Carnival Company & plc (NYSE: CCL) Q2 2022 earnings name dated Jun. 24, 2022
Company Contributors:
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Josh Weinstein — Chief Operations Officer
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Analysts:
Steven Wieczynski — Stifel Monetary Corp. — Analyst
Robin Farley — UBS — Analyst
Jaime Katz — Morningstar, Inc. — Analyst
C. Patrick Scholes — Truist Gear Finance Corp. — Analyst
James Hardiman — Citigroup — Analyst
Daniel Politzer — Wells Fargo Securities — Analyst
Assia Georgieva — Infinity Analysis — Analyst
Presentation:
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Good morning, and welcome to our Enterprise Replace Convention Name. I’m Arnold Donald, President and CEO of Carnival Company & plc. I’m joined immediately telephonically by our Chairman, Micky Arison, who’s in Europe; and right here with me in Miami, David Bernstein, our Chief Monetary Officer; Beth Roberts, Senior Vice President, Investor Relations; and as a part of our beforehand introduced transition, our Chief Operations Officer, Josh Weinstein. Thanks all for becoming a member of us this morning.
Now earlier than I start, please be aware that a few of our remarks on this name shall be forward-looking. Subsequently, I need to refer you to the cautionary assertion in immediately’s press launch. That is my ultimate enterprise replace as CEO. Whereas very disappointingly, our share value sadly displays the present market circumstances, I’m nonetheless very happy with all that the staff has completed over the past 9 years. I’m particularly happy with how properly we now have collectively overcome what appeared like insurmountable obstacles at occasions these previous few years.
And I stay very enthusiastic about our future. With money from operations now turning optimistic, we now have reached an inflection level and, in truth, turned the nook and are headed on a optimistic trajectory. I’m not solely enthusiastic about, I’m additionally very assured in the way forward for our firm, and I’m wanting ahead to its steady success. I strongly consider on this staff and we’re having fun with a clean transition. As Vice Chairman, far and away, my primary duty shall be to help Josh and his administration staff as they work to construct on the present momentum.
Josh is a confirmed government. He’s properly revered all through the corporate. He served in key management roles. He’s pushed sturdy enterprise outcomes throughout his tenure. And he performed an integral half in tuning the corporate via the worldwide pandemic. Josh’s thorough understanding of our business, of our operations and our enterprise technique places him in a robust place to steer the subsequent part of our firm’s journey. Together with his imaginative and prescient, depth and core values really aligned with those who characterize our firm, I can not consider anybody higher fitted to this function than Josh.
Now turning to our enterprise outcomes. It’s reinforcing to see the continued power and demand for cruise. We’re aggressively, but thoughtfully, ramping as much as full operations, with over 90% of the fleet now in service. And on the identical time, we’re driving occupancy larger on these ships which have been crusing and we’re targeted on enhancing pricing in comparison with pre-COVID ranges.
As we had indicated, for the 20 ships that restarted over the past quarter, occupancy has been deliberately constrained. That mentioned, occupancy elevated from 54% final quarter to 69% this quarter, whereas we additionally elevated accessible capability by 25%. Now the mixture drove an over 60% sequential enchancment in passengers carried. In reality, we carried over 1.6 million visitors this previous quarter. And partly within the month of June, we’re already approaching 80% occupancy and, once more, on even larger capability.
Now what makes that much more spectacular is we have been in a position to obtain that in an surroundings of uncertainty, given steadily altering protocols, together with those who have been much more restrictive than these in broader society and that have been much more restrictive than these discovered even in different parts of the journey and leisure sector. Whereas fortunately, vaccination and take a look at necessities are beginning to loosen up given the development within the state of the virus, we proceed, nonetheless, to face constraints within the pool of potential visitors resulting from ongoing necessities in a variety of locations. But, we now have been in a position to make very significant progress.
As you recognize, the CDC just lately lifted the testing necessities for reentry into the U.S. for air journey which, going ahead, clearly removes a few of the friction from our North American manufacturers deployment in each Europe and resulting from Canadian embarkation Alaska. Normally requiring an extended length flight, these itineraries are usually related to longer lead occasions. Consequently, we anticipate the actual profit to be realized in 2023 and past.
Importantly, buyer deposits elevated by $1.4 billion within the second quarter, topping $5 billion. Now we now have seen a continued improve in categorical demand, and we anticipate to see that demand proceed to construct as protocols are additional relaxed and as society turns into more and more snug managing the virus. Regarding the specter of world recession, whereas not recession-proof, our enterprise has confirmed to be recession-resilient repeatedly.
As we now have seen in prior cycles, even in downturns, employed folks take holidays. And that’s much more true in immediately’s surroundings the place folks prioritize spending on experiences over spending on issues. Cruise stays an particularly interesting trip choice throughout downturns due to its compelling worth proposition relative to land-based alternate options. Additionally, there may be pent-up demand for journey globally which is a robust tailwind.
Presently, we’re seeing success for close-to-home cruises, with many sailings attaining occupancy at or above 100%, the place visitors understand far much less friction than with worldwide embarkations. In reality, our Carnival Cruise Line model, crusing its whole fleet, is predicted to achieve practically 110% occupancy throughout our third quarter. We additionally noticed an enchancment in new-to-cruise visitors within the second quarter, and we now have begun to ramp up our promoting efforts selectively to assist help attracting first-time cruisers.
Regarding pricing. We stay targeted on enhancing value via subsequent yr. We’re targeted on optimizing the occupancy whereas preserving long-term pricing. On this present surroundings of journey restrictions and well being protocols the place we now have coast unavailability, we use OPay channels and restricted promotions to capitalize on near-term demand. We’re constructing on our aggressive fleet optimization efforts. Given challenges in components of Europe, we now have reallocated capability to capitalize on markets the place there may be stronger demand.
In reality, we simply introduced an particularly artistic strategy that we expect holds nice promise-, the launch of Costa by Carnival. With Costa by Carnival, we deliver the atmosphere and great thing about Italy to Carnival Cruise Line visitors. Costa Venezia, Costa Firenze, each newly launched and each spectacular, shall be managed by Carnival Cruise Line, catering to Carnival’s visitor base starting within the spring of ’23 and 2024, respectively.
This new idea will supply a singular expertise for Carnival visitors to decide on enjoyable, Italian fashion whereas capitalizing on Costa’s stunning Italian design parts. Deployment for Venezia shall be introduced shortly and can symbolize a brand new itinerary choice for Carnival visitors. Individually, we additionally introduced the switch of Costa Luminosa to the Carnival model starting in November 2022 catering to Australian visitors. Now with these modifications, the Carnival model will replenish capability which have been faraway from latest ship exits and contribute to handle development for the model.
These new and differentiated product choices allow us to capitalize on demand amongst Carnival Cruise Line visitors and strengthen return on invested capital throughout our portfolio. As well as, we proceed to additional optimize our fleet and have introduced a elimination of a further smaller, much less environment friendly ship, bringing the full to 23 ships to be faraway from the fleet since 2019. The accelerated elimination of those much less environment friendly ships, coupled with the supply of 9 bigger, extra environment friendly ships delivered since 2019 fosters larger revenues over time via a 7 share level improve within the mixture of premium priced balcony cabins and a good higher platform for onboard income alternatives in addition to producing a 6% discount in ship stage unit prices, excluding gas, moderating the results of inflation and enabling us to ship extra income to the underside line.
Upon returning to full operations, practically 1 / 4 of our capability will include newly delivered ships, expediting our return to profitability and enhancing our return on invested capital. Furthermore, subsequent yr, our capability development in comparison with 2019 is concentrated in manufacturers with our highest returns. Regarding latest gas costs, we proceed to aggressively handle our gas consumption. Upon reaching full fleet operations, we anticipate that we’ll obtain an additional 10% discount in unit gas consumption and 9% discount in carbon depth as in comparison with 2019.
With our proactive efforts to cut back gas consumption, we truly peaked our carbon footprint in 2011, and that’s regardless of an over 30% improve in capability anticipated via 2023. In reality, we now have reaffirmed and strengthened our carbon depth discount targets for 2030 and are on an accelerated path to attain them via our fleet optimization efforts, investing in tasks that drive power effectivity, designing energy-efficient itineraries and investing in port and vacation spot tasks.
Throughout the quarter, Carnival Cruise Line broke floor on an thrilling new vacation spot undertaking, Carnival Grand Bahama Cruise port. This vacation spot is predicted to open in late 2024 and can supply visitors a uniquely Bahamian expertise with many thrilling options and facilities. Now this personal visitor expertise vacation spot will be a part of Princess Cay, Half Moon Cay, Grand Turk, Mahogany Bay, Amber Cove and Cozumel, securing our sturdy foothold within the Caribbean. In reality, we profit from a complete of 9 owned or operated personal locations and port amenities, together with terminals in Santa Cruz de Tenerife and Barcelona.
Once more, I consider we now have operationally reached an inflection level and we’re on target with money from operations turning optimistic this quarter. We’ve got a robust liquidity place of $7.5 billion and have already managed our debt maturity towers down via 2024. We’ve got 91% of the fleet now working and at enhancing occupancy ranges, which bodes properly for future money technology.
And whereas to this point, vacationers understand uncertainty and friction continues to be a headwind as protocols turn into much less restrictive and society continues to turn into more and more extra snug managing the virus, we anticipate to see demand proceed to construct, as we now have already seen with the power for Carnival Cruise Strains closer-to-home cruises. The enticing worth proposition relative to land-based alternate options, which is even larger immediately, and the continued power in onboard revenues ought to assist foster an excellent surroundings for pricing and will assist to speed up our momentum going ahead.
As soon as once more, I don’t have the phrases to adequately convey how personally rewarding and provoking the dedication, the dedication, the artistic ingenuity and the outstanding execution of our Carnival staff, shipboard and shoreside all over the world has been. And that, after all, consists of our Chairman, Micky Arison, and the remainder of our Board of Administrators. Within the face of continually altering boundaries and constraints, in an surroundings of steady and excessive uncertainty, our world staff of tens of 1000’s efficiently tackled problem after problem after problem, honoring our dedication to our highest precedence of compliance, environmental safety and the well being, security and well-being of everybody whereas stewarding the shareholders’ property and positioning us for nice success over time. I merely can’t thank them sufficient and it’s really a privilege and an honor to work with them.
Thanks additionally to our valued visitors. Their loyalty to our 9 world-leading manufacturers and the numerous letters and calls of help are so deeply appreciated. Thanks to our journey agent companions, who’re extra crucial than ever and serving to to ship the good story of our cruise. Thanks to our house port and vacation spot communities who’ve stood by us all through these challenges, amongst different contributions offering vaccines and lobbying for workable protocols.
Thanks to our suppliers and different many stakeholders who stood by us and labored arduous to satisfy our wants whereas dealing with challenges of their very own. And naturally, thanks to our shareholders, our bondholders, the banks, the export credit score companies for continued confidence in us and for ongoing help. We’re certainly poised for a fantastic future due to the efforts and contributions of so many.
With that, I wish to take the chance to introduce Josh and provides him the possibility to say just a few phrases earlier than turning the decision again to David. Josh?
Josh Weinstein — Chief Operations Officer
Thanks, Arnold. And thanks once more to Micky and your entire Board of Administrators for this nice alternative. I strongly consider in our firm and our potential to create happiness by delivering unforgettable and much-needed holidays for our visitors. This want is much more necessary within the present surroundings given the stresses of the previous two years and the worth that all of us place on shared experiences with family and friends.
Now we’re uniquely positioned to ship on this via our 9 main cruise manufacturers, every with a give attention to assembly their particular visitors’ wants and desires. We plan on renewing our efforts to make sure every model obtain readability of positioning and successfully reaches their target market. This, alongside offering cruise experiences that actually resonate with their distinct visitor base, will assist every model optimize its yield and development aspirations to drive income.
We additionally anticipate to capitalize on our revitalized fleet, our continued portfolio optimization efforts and our unparalleled vacation spot footprint, significantly within the Caribbean and Alaska. As well as, we now have an thrilling sustainability highway map that underlies all of our efforts. What additionally offers me super confidence is our decided and resilient staff all over the world. They’ve confirmed time and time once more for the final 2.5 years that they will completely obtain something they usually do it whereas staying true to Carnival Company’s collective values and optimistic tradition. All of this can assist us speed up revenues and returns, drive sturdy earnings development and enhance the stability sheet.
As you mentioned, Arnold, we’re clearly at an inflection level and have a shiny future forward. I’m wanting ahead to placing the views I’ve gained right here in my 20 years in a number of roles to work for the good thing about our shareholders and our many different stakeholders.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Thanks, Josh. We’re wanting ahead to your management. David?
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Thanks, Arnold. I’ll begin immediately with a overview of visitor cruise operations, together with a abstract of our second quarter money circulation. Subsequent, I’ll contact on our 2024 obligatory auditor rotation. Then I’ll present an replace on reserving tendencies and end up with adjusted EBITDA expectations and our present monetary place. Turning to visitor cruise operations. Throughout the second quarter 2022, we restarted 20 further ships, leading to 74% of our complete fleet capability in visitor cruise operations for the entire of the second quarter. This was a considerable improve from 60% in the course of the first quarter 2022.
As of immediately, 91% of our fleet capability is in visitor cruise operations. We have been happy to see that the second quarter 2022 income elevated by practically 50% in comparison with first quarter 2022, reflecting continued sequential enchancment. For the second quarter, occupancy was 69% throughout the ships in service, a major improve from the 54% within the first quarter. We have been inspired by the very close-in demand we skilled in the course of the second quarter for the second quarter, leading to practically double the close-in occupancy good points in second quarter 2022 versus second quarter 2019, a development we had anticipated.
Income per passenger day for the second quarter 2022 decreased barely from a robust 2019. As Arnold indicated, we’re targeted on optimizing occupancy whereas preserving long-term pricing. Nevertheless, let’s not overlook the affect as a result of future cruise credit score, or FCC as they’re extra generally referred to as, which price us a few share factors in second quarter 2022 versus second quarter 2019. Excluding the affect of FCC’s income per passenger cruise day, the second quarter would have been larger than a robust 2019.
As soon as once more, our onboard and different income per diems have been up considerably within the second quarter 2022 versus second quarter 2019, partially as a result of bundled packages in addition to onboard credit utilized by visitors from cruises canceled in the course of the previous. We’ve got just lately expanded our bundled package deal providing given their recognition. The brand new bundled choices require us to make modifications to the accounting allocation. Because of this, within the third quarter, you will note extra of the income left in ticket, until allotted to onboard, impacting the onboard and different income per PCD comparisons for the third quarter as in comparison with the second quarter.
Simply one more reason so as to add to the checklist of the reason why one of the simplest ways to guage our efficiency is by reference to our complete cruise income metrics. On the associated fee facet, our adjusted cruise price with out gas per Accessible Decrease Berth Day, or ALBD as it’s extra generally referred to as, for the second quarter 2022 was up 23% versus second quarter 2019. The rise in adjusted cruise price with out gas per ALBD is pushed by primarily 5 issues: First, the price of a portion of the fleet being in pause standing. Second, restart-related bills for 20 ships. Third, 24 ships being in dry dock in the course of the quarter, which resulted in over double the variety of dry-dock days in the course of the second quarter versus the second quarter 2019. Fourth, the price of sustaining enhanced well being and security protocols. And at last, inflation.
Do not forget that as a result of a portion of the fleet was in pause standing in the course of the second quarter and the upper variety of dry-dock days, we unfold prices over much less ALBDs. The primary half of 2022 had an unusually massive variety of ships in dry dock as a part of our resumption of cruising ramp-up, optimizing our dry-dock schedule whereas the ships will not be in service and guaranteeing that the ships have been nice and work nice after they welcome their first guess again on board. Nevertheless, the second half 2022 dry-dock schedule appears to be like extra regular by historic requirements. We anticipate that many of those prices and bills driving adjusted cruise prices with out gas per ALBD larger will finish throughout 2022 and won’t reoccur in 2023.
Because of the entire above, we anticipate to see a major enchancment in adjusted cruise prices, excluding gas per ALBD, from the primary half of 2022 to the second half of 2022, with a mid-teens improve anticipated for the complete yr 2022 in comparison with 2019. Subsequent, I’ll present a abstract of our second quarter money circulation. We ended the second quarter 2022 with $7.5 billion in liquidity versus $7.2 billion on the finish of the primary quarter. The change in liquidity in the course of the quarter was pushed primarily by 6 issues: First, damaging adjusted EBITDA of roughly $900 million resulting from our ongoing redemption of visitor cruise operations, an enchancment from the primary quarter.
Second, our funding of $500 million in capital expenditures. Third, $200 million of debt principal funds. And fourth, $400 million of curiosity expense in the course of the quarter. All of which was greater than offset by a $1.4 billion improve in buyer deposits in the course of the quarter, together with the $1 billion principal quantity of senior unsecured notes we issued final month. Now I’ll contact on our 2024 obligatory auditor rotation. I needed to take a second to elucidate our scenario as it is rather completely different from most publicly listed corporations outdoors the U.Okay. and the EU. Carnival plc, our U.Okay. publicly listed firm, which is a part of our dualistic firm construction, is topic to U.Okay. regulation which requires obligatory auditor rotation.
Subsequently, PricewaterhouseCoopers, or PwC as they’re extra generally referred to as, have to be modified as Carnival plc’s auditor for the fiscal 2024 audit on the newest. Subsequently, we carried out a aggressive RFP course of for the impartial audit of Carnival plc in addition to the consolidated entity, Carnival Company & plc. Because of the just lately accomplished RFP course of, yesterday, our Board of Administrators appointed Deloitte as the corporate’s impartial auditor for fiscal 2024. We accomplished the RFP course of within the first half of 2022 to make sure an orderly transition of non-audit providers for the rest of 2022 and to make sure independence by Deloitte in 2023, as required beneath U.Okay. regulation.
Earlier than I proceed, I wish to add that the Board of Administrators and administration of Carnival Company & plc wish to thank PricewaterhouseCoopers for its continued service as the corporate’s impartial auditor. Now let’s take a look at reserving journey. The upper March weekly reserving volumes we talked about on our final enterprise replace continued all through the quarter. This resulted in reserving volumes for all future sailings in the course of the second quarter 2022 being practically double the reserving volumes in the course of the first quarter 2022. Second quarter 2022 reserving volumes for all future sailings have been the perfect quarterly reserving volumes we now have seen for the reason that starting of the pandemic, though they have been nonetheless beneath the 2019 stage.
I’m pleased to report that reserving volumes for the reason that starting of April for the second half of 2022 sailings have been larger than 2019 stage. All of this displays the beforehand anticipated prolonged wave season. And as I mentioned earlier than, we have been very inspired by the close-in demand we skilled in the course of the second quarter for the second quarter, leading to practically double the closing occupancy achieve in second quarter 2022 versus second quarter 2019, a development we had anticipated. Whereas the cumulative e book place for the second half of 2022 is beneath the historic vary, we consider we’re properly located with our present second half 2022 e book place given present reserving quantity, coupled with closer-in reserving patterns.
We proceed to anticipate that occupancy will construct all through 2022 and return to historic ranges in 2023. Pricing on our cumulative e book place for the second half of 2022 was decrease, with or with out FCC, normalized for bundled packages as in comparison with 2019 crusing. For the complete yr 2023, our cumulative superior e book place continues to be on the larger finish of the historic vary and at larger costs, with or with out FCC, normalize for bundled packages as in comparison with 2019 sailings. This can be a nice achievement given pricing on bookings for 2019 sailings is a tricky comparability as that was a excessive watermark for historic yield.
Throughout the second quarter 2022, we as soon as once more elevated our promoting expense in comparison with the primary quarter 2022 in anticipation of our full fleet being in visitor cruise operations and our 8% capability improve for 2023 versus 2019. Second quarter 2022 was the primary time for the reason that pandemic that promoting expense was above 2019 stage.
I’ll end up with our adjusted EBITDA expectations and our present monetary place. Everyone knows that reserving tendencies are a number one indicator of the well being of our enterprise. With improved latest reserving tendencies main the best way, driving buyer deposits larger, optimistic adjusted EBITDA is clearly inside our sights. Adjusted EBITDA over the primary half of 2022 was impacted by restart-related spending and dry-dock bills as 34 ships, practically 40% of our fleet, have been in dry dock in the course of the first half of fiscal 2022.
For the third quarter, with over 90% of our capability again in visitor cruise operations and occupancy percentages constructing, we anticipate ship stage money contribution to develop. Because of this, we anticipate adjusted EBITDA to be optimistic for the third quarter 2022 which, after every little thing we’ve been via, shall be one thing value celebrating. With EBITDA turning optimistic, extra liquidity than final quarter, debt maturity towers which have been properly managed via 2024, we now have already refinanced a portion of our 2023 maturities and we are going to do the remaining over time.
And now I’ll flip the decision again over to Arnold.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Thanks, David. Operator, please open the decision to questions.
Questions and Solutions:
Operator
Thanks [Operator Instructions]. Our first query comes from the road of Steven Wieczynski with Stifel. Please go forward.
Steven Wieczynski — Stifel Monetary Corp. — Analyst
Yeah, hey guys. Good morning. Arnold, congratulations, and it was a fantastic run. So thanks on your service. So first query could be across the reserving patterns, which clearly listed below are persevering with to strengthen. Nevertheless, I assume, buyers are going to, at this level, based mostly on the place your inventory is, they’re going to look previous reserving — present reserving patterns they usually’re going to give attention to what may come subsequent given an unsure macro backdrop.
And I assume my query is, how would you guys assault a slowdown in bookings or load elements? Previously, you’ll have usually lower costs with a view to preserve load elements excessive. However this time round, should you do see bookings sluggish, do you assume you guys and your friends will be capable of keep extra disciplined on the pricing facet of issues, so the restoration wouldn’t be as steep on the opposite facet?
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
A few fast feedback. To begin with, I wouldn’t touch upon what the others would do. You’ll be able to discuss to them straight. For us, we now have, as we’ve been hit with completely different variants and invasion of Ukraine and different issues and bringing extra capability on board, we’ve needed to take into account all of that. And at this time limit, largely we now have accomplished every little thing in thoughts of attempting to maintain our pricing sturdy going ahead as a result of we expect that’s the precise transfer proper now.
The optimistic factor right here is that there’s pent-up demand. And so even when there was a world recession, the fact is we’re, as I mentioned in my feedback, recession-resilient traditionally. And this time, if there was a recession, there’s super pent-up demand, which prior to now wasn’t essentially the case as a result of it’s been a few years the place folks haven’t been in a position to journey the best way they needed to. So a mix of issues. One is we’re naturally considerably recession-resilient. We’ve got added tailwind of pent-up demand. And sure, we’re targeted on doing what we will to finally drive the money we’d like however, on the identical time, do in a way the place we will preserve pricing power. David could have a remark.
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Sure. Only one factor I’d add to that. Bear in mind, Steve, not each recession is similar. And we’re at the moment in a really sturdy labor market. And provided that, if folks have jobs they usually really feel snug of their jobs, they’re prone to want a trip. And bear in mind, holidays are now not a luxurious, they’re a necessity in immediately’s world. So I feel we are going to do very properly. As Arnold mentioned, we’re recession-resilient and we’ll do very properly in a recessionary surroundings.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
After which there’s — we’ll see if a recession comes proper now. Financial savings are actually excessive. As David identified, employment charges are actually low. And so there’s financial power in the interim. We’ll see what occurs.
Steven Wieczynski — Stifel Monetary Corp. — Analyst
Okay. Acquired you. After which second query, I assume, most likely for you, David, across the latest debt elevate. And we received numerous questions from buyers about why you guys would exit and lift debt north of 10% and possibly what drove you. Or possibly there was an underlying cause as to why you needed to elevate debt at these ranges. And I assume from right here, the query goes to be, what’s the alternative shifting ahead to refinance? Or possibly there may be sufficient likelihood to refinance given the place charges are at this level?
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Yeah. So should you — as I mentioned on the final convention name, we have been seeking to, over time, refinance the $3 billion of 2023 maturities, and we have been targeted on that. And we took a glance and we consider that we’re in a rising rate of interest surroundings. And so we did exit and we raised $1 billion at 10.5%. It was a problem out there, no one may have predicted what would occur within the total market. However what’s fascinating is regardless of the market backdrop, we have been in a position to elevate $1 billion throughout the value discuss that we needed on that day and we felt superb about that.
We’re seeking to do $2 billion to refinance the remaining portion, as I mentioned in my notes, over time. However we’re simply averaging in. In case you take a look at it immediately, rates of interest are larger than they have been a month or so in the past once we truly did our bond providing. So I’d say that we have been in an excellent place. We be ok with what we did. And we’ll look to refinance the opposite $2 billion over the following months forward. And we’re simply averaging in. Remember, regardless of, I’ll say, including 10.5%, should you take a look at our portfolio of debt, our common rate of interest immediately is 4.5%. So we’ve accomplished a fantastic job managing the entire portfolio. And this is only one minor piece within the portfolio.
Steven Wieczynski — Stifel Monetary Corp. — Analyst
Okay, nice. Thanks guys. Actually recognize it. Better of luck Arnold.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Thanks Steve.
Operator
Subsequent query from the road of Robin Farley, UBS. Please go forward.
Robin Farley — UBS — Analyst
Nice. Thanks. Arnold, greatest needs, since that is the final earnings name you’ll be becoming a member of it for. Good luck with every little thing.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Thanks Robin.
Robin Farley — UBS — Analyst
I had a query on occupancy. I feel buyers form of wrestle with how a lot of the decrease occupancy is form of non permanent, just like the Omicron cancellations in Q1 and new ships going into service at decrease ranges. And the way a lot — in different phrases, to attempt to form of see the trail demand there, I ponder should you may give us a little bit little bit of shade on form of the sequential construct in occupancy via Q2, I do know you usually wouldn’t give that stage of element and/or possibly one thing together with your visibility on Q3, which I feel usually you’ll be 80% to 90% booked by now. And simply form of are you seeing, for ticket value relative to ’19 and occupancy, with that stage of visibility, I don’t know should you can remark a little bit extra particularly.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Yeah, you guess, Robin. I’ll have David share some particulars. However the overarching remark could be that we now have actual power in occupancy. And we had some deliberately constrained occupancy as we introduced ships on again on-line due to protocols somewhere else and so forth. We additionally had some remoted conditions the place we’re shifting crew round quickly as we have been staffing up with crew and constrained capability for these causes as properly.
However total, our occupancy — however our occupancy charges, as we shared, have actually improved over time right here. And as we talked about, the Carnival model is 110% occupancy within the third quarter. So we now have extra capability crusing and occupancy is rising properly. And because the world continues to loosen up and turn into snug managing the virus and restrictions are relaxed, we see issues shifting extra into the route of the Carnival model the place issues are extra normalized although they nonetheless have some restrictions proper now. David?
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Sure. So in the course of the second quarter, I imply, the variance between the months, it went from 67% to 71%, which is why we wound up total with that 69% occupancy for the quarter. So — and as Arnold mentioned, we’re approaching 80% for the month of June. And with reserving tendencies good, we proceed to construct. So — however take note, that as I had indicated, we began 20 ships within the second quarter. And naturally, there are a selection of cruises, we’re early on, we constrain occupancy to make sure we follow and the visitors have a good time. And so we construct on these ships, and you’ll see the good thing about that once we received to June. So we really feel superb in regards to the total development. It’s optimistic. Shifting in the precise route. And we do anticipate to see an enhancing development within the third quarter and into 2023.
Robin Farley — UBS — Analyst
Okay, nice. Thanks. And possibly simply as a follow-up query on the expense commentary. You set — you talked about numerous form of buckets about pause standing, ship restart prices, dry dock, all of these as being a part of that 23% improve. And I do know you talked about that may enhance considerably by year-end. I ponder should you may quantify a little bit little bit of how a lot of that improve was simply inflation in well being and security. In different phrases, the opposite elements all being considerably non permanent, the pause standing, the restart price, the dry dock, how a lot of these form of 23 factors are — go away routinely simply by having your — the fleet again in service? Simply so we will take into consideration form of the place you possibly can get to by the top of the yr when it comes to expense per passenger per se.
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Yeah. I feel one of the simplest ways so that you can — you are able to do your individual quantification and it’s fairly straightforward. If you concentrate on, we have been form of 24% up per ALBD for the primary half. And all you must do is should you’re mid-teens for the complete yr, you possibly can again into the place we have been for the second half, taking out the pause standing, the restart, the dry docks. As a result of I did say that the dry docks within the again half of the yr have been going to be form of extra regular like when it comes to the variety of dry-dock days. So should you again into the quantity, you’ll be capable of see the place we’re for the again half of the yr, which is a greater reflection total than the primary half. Now there’s nonetheless noise in that as a result of provide chain disruption and different issues. And we’re working actually arduous to handle that down. And we are going to do this. So — however that’s most likely one of the simplest ways to again into it.
Robin Farley — UBS — Analyst
And I do know that that easy common would get you to form of a mid-single digit for the second half. However I assume I used to be questioning by form of the top of the yr, actually occupied with 2023, that’s how I used to be in search of form of what items would possibly go to.
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
I perceive. And I’m not able to offer price steering for 2023 at this level. However I used to be simply attempting to offer you some directional. You’ll be able to see what the again half is, and we’ll handle via all of these gadgets successfully over the subsequent six months. And like I all the time say, we hope to do higher. However at this level, it will be untimely for me to offer you price steering.
Robin Farley — UBS — Analyst
Okay. Understood. Thanks very a lot. Thanks.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Thanks Robin.
Operator
Our subsequent query comes from the road of Jaime Katz with Morningstar. Please go forward.
Jaime Katz — Morningstar, Inc. — Analyst
Hello. Good morning. Thanks for taking my query. I’d be fascinated by listening to the way you guys are seeing variations between home and worldwide customers, significantly due to this transition of Costa ship, possibly being this rebranding with Carnival and whether or not or not that’s signaling something?
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Yeah, I feel simply usually, clearly, Europe in some ways is extra challenged from client demand standpoint because it pertains to journey to an extent than North America. And what you’re seeing within the transfer with Costa by Carnival and the switch of the Luminosa in Australia to Carnival is a part of a rightsizing of Costa for what we see as a European surroundings which has difficult not solely by COVID and macroeconomic circumstances, considerably triggered by invasion of Ukraine, but additionally the invasion of Ukraine. And so all of these issues are impacting the European market sector.
So we’re reallocating to manufacturers which have stronger demand, which might be in a stronger place. That’s one of many stunning issues, our property are cellular. So — however total, we nonetheless see sturdy demand in Europe. And there are parts of Europe, the U.Okay. particularly. Additionally we see some persevering with power in parts of Germany and what have you ever. And so we see an excellent market in Europe, a robust market in North America. And we’re simply reallocating throughout the manufacturers to optimize our portfolio and maximize the money technology and place us for the long run.
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
If I can construct on that a little bit bit. I did wish to level out, so we talked about our bookings within the second quarter practically doubling the — what they have been within the first quarter. So the NAA manufacturers have been a little bit bit over double than the EA manufacturers, which incorporates Costa, we’re a little bit bit lower than double e book, I imply every little thing is on target. There may be good, stable, sturdy demand in all of the manufacturers. However the NAA manufacturers are doing, from a reserving development perspective, a little bit bit higher than the EA manufacturers.
I’d additionally wish to level out, add to Arnold’s feedback, about Costa by Carnival. As a result of take note, an enormous chunk of Costa’s capability in 2019 was in China. And so with that market in the intervening time closed, we quite than take all of that capability and put it in Europe, we created a brand new market in direction of the Carnival visitors which we expect will develop the market right here in North America and we’ll be in a significantly better place total. So we really feel superb about all of our manufacturers and the route and we’re managing it appropriately as you possibly can see, what Arnold talked in regards to the strikes of the ships.
Jaime Katz — Morningstar, Inc. — Analyst
Okay. After which David, I don’t assume it was explicitly famous, however prior to now, I feel you guys had pointed to 2023 EBITDA above 2019 ranges. And do you continue to really feel just like the enterprise is monitoring in the precise route to attain that?
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
So I mentioned that fairly a variety of occasions. I feel we’re — what I’ve all the time mentioned is we now have the potential for EBITDA to be larger in 2023 than 2019. That one huge wildcard, after all, is the worth of gas which has risen fairly a bit in the previous couple of months. So simply preserve that in thoughts. However there may be, with the occupancy enhancing over time, there definitely is that potential.
Jaime Katz — Morningstar, Inc. — Analyst
Thanks.
Operator
Our subsequent query comes from the road of Patrick Scholes with Truist. Please go forward.
C. Patrick Scholes — Truist Gear Finance Corp. — Analyst
Hello. Good morning everybody. Arnold, greatest needs as properly.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Thanks Patrick.
C. Patrick Scholes — Truist Gear Finance Corp. — Analyst
Thanks. Effectively, first query is, are you able to remark in your potential willingness to promote manufacturers to — a number of manufacturers to assist shore up the stability sheet?
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Effectively, we’re very happy with our portfolio of manufacturers. Having mentioned that, our job is all the time to maintain an open thoughts and do what’s greatest for the shareholders. And so we’d completely, once more, consider any and all choices. However we’re solely going to do what is smart for the shareholders given our projections of alternative given the portfolio we now have.
C. Patrick Scholes — Truist Gear Finance Corp. — Analyst
Okay. Truthful sufficient. After which my second query is a little bit of a clarification on a few of the textual content within the earnings launch the place you famous that cumulative superior bookings for the second half of ’22 are actually beneath the historic vary, which suggests — clearly it was lowered from the earlier the place you mentioned it was at decrease finish. Particularly, you famous right here, this place is in step with its anticipated enhancing occupancy ranges for the second half of ’22. Are you able to clarify a little bit bit extra what that final phrase means? I’m not fairly understanding what you imply by in step with anticipated enhancing occupancy ranges.
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Yeah. So what we have been attempting to — sure, what we’re simply attempting to say there may be, like Arnold indicated, that within the month of June, in his ready remarks, he mentioned occupancy was approaching 80%. And so what we have been attempting to say is even supposing we have been beneath the historic vary, we do anticipate, due to the closer-in nature of the reserving patterns, to see occupancy within the again half of 2022 to be larger than the 69% within the second quarter. And that’s all we have been actually attempting to point to folks with that assertion.
C. Patrick Scholes — Truist Gear Finance Corp. — Analyst
Okay. Thanks for the clarification.
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Certain.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Thanks Patrick.
Operator
Subsequent query from the road of James Hardiman with Citi. Please go forward.
James Hardiman — Citigroup — Analyst
Hey, good morning. Thanks for taking my questions. And Arnold, I needed to reiterate congratulations and good luck with what’s subsequent. Wished to hone in a little bit bit on a few of the pricing commentary, significantly the income per passenger cruise day. I feel you mentioned that quantity was down a little bit bit. There was some — a little bit little bit of an FCC headwind there. However I feel that very same quantity was up north of seven% within the final quarter.
Clearly, there’s this rising concern that the business goes to wish to push value a little bit bit to fill these ships. Perhaps converse to that concept. As we proceed to refill the ships within the third quarter and past, ought to we anticipate that pricing quantity to go down, down additional? After which clearly, we’re going to get again to a few of that FCC affect. However form of excluding that piece, how ought to we take into consideration income per passenger cruise day as we proceed to boost occupancy?
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
So — okay. I feel, total, Arnold in his notes talked about the truth that we have been targeted on maximizing occupancy whereas preserving value in the long run. And so we’re very eager on that. We did improve promoting expense within the second quarter for that function to create extra demand. We’re seeing extra first timers. We had talked about the truth that we noticed a major enchancment in first timers. So what we’re attempting to do right here is we’re constructing in direction of historic occupancy ranges in 2023 with higher pricing. As we indicated, the pricing for 2023 is up.
However with the shorter reserving window and the usage of OPay channels and the usage of restricted promotions, we’re driving occupancy within the quick time period with a view to optimize the EBITDA and the money circulation from operations of the enterprise. So whereas I’m not ready to offer you steering on the third and fourth quarter gross income per PCD, which, by the best way, should you simply take into consideration the third quarter, one of many issues to recollect is we hope to have numerous youngsters on board within the third quarter.
And people thirds and fourths can even usually, they add to the income, they add to the underside line. However they can even on a per PCD foundation be decrease than the decrease berths, each for the ticket and the onboard. The youngsters don’t usually spend as a lot on board both. However we’re pleased to have all of them on board. So there are elements in there that you must take into account as you concentrate on the development per PCD from third to fourth quarter and past.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
And with the rise in occupancy that we skilled within the second quarter, even with additionally the capability improve we had within the second quarter, while you normalize the FCCs, our pricing didn’t decline.
James Hardiman — Citigroup — Analyst
That’s actually useful shade. And possibly you already answered this to some extent, but when I form of zoom out right here for a minute. Traditionally, the business has largely used this value to fill paradigm. And I feel with a few of these metrics, the priority is that we’ll return to that. We have been — pre-pandemic, we have been — it appeared like in a greater place, pondering extra about long-term pricing alternative. Perhaps converse to if there’s been any change in your philosophy pre pandemic to now simply given the significance of filling up these ships and attending to optimistic free money circulation.
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
So one of many issues that you must take into consideration in all of that is, over time, we’re already seeing it, however we — the protocol friction is decreasing. Only in the near past, they dropped — the U.S. dropped the testing necessities for folks to get again into the U.S. from worldwide locations. And we’re seeing — we’re beginning to see the flexibility for us to cut back our protocols and scale back the friction. And I feel that may deliver again folks from the sidelines and can create further demand which is able to permit us to get higher occupancy at a greater value. So directionally, with extra first timers approaching board and the lowered protocols, we really feel superb in regards to the future over the subsequent few quarters in 2023.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
And take note, as you observe all of this, that there are combine points in right here, too. Simply portfolio combine and total model positioning in addition to particular itinerary — itineraries accessible and what have you ever. So the common value is, there’s numerous noise in that. And the general — the message we’re sending and what we’re experiencing is an encouragement of a robust market coming again, pent-up demand and us rigorously managing that, thoughtfully managing it, as we create the money and on the identical time place the enterprise properly for the long run.
James Hardiman — Citigroup — Analyst
That’s actually useful shade. Thanks each.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Thanks.
Operator
Subsequent query from the road of Dan Politzer, Wells Fargo. Please go forward.
Daniel Politzer — Wells Fargo Securities — Analyst
Hey, good morning everybody. And Arnold, better of luck. And Josh, congratulations on the brand new place. So I had a query on buyer deposits and the way we should always take into consideration this for the remainder of the yr. Clearly, it was very sturdy within the second quarter. I imply, there’s usually a decline sequentially. So simply as we take into consideration money circulation for the remainder of the yr and the way buyer deposits circulation via, is it protected to say that the third quarter ought to — is just not going to be money circulation optimistic or — simply provided that there’s that sequential decline? Or given the extent that you just guys proceed to get well when it comes to your bookings and operations, the third quarter may proceed to be money circulation optimistic?
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
In order that’s a fantastic query and we’ve been attempting to reply that. I’ll let you know that within the final — for the reason that finish of Could, buyer deposits have continued to extend. They’re up just a few hundred million {dollars}. In order that at the very least directionally within the final — what has it been, 3.5 weeks, that’s the place we’re at. Usually, in the course of the third quarter, there’s a discount as a result of we attain the seasonal excessive peak on the finish of Could. However there are offsetting elements this yr that we’d anticipate to see. With extra ships coming again on-line and better occupancies, that ought to mitigate any regular seasonalization. Whether or not it fully mitigates it or not, it’s very arduous for me to foretell at this level. However there are some mitigating elements to the traditional seasonalization of buyer deposits.
Daniel Politzer — Wells Fargo Securities — Analyst
Yeah. Yet one more fast one, if I may simply squeeze it in. On simply the newer cruise product, numerous your fleet has been refreshed. To what extent have you ever been in a position to seize that pricing? Sometimes, the newer product will get a premium value however that is form of a bizarre surroundings. Have you ever been in a position to seize that? And if that’s the case, any form of metrics or a solution to quantify that?
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
Yeah. It’s very arduous to inform. I imply we take a look at so many issues, however.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
There’s so many variables proper now.
David Bernstein — Chief Monetary Officer and Chief Accounting Officer
So many variables proper now, it’s simply very, very tough to inform in a comparability going again to 2019. So we take a look at the full, we handle it appropriately. I’ll let you know, these new ships are performing very properly, excessive ranges of occupancy, producing important money flows. And as we transfer ahead, I think that we will proceed to generate a premium there. Arnold indicated practically 1 / 4 of our fleet shall be new in 2023 or newly delivered.
The typical age of our fleet, consider it or not, I feel I mentioned this earlier than possibly on one of many earlier calls, however from 2019 to 2023, regardless of the passage of 4 years, the common age of our fleet went down one yr. In order that we’ve received numerous new capability which ought to assist very properly each on the income facet and on the associated fee facet from an effectivity perspective and higher gas consumption. So we’re very excited in regards to the future and delivering memorable trip experiences to most likely 14 million folks in 2023 as we go for historic occupancy ranges.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
Operator, we’ll take extra query. Let’s make it an excellent one for Josh. Go forward.
Operator
Our subsequent query comes from the road of Assia Georgieva, Infinity Analysis. Please go forward.
Assia Georgieva — Infinity Analysis — Analyst
Good morning. Arnold, you’ll be missed. However Josh, very pleased that you just obtained this nice place duty and triple promotion. So I do have an excellent query for you, hopefully. With the Costa by Carnival idea, that’s clearly one thing that may be a long-term fixture. We’re not simply shifting ships round for the subsequent two or three years. Do you consider that that is one thing that may very well be expanded?
And does the Costa gas play any function when it comes to what ships may truly proceed to hitch the brand new idea? LNG deliveries have been considerably tough, I assume, in Europe. We had points with Costa in South America final winter season. So how do you see the event of the idea? And what are the important thing parameters that may truly play into it?
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
I’m going to have Josh touch upon the general model positioning and stuff as we go ahead. However actual rapidly on the LNG gas query. LNG, as you recognize, is the cleanest burning fossil gas. It offers us a 20% discount in carbon emissions, and so forth. However the shifts are twin, to allow them to additionally burn MGO. And in order that, unto itself, wouldn’t affect the way forward for the Costa model. We’ll burn LNG every time it is smart to take action, which we expect would be the majority of the lifetime of the ships. However there are occasions the place we’ll clearly choose to burn MGO. However when it comes to the Costa by Carnival positioning, it’s a brand new idea, and I’ll let Josh share his ideas on it. Go forward, Josh.
Josh Weinstein — Chief Operations Officer
Only one factor to make clear. Clearly, the 2 ships that we’re speaking about which might be going beneath this Costa by Carnival umbrella will not be LNG ships. In order that clearly didn’t enter into our mindset in any respect. So simply to reiterate Arnold’s level. And with respect to the positioning, I feel it is a nice instance of leveraging the dimensions of this company. As a result of what we may have accomplished is taken these ships, new stunning ships, solely beneath the Costa title and attempt to introduce them into the North American market on a standalone foundation.
However that is truly the chance to leverage every little thing that Carnival does so properly right here in the USA and Canada for its visitor base. So by marrying that together with Costa’s stunning tonnage and onboard experiences, we now have the flexibility to marry that up and make a greatest go of making one thing actually particular. So the quick reply is, we completely anticipate this to achieve success and we don’t take a look at this as one thing quick time period. However ideally, will probably be one thing that works and we will construct upon.
Assia Georgieva — Infinity Analysis — Analyst
Okay. So at the moment, no additional plans. Clearly, you’ve made plans for 2023 and 2024. In order that’s loads of time and capability coming within the two ships. So at this level, it’s too early to debate whether or not this might turn into form of a mini model by itself.
Josh Weinstein — Chief Operations Officer
Yeah. I feel let’s strive it out with two ships, after which we’ll see how we do. However that’s it for now.
Arnold W. Donald — President, Chief Govt Officer and Chief Local weather Officer
So, thanks, everybody. Go forward. Go forward. I’m sorry. Okay. Thanks, everybody. Actually recognize it. And looking out ahead to listening to those as we go ahead and listening to the good information coming from Josh and our staff. So thanks all very a lot, and have a fantastic day.
Operator
[Operator Closing Remarks]
