U.S. investors dumped shares in Carnival Corp. and other cruise-line operators on Tuesday, showing fears that the weekend tragedy off Italy’s coast will hammer bookings for sea vacations, even as the industry highlighted a strong safety record.
Carnival, the largest operator with 101 cruise ships and the parent company of the shipwrecked Costa Concordia, was bearing the brunt of the selloff. Shares fell 14% to $29.60 on the New York Stock Exchange on Tuesday after a big decline on London’s stock exchange Monday, when U.S. markets were closed.
New York-listed shares of Royal Caribbean Cruises Ltd., the second-largest global cruise operator, fell 6.2% on Tuesday.
Carnival owns 10 cruise lines and has about $15 billion in annual sales. The accident, which the company has blamed on the ship’s captain, has soured the company’s image in the midst of the industry’s peak booking period. About a third of annual cruise itineraries are sold before the end of March, according to industry estimates.
Carnival’s shares had struggled even before the tragedy, falling 28% in the 12 months that ended Friday. The company is heavily exposed to the European markets, with lines there accounting for 37% of its fleet, according to UBS.
Costa Crociere SpA, operator of the Costa Concordia, the ship that ran aground, makes up about 16% of Carnival’s fleet, UBS estimated. The Costa Concordia, which could carry 3,800 passengers, represented about 1.5% of Carnival’s capacity.
Carnival has headquarters in Miami and London, and is incorporated in Panama.
The association pointed to data from G. P. Wild, a consultancy specializing in the cruise industry, that over a six-year period from 2005 to 2010 in which the cruise industry carried 98.2 million passengers, there were 16 fatalities and 518 injuries.
Industry observers couldn’t recall an incident involving a cruise ship in recent history with images as searing as the keeled-over Costa Concordia. Perhaps the closest comparison occurred in 2007, when the MS Sea Diamond ran aground near the Greek island of Santorini, eventually sinking and leaving two passengers missing and presumed dead.
In the biggest high-profile incident in the U.S. in recent years, more than 3,000 passengers aboard the Carnival Splendor were towed to shore in 2010 by a Mexican tugboat after an engine-room fire cut off the ship’s electricity. A U.S. Navy aircraft carrier delivered food and water to the stranded ship, but there were no injuries.
Safety standards for cruise ships are set by the International Maritime Organization, a United Nations agency, with enforcement falling to individual countries. Italian authorities are heading the investigation into the Costa Concordia accident, because the ship was flying under the Italian flag.
"We should seriously consider the lessons to be learnt and, if necessary, re-examine the regulations on the safety of large passenger ships in the light of the findings of the casualty investigation," Koji Sekimizu, secretary-general of the U.N. agency, said in a statement Monday.