Carnival Cruises 2014 Annual Report Download - page 49

With 100 ships and 10.6 million guests in 2014, we have the scale to optimize our structure by utilizing our
combined purchasing volumes and common technologies and implementing cross-brand initiatives aimed at cost
containment. In 2014, we continued working on expanding cross-brand contracting for food and beverages and
began working on cross-brand contracting for air travel to further utilize the scale of our combined purchases.
Our uncompromising commitment to the safety and comfort of our guests and crew is paramount to the success
of our business. We are developing a company-wide safety management system that standardizes our maritime
related policies, procedures and processes and are increasing the amount of maritime safety, ship command and
engine room management training for our shipboard officers at our expanding global training facility in the
Netherlands. We are also updating our processes, systems and training surrounding fire prevention, detection and
suppression. Furthermore, we continue to make investments in our ships’ maritime systems to improve their
safety and reliability, which also allows us to operate them more efficiently and sustainably.
We employ an average of 81,200 crew members, including officers, onboard the 100 ships we currently operate,
which exclude crew who are on a leave. We also have an average of 10,100 full-time shoreside employees and
2,800 part-time/seasonal employees. Our goal is to select, train and retain the finest shipboard and shoreside
employees because having a team of highly motivated and engaged employees is key to delivering vacation
experiences that exceed our guests’ expectations. We have structured our work processes and incentive
compensation plans to reflect a culture that enables our brands to better align their individual performance with
our primary financial goals. Our management teams are aligned by geographic region to further optimize our
operations, utilize our scale and better manage our performance. In 2014, we accelerated our cross-brand
collaboration and streamlined our non-guest facing operations within the Holland America Line, Princess and
Seabourn group.
While we are well underway with certain initiatives discussed above and are already beginning to see their
positive results, some of our initiatives will take longer to realize their full benefits due to our size and the nature
of the cruise industry. Our strategic initiatives demonstrate the benefits of communicating, coordinating and
collaborating across our brands and will help us fulfill our vision to deliver unmatched joyful vacation
experiences and breakthrough total shareholder returns by exceeding guests’ expectations and achieving the full
benefits inherent in our scale.
As of January 22, 2015, we have ten cruise ships scheduled to be delivered between February 2015 and
November 2018, some of which will replace existing capacity as older, smaller and less efficient ships exit our
fleet. We strategically time the introduction of additional ships into our brands to allow ample time for those
lines to further grow their guest base and absorb the new capacity. We have removed 16 ships from our fleet
since 2006 and have agreements in place to remove three more ships by March 2016. Based on our current ship
orders and announced ship withdrawals, our net capacity growth rate is expected to be 2.0% in 2015 and 2.8%
compounded annually through 2018. We are committed to measured capacity growth so that we achieve an
optimal balance of supply and demand to maximize our profitability in established cruise regions, such as North
America and Western Europe. We believe the increasing deployment of ships into the emerging Asia market may
further moderate the level of supply in North America and Western Europe.
Outlook for the 2015 First Quarter and Full Year
On December 19, 2014, we said that we expected our non-GAAP diluted earnings per share for the 2015 first
quarter and full year to be in the ranges of $0.07 to $0.11 and $2.30 to $2.60, respectively (see “Key Performance
Non-GAAP Financial Indicators”). Our guidance was based on fuel prices of $421 per metric ton and $436 per
metric ton for the 2015 first quarter and full year, respectively. In addition, our guidance was based on 2015 first
quarter and full year currency rates of $1.23 to the euro, $1.57 to sterling and $0.83 to the Australian dollar. The
fuel and currency assumptions used in our guidance change daily and, accordingly, our forecasts change daily
based on the changes in these assumptions.
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