REG - Carnival PLC - 1st Quarter Results
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RNS Number : 5066Y Carnival PLC 27 March 2026
March 27, 2026
RELEASE OF CARNIVAL CORPORATION & PLC QUARTERLY REPORT ON FORM 10-Q
FOR THE FIRST QUARTER OF 2026
Carnival Corporation & plc is hereby announcing that today it has released
its first quarter results of operations in its earnings release and filed its
joint Quarterly Report on Form 10-Q ("Form 10-Q") with the U.S. Securities and
Exchange Commission ("SEC") containing the Carnival Corporation & plc
unaudited consolidated financial statements as of and for the three months
ended February 28, 2026.
The information included in the Form 10-Q (Schedule A) has been prepared in
accordance with SEC rules and regulations. The Carnival Corporation & plc
unaudited consolidated financial statements contained in the Form 10-Q have
been prepared in accordance with generally accepted accounting principles in
the United States of America ("U.S. GAAP").
Schedule A contains information on Carnival Corporation &
plc's management's discussion and analysis of financial conditions and
results of operations, and the Carnival Corporation & plc unaudited
consolidated financial statements as of and for the three months ended
February 28, 2026.
The Directors consider that within the Carnival Corporation and Carnival plc
dual listed company arrangement, the most appropriate presentation of Carnival
plc's results and financial position is by reference to the Carnival
Corporation & plc U.S. GAAP unaudited consolidated financial statements.
MEDIA CONTACT INVESTOR RELATIONS CONTACT
Jody Venturoni Beth Roberts
001 469 797 6380 001 305 406 4832
The Form 10-Q is available for viewing on the SEC website at www.sec.gov under
Carnival Corporation or Carnival plc or the Carnival Corporation & plc
website at www.carnivalcorp.com or www.carnivalplc.com. A copy of the Form
10-Q has been submitted to the National Storage Mechanism and will shortly be
available for inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism. Additional
information can be obtained via Carnival Corporation & plc's website
listed above or by writing to Carnival plc at Carnival House, 100 Harbour
Parade, Southampton, SO15 1ST, United Kingdom.
Carnival Corporation & plc is the largest global cruise company, and among
the largest leisure travel companies, with a portfolio of world-class cruise
lines - AIDA Cruises, Carnival Cruise Line, Costa Cruises, Cunard, Holland
America Line, P&O Cruises, Princess Cruises, and Seabourn.
Additional information can be found on www.carnivalcorp.com, www.aida.de,
www.carnival.com, www.costacruise.com, www.cunard.com, www.hollandamerica.com,
www.pocruises.com, www.princess.com and www.seabourn.com
(http://www.seabourn.com) .
SCHEDULE A
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(in millions, except per share data)
Three Months Ended February 28,
2026 2025
Passenger ticket $4,023 $3,832
Onboard and other 2,142 1,978
Total Revenues 6,165 5,810
Cruise and tour operating expenses:
Commissions, transportation and other 872 850
Onboard and other 618 599
Payroll and related 684 640
Fuel 397 465
Food 382 354
Other operating 986 858
Total Cruise and tour operating expenses 3,939 3,766
Selling and administrative expense 924 848
Depreciation and amortization expense 696 654
Operating Income 607 543
Interest income 12 7
Interest expense, net of capitalized interest (291) (377)
Debt extinguishment and modification costs - (252)
Other income (expense), net (47) 12
Income (Loss) Before Income Taxes 280 (68)
Income tax expense, net (17) (7)
Net Income (Loss) 263 (75)
Less: net income attributable to noncontrolling interest 4 4
Net Income (Loss) attributable to Carnival Corporation & plc $258 $(78)
Earnings Per Share
Basic $0.19 $(0.06)
Diluted $0.19 $(0.06)
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in millions)
Three Months Ended February 28,
2026 2025
Net Income (Loss) $263 $(75)
Items Included in Other Comprehensive Income (Loss)
Change in foreign currency translation adjustment 73 (12)
Other (1) 1
Other Comprehensive Income (Loss) 72 (12)
Total Comprehensive Income (Loss) 335 (86)
Less: comprehensive income attributable to noncontrolling interest 4 4
Comprehensive Income (Loss) attributable to Carnival Corporation & plc $331 $(90)
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par values)
February 28, November 30, 2025
2026
ASSETS
Current Assets
Cash and cash equivalents $1,424 $1,928
Trade and other receivables, net 663 678
Inventories 510 505
Prepaid expenses and other 1,120 1,108
Total current assets 3,716 4,219
Property and Equipment, Net 43,700 43,494
Operating Lease Right-of-Use Assets, Net 1,295 1,328
Goodwill 579 579
Other Intangibles 1,181 1,177
Other Assets 1,095 890
$51,567 $51,687
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $1,502 $2,603
Current portion of operating lease liabilities 171 175
Accounts payable 1,242 1,245
Accrued liabilities and other 2,034 2,239
Customer deposits 7,472 6,831
Total current liabilities 12,420 13,092
Long-Term Debt 23,788 24,037
Long-Term Operating Lease Liabilities 1,146 1,178
Other Long-Term Liabilities 1,164 1,097
Contingencies and Commitments
Shareholders' Equity
Carnival Corporation common stock, $0.01 par value; 1,960 shares authorized; 14 13
1,367 shares issued at 2026 and 1,298 shares issued at 2025
Carnival plc ordinary shares, $1.66 par value; 217 shares issued at 2026 and 361 361
2025
Additional paid-in capital 17,871 17,253
Retained earnings 4,733 4,817
Accumulated other comprehensive income (loss) ("AOCI") (1,738) (1,810)
Treasury stock, 128 shares at 2026 and 131 shares at 2025 of Carnival (8,210) (8,364)
Corporation and 71 shares at 2026 and 72 shares at 2025 of Carnival plc, at
cost
Total shareholders' equity attributable to Carnival Corporation & plc 13,031 12,270
Noncontrolling interest 18 14
Total shareholders' equity 13,049 12,284
$51,567 $51,687
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in millions)
Three Months Ended
February 28,
2026 2025
OPERATING ACTIVITIES
Net income (loss) $263 $(75)
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities
Depreciation and amortization 696 654
Loss on debt extinguishment - 249
Share-based compensation 28 18
Amortization of discounts and debt issue costs 27 30
Non-cash lease expense 42 37
Greenhouse gas regulatory expense 15 6
Other 72 24
1,142 944
Changes in operating assets and liabilities
Receivables 17 33
Inventories (3) (17)
Prepaid expenses and other assets (149) (64)
Accounts payable (33) (31)
Accrued liabilities and other (296) (443)
Customer deposits 585 503
Net cash provided by operating activities 1,263 925
INVESTING ACTIVITIES
Purchases of property and equipment (566) (607)
Proceeds from sales of ships and other property and equipment 3 11
Advances to affiliates (37) (9)
Other 3 0
Net cash used in investing activities (597) (605)
FINANCING ACTIVITIES
Principal repayments of long-term debt (945) (3,448)
Debt issuance costs (4) (24)
Debt extinguishment costs - (197)
Proceeds from issuance of long-term debt - 2,980
Dividends paid (208) -
Other (9) (1)
Net cash used in financing activities (1,166) (690)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (2) (6)
Net increase (decrease) in cash, cash equivalents and restricted cash (501) (376)
Cash, cash equivalents and restricted cash at beginning of period 1,958 1,231
Cash, cash equivalents and restricted cash at end of period $1,457 $856
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
(in millions)
Three Months Ended
Common Ordinary Additional Retained AOCI Treasury Non-controlling interest Total shareholders' equity
stock shares paid-in earnings stock
capital
At November 30, 2025 $13 $361 $17,253 $4,817 $(1,810) $(8,364) $14 $12,284
Net income (loss) - - - 258 - - 4 263
Other comprehensive income (loss) - - - - 72 - - 72
Cash dividends - - - (208) - - - (208)
($0.15 per share)
Conversion of Convertible Notes 1 - 617 - - - - 618
Issuance of treasury shares for vested share-based awards - - (30) (135) - 165 - -
Share-based compensation and other 0 0 31 0 - (11) - 20
At February 28, 2026 $14 $361 $17,871 $4,733 $(1,738) $(8,210) $18 $13,049
At November 30, 2024 $13 $361 $17,150 $2,101 $(1,975) $(8,404) $6 $9,251
Net income (loss) - - - (78) - - 4 (75)
Other comprehensive income (loss) - - - - (12) - - (12)
Issuance of treasury shares for vested share-based awards - - - (31) - 31 - -
Share-based compensation and other 0 0 21 0 - (4) - 17
At February 28, 2025 $13 $361 $17,171 $1,991 $(1,986) $(8,376) $9 $9,182
The accompanying notes are an integral part of these consolidated financial
statements.
CARNIVAL CORPORATION & PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - General
The consolidated financial statements include the accounts of Carnival
Corporation and Carnival plc and their respective subsidiaries. Together with
their consolidated subsidiaries, they are referred to collectively in these
consolidated financial statements and elsewhere in this joint Quarterly Report
on Form 10-Q as "Carnival Corporation & plc," "our," "us" and "we."
Basis of Presentation
The consolidated financial statements are unaudited and, in the opinion of our
management, contain all adjustments, consisting of only normal recurring
adjustments, necessary for a fair statement. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States of America
("GAAP") have been condensed or omitted as permitted by such Securities and
Exchange Commission rules and regulations. The preparation of our interim
consolidated financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the amounts reported and
disclosed. We have made reasonable estimates and judgments of such items
within our financial statements and there may be changes to those estimates in
future periods. Our operations are seasonal and results for interim periods
are not necessarily indicative of the results for the entire year.
Our interim consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and the related notes
included in the Carnival Corporation & plc 2025 joint Annual Report on
Form 10-K filed with the U.S. Securities and Exchange Commission ("SEC") on
January 27, 2026 ("Form 10-K").
For 2025, we reclassified certain immaterial amounts within both operating
activities and investing activities in the Consolidated Statements of Cash
Flows to conform to the current year presentation. We also reclassified
certain immaterial amounts in the Consolidated Statements of Income (Loss),
Consolidated Statements of Comprehensive Income (Loss), Consolidated Balance
Sheets, Consolidated Statements of Cash Flows and Consolidated Statements of
Shareholders' Equity in order to separately present amounts attributable to
noncontrolling interests primarily associated with our subsidiaries that
operate Isla Tropicale and Amber Cove.
Property and Equipment
We review estimated useful lives and residual values of our ships for
reasonableness whenever events or circumstances indicate a revision is
warranted. In December 2025, we completed such review considering the period
over which we expect to operate our ships and our long-term plans. As a
result, we determined our ships' depreciable lives would be extended to 35
years. In connection with the increase in estimated useful life, we reduced
our estimated residual value of each ship to be 5% of our original ship cost
for LNG powered ships and a range of salvage values under $25 million for all
other ships, depending on the class and tonnage of the ship. This revision did
not have a material impact on our financial statements and has been applied
prospectively beginning December 1, 2025.
Accounting Pronouncements
In December 2023, the Financial Accounting Standards Board ("FASB") issued
guidance, Income Taxes - Improvements to Income Tax Disclosures. This guidance
requires disaggregation of rate reconciliation categories and income taxes
paid by jurisdiction, as well as other amendments relating to income tax
disclosures. This guidance is required to be adopted by us for our fiscal 2026
annual financial statements. We are evaluating the impact this guidance may
have on our consolidated financial statements.
In November 2024, the FASB issued guidance, Income Statement - Reporting
Comprehensive Income - Expense Disaggregation Disclosures - Disaggregation of
Income Statement Expenses. This guidance requires annual and interim
disclosure of disaggregated information for certain costs and expenses. This
guidance is required to be adopted by us beginning with our fiscal 2028 annual
financial statements and fiscal 2029 interim periods. We are evaluating the
impact this guidance may have on our consolidated financial statements.
In July 2025, the FASB issued guidance, Financial Instruments - Credit Losses
- Measurement of Credit Losses for Accounts Receivable and Contract Assets.
This guidance provides a practical expedient permitting an entity to assume
that conditions at the balance sheet date remain unchanged over the life of
the asset when estimating expected credit losses for current accounts
receivable and current contract assets accounted for under Revenue from
Contracts with Customers. This guidance is required to be adopted by us in the
first quarter of 2027. We are evaluating the impact this guidance may have on
our consolidated financial statements.
In September 2025, the FASB issued guidance, Intangibles - Goodwill and Other
- Internal-Use Software - Targeted Improvements to the Accounting for
Internal-Use Software. This guidance removes references to software
development stages. Entities will be required to start capitalizing software
costs when (i) management has authorized and committed to funding the software
project, and (ii) it is probable the project will be completed and the
software will be used as intended. This guidance is required to be adopted by
us in the first quarter of 2029. We are evaluating the impact this guidance
may have on our consolidated financial statements.
NOTE 2 - Revenue and Expense Recognition
Guest cruise deposits and advance onboard purchases are initially included in
Customer deposits when received. Customer deposits are subsequently recognized
as cruise revenues, together with revenues from onboard and other activities,
and all associated direct expenses of a voyage are recognized as cruise
expenses, upon completion of voyages with durations of ten nights or less and
on a pro rata basis for voyages in excess of ten nights. The impact of
recognizing these shorter duration cruise revenues and expenses on a completed
voyage basis versus on a pro rata basis is not material. Certain of our
product offerings are bundled and we allocate the value of the bundled
services and goods between Passenger ticket revenues and Onboard and other
revenues based upon the estimated standalone selling prices of those goods and
services. Future travel discount vouchers are included as a reduction of
Passenger ticket revenues when such vouchers are utilized. Guest cancellation
fees, when applicable, are recognized in Passenger ticket revenues at the time
of cancellation.
Our sales to guests of air and other transportation to and from airports near
the home ports of our ships are included in Passenger ticket revenues. The
related expenses of these services are included in Prepaid expenses and other
when paid prior to the start of a voyage and are subsequently recognized in
Commissions, transportation and other expenses at the time of revenue
recognition. We had prepaid air and other transportation expenses of
$221 million as of February 28, 2026 and $233 million as of November 30,
2025. The proceeds that we collect from the sales of third-party shore
excursions are included in Onboard and other revenues and the related expenses
are included in Onboard and other expenses. The amounts collected on behalf of
our onboard concessionaires, net of the amounts remitted to them, are included
in Onboard and other revenues as concession revenues. All of these amounts are
recognized on a completed voyage or pro rata basis as discussed above.
Fees, taxes and charges that vary with guest head counts are expensed in
Commissions, transportation and other expenses when the corresponding revenues
are recognized. The remaining portion of fees, taxes and charges are expensed
in Other operating expenses when the corresponding revenues are recognized.
Revenues and expenses from our hotel and transportation operations, which are
included in our Tour and Other segment, are recognized at the time the
services are performed.
Revenues by Country
Revenue by country, which are based on where our guests are sourced, were as
follows:
Three Months Ended
February 28,
(in millions) 2026 2025
United States $3,293 $3,185
Germany 821 683
United Kingdom 778 670
Other (a) 1,274 1,272
$6,165 $5,810
(a) No other individual country's revenue exceeded 10% for the three
months ended February 28, 2026 and 2025.
Customer Deposits
Our payment terms generally require an initial deposit to confirm a
reservation, with the balance due prior to the voyage. We also offer our
guests the opportunity to make advance purchases of certain onboard and other
services. Cash received from guests in advance of the cruise is recorded in
Customer deposits and in Other long-term liabilities on our Consolidated
Balance Sheets. These amounts include refundable deposits. We had total
customer deposits of $7.9 billion as of February 28, 2026 and $7.2 billion as
of November 30, 2025. Our customer deposits balance changes due to the
seasonal nature of cash collections, which typically results from higher
ticket prices and occupancy levels during the third quarter, the recognition
of revenue, refunds of customer deposits and foreign currency changes.
Trade and Other Receivables
Although we generally require full payment from our customers prior to or
concurrently with their cruise, we grant credit terms to a relatively small
portion of our revenue source. We have receivables from credit card merchants
and travel agents for cruise ticket purchases and onboard revenue. These
receivables are included within Trade and other receivables, net and are less
allowances for expected credit losses.
Contract Costs
We recognize incremental travel agent commissions and credit and debit card
fees incurred as a result of obtaining the ticket contract as assets when paid
prior to the start of a voyage. We record these amounts within Prepaid
expenses and other and subsequently recognize these amounts as Commissions,
transportation and other at the time of revenue recognition or at the time of
voyage cancellation. We had incremental costs of obtaining contracts with
customers recognized as assets of $393 million as of February 28, 2026 and
$363 million as of November 30, 2025.
NOTE 3 - Debt
February 28, November 30,
(in millions) Maturity Rate (a) 2026 2025
Secured Subsidiary Guaranteed
Notes
Notes Jun 2027 7.88% $192 $192
Notes Aug 2028 4.00% 2,406 2,406
Notes Aug 2029 7.00% 500 500
Total Secured Subsidiary Guaranteed 3,098 3,098
Unsecured Subsidiary Guaranteed
Notes
Convertible Notes Dec 2025 (b) 5.75% - 1,131
Notes May 2029 5.13% 1,250 1,250
EUR Notes Jan 2030 5.75% 590 580
Notes Mar 2030 5.75% 1,000 1,000
Notes Jun 2031 5.88% 1,000 1,000
EUR Notes Jul 2031 4.13% 1,180 1,160
Notes Aug 2032 5.75% 3,000 3,000
Notes Feb 2033 6.13% 2,000 2,000
Loans
Floating rate Aug 2027 - Nov 2027 SOFR + 1.13% - 1.38% 900 900
Export Credit Facilities
Floating rate Dec 2031 SOFR + 1.20% (c) 411 446
Fixed rate Aug 2027 - Dec 2032 2.42 - 3.38% 1,904 1,983
EUR floating rate Oct 2026 - Nov 2034 EURIBOR + 0.55 - 0.80% 2,409 2,461
EUR fixed rate Feb 2031 - Sep 2037 1.05 - 4.00% 6,001 6,132
Total Unsecured Subsidiary Guaranteed 21,644 23,042
Unsecured (No Subsidiary Guarantee)
Notes
Notes Jan 2028 6.65% 200 200
EUR Notes Oct 2029 1.00% 708 696
Loans
EUR floating rate Apr 2029 EURIBOR + 1.95% 354 348
Total Unsecured (No Subsidiary Guarantee) 1,262 1,244
Total Debt 26,004 27,383
Less: unamortized debt issuance costs and discounts (713) (744)
Total Debt, net of unamortized debt issuance costs and discounts 25,290 26,640
Less: Current portion of long-term debt (1,502) (2,603)
Long-Term Debt $23,788 $24,037
(a) The reference rates, together with any applicable credit adjustment
spread, for all of our floating rate debt have a 0.00% floor.
(b) See "Convertible Notes" below.
(c) Includes applicable credit adjustment spread.
As of February 28, 2026, all of our outstanding debt is issued or guaranteed
by substantially the same entities with the exception of the $1.8 billion of
export credit facilities of Sun Princess Limited and Sun Princess II Limited,
which do not guarantee our other outstanding debt.
As of February 28, 2026, the scheduled maturities of our debt are as follows:
(in millions)
Year Principal Payments
Remainder of 2026 $1,055
2027 2,535
2028 3,978
2029 4,168
2030 2,913
Thereafter 11,354
Total $26,004
Revolving Facility
As of February 28, 2026 we had $4.5 billion available for borrowings under the
Revolving Facility. We may borrow or utilize available amounts under the
Revolving Facility through June 2030, subject to the satisfaction of the
conditions in the facility.
Export Credit Facilities
As of February 28, 2026, we had $10.9 billion of undrawn export credit
facilities to fund ship deliveries planned through 2033. As of February 28,
2026, the net book value of our ships subject to negative pledges was
$19.4 billion.
Collateral Pool
As of February 28, 2026, the net book value of our ships and ship
improvements, excluding ships under construction, is $40.7 billion. Our
secured debt is secured on a first-priority basis by certain collateral, which
includes ships and certain assets related to those ships and material
intellectual property (combined net book value of approximately
$22.5 billion, including $20.8 billion related to ships and certain assets
related to those ships as of February 28, 2026) and certain other assets.
Convertible Notes
In December 2025, we settled $1.1 billion principal amount of the 2027
Convertible Notes, resulting in the issuance of 69.1 million shares of
Carnival Corporation common stock and a cash payment of $500 million.
Covenant Compliance
As of February 28, 2026, the most restrictive covenants for our Revolving
Facility, unsecured loans and export credit facilities include the following:
• Maintain minimum interest coverage (adjusted EBITDA to
consolidated net interest charges, as defined in the agreements) at a ratio of
not less than 3.0 to 1.0
• Maintain minimum issued capital and consolidated reserves (as
defined in the agreements) of $5.0 billion
• Limit our debt to capital (as defined in the agreements)
percentage to a percentage not to exceed 65%
• Maintain minimum liquidity of $1.5 billion
• Limit the amounts of our secured assets as well as secured and
other indebtedness
At February 28, 2026, we were in compliance with the applicable covenants
under our debt agreements. Generally, if an event of default under any debt
agreement occurs, then, pursuant to cross-default and/or cross-acceleration
clauses therein, substantially all of our outstanding debt could become due,
and our debt could be terminated. Any financial covenant amendment may lead to
increased costs, increased interest rates, additional restrictive covenants
and other available lender protections that would be applicable.
NOTE 4 - Contingencies and Commitments
Litigation
We are routinely involved in legal proceedings, claims, disputes, regulatory
matters and governmental inspections or investigations arising in the ordinary
course of or incidental to our business. We have insurance coverage for
certain of these claims and actions, or any settlement of these claims and
actions, and historically the maximum amount of our liability, net of any
insurance recoverables, has been limited to our self-insurance retention
levels.
We record provisions in the consolidated financial statements for pending
litigation when we determine that an unfavorable outcome is probable and the
amount of the loss can be reasonably estimated.
Legal proceedings and government investigations are subject to inherent
uncertainties, and unfavorable rulings or other events could occur.
Unfavorable resolutions could involve substantial monetary damages. In
addition, in matters for which conduct remedies are sought, unfavorable
resolutions could include an injunction or other order prohibiting us from
selling one or more products at all or in particular ways, precluding
particular business practices or requiring other remedies. An unfavorable
outcome might result in a material adverse impact on our business, results of
operations, financial position or liquidity.
As previously disclosed, on May 2, 2019, the Havana Docks Corporation filed a
lawsuit against Carnival Corporation in the U.S. District Court for the
Southern District of Florida under Title III of the Cuban Liberty and
Democratic Solidarity Act, also known as the Helms-Burton Act, alleging that
Carnival Corporation "trafficked" in confiscated Cuban property when certain
ships docked at certain ports in Cuba, and that this alleged "trafficking"
entitles the plaintiffs to treble damages. On March 21, 2022, the court
granted summary judgment in favor of Havana Docks Corporation as to liability.
On December 30, 2022, the court entered judgment against Carnival Corporation
in the amount of $110 million plus $4 million in fees and costs. We
appealed. On October 22, 2024, the Court of Appeals for the 11(th) Circuit
reversed the District Court's judgment against us. On March 6, 2025, Havana
Docks filed a petition for certiorari with the Supreme Court of the United
States and we responded. On October 3, 2025, the Supreme Court accepted review
of the case and heard arguments on February 23, 2026. We believe the ultimate
outcome of this matter will not have a material impact on our consolidated
financial statements.
As of February 28, 2026, two purported class actions brought against us by
former guests in the Federal Court in Australia and in Italy remain pending,
as previously disclosed. These actions include claims based on a variety of
theories, including negligence, gross negligence and failure to warn, physical
injuries and severe emotional distress associated with being exposed to and/or
contracting COVID-19 onboard our ships. On October 24, 2023, the court in the
Australian matter held that we were liable for negligence and for breach of
consumer protection warranties as it relates to the lead plaintiff. The court
ruled that the lead plaintiff was not entitled to any pain and suffering or
emotional distress damages on the negligence claim and awarded medical costs.
In relation to the consumer protection warranties claim, the court found that
distress and disappointment damages amounted to no more than the refund
already provided to guests and therefore made no further award. Further
proceedings will determine the applicability of this ruling to the remaining
class participants. On March 31, 2025, the court in the Italian matter
returned a ruling rejecting most of the plaintiffs' claims and awarding a
half-price fare reduction for certain passengers. Plaintiffs have appealed the
ruling. We continue to take actions to defend against the above claims. We
believe the ultimate outcome of these matters will not have a material impact
on our consolidated financial statements.
Regulatory or Governmental Inquiries and Investigations
We have been, and may continue to be, impacted by breaches in data security
and lapses in data privacy, which occur from time to time. These can vary in
scope and range from inadvertent events to malicious motivated attacks.
We have incurred legal and other costs in connection with cyber incidents that
have impacted us. The costs associated with cyber incidents over the last
three years were not material. While past incidents did not have a material
adverse effect on our business, results of operations, financial position or
liquidity, no assurances can be given about the future and we may be subject
to future attacks, incidents or litigation that could have such a material
adverse effect.
On March 14, 2022, the U.S. Department of Justice and the U.S. Environmental
Protection Agency notified us of potential civil penalties and injunctive
relief for alleged Clean Water Act violations by owned and operated vessels
covered by the 2013 Vessel General Permit. We are working with these agencies
to reach a resolution of this matter. We believe the ultimate outcome will not
have a material impact on our consolidated financial statements.
Other Contingent Obligations
Some of the debt contracts we enter into include indemnification provisions
obligating us to make payments to the counterparty if certain events occur.
These contingencies generally relate to changes in taxes or changes in laws
which increase the lender's costs. There are no stated or notional amounts
included in the indemnification clauses, and we are not able to estimate the
maximum potential amount of future payments, if any, under these
indemnification clauses.
We have agreements with a number of credit card processors that transact
customer deposits related to our cruise vacations. Certain of these agreements
allow the credit card processors to request, under certain circumstances, that
we provide a capped reserve fund in cash. Although the agreements vary, these
requirements may generally be satisfied either through a withheld percentage
of customer payments or providing cash funds directly to the credit card
processor. As of February 28, 2026 and November 30, 2025, we were not required
to maintain any reserve funds or compensating deposits.
Ship Commitments
As of February 28, 2026, our new ship growth capital commitments were
$0.5 billion for the remainder of 2026 and $1.6 billion, $1.5 billion,
$1.9 billion, $1.7 billion and $4.9 billion for the years ending November
30, 2027, 2028, 2029, 2030 and thereafter.
NOTE 5 - Fair Value Measurements and Financial Risks
Fair Value Measurements
Fair value is defined as the amount that would be received for selling an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date and is measured using inputs in one of
the following three categories:
• Level 1 measurements are based on unadjusted quoted prices in
active markets for identical assets or liabilities that we have the ability to
access. Valuation of these items does not entail a significant amount of
judgment.
• Level 2 measurements are based on quoted prices for similar
assets or liabilities in active markets, quoted prices for identical or
similar assets or liabilities in markets that are not active or market data
other than quoted prices that are observable for the assets or liabilities.
• Level 3 measurements are based on unobservable data that are
supported by little or no market activity and are significant to the fair
value of the assets or liabilities.
Considerable judgment may be required in interpreting market data used to
develop the estimates of fair value. Accordingly, certain estimates of fair
value presented herein are not necessarily indicative of the amounts that
could be realized in a current or future market exchange.
Financial Instruments that are not Measured at Fair Value on a Recurring
Basis
February 28, 2026 November 30, 2025
Carrying Fair Value Carrying Fair Value
Value Value
(in millions) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Liabilities
Fixed rate debt (a) $21,930 $- $21,949 $- $23,229 $- $24,167 $-
Floating rate debt (a) 4,074 - 4,077 - 4,154 - 4,142 -
Total $26,004 $- $26,026 $- $27,383 $- $28,308 $-
(a) The debt amounts above do not include the impact of debt issuance
costs and discounts. The fair values of our publicly-traded notes were based
on their unadjusted quoted market prices in markets that are not sufficiently
active to be Level 1 and, accordingly, are considered Level 2. The fair values
of our other debt were estimated based on current market interest rates being
applied to this debt.
Financial Instruments that are Measured at Fair Value on a Recurring Basis
Cash equivalents consisting of money market funds and cash investments with
original maturities of less than 90 days were $0.9 billion as of February 28,
2026 and $1.4 billion as of November 30, 2025. These cash equivalents are
considered Level 1 instruments.
Nonfinancial Instruments that are Measured at Fair Value on a Nonrecurring
Basis
Valuation of Goodwill and Trademarks
As of February 28, 2026 and November 30, 2025, goodwill for our North America
segment was $579 million.
Trademarks
(in millions) North America Europe Total
Segment Segment
November 30, 2025 $927 $249 $1,176
Exchange movements - 4 4
February 28, 2026 $927 $253 $1,180
Financial Risks
Fuel Price Risks
We manage our exposure to fuel price risk by managing our consumption of fuel.
Substantially all of our exposure to market risk for changes in fuel prices
relates to the consumption of fuel on our ships. We manage fuel consumption
through fleet optimization, energy efficiency, itinerary efficiency, new
technologies and alternative fuels.
Foreign Currency Exchange Rate Risks
Overall Strategy
We manage our exposure to fluctuations in foreign currency exchange rates
through our normal operating and financing activities, including netting
certain exposures to take advantage of any natural offsets and, when
considered appropriate, through the use of derivative and non-derivative
financial instruments. Our primary focus is to monitor our exposure to, and
manage, the economic foreign currency exchange risks faced by our operations
and realized if we exchange one currency for another. We consider hedging
certain of our ship commitments and net investments in foreign operations. The
financial impacts of our hedging instruments generally offset the changes in
the underlying exposures being hedged.
Operational Currency Risks
Our operations primarily utilize the U.S. dollar, Euro, Sterling or the
Australian dollar as their functional currencies. Our operations also have
revenue and expenses denominated in non-functional currencies. Movements in
foreign currency exchange rates affect our consolidated financial statements.
Investment Currency Risks
We consider our investments in foreign operations to be denominated in stable
currencies and of a long-term nature. We have euro-denominated debt which
provides an economic offset for our operations with euro functional currency.
In addition, we have in the past and may in the future utilize derivative
financial instruments, such as cross currency swaps, to manage our exposure to
investment currency risks.
Newbuild Currency Risks
Our shipbuilding contracts are typically denominated in euros. At February 28,
2026, our newbuild currency exchange rate risk relates to euro-denominated
newbuild contract payments for non-euro functional currency cruise lines. The
cost of shipbuilding orders that we may place in the future that are
denominated in a different currency than the functional currency of the cruise
line will be affected by foreign currency exchange rate fluctuations. These
foreign currency exchange rate fluctuations may affect our decision to order
new cruise ships. We have in the past and may in the future utilize derivative
financial instruments, such as foreign currency derivatives, to manage our
exposure to newbuild currency risks. Our decisions to hedge non-functional
currency ship commitments for our cruise lines are made on a case-by-case
basis, considering the amount and duration of the exposure, market volatility,
economic trends, our overall expected net cash flows by currency and other
offsetting risks.
Interest Rate Risks
We manage our exposure to fluctuations in interest rates through our debt
portfolio management and investment strategies. We evaluate our debt
portfolio to determine whether to make periodic adjustments to the mix of
fixed and floating rate debt through the use of interest rate swaps,
refinancing of existing debt and the issuance of new debt.
Concentrations of Credit Risk
As part of our ongoing control procedures, we monitor concentrations of credit
risk associated with financial and other institutions with which we conduct
significant business. We seek to manage these credit risk exposures,
including counterparty nonperformance primarily associated with our cash and
cash equivalents, investments, notes receivables, reserve funds related to
customer deposits (when required), future financing facilities, contingent
obligations, derivative instruments, insurance contracts and new ship progress
payment guarantees, by:
• Conducting business with well-established financial
institutions, insurance companies and export credit agencies
• Diversifying our counterparties
• Having guidelines regarding credit ratings and investment
maturities that we follow to help safeguard liquidity and minimize risk
• Generally requiring collateral and/or guarantees to support
notes receivable on significant asset sales and new ship progress payments to
shipyards
We also monitor the creditworthiness of travel agencies, tour operators and
credit and debit card providers to which we extend credit in the normal course
of our business. Our credit exposure also includes contingent obligations
related to cash payments received directly by travel agents and tour operators
for cash collected by them on cruise sales in certain European countries where
we are obligated to honor our guests' cruise payments made by them to their
travel agents and tour operators regardless of whether we have received these
payments.
Concentrations of credit risk associated with trade receivables and other
receivables, charter-hire agreements and contingent obligations are not
considered to be material, principally due to the large number of unrelated
accounts, the nature of these contingent obligations and their short
maturities. Normally, we have not required collateral or other security to
support normal credit sales and have not experienced significant credit
losses.
NOTE 6 - Segment Information
The chief operating decision maker ("CODM"), who is the Chief Executive
Officer of Carnival Corporation and Carnival plc assesses performance and
makes decisions to allocate resources for Carnival Corporation & plc
based upon review of the results across all of our segments. The operating
segments within each of our reportable segments have been aggregated based on
the similarity of their economic and other characteristics, including
geographic guest sourcing. Our four reportable segments are comprised of
(1) North America cruise operations ("North America"), (2) Europe cruise
operations ("Europe"), (3) Cruise Support and (4) Tour and Other.
Our Cruise Support segment includes our portfolio of leading port destinations
and exclusive islands as well as other services, all of which are operated for
the benefit of our cruise lines. Our Tour and Other segment represents the
hotel and transportation operations of Holland America Princess Alaska Tours
and other operations.
Our CODM uses adjusted operating income (loss) in assessing segment
performance and determining how to allocate resources. This metric is used to
review segment operating trends and monitor variances against the plan and
prior year results. Resource allocation primarily occurs during the annual
capital appropriation process.
The below tables include our calculation of adjusted operating income (loss),
our significant segment expenses, and a reconciliation of adjusted operating
income (loss) to income (loss) before income taxes:
Three months ended February 28, 2026
(in millions) North America Europe Cruise Support Tour and Other Total
Total Revenues $4,019 $2,069 $77 $0 $6,165
Cruise and tour operating expenses:
Commissions, transportation and other 468 442 (38) (c) -
Onboard and other 465 133 20 -
Payroll and related 375 268 41 -
Fuel 270 127 1 -
Food 268 113 1 -
Other operating (a) 606 339 28 13
Total cruise and tour operating expenses 2,452 1,421 53 13 3,939
Adjusted selling and administrative expense (b) 537 283 83 5 907
Depreciation and amortization expense 460 194 34 7 696
Adjusted Operating Income (Loss) 569 170 (92) (24) 623
Restructuring expenses 0
Other (16)
Interest income 12
Interest expense, net of capitalized interest (291)
Other income (expense), net (47)
Income (Loss) Before Income Taxes $280
Capital Expenditures $264 $172 $113 $17 $566
(a) Represents other operating expenses, which include port costs that do
not vary with guest head counts; repairs and maintenance, including minor
improvements and dry-dock expenses; hotel costs; entertainment; freight and
logistics; insurance premiums; tour and other expense for our hotel and
transportation operations and all other ship operating expenses.
(b) Excludes certain other gains and losses that are not part of our core
operating business.
(c) Includes intercompany port fees, taxes and charges to our cruise
segments related to our port destinations and exclusive islands, which
eliminate in consolidation.
Three months ended February 28, 2025
(in millions) North America Europe Cruise Support Tour and Other Total
Total Revenues $3,906 $1,830 $72 $2 $5,810
Cruise and tour operating expenses:
Commissions, transportation and other 457 419 (26) (c) -
Onboard and other 473 114 12 -
Payroll and related 359 247 33 -
Fuel 319 146 0 -
Food 257 97 0 -
Other operating (a) 571 247 25 15
Total cruise and tour operating expenses 2,436 1,270 45 15 3,766
Adjusted selling and administrative expense (b) 520 250 72 4 847
Depreciation and amortization expense 434 169 45 6 654
Adjusted Operating Income (Loss) 516 140 (91) (22) 543
Restructuring expenses 0
Other -
Interest income 7
Interest expense, net of capitalized interest (377)
Debt extinguishment and modification costs (252)
Other income (expense), net 12
Income (Loss) Before Income Taxes $(68)
Capital Expenditures $291 $120 $182 $15 $607
(a) Represents other operating expenses, which include port costs that do
not vary with guest head counts; repairs and maintenance, including minor
improvements and dry-dock expenses; hotel costs; entertainment; freight and
logistics; insurance premiums; tour and other expenses for our hotel and
transportation operations and all other ship operating expenses
(b) Excludes restructuring expenses
(c) Includes intercompany port fees, taxes and charges to our cruise
segments related to our port destinations and exclusive islands, which
eliminate in consolidation.
Total assets were as follows:
(in millions) February 28, 2026 November 30, 2025
North America $31,304 $31,400
Europe 16,406 16,030
Cruise Support 3,435 3,836
Tour and Other 421 421
$51,567 $51,687
Substantially all of our long-lived assets consist of our ships and move
between geographic areas.
NOTE 7 - Earnings Per Share
Three Months Ended
February 28,
(in millions, except per share data) 2026 2025
Net income (loss) attributable to Carnival Corporation & plc $258 $(78)
Interest expense on dilutive Convertible Notes 0 -
Net income (loss) attributable to Carnival Corporation & plc for diluted $259 $(78)
earnings per share
Weighted-average shares outstanding 1,379 1,309
Dilutive effect of equity awards 8 -
Dilutive effect of Convertible Notes 4 -
Diluted weighted-average shares outstanding 1,392 1,309
Basic earnings per share $0.19 $(0.06)
Diluted earnings per share $0.19 $(0.06)
Antidilutive shares excluded from diluted earnings per share computations were
as follows:
Three Months Ended
February 28,
(in millions) 2026 2025
Equity awards - 7
Convertible Notes - 84
Total antidilutive shares - 92
NOTE 8 - Supplemental Cash Flow Information
(in millions) February 28, 2026 November 30, 2025
Cash and cash equivalents (Consolidated Balance Sheets) $1,424 $1,928
Restricted cash (included in Prepaid expenses and other and Other assets) 33 30
Total cash, cash equivalents and restricted cash (Consolidated Statements $1,457 $1,958
of Cash Flows)
NOTE 9 - Shareholders' Equity
Dividends
In December 2025 we declared a cash dividend of $0.15 per share, which was
paid in February 2026.
Share Repurchase Program
In March 2026, the Boards of Directors approved a share repurchase program of
up to $2.5 billion of the company's shares. The timing, volume and structure
of any share repurchases will be subject to market and general economic
conditions, the prevailing share price(s), applicable legal requirements and
the receipt of any required shareholder authority for Carnival plc. Due to
legal requirements associated with the current open voting period for the
unification of the dual listed company structure, the program will commence
following the meetings of shareholders expected to be held on April 17, 2026
and does not have an expiration date.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Cautionary Note Concerning Factors That May Affect Future Results
Some of the statements, estimates or projections contained in this document
are "forward-looking statements" that involve risks, uncertainties and
assumptions with respect to us, including statements concerning future
results, operations, strategy, outlooks, plans, goals, reputation, cash flows,
liquidity and other events which have not yet occurred. These statements are
intended to qualify for the safe harbors from liability provided by Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934, as amended. All statements other than statements of historical
facts are statements that could be deemed forward-looking. These statements
are based on current expectations, estimates, forecasts and projections about
our business and the industry in which we operate and the beliefs and
assumptions of our management. We have tried, whenever possible, to identify
these statements by using words like "will," "may," "could," "should,"
"would," "believe," "depends," "expect," "goal," "aspiration," "anticipate,"
"forecast," "project," "future," "intend," "plan," "estimate," "target,"
"indicate," "outlook," and similar expressions of future intent or the
negative of such terms.
Because forward-looking statements involve risks and uncertainties, there are
many factors that could cause our actual results, performance or achievements
to differ materially from those expressed or implied by our forward-looking
statements. This note contains important cautionary statements of the known
factors that we consider could materially affect the accuracy of our
forward-looking statements and adversely affect our business, results of
operations and financial position. These factors include, but are not limited
to, the following:
• Events and conditions around the world, including geopolitical
uncertainty, war and other military actions, pandemics, inflation, higher
interest rates and other general concerns impacting the ability or desire of
people to travel could lead to a decline in demand for cruises as well as have
significant negative impacts on our financial condition and operations.
• Incidents concerning our ships, guests or the cruise industry
may negatively impact the satisfaction of our guests and crew and lead to
reputational damage.
• Adverse weather conditions or an increase in the frequency
and/or severity of adverse weather conditions could have a material impact on
our business and results of operations.
• Our targets, goals, aspirations, initiatives, public statements
and disclosures, including those related to sustainability matters, may expose
us to risks that may adversely impact our business.
• Cybersecurity incidents and data privacy breaches, as well as
disruptions and other damages to our principal and other offices, information
technology operations and system networks and failure to keep pace with
developments in technology may adversely impact our business operations, the
satisfaction of our guests and crew and may lead to fines, penalties and
reputational damage.
• Our debt requires a significant amount of cash to service and
our ability to generate sufficient cash depends on many factors, some of which
may be beyond our control. Our financial condition and operations could be
adversely impacted if we are unable to service our debt or satisfy our
covenants.
• Increases in fuel costs, changes in the types of fuel consumed
and availability of fuel supply may adversely impact our scheduled itineraries
and costs.
• The loss of key team members, our inability to recruit or retain
qualified shoreside and shipboard team members and increased labor costs could
have an adverse effect on our business and results of operations.
• We rely on suppliers who are integral to the operations of our
businesses. These suppliers and service providers may be unable to deliver on
their commitments, which could negatively impact our business.
• Fluctuations in foreign currency exchange rates may adversely
impact our financial results.
• Our investments in port destinations and exclusive islands may
expose us to additional risks.
• Overcapacity and competition in the cruise and land-based
vacation industry may negatively impact our cruise sales, pricing and
destination options.
• Inability to implement our shipbuilding programs and ship
repairs, maintenance and refurbishments may adversely impact our business
operations and the satisfaction of our guests.
• Changes in and non-compliance with laws and regulations under
which we operate, such as those relating to health, environment, safety and
security, data privacy and protection, anti-money laundering, anti-corruption,
economic sanctions, trade protection measures, labor and employment, and tax
may be costly and lead to litigation, enforcement actions, fines, penalties
and reputational damage.
• Factors associated with sustainability and the impact of
greenhouse gases and other emissions on the environment could have a material
impact on our business and operating results.
• We may not successfully complete the proposed unification of our
dual listed company ("DLC") structure and the migration of Carnival
Corporation's legal incorporation to Bermuda, or, if we do, we may not realize
the anticipated benefits and will be subject to Bermuda law, which differs in
some respects compared to our current jurisdictions.
The ordering of the risk factors set forth above is not intended to reflect
our indication of priority or likelihood. There may be additional risks that
we consider immaterial or which are unknown. Additional information about the
factors that may affect future results is contained in our most recent Annual
Report on Form 10-K as well as our other filings with the SEC, all of which
are available on the SEC's website at www.sec.gov.
Forward-looking statements should not be relied upon as a prediction of actual
results. Subject to any continuing obligations under applicable law or any
relevant stock exchange rules, we expressly disclaim any obligation to
disseminate, after the date of this document, any updates or revisions to any
such forward-looking statements to reflect any change in expectations or
events, conditions or circumstances on which any such statements are based.
Forward-looking and other statements in this document may also address our
sustainability progress, plans, and goals (including emissions and
environmental-related matters). In addition, historical, current, and
forward-looking sustainability-related statements may be based on standards
and tools for measuring progress that are still developing, internal controls
and processes that continue to evolve, and assumptions and predictions that
are subject to change in the future and may not be generally shared.
New Accounting Pronouncements
Refer to Note 1 - "General" of the consolidated financial statements for
additional discussion regarding Accounting Pronouncements.
Critical Accounting Estimates
For a discussion of our critical accounting estimates, see "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" that is included in the Form 10-K.
Seasonality
Our Passenger ticket revenues are seasonal. Demand for cruises has been
greatest during our third quarter, which includes the Northern Hemisphere
summer months. This higher demand during the third quarter results in higher
ticket prices and occupancy levels and, accordingly, the largest share of our
operating income is typically earned during this period. Our results are also
impacted by ships being taken out-of-service for planned maintenance, which we
schedule during non-peak seasons. In addition, substantially all of Holland
America Princess Alaska Tours' revenue and operating income is generated from
May through September in conjunction with Alaska's cruise season.
Proposed DLC Unification and Redomiciliation
On January 27, 2026, Carnival Corporation filed a Registration Statement on
Form S-4 with the SEC, as amended by Amendment No. 1 filed on February 20,
2026 (the "S-4"), in connection with the proposed unification of the dual
listed company structure under a single corporate entity, Carnival
Corporation, with Carnival plc as its wholly-owned UK subsidiary, and the
shifting of Carnival Corporation's legal incorporation from Panama to Bermuda,
as previously disclosed. The SEC declared the S‑4 effective on February 27,
2026 and the definitive joint proxy statement/prospectus relating to the S‑4
was filed with the SEC on February 27, 2026.
Known Trends and Uncertainties
We believe changes in the cost of fuel, fluctuations in foreign currency
exchange rates and new and evolving regulatory requirements related to the
reduction of greenhouse gas emissions are reasonably likely to impact our
profitability in both the short and long-term. We became subject to the EU
Emissions Trading System ("ETS") on January 1, 2024, which includes a
three-year phase-in period. The impact of this regulation in 2025 was
$91 million, which represented costs associated with 70% of emissions under
the ETS operational scope. In 2026, all in scope emissions will be impacted.
Recent geopolitical uncertainty may impact our results of operations and may
heighten other risks discussed in "Item 1A. Risk Factors," included in the
Form 10-K.
Statistical Information
Three Months Ended
February 28,
2026 2025
Passenger Cruise Days ("PCDs") (in millions) (a) 24.4 24.3
Available Lower Berth Days ("ALBDs") (in millions) (b) (c) 23.7 23.6
Occupancy percentage (d) 103% 103%
Passengers carried (in millions) 3.1 3.2
Fuel consumption in metric tons (in millions) 0.7 0.7
Fuel consumption in metric tons per thousand ALBDs 28.9 30.3
Fuel cost per metric ton consumed (excluding emission allowances) $559 $643
Currencies (USD to 1)
AUD $0.68 $0.63
CAD $0.73 $0.70
EUR $1.18 $1.04
GBP $1.35 $1.25
Notes to Statistical Information
(a) PCD represents the number of cruise passengers on a voyage multiplied
by the number of revenue-producing ship operating days for that voyage.
(b) ALBD is a standard measure of passenger capacity for the period that
we use to approximate rate and capacity variances, based on consistently
applied formulas that we use to perform analyses to determine the main
non-capacity driven factors that cause our cruise revenues and expenses to
vary. ALBDs assume that each cabin we offer for sale accommodates two
passengers and is computed by multiplying passenger capacity by
revenue-producing ship operating days in the period.
(c) For the three months ended February 28, 2026 compared to the three
months ended February 28, 2025, we had a 0.5% capacity increase in ALBDs
comprised of a 1.4% capacity increase in our North America segment and a 1.3%
capacity decrease in our Europe segment.
• Our North America segment's capacity increase was caused by a
Princess Cruises 4,310-passenger capacity ship that entered into service in
September 2025, partially offset by a P&O Cruises (Australia)
2,000-passenger capacity ship that left the fleet in February 2025.
• Our Europe segment's capacity decrease was caused by more ship
dry-dock days in 2026 compared to 2025.
(d) Occupancy, in accordance with cruise industry practice, is calculated
using a numerator of PCDs and a denominator of ALBDs, which assumes two
passengers per cabin even though some cabins can accommodate three or more
passengers. Percentages in excess of 100% indicate that on average more than
two passengers occupied some cabins.
Three Months Ended February 28, 2026 ("2026") Compared to Three Months Ended
February 28, 2025 ("2025")
Revenues
Consolidated
Passenger ticket revenues made up 65% of our 2026 total revenues. Passenger
ticket revenues increased by $191 million, or 5.0%, to $4.0 billion in 2026
from $3.8 billion in 2025.
This increase was caused by:
• $158 million - net favorable foreign currency translation impact
• $42 million - higher ticket prices driven by continued strength
in demand
These increases were partially offset by a decrease of $27 million in air
transportation revenue.
The remaining 35% of 2026 total revenues were comprised of Onboard and other
revenues, which increased by $164 million, or 8.3%, to $2.1 billion in 2026
from $2.0 billion in 2025.
This increase was driven by:
• $104 million - higher onboard spending by our guests
• $49 million - net favorable foreign currency translation impact
North America Segment
Passenger ticket revenues made up 61% of our North America segment's 2026
total revenues. Passenger ticket revenues increased by $17 million, or 0.7%,
and were $2.4 billion in 2026 and 2025.
This increase was caused by:
• $35 million - 1.4% capacity increase in ALBDs
• $22 million - higher ticket prices driven by continued strength
in demand
These increases were partially offset by a 1.3 percentage point decrease in
occupancy, representing $31 million.
The remaining 39% of our North America segment's 2026 total revenues were
comprised of Onboard and other revenues, which increased by $95 million, or
6.4%, to $1.6 billion in 2026 from $1.5 billion in 2025.
This increase was caused by:
• $91 million - higher onboard spending by our guests
• $21 million - 1.4% capacity increase in ALBDs
These increases were partially offset by a 1.3 percentage point decrease in
occupancy representing $19 million.
Europe Segment
Passenger ticket revenues made up 77% of our Europe segment's 2026 total
revenues. Passenger ticket revenues increased by $172 million, or 12%, to
$1.6 billion in 2026 from $1.4 billion in 2025.
This increase was caused by:
• $158 million - net favorable foreign currency translation
• $36 million - 2.5 percentage point increase in occupancy
• $20 million - higher ticket prices driven by continued strength
in demand
These increases were partially offset by a decrease of $21 million in air
transportation revenue.
The remaining 23% of our Europe segment's 2026 total revenues were comprised
of Onboard and other revenues, which increased by $68 million, or 16%, to $480
million in 2026 from $413 million in 2025. This increase was driven by a net
favorable foreign currency translation impact of $49 million.
Operating Expenses
Consolidated
Operating expenses increased by $173 million, or 4.6%, to $3.9 billion in 2026
from $3.8 billion in 2025.
This increase was caused by:
• $126 million - net unfavorable foreign currency translation
• $75 million - higher repair and maintenance expenses (including
dry-dock expenses)
• $19 million - 0.5% capacity increase in ALBDs
These increases were partially offset by:
• $44 million - lower fuel prices including the impact of emission
allowances
• $27 million - lower fuel consumption per ALBD
Selling and administrative expenses increased by $76 million, or 9.0%, to $924
million in 2026 from $848 million in 2025. This increase was driven by
increased investment in advertising, higher compensation expense and higher
information technology expense.
Depreciation and amortization expenses increased by $42 million, or 6.4%, to
$696 million in 2026 from $654 million in 2025.
North America Segment
Operating expenses increased by $16 million, or 0.7%, to $2.5 billion in 2026
from $2.4 billion in 2025.
This increase was caused by:
• $35 million - 1.4% capacity increase in ALBDs
• $35 million - higher repair and maintenance expenses (including
dry-dock expenses)
These increases were partially offset by:
• $35 million - lower fuel prices including the impact of emission
allowances
• $19 million - lower fuel consumption per ALBD
Selling and administrative expenses increased by $16 million, or 3.0%, to $537
million in 2026 from $521 million in 2025.
Depreciation and amortization expenses increased by $26 million, or 6.1%, to
$460 million in 2026 from $434 million in 2025.
Europe Segment
Operating expenses increased by $151 million, or 12%, to $1.4 billion in 2026
from $1.3 billion in 2025.
This increase was caused by:
• $129 million - net unfavorable foreign currency translation
• $41 million - higher repair and maintenance expenses (including
dry-dock expenses)
These increases were partially offset by a 1.3% capacity decrease in ALBDs,
representing $16 million.
Selling and administrative expenses increased by $33 million, or 13%, to $283
million in 2026 from $250 million in 2025. This increase was caused by higher
compensation expense, increased investment in advertising and higher
information technology expense.
Depreciation and amortization expenses increased by $25 million, or 15%, to
$194 million in 2026 from $169 million in 2025. This increase was caused by
net unfavorable foreign currency translation impacts.
Operating Income
Our consolidated operating income increased by $64 million to $607 million in
2026 from $543 million in 2025. Our North America segment's operating income
increased by $54 million to $569 million in 2026 from $516 million in 2025,
and our Europe segment's operating income increased by $30 million to $170
million in 2026 from $140 million in 2025. These changes were primarily due to
the reasons discussed above.
Nonoperating Income (Expense)
Interest expense, net of capitalized interest decreased by $85 million, or
23%, to $291 million in 2026 from $377 million in 2025. The decrease was
caused by lower average interest rates and a decrease in total debt.
Other income (expense), net changed by $59 million, to $(47) million in 2026
from $12 million in 2025. The decrease was substantially all due to foreign
currency remeasurement.
Liquidity, Financial Condition and Capital Resources
As of February 28, 2026, we had $5.9 billion of liquidity including
$1.4 billion of cash and cash equivalents and $4.5 billion available for
borrowing under our multicurrency revolving credit facility. In addition, we
had $10.9 billion of undrawn export credit facilities to fund future ship
deliveries.
We had a working capital deficit of $8.7 billion as of February 28, 2026
compared to $8.9 billion as of November 30, 2025. We operate with a
substantial working capital deficit, largely due to our business model in
which guest cruise deposits and the advance purchases of onboard and other
services are collected ahead of the sailing date and recorded as a liability
until recognized as revenue. These customer deposits are used alongside other
cash sources to fund operations, service debt, and support capital
investments.
We have agreements with a number of credit card processors that transact
customer deposits related to our cruise vacations. Certain of these agreements
allow the credit card processors to request, under certain circumstances, that
we provide a capped reserve fund in cash. In addition, we have a relatively
low level of accounts receivable and limited investment in inventories.
We are not a party to any off-balance sheet arrangements, including guarantee
contracts, retained or contingent interests, certain derivative instruments
and variable interest entities that either have, or are reasonably likely to
have, a current or future material effect on our consolidated financial
statements.
Sources and Uses of Cash
Operating Activities
Our business provided $1.3 billion of net cash flows from operating activities
during the three months ended February 28, 2026, an increase of $0.3 billion,
compared to $0.9 billion provided for the same period in 2025. This was
caused by an improvement in our earnings with $263 million of net income in
2026 compared to $75 million of net loss in 2025 and other working capital
changes, partially offset by the nonrecurrence of losses on debt
extinguishment.
Investing Activities
During the three months ended February 28, 2026, net cash used in investing
activities of $597 million was driven by capital expenditures of $566 million
substantially all attributable to ship improvements and development of our
portfolio of exclusive destinations.
During the three months ended February 28, 2025, net cash used in investing
activities was $605 million. This was caused by capital expenditures of
$607 million primarily attributable to ship improvements and developments in
our port destinations and exclusive islands.
Financing Activities
During the three months ended February 28, 2026, net cash used in financing
activities of $1.2 billion was driven by:
• Repayments of $945 million of long-term debt
• Payments of cash dividends of $208 million
During the three months ended February 28, 2025, net cash used in financing
activities of $690 million was driven by:
• Repayments of $3.4 billion of long-term debt
• Debt issuance costs of $24 million
• Debt extinguishment costs of $197 million
• Issuances of $3.0 billion of long-term debt
Funding Sources
We plan to use existing liquidity and future cash flows from operations to
fund our cash requirements including capital expenditures not funded by our
export credit facilities. We seek to manage our credit risk exposures,
including counterparty nonperformance associated with our cash and cash
equivalents, and future financing facilities by conducting business with
well-established financial institutions, and export credit agencies and
diversifying our counterparties.
(in billions) 2026 2027 2028 2029 2030 Thereafter
Future export credit facilities at February 28, 2026 $- $1.4 $1.4 $1.7 $1.5 $5.0
Our export credit facilities contain various financial covenants as described
in Note 3 - "Debt". At February 28, 2026, we were in compliance with the
applicable covenants under our debt agreements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
For a discussion of our hedging strategies and market risks, see the
discussion below and Note 10 - "Fair Value Measurements, Derivative
Instruments and Hedging Activities and Financial Risks" in our consolidated
financial statements and "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations" within our Form 10-K. There
have been no material changes to our exposure to market risks since the date
of our 2025 Form 10-K.
Interest Rate Risks
The composition of our debt was as follows:
February 28, 2026
Fixed rate 52%
EUR fixed rate 33%
Floating rate 5%
EUR floating rate 11%
Item 4. Controls and Procedures.
A. Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable
assurance that information required to be disclosed by us in the reports that
we file or submit under the Securities Exchange Act of 1934, is recorded,
processed, summarized and reported within the time periods specified in the
U.S. Securities and Exchange Commission's rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by us in our
reports that we file or submit under the Securities Exchange Act of 1934 is
accumulated and communicated to our management, including our principal
executive and principal financial officers, or persons performing similar
functions, as appropriate, to allow timely decisions regarding required
disclosure.
Our Chief Executive Officer and our Chief Financial Officer and Chief
Accounting Officer have evaluated our disclosure controls and procedures and
have concluded, as of February 28, 2026, that they are effective as described
above.
B. Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting
during the quarter ended February 28, 2026 that have materially affected or
are reasonably likely to materially affect our internal control over financial
reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
To the extent disclosure is required by Part II. Item 1 of Form 10-Q, the
legal proceedings described in Note 4 - "Contingencies and Commitments" of our
consolidated financial statements, including those described under "Regulatory
or Governmental Inquiries and Investigations," are incorporated in this "Legal
Proceedings" section by reference. Additionally, SEC rules require disclosure
of certain environmental matters when a governmental authority is a party to
the proceedings and such proceedings involve potential monetary sanctions that
we believe will exceed $1 million for such proceedings.
Item 1A. Risk Factors.
The risk factors that affect our business and financial results are discussed
in "Item 1A. Risk Factors," included in the Form 10-K, and there has been no
material change to these risk factors since the Form 10-K filing. These risks
should be carefully considered, and could materially and adversely affect our
results, operations, outlooks, plans, goals, growth, reputation, cash flows,
liquidity, and stock price. Our business also could be affected by risks that
we are not presently aware of or that we currently consider immaterial to our
operations.
Item 5. Other Information.
Trading Plans
During the quarter ended February 28, 2026, no director or Section 16 officer
adopted or terminated any Rule 10b5-1 trading arrangements or non-Rule 10b5-1
trading arrangements (in each case, as defined in Item 408(a) of Regulation
S-K).
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