Carnival Corporation reported net income of $415.1 million, or $0.67 per share, on revenues of $1.2 billion for its third quarter ended August 31, 1999, compared to net income of $344.7 million, or $0.58 per share, on revenues of $1.1 billion for its third quarter of last year.

Net income for the nine-month period was $776.2 million, or $1.26 per share, on revenues of $2.7 billion this year, compared to net income of $615.3 million, or $1.03 per share, on revenues of $2.3 billion for the same period in 1998.

The company attributed its earnings improvement to increased ship capacity and what it called "strong net revenue yields."

According to Carnival Corporation Chairman and CEO Micky Arison, the strength of the company's cruise business in the Caribbean and Alaskan markets during the third quarter offset the negative effects of the Kosovo conflict on the company's ships sailing in Europe.

"Having several strong brands sailing in different parts of the world gives us the ability to lessen the impact of situations such as Kosovo," Arison said in a prepared statement.

In related news, Carnival vice chairman Howard Frank confirmed the company's interest in P&O (see "Talk is Cheap" in Cruise Industry News no. 15).

Carnival is also close to signing a contract with Fincantieri to build the so-called Class 8000 ships for Holland America Line, which were long rumored to be going to Samsung. An announcement is expected before the end of the year.

In addition, as Carnival is moving closer to finalizing a building contract for the Queen Mary 2, it is expected to buy the 32 percent it does not already own of Cunard Line. The Norwegian investors would receive Carnival shares in exchange for their interest in Cunard and, thanks to Carnival, would net an estimated 30 percent return on their investment since April of 1998.

Not surprisingly, "one or two older ships" from Carnival or Holland America may also be put up for sale in the near future, according to Carnival Corp.

Analysts continue to be bullish on Carnival, estimating that the stock, which at press time traded at $42, will go as high as the $60 range within the next 12 to 15 months.

As Carnival's earnings have historically been driven by capacity, the company is well-positioned for the future with capacity increases estimated by Cruise Industry News to be approximately 17 percent in 2000, 4 percent in 2001, 8.5 percent in 2002, and 4.5 percent in 2003. In addition will be the new ships for HAL and Cunard.

While the eventual sale of older ships will reduce capacity accordingly, the older ships are less efficient, and their departure may actually increase net earnings in relative terms. Older ships are also more prone to mechanical failures, which in turn add repair costs and sometimes bad publicity.