Carnival Corporation has reported net income of $204.0 million, or $0.34 per share, on revenues of $875.1 million for its second quarter ended May 31, 2000, compared to net income of $203.3 million, or $0.33 per share, on revenues of $796.1 million for the second quarter of 1999.

The second quarter of 2000 also benefited from non-recurring net gains of $10.7 million from the company's affiliated operations - a tax benefit for Costa Crociere.

In a prepared statement, Carnival Corporation Chairman Micky Arison said that earnings were constrained by a combination of lower net revenue yields and significantly higher fuel costs.

In a conference call to analysts, Arison attributed the pricing pressure mainly to the competitive situation among the cruise lines. "Everybody is reaching for high occupancy," he said, refusing to acknowledge that the pricing pressure may be related to overcapacity.

Arison explained this by pointing out that there is pricing pressure in all the cruise markets - even where there are no capacity increases, he said.

Arison also cited the Millennium factor as still affecting pricing, company events (mishaps), and the negative publicity that focused on the industry last year.

Arison said that to operate efficiently, a vessel must have high load factors, and his goal is to fill the ships. The objective is to attract first-time passengers and to build a huge customer base, according to Arison.

Meanwhile, Arison said, "I think we are in this (price pressure) for a year or more." But he added that there are anecdotal signs of pricing picking up at Carnival Cruise Lines.

Vice Chairman Howard Frank and Senior Vice President of Finance and CFO Gerry Cahill said they expected continued pressure on pricing for the balance of the year, with earnings up slightly over the second half of 1999. The Carnival executive team would not venture any forecast for 2001.

Regarding affiliated companies, Cahill said that excluding the tax benefit, Costa's earnings were flat, offset by higher fuel costs and the strong dollar.

Airtours' contribution was a loss of $11 million, compared to a loss of $5.7 million for the same period last year. Carnival also received payment of $6.6 million from Fincantieri in compensation for the delayed delivery of the Zaandam.

As for future activities, Frank said that announcements were expected to be made in the next 30 to 60 days regarding other distribution networks in order to expand the company's market reach in North America and Europe.

Added Arison, "Essentially we will commit capital to build and support distribution." Frank also said that Carnival was in discussions to sell off its 80s-built ships. "It is too early to say anything definitely, but older tonnage will be moved out," Frank added. But Carnival will not move ships to Costa, for instance. "Costa needs modern ships," Frank emphasized.

He said that in today's competitive environment, some of the companies at the lower level of the food chain were struggling and noted that Premier Cruise Lines was clearly showing signs of struggling. "If they fall away, it will be positive for the capacity," Frank said.

Carnival also reported 4,081,000 passenger cruise days and a load factor of 102.3 percent for its second quarter this year, compared to 3,470,000 passenger cruise days and a load factor of 99.9 percent last year.

For the six-month period, Carnival reported net income of $375.5 million on revenues of $1,700.0 million this year, compared to net income of $361.1 million on revenues of $1,544 .4 million for the same period last year.