Carnival Corporation (CCL) Q1 2022 Earnings Call Transcript

Carnival Corporation  (NYSE: CCL) Q1 2022 earnings call dated Mar. 22, 2022

Corporate Participants:

Arnold W. Donald — President & Chief Executive Officer

David Bernstein — Chief Financial Officer

Analysts:

Robin Farley — UBS — Analyst

Steve Wieczynski — Stifel — Analyst

James Hardiman — Citi — Analyst

Assia Georgieva — Infinity Research — Analyst

Stuart Gordon — Berenberg — Analyst

Fred Wightman — Wolfe Research — Analyst

Presentation:

 

Arnold W. Donald — President & Chief Executive Officer

Good morning, and welcome to our business update conference call. I’m Arnold Donald, President and CEO of Carnival Corporation & plc. Today, I’m joined telephonically by our Chairman, Micky Arison; our Chief Financial Officer, David Bernstein; and Beth Roberts, Senior Vice President, Investor Relations. We’d like to thank you all for joining us this morning.

Now 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. Prior to getting into the details of the update, I just first want to say my heart goes out to all those affected by the invasion of Ukraine. I know thousands of members of our Carnival family are directly impacted and have loved ones in the area.

We, along with the rest of the world, are praying for a peaceful resolution. Now concerning our business. We’re well on our way back to full cruise operations, with three quarters of our capacity having resumed guest operations and a plan to return the balance of the fleet for the summer season. And while the conversation around COVID-19 is greatly reduced, we still have to and are successfully actively managing.

Our enhanced protocols have helped us become among the safest farms of socializing and travel with far lower incident rates than on land. In fact, we have carried more than two million since resuming gas operations. Our guests are enjoying great vacations, and we are enjoying historically high guest satisfaction scores. Of course, we have not lost sight of our highest responsibility, and therefore, our top priority, which is always compliance, environmental protection and the health, safety and well-being of everyone, our guests, the people and the communities we touch and serve, and of course, our Carnival family, our team members shipboard, and shoreside.

I’d like to start today by sincerely thanking our Carnival team members for their significant contributions which collectively have gotten us to where we are today despite a multitude of challenges. Through their collective efforts, so far, we successfully returned 64 ships to guest operations; enabled over 70,000 crew members to return to work, happy, healthy, and vaccinated through our team’s considerable efforts to secure and distribute vaccines; reopened our eight owned and operated private destinations and port facilities, which about half of our guests have experienced since resuming operations, Princess Cay, Half Moon Cay, Grand Turk, Mahogany Bay, Amber Cove, Cozumel, Santa Cruz de Tenerife, and Barcelona; and most importantly, delivered 2.2 million joyful vacations and counting. At the same time, we also managed down operating costs, reducing our monthly adjusted EBITDA losses by 40% since mid-2020; completed a continuous stream of capital raising, exceeding $29 billion; refinanced more than $9 billion of debt, improving interest rates; amended over 100 different lender agreements; and successfully addressed our maturity tower out through 2024. All of which culminated in a consistent liquidity position exceeding $7 billion, an integral part of reinforcing stakeholder confidence.

At our scale, the sheer volume of these accomplishments is no small feat. Yet these challenging operational deliverables were achieved while encountering strong headwinds like: delta; omicron; complex, constraining, and constantly changing regulations and protocols; and more recently, the very troubling invasion of Ukraine. All of which undermine consumer confidence and generate greater friction on cross-border travel, labor, supply chain, itinerary planning, and more. Now concerning the invasion of Ukraine.

For the 4.6% of our capacity that was expected to call on Russian ports in the remainder of the year, we have decided to totally withdraw from Russia and have found attractive alternatives. That said, St. Petersburg was a marquee port for us. And while there have been times where we were unable to offer certain [Indecipherable] itineraries, in this instance, the close end nature of the deployment change does lead to some regional disruption in recent booking patterns.

Now while the invasion has added some volatility to our business and does impact consumer confidence, with 50 years under our belt, we have successfully managed through a plethora of headwinds like: spikes in fuel prices, the Gulf War, Arab Spring, September 11, Ebola, Zika, SARS, MERS and more. And once again, the mobility of ships continues to be an asset. Time and time again, we have seen guests travel through challenges. In fact, Carnival Cruise Line turned 50 this month and recently enjoyed its three best weeks of bookings since resuming operations.

As we previously disclosed, we had experienced an impact on booking patterns more broadly at the start of our fiscal year due to the omicron variant. Despite omicron, guests carried grew by nearly 20% in the first quarter. Of course, albeit less than we would have otherwise achieved without the elevated cancellations which occurred in part due to a higher incidence of pretravel positive COVID test results as well as the difficulties that many prospective guests experienced obtaining timely tests. Moreover, there was just an overall impact omicron had on our society over the course of our first quarter.

However, we did maintain price as we said we would. We fully expect an extended wave season. In fact, we’re already achieving occupancies in the month of March that are nearing 70% with more than 40 sailings exceeding 100% occupancy, a testament to the underlying demand for crews and closer in nature of booking patterns. Concerning recent fuel prices.

It’s certainly not the first time we’ve seen a dramatic spike in fuel prices. Helping to address that, we aggressively manage our consumption. And we are stepping up our efforts to further reduce consumption. Now historically, we have not used fuel derivatives.

And while there is an optics benefit of smoothing earnings, over time, prices have gone up and they’ve also come down. But there is an economic cost to derivatives. Over the past few years, we’re very glad not to have speculated with few derivatives because on a further drain on cash. With our proactive efforts to reduce our footprint since 2007, we have reduced our unit fuel consumption nearly 30% and carbon intensity nearly 25% through 2019.

And thanks to accelerated efforts across the board, upon reaching full fleet operations, we anticipate that we will achieve a further 10% reduction in unit fuel consumption and 9% reduction in carbon intensity as compared to 2019. In fact, we’ve been working hard to resume operations not only a strong operating company but a more sustainable, better all-around company. We made further strides toward those efforts again this quarter. During the quarter, we enhanced our fleet optimization efforts, delivering three new ships: Costa Toscana, AIDAcosma, and Discovery Princess, bringing the total to nine larger, more efficient ships delivered since 2019.

Moreover, we’ve announced the removal of an additional three smaller, less efficient ships, bringing the total to 22 ships to be removed from the fleet also since 2019. The accelerated removal of these less efficient ships has lowered capacity growth to 2.2% compound annually from the previous 4.5% through 2025, which should enable us to capitalize on pent-up demand on intentionally constrained capacity. The fleet optimization effort will also foster higher revenues through a seven percentage point increase in premium-priced balcony cabins and an even better platform for onboard revenue opportunities as well as generating a 5% reduction in ship level unit costs, excluding fuel, going forward, enabling us to deliver more revenue to the bottom line. Upon returning to full operations, nearly a quarter of our capacity will consist of newly delivered ships, expediting our return to profitability and improving our return on invested capital.

Again, we have long since recognize the importance of reducing our carbon footprint having peaked our absolute carbon emissions more than a decade ago. And we are continuing to innovate to effect change. AIDAprima will become our first ship to pilot battery power, enabling her to optimize the efficiency of the engines while at sea, reducing emissions. We also signed groundbreaking agreements through our subsidiary, Ecospray, to partner in the production of green bio-LNG generated from waste sources.

In addition, we continue to invest to drive energy efficiency, rolling out our fourth in a series of 23 ships with innovative air lubrication system, which reduces drag on the haul and generates nearly 5% reduction in carbon emissions. We’ve also taken strides to reduce our impact on climate change and mitigate climate risk in our business. We are working toward full adoption of the recommendations of the Task Force on Climate-related Financial Disclosures, that’s TCFD, and have begun by reinforcing our strong governance framework with my assuming the role of Chief Climate Officer, and with the formation of our Strategic Risk Evaluation Committee to further support climate-related strategic decision-making and risk management processes. Having broadened our commitments to ESG with the introduction of our 2030 sustainability goals and our 2050 aspirations, we are tracking ahead on both our important food waste and single-use plastic reduction efforts.

And we are nearing completion on the rollout of more than 600 food waste biodigesters across our fleet, the most advanced technology of its kind. We believe we have clearly maximized our return to service, and we have positioned our company well to withstand volatility on our path to profitability. Throughout the pause, we have been proactively managing to resume operations as an even stronger and more efficient operating company to maximize cash generation and to deliver double-digit return on invested capital over time. Again, our cash flow will be the primary driver to return to investment-grade credit over time, creating greater shareholder value.

There have been multiple demonstrations of the resilience of the human spirit and the resilience of our business. It is heartening that our company can be a part of bringing our guests much needed social enjoyment with family and with friends, along with the excitement of experiencing new destinations and cultures, all dearly missed throughout the pandemic. I referenced Carnival Cruise Line celebrating 50 years. 50 years, frankly, seems such a short time ago that Tad Arison started Carnival Cruise Line, and along with Micky, built the modern day cruise industry, bringing joy from millions of on millions of guests and creating hundreds of thousands of jobs with all that means and creating better quality of life around the world.

Of course, it cannot have been done without the overwhelming support from everyone. So once again, thank you to our valued guests. Thank you to our travel agent partners. Thank you to our home port and destination communities.

Thank you to our suppliers and other many stakeholders. And of course, thank you to our shareholders, bondholders, banks, and the export credit agencies for your continued confidence in us and for your ongoing support. And again, I would like to thank our team members for their dedication, their commitment and their outstanding execution. We are excited to welcome everyone back on board.

With that, I’ll turn the call over to David.

David Bernstein — Chief Financial Officer

Thank you, Arnold. I’ll start today with a review of guest cruise operations, along with a summary of our first quarter cash flows. Then I’ll provide an update on booking trends and finish up with adjusted EBITDA and net income expectations. Turning to guest cruise operations.

During the first quarter 2022, we restarted 10 additional ships, resulting in 60% of our fleet capacity in guest cruise operations for the whole of the first quarter. This was a substantial increase from 47% during the fourth quarter 2021. As of today, 75% of our fleet capacity has resumed guest cruise operations. Agility to continuously adapt to the ever changing landscape has been one of our greatest strengths during the pandemic.

In the first quarter, we continued to demonstrate this scale as we adjusted restart dates to optimize our guest cruise operations. And we now expect each brand’s full fleet to be back in guest cruise operations for its respective summer season where we historically generate the largest share of our operating income. I am happy to report that just last week, we announced plans for our Australia restart, commencing at the end of May after the government advised that cruising would be permitted beginning in April. For the first quarter, occupancy was 54% across the ships in service.

We never expected to achieve our historical 100-plus percent occupancies for the first quarter since many of these sailings were confirmed just a number of months before departure, which resulted in less than the normal booking lead time. However, we had anticipated first quarter occupancy would exceed the 58% achieved in the fourth quarter of 2021. We started the quarter with over 55% cabin occupancy booked for the first quarter and expected to improve upon that during the quarter. However, during the first quarter 2022, as a result of the omicron variant, we experienced an impact on bookings for near-term sailings, including higher cancellations resulting from an increase in pretravel positive test results, challenges in the availability of timely pretravel tests and disruption than omicron caused on society during this time.

All of this inhibited our ability to build on our cabin occupancy book position for the first quarter 2022 during the first quarter, resulting in occupancy for the first quarter 2022 at 54% being lower than the 58% occupancy we achieved in the fourth quarter of 2021. Despite all that, during the first quarter, we carried over one million guests, which was nearly a 20% increase from the fourth quarter 2021. Once again, our brands executed extremely well with Net Promoter Scores continuing at elevated levels compared to pre-COVID scores. Revenue per passenger day for the first quarter 2022 increased approximately 7.5% compared to a strong 2019 despite our lucrative world cruises and exotic voyages being shelved this year.

Our revenue management teams held on price when we experienced an impact on bookings for near-term sailings, optimizing our longer-term prospects for future revenue and pricing. Once again, our onboard and other revenue per diems were up significantly in the first quarter 2022 versus the first quarter 2019, in part due to the bundled packages as well as onboard credits utilized by guests from cruises canceled during the pause. We had great growth in onboard and other per diems on both sides of the Atlantic. Increases in bar, casino, shops, spa and Internet led the way onboard.

Over the past 2.5 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 a result of these bundled packages, the line between passenger ticket and onboard revenue is blurred. For accounting purposes, we allocate the total price paid by the guests between the two categories.

Therefore, the best way to judge our performance is by reference to our total cruise revenue metrics. On the cost side, our adjusted cruise cost without fuel per available lower berth day, or ALBD as it is more commonly called, for the first quarter 2022 was up 25%. I did say adjusted cruise costs and not net cruise costs, a term we had previously used. The calculation of adjusted cruise costs and net cruise costs are the same.

However, we felt the new name more appropriately lined up with our other non-GAAP measures of adjusted net income and adjusted EBITDA, which are also referenced in our business update press release issued earlier this morning. The increase in adjusted cruise costs without fuel per ALBD is driven essentially by five things: first, the cost of a portion of the fleet being in pause status; second, restart related expenses; third, 15 ships being in dry dock during the quarter, which resulted in nearly double the number of dry dock days during the first quarter versus the first quarter 2019; fourth, the cost of maintaining enhanced health and safety protocols; and finally, inflation. Remember, that because a portion of the fleet was in pause status during the first quarter and the higher number of dry dock days, we spread costs over less ALBDs. I did want to point out that in the second quarter of 2022, we expect a further 24 ships to enter dry dock as part of our resumption of cruising ramp-up, optimizing our dry dock schedule while the ships are not in service and ensuring that the ships look great when they welcome their first guests back onboard.

This will again result in a doubling of the dry dock days during the quarter compared to 2019, which will impact adjusted cruise cost without fuel per ALBD during the second quarter. We anticipate that many of these costs and expenses driving adjusted cruise costs without fuel per ALBD higher will end during 2022 and will not reoccur in 2023. As a result of all of the above, we expect to see a significant improvement in adjusted cruise costs, excluding fuel per ALBD, from the first half of 2022 to the second half of 2022 with a low double-digit increase expected for the full year 2022 compared to 2019. Next, I’ll provide a summary of our first quarter cash flows.

We ended the first quarter 2022 with $7.2 billion in liquidity versus $9.4 million at the end of the fourth quarter. Looking forward, we believe we remain well positioned given our liquidity. The change in liquidity during the quarter was driven essentially by four things: first, an improved negative adjusted EBITDA of $1 billion due to our ongoing resumption of guest cruise operations despite the impact of the omicron variant. We had thought adjusted EBITDA was going to improve more.

But as I said before, the omicron variant inhibited our ability to grow occupancy during the quarter, which limited the improvement in adjusted EBITDA. Second, our investment of $400 million in capital expenditures net of export credits. Third, $500 million of debt principal payments. And fourth, $400 million of interest expense during the quarter.

Now let’s look at booking trends. Since the middle of January, we have seen an improving trend in booking volumes for future sailings. Recent weekly booking volumes have been higher than at any point since the restart of guest cruise operations. During the first quarter, we increased our booked occupancy position for the second half of 2022, albeit not at the same pace as a typical wave season due to the omicron variant.

As a result, the cumulative advanced book position for the second half of 2022 is at the lower end of the historical range. However, we believe we are well situated with our current second half 2022 book position given the recent improvement in booking volumes, coupled with closer in booking patterns and our expectation for an extended wave season. We continue to expect that occupancy will build throughout 2022 and return to historical levels in 2023. And importantly, I am happy to report that prices on these bookings for the second half of 2022 continue to be higher with or without future cruise credits, or more commonly called FCCs, normalized for bundled packages as compared to 2019 sailings.

Our cumulative advanced book position for the first half of 2023 continues to be at the higher end of the historical range, also at higher prices with or without FCCs normalized for bundled packages as compared to 2019 sailings. This is a great achievement given pricing on bookings for 2019 sailings is a tough comparison as that was a high watermark for historical yields. I will finish up with our adjusted EBITDA and net income expectations. We all know that booking trends are a leading indicator of the health of our business.

With improved recent booking trends leading the way, driving customer deposits higher, positive adjusted EBITDA is clearly within our sights. Over the next few months, we expect ship level cash contribution to grow as more ships return to service and as we build on our occupancy percentages. However, as I’ve already said, adjusted EBITDA over the first half of 2022 has been or will be impacted by the restart-related spending and dry dock expenses as 39 ships, over 40% of our fleet, will have been in dry dock during the first half of fiscal 2022. Given all these factors combined, we expect monthly adjusted EBITDA to continue to improve and turn consistently positive at the beginning of our summer season.

We continue to expect a net loss for the second quarter of 2022 on both a U.S. GAAP and adjusted basis. However, we expect the profit for the third quarter of 2022. For the full year, we do expect a net loss.

Looking to brighter days ahead in 2023, with the full fleet back in service all year, 8% more capacity than 2019 and improved fleet profile with nearly a quarter of our capacity consisting of newly delivered ships, continuing momentum on our outstanding Net Promoter Scores and occupancy returning to historical levels, we are looking forward to providing memorable vacation experiences to nearly 14 million guests and generating potentially greater adjusted EBITDA than 2019. And now I’ll turn the call back over to Arnold.

Arnold W. Donald — President & Chief Executive Officer

Thank you, David. Operator, please open the call for questions.

Questions and Answers:

 

Operator

Thank you. [Operator instructions] And we’ll proceed with our first question on the line from Robin Farley with UBS. Go right ahead.

Robin Farley — UBS — Analyst

Great. Thank you. Good morning. I have one revenue and one expense question.

For expenses, you talked about it being up 20 — this is the nonfuel expense, up 25% in Q1 and sort of up low double digits for the year. So if that’s kind of up 11% or 12% for the year, it sounds like it would be close to flat with 2019 by the end of this year. So I wanted to make sure we’re thinking about those numbers right. And your comments included the idea that with the ship sales will have a 5% reduction in operating expense ex-fuel in 2023 versus ’19. So I know you’re not sort of giving full guidance for ’23. But is that the way to think about non-fuel expense being kind of flat by the end of this year and then kind of down 5% next year? That’s the expense question. And then on the revenue side, obviously, lots of positive news about the incremental volume build. I wonder if you could comment a little bit more specifically on sort of European itineraries versus the rest which — just to think about how price may be holding up outside of Europe, and then also how the incremental European cruises — you might have a lot at high prices from kind of the last 12 months that had been shifted there for the summer, but maybe how that incremental European demand is looking in terms of price impact. Thank you.

Arnold W. Donald — President & Chief Executive Officer

Hi, Rob, and good morning to you. I’ll have David comment a little bit on both. But directionally, on the cost question, as he articulated, we had a lot of capacity out in dry dock, etc. So we’re doing stuff over a smaller number of birds in terms of looking at the cost increases.

And we had lots of one-time costs and so on. So we’re not giving guidance for next year. But as we indicated, as you look through the second half of the year and see how the cost increases will be softer, we’re pointing in the right direction. And we’ve done a lot of things going forward, including with the change in the fleet with a significant part of our capacity 25% being new ships, which are inherently more efficient.

But also all the active management, things we’ve done with the existing fleet, the pre-existing fleet, exiting less efficient ships and so on and then shoreside as well. We’re doing a number of things to offset inflation and to just make ourselves that a company from a cost infrastructure standpoint. So David, I’ll let you comment on the cost and we can get back to the revenue. David, go ahead.

David Bernstein — Chief Financial Officer

Yes. So directionally, Robin, your math is correct, I mean, overall speaking. To get back to a low double digit for the year, you do have to sort of get directionally toward that flattish area by the end of the year. But let’s — I’ll remind you of one thing that I’ve said many times before. Costs do vary by quarter because of a variety of things, dry dock, advertising, etc. So as Arnold said, we’re not giving guidance for 2023. And overall, he mentioned all of the, I guess, tailwinds that help us achieve improved operating costs and adjusted cruise costs for 2023. I will also mention that we have 8% more capacity, so we get leverage versus 2019. We also get some shoreside SG&A leverage. But I will remind you, it is four years of inflation that is the headwind. So that is a challenge. And so we will do everything we can to properly manage the cost for 2023. But it is a little bit premature for us to give guidance at this point.

Arnold W. Donald — President & Chief Executive Officer

Thanks, David. Do you want to start on the revenue, David? And I can wrap up. Go ahead.

David Bernstein — Chief Financial Officer

Yes. So on the revenue side, what’s interesting, when you look at all of the different itineraries, we had mentioned the uptick in recent booking volumes. And we’re actually seeing that uptick across all the different itineraries, whether it be in the Caribbean, in the Med and also even parts of Northern Europe. The exception, of course, is we did have, as Arnold said in his notes, I guess, 4.6% of our capacity for the remainder of the year.

That’s actually 3.8% for the whole year, touched on, went to St. Petersburg. And we did, I guess, change — we moved two ships. And we changed the attractive itineraries for the remaining ships that are in the Baltic to go to other ports. So we have seen the bookings for those ships impacted. But remember, it’s early days, and we just made the changes to those itineraries. So we’ve got to get the message out. But for all of the rest of the itineraries, across the board, whether they be in the Med, East, West Med, Caribbean and other parts of the world, we are seeing good solid booking trends at good solid pricing.

We mentioned that our revenue management teams are holding pricing. And we are seeing good volume. I will point out that for the second — bookings for the second quarter, we’ve even seen volumes that exceeded the 2019 levels, which I guess is not surprising from the perspective that we have more inventory to sell for the second quarter than we did for 2019. But it’s great that the demand is there and we are seeing the volume.

And as Arnold indicated in his notes, in the month of March, we are seeing occupancies approach 70%. And we even had I think he said 40 voyages where occupancy exceeded 100% or expect to exceed 100%. So I think we are well positioned around the globe. And we’ll also work very hard to get those remaining itineraries booking again now that we readjusted them with other attractive ports.

Robin Farley — UBS — Analyst

Oh, that’s great. Thank you. I think that commentary addresses so much of what investors have been concerned about. And then just to clarify, did I mishear when I thought I heard you say 5% reduction in operating expense ex fuel by 2023 versus ’19. Was that 5%?

David Bernstein — Chief Financial Officer

Yes. So Arnold had indicated that 5% was in ship operating expenses. And that’s on an apples-to-apples basis, putting everything else aside as a result of the fleet optimization, just looking at a comparison to 2019. Of course, there’s changes in itinerary, there’s also — which impact that. There’s inflation which impacts that. There’s other cost savings that we’re working hard. That was just the fleet optimization portion. And that was obviously a great tailwind to help us reduce costs as we go into 2023.

Robin Farley — UBS — Analyst

All right. Thank you very much. Thanks.

David Bernstein — Chief Financial Officer

Thanks, Robin. Thank you. Operator?

Operator

We’ll proceed. Our next question on the line from Steve Wieczynski from Stifel. Go ahead.

Steve Wieczynski — Stifel — Analyst

Yes. Hey, guys. Good morning. So I want to ask about onboard revenues. And I think there’s a fear now that consumers might start pulling back on spending given — whether it’s higher fuel prices or other economic headwinds that might be out there. So given you guys have realtime data in terms of onboard spend, have you guys seen anything over the last couple of weeks that would make you believe the consumer might be starting to slow down once they come onboard? And I guess is there — have you seen any difference in spending patterns across your different geographies?

Arnold W. Donald — President & Chief Executive Officer

Haven’t seen any particular slowdown or anything like that in terms of onboard spend. It’s been very strong, has continued to be healthy around the world, has been up everywhere. So don’t see major distinctions from one geography to the next. As we get to full occupancy and we carry more kids in the summer, that kind of thing, you can see the the kind of per diems maybe will change a little bit. But overall, the spending is significantly up and has continued to be so far.

Steve Wieczynski — Stifel — Analyst

Okay. Got you. Thanks for that, Arnold. And then second question would be around the liquidity position. It looks like you burned around 700 a month in the first quarter. And I guess with some disruptions around omicron and now the war and fuel, just maybe wondering at what level of liquidity you would start to get, I don’t know if I’d use the word, uneasy. And I guess a better way to ask that question might be, do you see anything on the horizon that would make you believe that you might need to increase your liquidity base moving forward?

Arnold W. Donald — President & Chief Executive Officer

We’ve had good liquidity through this period. We will obviously continue to monitor. But as we move ahead and get more of our ships sailing and are able to generate obviously more revenue and more customer deposits, etc. At this stage, we feel we’re in good shape on liquidity and see that going forward. If something changes, of course, obviously, we’ll report at that time. But right now, we feel good about our liquidity position.

Steve Wieczynski — Stifel — Analyst

Okay. Got you.

Arnold W. Donald — President & Chief Executive Officer

David? Go ahead David.

David Bernstein — Chief Financial Officer

Can I just — first of all, the one thing on the onboard revenue, the only thing I want to add that Arnold didn’t mention is we have been raising price onboard. There’s been — there is strong demand. And obviously, with the environment being what it is, there’s been an opportunity to raise price, and we’ve been capturing that opportunity. And as far as the liquidity, I guess, the two things that we continue to think about, in addition to what Arnold mentioned, is we think about refinancing our 2L notes, which are still out there. And of course, we have $3 billion of maturities in 2023 that we think about what is the optimal time to refinance that. But other than that, I just want to add those concepts as we think through those in the ensuing months and quarters ahead.

Steve Wieczynski — Stifel — Analyst

Okay. Got you. Thanks, guys. Appreciate it.

Arnold W. Donald — President & Chief Executive Officer

Thanks, Steve.

Operator

We’ll get to our next question on the line from the line of James Hardiman with Citi. Go right ahead.

James Hardiman — Citi — Analyst

Hey. Morning. Thanks for taking a couple of my questions on the pricing front. So you guys spoke to revenue per passenger cruise day being up 7.5%. I think that number for the November quarter was plus 4%, which is obviously encouraging, right? I think the concern was that pricing benefited from the fact that these cruise ships weren’t full in that the last, whatever, 20% to 30% of the rooms would come in at a discount. And so we couldn’t really take that pricing strength to the bank. But this is a sample of 2, obviously. That pricing actually accelerated as the ships got more full from 4Q to 1Q. So maybe speak to how we should contextualize these pricing numbers. Is there any reason to think that those will come in a bit as we get the last, call it, 30% of occupancy? Or is there the opportunity for that to continue to accelerate?

Arnold W. Donald — President & Chief Executive Officer

We’re certainly — thanks for your question, first of all. We’re certainly going to continue to work hard to make certain the prices hold and accelerate. And we’ll have to see in the end where we’re managing yield. And so we want to optimize occupancy and price. Right now, there’s lots of demand. We obviously will be ramping up our advertising and promotional efforts as time goes on. We have increased already, but still well below where we were in 2019. We’ve gotten smarter and more efficient in how we do that. And so we want to create more demand and keep it going. But as you’ve heard from what we reported so far, pricing is strong, and we’ve been able to maintain price. David, I don’t know if you want to add any more color.

David Bernstein — Chief Financial Officer

Yes. The only thing I wanted to add to what Arnold said is, James, you really need to think about it a little bit differently because you’re sort of saying, well, when the last 30% comes in, it does — the last 30% isn’t going to come in at the last second. Remember that for the last few quarters, the booking window has been much shorter. And so when we think about the future, we said we don’t expect to get to historical occupancy levels until 2023.

But we do expect to see an improving level of occupancy every quarter as we go forward. And one of the reasons is because for 2023, looking out today, we’ve got a much fuller booking curve. We’ll manage pricing the way Arnold described, along that booking curve, and we’ll get to our historical occupancy levels. And we’re being very careful in the short term where the booking curve is shorter to manage that appropriately.

We’re driving demand, as Arnold mentioned, with the advertising. Although advertising these days seems to be — the mix of advertising has changed tremendously and will continue to evolve. So think of it in terms of booking curve. And with the longer booking curve toward next year, we can get to those occupancy levels because there’s a lot of demand out there. People want to cruise. We have a great product. We’re still a good value compared to land-based alternatives, although we’re trying to make it a bit less of a value as we move forward and to raise price as Arnold indicated.

James Hardiman — Citi — Analyst

That’s really helpful. And then along those same lines, everybody wants to compare sort of your pricing strength to your competitors as we look versus 2019. Are there any sort of major differences you would call out that make those comparisons not really apples-to-apples? Obviously, you have, I guess, a, more of a global consumer base, right? And I don’t know if there are any major differences between sort of the U.S. customers and sort of worldwide. And then the other piece is just maybe a bit more of a mass market customer. And so how do we think about the potential for growth out of those contingents?

Arnold W. Donald — President & Chief Executive Officer

First of all, your understandings are right. It is apples and oranges. There are a number of differences, not the least of which is we’re on different fiscal quarters and so even the [Indecipherable] You have timing. Then you also, obviously, in addition to that, is cabin mix. It’s itinerary mix, as you mentioned, composition of the European itineraries. And right now, you have big itinerary changes because a lot of our lucrative itineraries, which would be similar for some of the others perhaps to, but we may have more of it in terms of world cruises and more exotic cruises and so on and so forth. But anyway, all those things are different. When we try our best to kind of normalize all that, which is extremely difficult to do and try to match up month-by-month, when we’ve done that, we see that we’re doing as well of and, in some cases, better than the others. In the recent times, one has done better on price. But at the same time, they’ve not done as well in occupancy. And so in the end, we don’t see a big performance difference on that when we try to match up. But it is apples and oranges. David, I don’t know if you want to add anything else.

David Bernstein — Chief Financial Officer

I’ll add some clarity to that. So remember, one of our competitors had a lot less occupancy than us during their fourth quarter period, which probably leads to more balconies, cabins at a higher price as part of the overall mix. And also some of our competitors, one of them was not carrying any kids because of the vaccine requirements and kids are at a lower price. So as a result of that too, that affects the overall position.

Arnold mentioned the itinerary differences. But what we did do is we lined up the months, October, November and December. And we can do that internally for ourselves compared to our competition. And so we try to also balance. Remember, occupancy, there’s two sides to the equation, there’s price and occupancy. And the best way to balance that out is to look at the gross revenue per ALBD as opposed to the gross revenue per PCD. Because I will tell you, if all I did was sell one penthouse suite on one ship and didn’t sell anything else, my per PCD would be incredibly high. But when you balance it all out, the revenue per ALBD reduction because, of course, the occupancy was down in all three companies, we’re the same, within two percentage points.

So the reduction in revenue per ALBD was a two percentage points difference between all three companies. And so I think we are, as Arnold said, we’re doing better in some. And we’re well positioned and looking forward to, as I said, 2023 and providing 14 million memorable vacation experiences to people around the globe.

James Hardiman — Citi — Analyst

That’s a really good color. David, thank you.

David Bernstein — Chief Financial Officer

Thank you.

Operator

Our next question on the line from the line of Assia Georgieva with Infinity Research. Go ahead.

Assia Georgieva — Infinity Research — Analyst

Good morning. It’s mind-boggling how many refinancings you guys did. So David, a question to you. How should we model interest expense going forward? I think you probably have hit the lowest-lying fruit at this point. Do you expect that there could be further significant savings on interest expense into the back half of the year and possibly 2023?

David Bernstein — Chief Financial Officer

Yes. So in terms of interest expense, we did give a forecast in the business update, which was $1.5 billion. And it was the same interest expense forecast we gave back in December. So that is our forecast for the full year 2022. We do have the opportunity, as I mentioned before, to refinance the 2L notes at some point in the future. And we’ll carefully look at that opportunity, and that might provide some interest savings over time. But on the flip side, we’re all watching the Fed and there is the possibility for rates to move up. So at this point, it is a little premature to forecast 2023. If you know exactly what the Fed is going to do andall, let me know. But it is difficult. But it’s going to be in that neighborhood, plus or minus, as you think it through in 2023.

Assia Georgieva — Infinity Research — Analyst

The Fed hasn’t called me today. So I don’t know what the latest thinking is. Can I ask a couple of — one question, revenue and itinerary related. It’s great news that Australia is opening up. And obviously, that will be more helpful during the winter season 2022, 2023. Given that Spirit will be permanently based in the U.S., are you thinking of adding another Carnival ship so that you have a little bit more scale as opposed to just one ship? And do you think that China is an opportunity that might come online within the current fiscal year?

Arnold W. Donald — President & Chief Executive Officer

Well, first of all, we’re delighted to see that the Australian government is not extending the ban cruises beyond the April 17 date. And we’ve already announced, as you are aware, P&O Australia is going to start selling late May in Australia. And so we’re happy to be bringing joy for cruise vacations to Australians again and giving people who want to cruise in Australia an opportunity to do so. So we’re excited about that.

China, we’ll have to see how things pan out there. Right now, it’s still not practical. And as we’ve always said with China, when we’re able to do it profitably, we’ll do it. And when we can’t, we won’t. And so we continue to work with the authorities there and other places that are still not yet quite open to eventually get it open for cruise in a way that makes sense for everyone. So that’s that. The Fed hasn’t called me today either, by the way. But I would say, overall, things are really looking good.

I mean we’re — 75% of the ships are now sailing. Whether we’ll put another ship into Australia for the Carnival brand, that’s the decision to be made over time. But almost certainly, given the demand in Australia historically for the various brands, it would not be illogical to think at some point once things are up and going again, Carnival would have an even greater presence. So but at this point, we don’t have any specific plans. Right now, we’ll see how things pan out.

Assia Georgieva — Infinity Research — Analyst

Thank you, Arnold. Yes. David, I’m sorry.

David Bernstein — Chief Financial Officer

The only thing I just wanted to remind everybody is that remember, Carnival Cruise Lines moved out six ships so — during the pause in guest cruise operations. And so as a result of that, as Arnold said, we’ll relook at it. But everything needs to be reexamined to make sure we optimize the cash flow and profitability of Carnival Cruise Lines.

Arnold W. Donald — President & Chief Executive Officer

And by the way —

Assia Georgieva — Infinity Research — Analyst

We have some time before their season, right? So there’s still a few months to go?

Arnold W. Donald — President & Chief Executive Officer

Yes. And Carnival is doing so well. I mean it’s lead the way period in terms of occupancy, has been strong yields. We’ve had unbelievable bookings the past few weeks, wave level bookings in the Carnival brand in the last few weeks here and is super positive for the brand and a good, hopefully, leading indicator for the overall industry.

Assia Georgieva — Infinity Research — Analyst

It does seem that wave season is being extended. And I imagine it’s not just the pause or the slowdown because of omicron, but also because people have been cooped up for two years. And it might be taking a little bit longer to make those decisions given uncertainty, COVID or geopolitical. So hopefully, we’ll continue to see a great booking volume stream over the next weeks.

Arnold W. Donald — President & Chief Executive Officer

Absolutely. Yes, there’s no question, consumer confidence, uncertainty driven by all the various dynamics, COVID, the invasion in Ukraine and all that. But clearly, there’s momentum.

Assia Georgieva — Infinity Research — Analyst

Great. Thank you so much. Thank you both.

Operator

Thank you. We got our next question on the line from the line of Stuart Gordon with Berenberg. Go ahead with the question.

Stuart Gordon — Berenberg — Analyst

Yeah. Just a couple of points I’d be interested. And the first one is on the dry dock days. Could you just give some color on sort of the number of days that you’re expecting in the first half of ’22 versus ’19, perhaps also a full year if you have it? And then how that should shape up for ’23. I’m assuming you’re putting through a lot of dry dock days that will therefore not be required next year. And just the second is on the omicron impact. What was the damaged occupancy from cancellations due to omicron, if you could give us some flavor on that? Thank you.

Arnold W. Donald — President & Chief Executive Officer

Yes. I’ll take the second part and let David tell you about the dry dock days. In terms of omicron, as we said in the opening comments, it clearly had an effect on consumer confidence, and it caused disruption. People either were testing positive, so they couldn’t cruise or they weren’t able to get timely tests. And then there was just the overall impact on society and uncertainty and uneasiness that omicron created. It’s tough to quantify it and isolate it to say this was all omicron and this was something else. But the bottom line is it had an impact, it had an impact on wave and which is why we feel — partly why we feel now we have an extended wave season and are seeing that rebound now. But we did get through it. We got through it and just as we got through delta. And now, there’s lots of momentum and things are clearly pointed in the right direction. So go ahead, David, on the dry dock days.

David Bernstein — Chief Financial Officer

Yes. So the dry dock days, in the first quarter, we have 273 days versus 141 in 2019. In the second quarter, there’s 399 days versus 184 days in 2019. For the full year, this year, right now, the plan is 802 dry dock days. We have some additional dry docks in the fourth quarter. I only have at the moment the first half of 2023. By the way, most — many of the dry docks are usually either the first half or the fourth quarter. But the first half is down to, in ’23, 272 days. There’ll probably be some more in the fourth quarter. But you can see the number of dry dock days will be significantly less. 802 is an unusually large number. I don’t think we’ve ever exceeded. I think something in the range of 550 was probably the largest number we ever had. But as I mentioned in my notes, we’re bringing back the ships. We’re optimizing it. The ships are not in service. And we want to make sure the ships look great when the guests get back onboard. And of course, we are cleaning the hull. Because I will tell you, you get those hulls clean, and it is incredibly much more efficient from a fuel perspective. So we are optimizing the situation. I don’t have the full year 2019 at my fingertips. I do apologize. But perhaps Beth can get back to you on that one.

Stuart Gordon — Berenberg — Analyst

No. That was very helpful. Could I just circle back to the first question. I mean would it be fair to say that if we were to see another variant, each iteration of the variant, delta, omicron, you’re a recovering faster; but b, also seeing less of an impact because the human nature is we’re getting more used to it? Would that be a fair observation at least?

Arnold W. Donald — President & Chief Executive Officer

I think we’ll have to see what happens with the variants. But clearly, society is better prepared. There’s better understanding of transmission, of epidemiology, of everything. More people are vaccinated. That’s a biggie, of course. And people — and fewer and fewer people are getting really sick from, whether it’s omicron or the B variant of omicron or whatever. And so the focus is shifting more to where it should be, which is hospitalizations or worse — long-term effects are worse. And as long as I think society doesn’t see a huge ramp-up in that, from some variants, then you’re absolutely right, people are learning how to live with it and live with it safely and comfortably.

And of course, our protocols have been — have served us very well. On the ships, we are far better than the equivalent incidents on land, partly because of the testing, the vaccinations, all the other protocols we have in place. And so we’re among the safest forms of socialization there is, and we’ve learned a lot about how to manage. And so through delta, through omicron, through all those, we have had much lower incidents than what you would find on land and have gotten pretty adept at serving the best interest of public health and dealing with it. But overall, society is getting used to it. And as long as hospitalizations don’t ramp-up or worse, then you would think the trend you’re seeing today would continue.

Stuart Gordon — Berenberg — Analyst

Thanks so much.

David Bernstein — Chief Financial Officer

And remember, test is much more available. That will be very helpful as well. Because in the first quarter, that was a big issue for us on the testing side.

Stuart Gordon — Berenberg — Analyst

Yes. Understood. Thank you very much.

Operator

Thank you. We’ll get to our next question —

Arnold W. Donald — President & Chief Executive Officer

This will probably be the last question. Okay. Thank you.

Operator

Okay. So a final question from the line from Fred Wightman with Wolfe Research. Go right ahead.

Fred Wightman — Wolfe Research — Analyst

Hey, guys. Good morning. I was hoping you could give a little bit more detail on the sailings where you are seeing occupancy over 100%. It sounds like that might be mostly concentrated in the Carnival brand. But are those largely South Florida departures? Are you seeing pretty broad-based strength in terms of where those are located or home porting, anything else to add would be great.

Arnold W. Donald — President & Chief Executive Officer

Definitely more North American oriented, not only the Carnival brand. I think the better characterization would be kind of traditional itineraries that people have been used to. And so in a number of cases, of course, we’ve had ultra-itineraries because destinations weren’t available or they had protocols, etc., that made it difficult to take guests there and what have you. But overall, I think the most important aspect of that is you’re talking a lot of sailings at 100%, which is showing that things are definitely coming back.

And that we have the ability to sell at 100% with protocols and still serve the interest of public health with really good outcomes from a health and safety standpoint. So that’s — I would characterize it, there’s still a lot of destinations elsewhere that have restrictions. There’s additional protocols. The [Indecipherable] have nine brands all over the world. There’s all kinds of regulations and protocols not just in home markets, but in destination markets that we have to deal with. And all of that creates challenge. But it’s becoming less. And we are moving toward full occupancies over time and having all of the ship sail.

Fred Wightman — Wolfe Research — Analyst

Makes sense. And a housekeeping question. When you guys are making comments about forward earnings commentary for the back half of this year and then into ’23, are you just assuming the current spot fuel price? Or are you looking at the forward curve there? I’m assuming that [Indecipherable].

David Bernstein — Chief Financial Officer

Yes. So our commentary was very broad. I do assume that fuel will be better than the current spot price. But the commentary is pretty broad. And we’re not giving specific guidance. So while fuel price matters to the bottom line, it’s still — depending on the price, it’s there’s a wide range where we’re still within the guidance we gave of a profit and loss.

Fred Wightman — Wolfe Research — Analyst

Okay. Thanks, guys.

Arnold W. Donald — President & Chief Executive Officer

Thank you, all. Operator, thank you very much. But everyone, thank you. We appreciate your interest in us. We’re very excited about welcoming people back onboard. Again, our heart goes out to all of those impacted by Ukraine invasion. But we’re looking forward to peace there and brighter days ahead. Thank you.

Operator

[Operator Closing Remarks]