To those who woke up on Saturday to images of a massive cruise liner keeled over following a very peculiar Friday night accident off the coast of Italy, no, this was not a prop for the latest James Cameron movie: it is the Carnival Corp's Costa Concordia [11], which carried over 4,200 passengers and crew, and foundered after hit a submerged rock off the Tuscan island of Giglio in very calm conditions. At last count 11 passengers and 6 crewmembers were missing, with at least 6 confirmed dead as of last night.
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Here is a summary of what is known as of now, via the BBC [13]:
- Costa Cruises, which operated the boat, is a subsidiary of Carnival Corporation.
- The boat's captain has been arrested and charged with homicide
- Italy's Generali (of Zero Hedge Trade Marked A&G fame) is among the group of insurers of the Costa. It has since said the "Net Impact would be very marginal" - how about the gross impact?
- Costa Cruises president Gianni Onorato said a normal evacuation had been almost impossible because the ship had listed so quickly
- The captain, Francesco Schettino, 52, had worked for Costa Cruises for 11 years, who has now been arrested, insisted he had been last to leave the ship, and said the rock was not marked on his nautical chart
- The chief prosecutor in the city of Grosseto told reporters that Capt Schettino "very ineptly got close to Giglio", according to Italy's Ansa news agency
- Italian, German, French and British nationals were among the 3,200 passengers on board. There were also 1,000 crew.
- Some passengers told the Associated Press news agency that the crew had failed to give instructions on how to evacuate the ship.
Video, courtesy of RT:
Reuters explains [14]why this event will likely have a major impact on the Cruise line industry:
The spectacular cruise liner accident off the coast of Italy is not just a disaster for the ship's owners, but could inflict wider damage on an industry already facing stiff headwinds.
"This is a PR (public relations) nightmare for the Costa brand," said Jaime Katz, equity analyst from investment research company Morningstar in Chicago.
"The question is, when that's been stripped out, whether the Carnival brand will be tarnished."
The accident could hardly have come at a worse time for the group, with the global economic crisis already making potential cruise customers nervous about their jobs and finances.
"I think the important factors are that this adds insult to injury, with struggling economic markets in Europe and all the unrest you've seen in the Middle East," Katz said, noting that the accident came at the peak season for the industry.
"Carnival still books a large portion of their bookings at this time of year. What company, in the middle of the busiest season for their business, wants to be weighed down with that sort of PR?" she asked.
Costa Crociere has been fully owned by Carnival since 2000 when the Miami-based company bought the half it didn't already own. At that time Carnival, which makes about 40 percent of its revenues in Europe, said Costa Crociere would be its primary platform for expanding in this part of the world.
In December Carnival, which accounts for about half of the global cruise line business, lowered its prices for 2012 voyages because of weaker demand in crisis-hit Europe.
Sharon Zackfia, a research analyst with William Blair & Co., a global investment services company, said it was too early to know the full costs for Carnival but they would include passenger refunds, potential litigation and repairs.
There is also the problem of consumer attitudes souring on the industry as a whole because of safety concerns - a mindset that, along with consumer fears over the sluggish U.S. economy and the EU debt crisis, could freeze some people's plans for overseas travel.
"Any time you have something like this happen, there is worry that it will have an impact on how the public views the safety of the industry in general," she said, adding, however, that the industry in general had a good safety track record.
Another potential problem for the shipowner and insurers is environmental damage.
Local officials have expressed concern that the ship's fuel, a full load as it had just begun the cruise, could spill into the pristine waters of the island, which is in a marine reserve. However by early Sunday there was no sign of pollution.
Italian reports said salvage operations were being held back until all passengers were accounted for.
Carnival stock short interest via BBG:
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Below is the Carnival Corporation statement on the Costa Concordia
On January 13, 2012, Costa Cruises' vessel, the Costa Concordia, departed from Civitavecchia, Italy with approximately 3,200 passengers and 1,000 crew members on a seven-day voyage. At approximately 10:00pm CET, the vessel struck rock off the coast of Isola del Giglio, Italy and sustained significant damage causing the ship to list severely. The order was given to abandon ship and deploy the lifeboats.
Tragically, there are reports of some deaths and injuries. This is a terrible tragedy and we are deeply saddened. Carnival Corporation & plc offers our sympathies and heartfelt condolences to all of the Costa Concordia guests, crew members and their families. Carnival Corporation & plc and Costa Cruises are committing our full resources to provide assistance and ensure that all guests and crew are looked after.
We want to express our deep gratitude to the Italian Coast Guard and local authorities and community members who have gone to extraordinary lengths to assist in the evacuation of the ship and provide support for our guests and crew.
We are working to fully understand the cause of what occurred. The safety of our guests and crew members remains the number one priority of Carnival Corporation & plc and all of our cruise lines.
Costa Concordia was sailing on a Mediterranean cruise from Civitavecchia (Rome) with scheduled calls at Savona, Italy; Marseille, France; Barcelona, Spain; Palma de Mallorca; Cagliari and Palermo, Italy.
Friends and family members may use the following country-specific contact numbers to reach Costa Cruises:
Italy 848505050
U.S. 800-462-6782
Austria 00438109006565
Germany +4940570121314
France +33155475554
Spain +34934875685
Portugal +34914185951
UK 08453510552
Carnival Corporation & plc is the parent company of ten cruise lines including Carnival Cruise Lines, Holland America Line, Princess Cruises, Seabourn, AIDA Cruises, Costa Cruises, Cunard, Ibero Cruises, P&O Cruises (UK) and P&O Cruises (Australia).