Cruise companies aim to keep fuel costs down. Their strategies for doing so differ

Summary

• Carnival, Royal Caribbean, and Norwegian Cruise Line Holdings reported strong earnings for their most recent quarters despite rising fuel prices.
• Brent crude oil reached a six-month high of $116.72 per barrel following the start of the U.S.-Israel war with Iran on Feb. 28.
• Royal Caribbean & Norwegian utilize hedging strategies using derivatives to reduce exposure to fuel price swings.
• Carnival CEO Josh Weinstein states that cutting fuel consumption is the best method to control costs rather than hedging.
• Jefferies analyst David Katz notes that hedging helps manage Wall Street expectations & prevents stock volatility based on fuel price fluctuations.
• Carnival reported an all-time high net income of $1.9 billion for the third quarter.
• Carnival has reduced its unit fuel consumption rate by 26% since 2019, estimating $700 million in savings for 2026.
• Carnival spent $615 million on fuel in the third quarter, representing 7.3% of revenue, with a projection of $640 million for the fourth quarter.
• Royal Caribbean beat analyst expectations for earnings per share but narrowly missed on revenue for the third quarter.
• Royal Caribbean CEO Jason Liberty stated the company is over 60% hedged for 2026 to insulate against rising fuel costs.
• Royal Caribbean spent about $347 million on fuel in the third quarter, or 6.2% of revenue, with a projection of $379 million for the fourth quarter.
• Royal Caribbean reported strong bookings with 2027 reservations up by a high-teens percentage.
• Norwegian Cruise Line Holdings reported third-quarter revenue of $2.9 billion & adjusted earnings per share of $1.12.
• Norwegian has hedged approximately 48% of its fuel consumption for 2026.
• Norwegian spent about $196 million on fuel in the third quarter, or 6.6% of revenue, with fuel consumption projected to rise to 255,000 metric tons in the fourth quarter.