Analyst: cruise fire should be short-lived story

Analyst says fire on board a Royal Caribbean vessel should be a short-lived story

Associated Press

NEW YORK (AP) -- A fire on board a Royal Caribbean vessel over the Memorial Day weekend should be a short-lived story, an analyst said Tuesday.

The fire took place on the Royal Caribbean's Grandeur of the Seas on Monday. No injuries were reported and the ship's 2,200 passengers were expected back in Baltimore on Tuesday after being flown on charter flights from the Bahamas.

Royal Caribbean said the ship never lost power and was able to sail into port in Freeport, Bahamas, Monday afternoon. The cause of the fire wasn't immediately known, but the U.S. Coast Guard and the National Transportation Safety Board planned to investigate. Passengers will get a full refund of their fare and a certificate for a future cruise.

This is not the first incident to plague the cruise industry this year. Carnival Corp. also had trouble with a fire aboard one of its vessels three months ago. The Triumph was disabled during a February cruise by an engine room fire in the Gulf of Mexico, leaving thousands of passengers to endure cold food, unsanitary conditions and power outages while the ship was towed to Mobile, Ala. It remained there for repairs until early May when it headed back to sea under its own power.

Harry Curtis of Nomura Equity Research said that in the case of Royal Caribbean Cruises Ltd., it is important to note that the fire was in a non-customer section of the ship and that there were no injuries or deaths. The analyst said that media coverage of the incident shouldn't be too bad because it appears the ship's crew acted quickly to get passengers to evacuation stations and the vessel managed to get to port fast.

But Curtis said in a client note that the fire could lower Royal Caribbean's earnings by about 4 cents per share this year, as the company has to issue a refund, cancel at least one cruise and possibly more, and still make repairs and review the matter.

The analyst maintained a "Buy" rating and $41 price target.

Shares of Royal Caribbean fell 56 cents to $35.57 in afternoon trading. Over the past year, shares have traded between $22.12 and $38.62.

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