue to ensure that that's the case and when there are cases, you know the risk of propagation of spread of the virus as it has been.

Very effectively control today and as long as that continues to be the case will contain a sale with confidence.

But we will adjust and adapt to what we need to I think the most important thing.

Is where we have had cases them in most instances they either asymptomatic.

Our minor symptoms, we have not had you know.

Lots of cases, where people have to be hospitalized or are worse and.

I think that's important and that's also.

The increasing trend of society at large and hopefully that trend will continue.

Yes, that's great to hear.

Thank you.

Other questions. So that was the last question.

Yes.

Hey look everyone. Thank you really appreciate your engagement, please have a safe and enjoyable holiday and.

We look forward to talking to you guys or the next business update so thank you very much.

Hello, everyone.

That does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your lines.

Great day, everyone.

Yeah.

Okay.

Uh huh.

[music].

Uh huh.

Okay.

Uh huh.

Uh huh.

Uh huh.

Sure.

Okay.

Oh.

Uh huh.

[music].

[music].

[music].

Good morning.

Happy holidays, everyone.

Well to our business update.

Hi, Good morning, Donald President and CEO of Carnival Corporation, and plc and today I'm joined telephonic lead by our Chairman Micky Arison.

As well as by David Bernstein, Our Chief Financial Officer, and by Beth Roberts Senior Vice President Investor Relations.

Thank you 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.

What a difference a year.

We are clearly on our way back full crews operations with 50 ships now serving guests as we end the fiscal year.

Well, just one ship one short year ago.

We've already returned over 65000 crew members to our ships and is resuming operations.

1.2 million guests and counting.

Bill.

Now we've achieved that while delivering exceptional guest experience with historically high net promoter scores.

These are strong accomplishment, especially in light of the uncertainty we see just one year ago went back meetings were not yet available.

The protocols to mitigate the spread of the virus we're steadily volts.

Today, our team members and the vast majority of everything.

Have received vaccine and many have received boosters.

Habits.

The protocols for COVID-19, and its very enabling occupancy just progressed toward historical levels. In fact, occupancies at our Carnival cruise line. Brian was currently operate that generate that are most similar to its normally publish that generic.

Now approaching 90% and that's after the impact of the variance on their term book.

Again Carnival cruise line continues to outperform with both occupancy and pricing strength.

And even at this early stage as a company.

We're now generating meaningful cash flow at the <unk>.

ZIP levels to date and growth, helping to fund startup costs with the remaining fleet.

Total customer deposits have grown by over.

One 2 billion from the prior year end level is well.

Position continue to build and to strength.

Importantly, we ended the year with $9 $4 billion of liquidity and that's essentially the same liquidity level with last year, but with significantly improved cash flow generation ahead.

Our niche in ship operating cash flow and cause of them or.

Continue to build.

60 acreage set of our capacity now in operation and the remainder planned by spring we are well positioned.

Summer season, where we historically have the lion's share of our operating.

Throughout 2020, one we said that we expected the environment to remain dynamic and it certainly.

Of course, the generally has been a key strength of ours, and we continue to aggressively manage to optimize given the ever changing landscape.

As we have demonstrated through the Delta Berry and now with Ami.

We have navigated near term operational challenges, while the variance there a corresponding effect on consumer confidence.

Some near term booking volatility.

Our book position has remained resilient.

And in the case of Delta variant already recovered importantly, these variants have not had a significant impact on our ultimate plan to return our full fleet to gas.

The operations in the spring of 2022.

It is clear we have maximize our return to service in 2021.

We have positioned the company well to withstand the potential volatility on our path to profitability at.

At the same time, we have not lost sight of our highest responsibility and therefore, our top priority, which is always complaints environmental protection.

And the health safety and well being of everyone.

Our guests.

Pete.

As we touch them.

And of course, our Carnival family.

Team members shipboard and shore side.

And to that end, we've achieved many important milestones along the way in our return to service.

He'd been broadened.

Broadening our commitment to ESG with introduction about screen 30 sustainability goals and our 2050 aspiration and that's building on the successful achievement of our 2020 goals.

Inquiry.

ESG the disclosure by incorporating SaaS, B and T Cfd framework in our sustainability report.

Bolstering our compliance efforts with the addition of a new board member with valuable compliance experience. A strong addition to our board of directors and our board compliance Committee.

Improving our culture through emphasizing the essential behaviors and incorporating them into our eat those training and development and through everyday real time feedback.

As we are already amongst the most diverse companies in the world with our global employee base, representing over 130 countries.

Focusing our efforts on diversity and inclusion at every level and in all areas of our operations.

And of course, there are many more operational milestones such as reopening our eight owned and operated private destination support facility.

Princess Cay.

<unk> grants hurt mahogany Bay Amber Cove.

The mill.

Accrues to Tenerife and Barcelona all.

All delivering an exceptional experience to over 630000 of the $1 2 million guests since resuming operations.

Welcoming nine new more efficient ships across our world, leading brands, including Moneygram powered by LNG.

Right nothing short of a game changer crowd namesake brand Carnival cruise lines.

Premium brands all of them are introduced the new Rotterdam.

Sister ship very successful comes down and new start.

Princess walk in guests aboard a new medallion class ship Enchanted Princess and we'll welcome another new medallion class ship discovery process early next year.

Ultra luxury brand Seabourn welcomed seaborne adventure with this world class expedition team and its spectacular 360 degree view submarines for the U K. We successfully introduced Iona also powered by LNG, but Germany, we shortly take deliver.

About six LNG powered ships I E. The top.

Assistant to the also highly successful either Nova.

And southern Europe.

<unk> and LNG powered comps the tough comp will replace the exit of several less efficient ships.

Blue Chip Mardi Gras I own assets, Wisconsin have joined Eaton over and passes Morocco to be the only five and with the addition of Aida Kosmos shortly the only six large cruise ships in the world currently powered by LNG, demonstrating our leading edge <unk> carbon.

<unk> efforts.

While the utilization of LNG as a positive step for the environment.

LNG is inherently 20% more carbon efficient.

It's not our ultimate solution.

We have announced our net zero aspiration by 2015 on.

Well there is no no net zero carbon emissions in our industry. At this time, we are working to be part of the solution.

We have and expect to continue to demonstrate leadership and executing carbon reduction strategies.

We are focused on decreasing our unit fuel consumption to date, reducing even the need for carbon offsets.

Our decarbonization efforts have enabled us to peak, our absolute carbon emissions way back in 2011.

And that's despite an approximate 25% capacity growth since that time.

While today based on publicly available information. We believe we are the only major cruise operated at peak, our absolute emissions our entire industry is moving in the right direction.

And as a company with a 25% reduction in carbon intensity already under our belt, we are well positioned to achieve our 40% reduction goal by 2030.

We are working hard to reach that deliverable are ahead of schedule.

In addition to our cutting edge LNG upwards, we have many other ongoing efforts to accelerate de carbonization.

To name just a few they include itinerary optimization.

And technology upgrades to our existing fleet at an investment of over $350 million in areas, such as air conditioning waste management lighting and of course the list goes on.

We are actively increasing our shore power capabilities.

Greater than 45% of our fleet is already equipped to connect the short pump.

And we plan to reach at least 60% by 2030.

Now we helped develop a burst port with short power capability for cruise ships, leading to the development of 21 ports to date and pound.

We are focused on expanding shore power to our high volume ports around the world that includes Miami.

Our Hampton, England, and Hamburg, Germany.

So ultimately achieve net zero emissions over time.

Vesting in research and development pardon me in on project to evaluate and pilot maritime scale battery and fuel cell technology.

And working with classification Society and engine manufacturers to assess hydrogen.

Methanol as well as violence synthetic view as future low carbon fuel options for cruise ships.

Also these efforts combined with the exit of 19 less efficient ships are <unk>.

Our cat to deliver upon returning to full operations.

A 10% reduction in unit fuel consumption on an annualized basis.

That's a significant achievement on our path to de carbonization.

Our strategic decision to accelerate the exit of 19 shifts.

With a more efficient and more effective fleet overall.

And it's lowered our capacity growth to roughly 2.5% compounded annually from 2019 through 2025.

Now for four and a half a turn annually pre COVID-19 Wildcat.

Wild capacity growth is constrained we will.

We'll benefit from this exciting roster of new ships spread across our brands, enabling us to capitalize on the pent up demand and drive even more enthusiasm around a restart plan.

We are afraid of a structural benefit to revenue from these enhanced guest experiences new ships.

Due to the richer mix of premium quite balcony cabins, which will increased six percentage points to 55% of our fleet in 2023.

As we mentioned before we will also achieve a structural benefits of unit cost as we deliver these new larger more efficient ships.

Coupled with the exit of might be less efficient ships it'll.

It'll help generate a 4% reduction in ship level unit costs going forward, enabling us to deliver more revenue to the bottom line.

Upon returning to full operations nearly 50% of our capacity will consist of these newly deliberate larger more efficient ships expediting, our return to profitability and improving our return on EBITDA.

We are clearly resuming operations as a more efficient operating model.

And we'll use our cast votes were to reduce our leverage on our path back to investment grade credit.

Last quarter, we discussed the initial impact of the Delta. There you indicated we saw an impact on near term booking volumes in the month of August booking.

Booking volumes have.

Accelerated sequentially and return to pre Delta levels in November.

As we said we would we maintained price despite the disruption.

Cheating, 4% higher revenue per passenger cruise days in our fourth quarter than the fourth quarter of 2019.

In fact, the Carnival cruise lines brand, where we as I mentioned are able to offer more comparable itineraries to those in 2019 experience.

Experienced its second consecutive quarter of double digit revenue.

While improving occupancy with nearly 60% of its capacity returned to service.

Now that's a testament to the fundamental strength in demand, while whose product, especially when you consider that this was accomplished without the benefit of a major habits that we.

We expect to build on this momentum with the brand's announcement just last week on his Thunder struck campaign.

Engineer to highlight the joy fond of Carnival cruise.

That advertising campaign is launching over the holidays, including the Activations on Christmas day.

And times square on New year's Eve and time for outweighed.

Training is something that's very present in the news today.

We have also experienced some initial impact on near term bookings, although difficult to measure.

That said, we have a solid book position and intentionally constrained capacity, but first half of 2022.

The existing demand and limited capacity, we remain focused on maintaining price.

Bookings continue to build for the remainder of 2022 and well into 2023, and we are achieving those early booking with strong demand.

In fact pricing on our book position for the back half of 2022 improved since last quarter and that's despite the Delta Mary.

The current environment, while China has improved dramatically since last summer.

And as the current trend of vaccine rollout and advancements in therapies continues it should improve EBIT further by next summer.

So looking forward, we remain on a path to consistently deliver cash flow from operations during the second quarter 2022, and generate profit in the second half of 2022.

And pardon me, we believe we have the potential to generate higher EBITDA in 2023 compared to 2019 give.

Given despite our modest growth rate additional capacity and our improved cost structure.

Throughout the pause we have been proactively managing to resume operations as an even stronger and more efficient operating.

To maximize cash generation and to deliver double digit return on invested capital.

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.

We continue to move forward in a very positive way.

That I again express my deepest appreciation so carnival team members, both shipboard and shore side.

Consistently go above and beyond.

I am very proud of all we've accomplished collectively to sustain our organization through these challenging times and I am very humbled by the dedication I've seen from our teams throughout.

Of course, we couldn't have done it without the overwhelming support from all of them.

So once again.

Thank you to our valued guests.

Thanks.

Travel agent partners.

So our home court and destination.

Thank you to our suppliers and other many stakeholders and of course.

Thank you to our investors for your continued confidence in us and for your ongoing support.

Once again.

We can't wait to welcome everyone back onboard.

With that I will turn the call over to David.

Thank you Arnold I'll start today with some color on our positive cash from operation.

Followed by a review of guests cruise operation along with a summary of our fourth quarter cash flows.

I'll provide an update on booking trends and finish up with some insight into our financial position.

Turning to cash from operation.

I am so happy to report that our cash from operations turned positive in the month of November ahead of our previous indication driven.

Driven by increases in customer deposits and other working capital changes.

We all know that booking trend are a leading indicator of the health of our business.

With solid fourth quarter booking trends, leading the way driving customer deposits higher.

Positive EBITDA is clearly within our sights.

Over the next few months.

Expect ship level cash contributions to grow as more ships returned to service and as we build on our occupancy percentages.

However, cash from operations and EBITDA over the next few months will be impacted by restart related spending and dry dock expenses is 28 ships.

A third of our fleet will be in dry dock during the first half of fiscal 2022.

Given all these factors combined we expect post monthly cash from operations and monthly EBITDA to consistently turned positive during the second quarter.

2022.

So 2022 will be a tale of two halves.

While we expect a net loss for the first half of 2020 to.

It makes me feel so good to say we expect the profit.

Second half of 2022.

Now, let's look at guest cruise operation.

During the fourth quarter, we successfully restarted 22 shafts.

During the month of December we will restart and additional staffing ships. So we will be celebrating on new year's Eve with over two thirds of our fleet capacity in service.

Our plans call for the remainder of the fleet to restart catch cruise operations by spring, putting us in a great position for us.

Seasonally strong summer period.

For the fourth quarter occupancy with 58% across the ship and service.

And that was a four point improvement over the 54% we achieved last quarter during the peak summer season.

The slowdown in bookings just prior to the fourth quarter from the Delta variant.

During the fourth quarter, we carried over 850000 gas, which was two and a half times the number of guests we carried in the third quarter.

All brands executed extremely well with net promoter scores continuing at elevated levels compared to pre Covid score.

Revenue per passenger cruise days for the fourth quarter 2021 increased 4% compared to a strong 2019.

The current constraint on itinerary offering.

Once again, our onboard and other revenue per Dms were up significantly in the fourth quarter 2021 versus the fourth 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 in onboard another pre dms on both sides of the Atlantic.

Increases in bar Casino shop.

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 options.

In the end, we will see the benefit of these bundled packages in onboard and other revenue as we did during the second half of 2021.

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

For accounting purposes, we allocate the total price paid by the gas between the two categories there.

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

For those of you who are modeling our future results.

Based on our planned restart schedule for fiscal 2022.

Bailable, lower birthdays or L. B DS as they are more commonly called will be approximately 78 million.

By quarter, the a L. P DS will be for the first quarter 14.1 million.

For the second quarter $17 8 million.

For the third quarter 23 million even.

For the fourth quarter $23 1 million.

Fuel consumption will be approximately $2 9 million metric tons.

Our current blended spot price for fuel is $563 per metric ton.

I did want to point out that due to the cost of a portion of our fleet being in Pas status. During the first half of 2022.

Restart related expenses.

The cost of maintaining enhanced health and safety protocols and.

And inflation.

We are projecting net cruise cost without fuel per a L. B D. In 2022 to be significantly 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 impasse status. During the first half we are spreading costs over less a L. B D.

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

In addition, we expect depreciation and amortization to be $2 4 billion for fiscal 2022.

While net interest expense without any further refinancings is likely to be around one 5 billion.

Next I'll provide a summary of our fourth quarter cash flows.

During the fourth quarter 2021, our liquidity increased by $1 6 billion.

294 billion at the end of the fourth quarter from 7.8 billion at the end of the third quarter.

The increase in liquidity was driven by the $2 billion senior unsecured notes, we issued in October to refinance 2022 maturities.

The 360 million customer deposit increase added to the total.

This was the third consecutive quarter, we saw an increase in customer deposits.

Completion of a loan we previously mentioned supported by the Italian government.

With some dead holiday principal refund payments added another $400 million.

Working capital and other items net contributed 300 million.

All of these increases totaled $3 1 billion, which was somewhat offset by our cash burn of 1.5 billion <unk>.

Simply our monthly average cash burn rate of 510 million per month times three.

It should be noted that our monthly average cash burn rate for the fourth quarter 2021 was better than planned driven by lower capital expenditures.

Turning to booking trends are cumulative advance book position for the second half of 2022 and the first half of 'twenty 'twenty three are at the higher end of historical ranges and at higher prices compare to 2019 with or without F. C. CS.

But normalized for bundled packages.

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

Looking volumes for the same period during the fourth quarter of 2021 while higher than the third quarter.

During the fourth quarter 2021 we significantly increased our advertising expense compared to the third quarter in anticipation of the full fleet being in operation in the spring of 'twenty, 'twenty, two generating demand and allowing us to improve pricing on our book position. However.

Ever fourth quarter advertising expense is still significantly below our spending in the fourth quarter 2019.

Finally.

I will finish up with some insights into our financial position.

What a difference a year makes except for our liquidity as Arnold indicated we entered 2022 with $9 4 billion of liquidity essentially the same liquidity level as last year, but with significantly improved cash flow generation ahead and.

Chip operating cash flows and customer deposits continue to build.

Through our debt management efforts, we have refinance $9 billion to date, reducing our future annual interest expense by approximately $400 million per year, and extending maturities optimizing our debt maturity profile.

With our 2020 two maturities already refinance we do not have any financing needs for 2022.

However, we will pursue refinancing to extend maturities and reduced interest expense at the right time.

Given our long history of positive strong resilient and growing cash flows.

Like many other industries in 'twenty two 'twenty three our focus will shift to deleveraging driven by cash from operations.

Expect to return to investment grade credit over time, creating greater shareholder value.

And now I'll turn the call back over to Arnold. Thank you David Operator, Please open the call for questions.

Thank you.

If you would like to register a question. Please press star one four on your telephone.

You will hear a three time problem technology a request. If your question has been answered and you would like to withdraw your registration. Please press. The one followed by three once again to register a question. Please press star one four on your telephone keypad one moment. Please for the first question.

Our first question comes from Steve <unk> with Stifel. Please proceed.

Hey, guys. Good morning end up and happy holidays.

So I just want to be clear about the near term booking pressure due to Ami crowded is it is it fair to say that the booking pressure is really just around bookings for the first half of 2022 and what I'm trying to get at is you know we want to be sure that that booking weakness hasn't started to impact that further out bookings and I know.

You know, it's hard to understand which way army crop might go but would.

Would you expect a similar path that you witnessed around delta, meaning bookings slowed and then rebounded very quickly is that fizzled out got out of the media.

Hey, good morning, Steve and happy holidays to you and I think.

You know we have the experience share them opening remarks about the Delta Varian.

We recovered in November it completely.

From that we'll have to see how this plays out.

Yeah, I think the great news is it appears to date from scientists around the world and medical experts.

Well. This particular variant is highly infectious it seems to have less damaging effects on people that contracted, especially those who are vaccinated and we encourage everyone to be vaccinated everybody to get their boosters.

We have very effective protocols.

So again I think our actual performance and we had these protocols in place as you will recall, even before they were vaccines, we had effective protocols with sailings in Europe. So you know we're amongst the safest form.

Of socializing in.

And travel that that there are and so to your question on the bookings at this point, we have not seen.

Any major impact on you know the second half 'twenty two 'twenty three bookings its hard for us to even quantify any impact. Although you know we're kind of a reflection of overall consumer behavior globally. So I'm sure we've had some impact but we do see some.

A little spike in near term.

Cruise cancellations.

But the booking patterns are strong and we have not at this point seen anything in.

You know based on limited experience of the Delta very known and how this one seems to be playing out where we're at this time not anticipating any.

I hope that answered your question.

Yeah, that's great color I appreciate that and then a second question is probably for David but you know David you guys have refinanced over but I think it's I think you said the numbers $9 billion, so far and I'm wondering.

You know how much more you think is available to refinance over the next six to 12 months and maybe help us understand that you talked about interest costs were 22 being around 1 billion and a half dollars and what that number might actually look.

Look like by the time, we get to next year and I'm not trying to get more no doubt about who we're trying to get more detailed guidance out of you guys. I'm just trying to understand the magnitude of of up how much more you really could go.

From here.

Sure so.

Steve The if you look at our capital structure, the biggest piece that high interest rate debt at the two L notes that we did.

In 'twenty 'twenty and those have high nines or low tens in terms of interest expense. So there is an opportunity there to do refinancing of.

Those notes and we will look for the right time to consider doing that during 2022 and that could have on that few billion dollars. That's outstanding that could lower interest expense, even further but we did give the forecast is what the guidance at 1.5 billion.

And depending on the timing of any refinancing and the exact interest rate.

Right on on what we refinance them then there should be a considerable amount of savings going forward.

Of course, you know keep in mind that as Arnold indicated we do expect that we believe we have the opportunity for higher EBITDA in 2023, as compared to 2019 and that should begin to drive.

Did that down in 2023, our overall debt levels and a correspondingly tried interest expense. So it's a little premature to give guidance, but you know we do expect a lower interest expense in 2023.

Yeah.

Okay, great. Thanks, guys appreciate it happy holidays again.

Happy holidays.

Yes.

Our next question comes from Robin Farley with UBS. Please proceed.

Great. Thank you.

On your commentary that you know pricing for second half. That's 22 has gone up over the last quarter and realizing of course that cute Q1 tied to it is still challenged.

Can you give us some color if theyre affirming point sometime during Q2, where you see that sort of thing.

The near term impact sort of stopping and things being firm you know is it from sort of may forward or is there such a.

Affirming point, you now or is it even earlier than may potentially where where youre seeing that the bookings and pricing moving up.

That you are seeing the second half, but where you can kind of see that point in Q T where it's affirming thanks.

Okay.

Dave do you want to take a first shot and yes sure no problem. So you know listen.

A lot of the the reason we're focused on the back half of the year and we've talked about the comparisons in the back half.

And also the first half of 2023 is because youre talking about apples and apples comparisons relatively speaking because the whole fleet is in operation the itineraries that we're running or [noise].

Looking you know are similar to the itineraries that we ran in 2019. So it's an apples to apples comparison and you can see what the the booking trends are the pricing trends look like if you look at the first half.

Of 2022 remember you know this is apples and oranges.

In 2019, we had world cruises, we had longed exotic voyages.

You know our whole fleet was in operation that's not true for the first half of 2022, so on an apples to apples basis. You know the comparison doesn't look nearly as good as when you get down to the detail itinerary level and at the detail level whether there.

We are pleased with pricing.

You know just to give you some comparisons I mean look at the fourth quarter.

Total cruise revenue yield per P. C. D was up 4% and so overall, we're very very pleased with the pricing that we're seeing them for the whole year. It just it's an apples and oranges for the first half.

Okay understood. Thank you and then for my other question.

Commentary about expenses is very helpful. Thinking about you know there are some.

Nonrecurring higher things in 2022, and you said you know most of those won't recur in 'twenty, three and I realize it's way too early for you to you know Kim and expense guidance number in 2023.

But is it reasonable to think that.

The improvement in efficiencies from having sold those 19 ships, but the expense per.

Per unit savings from that would more than offset the inflation piece, which you know the replacement piece may.

The recurring but whereas all the other sort of restart and.

In the past status all of those expenses. Once those are gone is it reasonable to think that your.

So the savings from lessors.

Less efficient ships being gone would more than offset any inflation.

Hey, Rob Robyn Thanks.

Thanks for the question happy holidays to you.

Obviously, we can't forecast what inflation is going to be and all of that and I know you understand that but what we can tell you is that.

Exiting the ships and the.

The other.

Efficiencies that we are managing to you know as I said in my opening comments put us in a fundamentally lower cost basis, and we will have to see what happens with inflation and so on but but clearly whatever our revenue way, but the general.

And in prices look strong, though more of it will fall to the bottom line because of that but I wouldn't want to try to predict and inflation.

Or anything but we.

We know, we're coming out leaner and more efficient it will be better position than we were expecting.

<unk> to be in position to deliver more EBITDA.

In 'twenty three than we did in 19.

Great understood. Thank you Beth.

Yeah.

Our next question comes from Jamie Katz with Morningstar. Please proceed.

Oh good morning, Thanks for taking my questions.

With me here, a little bit about the timing of marketing spend over the course of the next year. My guess is that it might be more.

Front end loaded to give them.

The uncertainty around the first part and then do you have any comments on the supply chain.

That they're seeing from a procurement perspective, it would be very interesting to hear that given all of the publicity around kashi.

Okay sure on the marketing spend I'm first of all again we're.

We're very pleased with the results, we've been able to enjoy especially.

With the Carnival brand, whether itineraries are more comparable to what they normally would be pre COVID-19 without any advertising are very limited. So as we get ready for wave we are launching our campaigns.

Campaigns across the brands in.

In anticipation of wave are still you know less spend than we had say in previous year's pre COVID-19, but a significant ramp up from from where we are and we're being very diligent and that's part of your physical suites, we talked about it and looking at how to affect that spend for it.

The greatest impact so we've.

<unk> gotten more efficient.

And the spend we believe as well so we are starting to ramp up but again of the full fleet won't be selling until you know.

Sometime in the spring or whatever the opposite we're looking for bookings, though in the second half of 'twenty, two and beyond so a lot of spend is for that.

But oh, it will ramp up and judge as we go what seems to make the most sense and what's really going to drive guest behavior.

Yeah.

In terms of the supply chain and sourcing question.

We're global we source from all over the World there's lots of dynamics everywhere. We've had you know.

Oh single challenges issue challenges at times.

With provisions are procuring particular services in a particular area.

But but overall, we're able to sale.

And a great way for the guests where the guests are having a great time them in a way that is compliant and.

And very much in the best interest of public health and so we've been able to manage manage through.

Any other color you want to add David on one other point.

I think you hit the points well I just didn't want to add one point I was on mute I apologize when Robin you asked the question about the cost I just wanted to point out to everybody that point by the time, we get to 2023 remember there's four years of inflation there between 23 and 2019, so just keep that in mind.

In addition to the other common and Arnold made about cost for 2023.

Thank you for helping to meet your hurdle.

Enjoy your thank you.

Our next question comes from Patrick Scholes with Trust Securities. Please proceed.

Great. Thank you everyone I Wonder if you can just help me clarify sort of apples to apples on.

Your commentary.

Bookings and he said.

Advanced bookings for the second half of 'twenty two in the first half of 'twenty three are now at the higher end of historical ranges.

Previously of course, you had just talked about the second half of next year, when you're talking about the advanced bookings for second half of 2022 in the first half of 'twenty. Three is that is that a combined 22 and 'twenty three together what is that for both periods separately I'm just trying to apples to apples to what you said.

Just the single period last time that makes sense.

Got it.

So go ahead, David go ahead, yeah. So when we with the reason we labeled the period separately is because we looked at each individually and each one was at the higher end of that historical range. Okay.

Individually.

Okay and then.

Okay. So we're gonna look individually I want to be clear here apples to apples you had said previously back half of next year.

Was that a new historical high meaning.

Historical high but now it's at the higher end with that is it fair to assume that it's not the bookings for the second half of next year not quite as high.

As you had said last quarter am I interpreting that correctly. Thank you. Yeah, you are interpreting that correctly, but by the way.

Nobody really wants to be breaking new records on the advance booking curve because if you Wanna properly. The goal is to maximize the pricing and maximize the revenue when the ship sails.

So historically you know if you're in that grade of book position.

It's time to raise price slow down the booking curve you don't need to be that far ahead. If I told you that we were sold out for the back half of 2022 at <unk>.

This moment in time, you tell me, we we didn't manage it properly we left money on the table so its not shocking that.

We pulled back a little bit and we raised price and you saw a slowdown in the booking trends.

Fair enough I appreciate the.

Color on that thank you.

Yeah.

Our next question comes from Ben Chaiken with Credit Suisse. Please proceed.

Hey, How's it going another apples to apples question does this forgive me does this when you guys give the forward commentary on pricing does this adjusts for the 19 chips removed or is it just a gross bookings versus gross bookings previously because that didn't make sense I can trying to acquire.

Okay.

Meaning does that capture the mix shift I guess, yeah. So essentially.

We just looking at the fleet in 2019 that existed in haul into bookings and so we don't subtract out ships that left the fleet, we're not doing consistent fleet, we're doing today's fleet versus the fleet, we had for 2019 ceiling.

So yes, there is some benefit to as Arnold said, you know the newer ships will get.

Better price point, better mix of cabins and other things and so that is benefiting the price over time, but they're also more cost efficient and they generate significantly more EBITDA as well so all that you're seeing all of that flow through in the booking trends in ultimately flow through it.

The cash flow and P&L.

The other thing that's out there.

Another variable our itineraries in.

So we don't adjust for itineraries either in certain dietary temporary some more higher yielding than others and so on and so forth.

But those are normal variances that happen year to year.

Gotcha that totally makes sense. Thank you and then I guess just one other you guys mentioned several times bundled packages I guess are you seeing I know, we're kind of early in the.

The you know the.

It returned to cruise, but are you seeing passengers, having additional wallet once on board as well like are there incremental opportunities to standard.

Oh, absolutely, we're seeing them higher spending levels on board. There's no question about that you know in some cases bundling and that's contributing to that.

We've always done that each brand is different and then over time, there's always been some bundling that seems to be even more of it.

No. Currently then there than there has been in the past and.

Here is that when you have these bundled packages that overall, you end up getting greater yield because there's additional spin but right now there's also I'm sure Justice pent up.

Demand you know where you know people are anxious to go out and experience things and have a good time and that's also showing up in onboard revenues right now which are very strong.

Gotcha. Thank you.

Our next question comes from.

George Yeboah with Infiniti Research. Please proceed.

Good morning.

I have a couple of questions.

You mentioned in the prepared remarks that the Carnival brand is already at 90% occupancy which is fantastic news.

Given that we have the restart dates for all of the ships at this point theyre pretty much thick.

So we can be hopeful that there might be upside from a higher occupancy levels should we think that the princess might be the next plan.

Is getting to a level somewhat closer to the carnival Bantam, possibly caster.

Is that a fair way to look at it.

The upside from occupancy.

Yeah. Thanks for the question.

First of all you know we've had a number of shifts on the carnival brand, even at 100% occupancy in and the trend. There is very good but again those itineraries are most comparable to the itineraries that existed pre.

Pre COVID-19.

And so you are you have you know various other itineraries.

Going on and just great execution by by the Carnival team in terms of which brand is next you know that's pretty complicated.

As we bring shifts back we don't bring them back right away anywhere near 100% occupancy.

And so you have to look at the proportion of shifts returning to service and when they were returned to service and then you have to look at it. The itineraries. We also have different protocols around the world you know we have a number of European.

Sailings that you'll still have social distancing in a physical distancing requirements and that caps the occupancy.

And the 60% to 80% range, depending on the itinerary and the ship and so on so there are a lot of variables here and we just have to see what the situation is around the speed of ramp up and we know what the required protocols are and which itineraries were going to be able to bring the ships back.

And two you know with.

With the plans we have we can kind of predict but this is a very dynamic situation and has been our team has been really a you know able to adapt to it and execute well overall the trend is positive and and you know the brands will get to where they need to to be given their particular circumstances, but the true.

January overall trajectory, despite the fits and the stops and the speed bumps and potholes, sometimes so Ford and detours lowball trajectory is positive.

You gave me such a great segue into my second question, because you mentioned it Tonight, probably three or four times and.

I understand that the Australia, and New Zealand has basically been closed for the winter season, Carl printers couldn't do her lungs ledge somewhere I think partly because of Australia and New Zealand are being such an uncertain you know and vacation point at this point.

And then.

Referencing again, it deliveries and the new LNG ships coming in custody of Derma Hep to replace Costa Smeralda in South America, because we don't have enough access to reliable access to LNG facilities.

Would you given that you're the only cruise company lunch cruise company that is operating LNG ships would you have to participate in building out the infrastructure.

Places such as Brazil for example.

Yeah, I think Oh, we have a <unk>.

Strong partnership.

With Royal Dutch shell in terms of LNG infrastructure access et cetera, and then obviously we go.

Beyond that relationship to secure what we need.

But as some of you know when we built the first ship you know.

When we started building it there was no infrastructure and so we we we made a commitment you know early because of our commitment on environmental front and and now we're very excited to have the six shifts with another five coming so again you may have to adjust in the mall.

And here, there or whatever but overall.

We see a clear.

Your line of sight on the infrastructure to support.

Good yielding itineraries that are exciting for I guess, you know with our LNG powered ships and then if if absolutely necessary. The ships can use alternative fuel source, obviously, but.

Our intention and purposes because.

Because we built them as LNG.

Power shifts to to use LNG.

Similar to participate further.

Sorry.

Yeah go ahead, yeah, you'll follow on how do we have to participate and help fund or something to the establishment of an infrastructure. We don't anticipate having to we don't anticipate having to put capital in ourselves to help establish the infrastructure. We don't we think there are plenty of players.

And that part of the business to to do that timing may be you know a little off here or there, but we don't see a need at this point for us to.

Commit our capital to building LNG infrastructure.

<unk>.

Okay, great. Thank you so much and I'm really glad to have made such a commitment.

Our environment so.

Actually that's a great holiday season for me as well.

Thank you same to you.

Yes.

Our next question comes from Paul Golding with Macquarie Capital. Please proceed.

Thanks, So much so I had a quick question on just structural evolution of the marketplace. David I think you had mentioned earlier about the mix shift are increasing a bit sequentially towards higher end state room mix and I'm wondering if that's something that's beyond the current order book Youre looking.

Do more long term because you see higher propensity to spend should we expect as far as thinking you know once we're in a clear yield environment should we expect just continued increase in higher end state room mix and then I have a follow up on inflation.

Sure. So you know I think what Arnold in his prepared remarks talked about I think it was five percentage points higher or five or six percentage points higher balcony cabins and and so the mix of balconies.

I know our fleet in the future is higher than the mix historically, a lot of that has to do with.

The way in which we build chips into design, new shifts we've been able to get them effectively more balcony cabins on each and every ship, which will hopefully we believe will drive yields and satisfaction levels of our guests.

I don't think he's going to see for the ships we have on the water.

You know through 2025, that's all well said, we're beginning to start thinking about future Newbuild and we'll analyze that based off of customer trends and and desires and we'll work those into the plans and you can be sure we'll be thinking about that and making sure that we optimize our return.

On invested capital over time as it result in some what.

What we do.

Great and then on the cost side as we think about your commentary on inflation.

Your your thoughts on.

2022, our fuel costs.

Yeah.

Should we start thinking more about whether hedging is going to play a role here again for for your team you know versus what was previously I'm not not a robust hedging program on on your side and the fuel space.

You know, we historically haven't hashed and.

At this point in time, and if that changes, we'll let you know, but but as you know historically.

Historically, we haven't had as we we felt that over time you know.

That all takes care of itself and we have some natural hedges with the.

Portfolio, we have and you know revenues and costs.

Of course in different currencies around the world are you talking about fuel price hedging, but I'm, just saying other than that we really typically don't hedge.

And other than the LNG nothing meaningful on on mix shift between bunker, and NGO and going into the and I think over time.

There's no question that over time, we'll see.

Laure.

<unk> ratio.

Of Mgo, given the fact, we're bring in LNG.

LNG in and we have advanced air quality.

Those systems, you know on the ships et cetera, so the combination of LNG and.

The extended use of advanced air quality systems, we we should see.

A lowering of the requirements on an M. G O as we as we go forward David you want to add any additional color.

No I think that says it well my blended fuel average for 'twenty two reflected probably a 10 point drop in the NGL mix from 'twenty one to 'twenty two.

Great. Thanks, so much for that color and happy holidays.

Yeah, happy holidays and be safe.

Yeah.

Yeah.

Our next question comes from Ben CFO with Cleveland Research. Please proceed.

Thanks, I wanted to follow up on occupancy I think you've mentioned that August was about 59%. So it looks like it was pretty stable throughout your fiscal <unk>.

Definitely appreciate that it's a dynamic situation that you alluded to but how are you thinking about that occupancy build throughout 2022 do you anticipate it's more linear or more inflicting in the second half.

Kind of what's built into the budget as it relates to your profitability assumptions.

So I'll start just with the overall comment that.

Clearly the occupancy trend is.

Really positive now when you look at the.

Comparison, you just made there are a lot of dynamics in there.

For example, we brought on as David mentioned I think in some of his comments.

22 ships or or something in and obviously when you bring the ships on they're not initially at full occupancy.

It's all purpose as we bring them in and so that that average is down you know oxy. So what we're looking at overall for Oxford trends or.

Where you have comparable itineraries and ships that have been selling for a while what's happening with the occupancy on those ships.

And that's a very positive message. So you you you have a number of things waiting for Osaka see numbers David.

Yeah. So the you know the other thing keep in mind that affected the fourth quarter was the filter variant in the month of August impacted bookings many of which what might have been for the fourth quarter and as a result of that you know we had hoped to have higher occupancy in them.

Fourth quarter, but.

Yeah.

The Delta variance and everything else and a few itinerary changes that we had a we were very pleased with the overall, 59% you know looking forward I will say, it's very difficult to predict exactly you know by month or by quarter with the occupancy is going to be we're in a good.

Our book position and we're expecting overall the trend to be positive and to see increasing occupancies throughout 2022.

But I think it would be premature for us to to get some sort of guide.

Okay. Operator, we have time for one more question.

We have a question from my Ryan Sundby with William Blair. Please proceed.

Yeah.

I had a question around operating procedures.

Like proof of vaccination in major countries also it's been a really effective tool for the industry to cause me not here.

And I guess, given more breakthrough cases really around all life experiences.

Last month or so.

Is that still an effective tool going forward and when when do you need to start considering acquiring a booster, which I think a market like France, it's not required.

Yeah, Hey, thanks for the question Yeah, I think overall, we continue to be informed by you know again the.

Scientists around the world of medical experts.

And of course, we continue to act and compliance whatever the rules are and the destinations in home ports.

That we're operating.

But the bottom line is that you know this is a dynamic situation.

In the markets, where we are requiring.

Vacs and required testing it everywhere.

We acquired vaccines in most places and we're encouraging boosters of course, our crew is vaccinated and over 10000 of them have already received boosters and will be continuing with that they're tested very frequently the crew is and then those protocols.

Calls have worked in and have helped us be amongst the safest forms as I mentioned before.

Socializing and travel or of any of the traveler leisure sector. So yes. They.

They have worked.

And and they are continuing to work so we'll see how it plays out will follow.

The size and obviously it will be in compliance, but right now we are sailing with confidence.

As you noted you know there are going to be some cases.

Theres a far lower incidence of cases right now on cruise and society at large and we want to work to continue to ensure that that's the case and when there are cases, you know the risk of propagation of spread of the virus is a has been you know very effectively control.

Today and as long as that continues to be the case will contain a sale with confidence, but we will adjust and adapt to what we need to I think the most important thing.

Is where we have had cases.

In most instances they either asymptomatic.

Our minor symptoms, we have not heard you know.

Lots of cases, where people have to be hospitalized or are worse and.

I think that's important and that's also.

The increasing trend of society at large and hopefully that trend will continue.

Yeah, that's great to hear.

Thank you.

With other questions. So that was the last question that was okay.

Hey look everyone. Thank you really appreciate your engagement, please have a safe and enjoyable holiday and.

We look forward to talking to you guys or the next business update so thank you very much.

Hello, everyone.

That does conclude the conference call for today, we thank you for your participation and as such please disconnect. Your line have a great day everyone.