Carnival Q3 2025 Earnings Report

Carnival EPS Results

• Actual EPS: $1.43
• Consensus EPS: $1.32
• Beat/Miss: Beat by +$0.11
• One Year Ago EPS: $1.27

Carnival Revenue Results

• Actual Revenue: $8.15 billion
• Expected Revenue: $8.09 billion
• Beat/Miss: Beat by +$62.08 million
• YoY Revenue Growth: +3.30%

Carnival Announcement Details

• Quarter: Q3 2025
• Date: 9/29/2025
• Time: Before Market Opens
• Conference Call Date: Monday, September 29, 2025
• Conference Call Time: 10:00AM ET

Carnival (NYSE:CCL) & plc is a leading global cruise operator, offering leisure voyages to millions of passengers each year. The company’s core business centers on planning and operating passenger cruise itineraries, which combine accommodations, dining, entertainment, and onboard amenities. Carnival’s fleet spans a range of vessel sizes and styles, from mass-market ships catering to families to boutique vessels focused on luxury experiences.

Through a portfolio of well-known brands, Carnival serves travelers across North America, Europe, Asia, Australia, and beyond. Its prominent cruise lines include Carnival Cruise Line in the Caribbean and North America; Princess Cruises, known for global itineraries; Holland America Line, which emphasizes premium service; Costa Cruises and AIDA Cruises, which focus on European and Asian markets; P&O Cruises in the United Kingdom and Australia; Cunard, with a legacy in luxury transatlantic voyages; and Seabourn, which specializes in ultra-luxury cruising. Each brand tailors its onboard offerings—such as themed dining venues, live performances, enrichment programs, and shore excursions—to distinct market segments.

Founded in 1972 by entrepreneur Ted Arison and headquartered in Miami, Florida, Carnival has grown through strategic brand acquisitions and fleet expansions. The company merged with P&O Princess Cruises in the early 2000s, solidifying its position as one of the world’s largest cruise operators. Carnival’s board is chaired by Micky Arison, and the organization is led by Chief Executive Officer Josh Weinstein, who took the helm in 2022. Under this leadership team, Carnival continues to invest in new ships, sustainability initiatives, and enhanced guest experiences to maintain its competitive edge in the cruise industry.

Carnival Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record Q3 performance with $2 billion net income, highest operating income and EBITDA in nearly 20 years on 2.5% lower capacity, with yields up 4.6% and costs below guidance enabling a third full-year guidance raise.
• Positive Sentiment: Balance sheet strength improved as net debt to EBITDA fell to 3.6x, convertible notes redemption underway, over $11 billion refinanced at favorable rates and on track toward sub-3x leverage and investment-grade ratings.
• Positive Sentiment: Forward booking momentum remains robust with nearly half of 2026 booked at higher prices and record bookings for 2027, supporting utilization gains despite only 0.8% capacity growth next year.
• Positive Sentiment: Destination developments such as Celebration Key and the upcoming Relax Away Half Moon Cay pier expansion are delivering strong guest feedback, media impressions and expected to host millions of visits, boosting itinerary premiums.
• Negative Sentiment: 2026 planning reflects headwinds including a ~0.5-point yield drag from Carnival Rewards, ~1 point of dry-dock cost increases and ~0.5 point of new destination operating expenses.

Presentation

[Operator]

Welcome to the Carnival Corporation & plc Q3 2025 Earnings Results Conference Call and webcast. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may be placed into the question queue at any time by pressing Star 1 on your telephone keypad, and we ask that you please ask one question, one follow-up. Up to return to the queue.

[Operator]

As a reminder, this conference is being recorded. It's now my pleasure to turn the. Call over to Beth Roberts. Please go ahead, Beth.

[Beth Roberts, SVP - IR at Carnival]

Thank you.

[Beth Roberts, SVP - IR at Carnival]

Good morning and welcome to our third quarter 2025 earnings conference call. I'm joined today by our CEO Josh Weinstein, our CFO David Bernstein, and our Chair Micky Arison. Before we begin, please note that some of our remarks on this call will be forward looking. Therefore, I will refer you to today's press release and our filings with the SEC for additional information on factors and risks that could cause actual results to differ from our expectations. We will be referencing certain non-GAAP financial measures including yields, cruise costs without fuel, EBITDA, net income, ROIC, and related statistics, all of which are on a net basis or adjusted as defined unless otherwise stated. A reconciliation to U.S. GAAP is included in our earnings press release and our investor presentation, which are available on our corporate website.

[Beth Roberts, SVP - IR at Carnival]

References to ticket prices, yields, and cruise costs without fuel are in constant currency. Unless we note otherwise, please visit our corporate website where our earnings press release and investor presentation can be found. With that, I'd like to turn the floor over. Call over to Josh.

[Josh Weinstein, CEO & Director at Carnival]

Thanks, Beth. This was a truly outstanding quarter with our business continuing to fire on all cylinders, outperforming and taking us to new heights once again. We delivered record revenues, yields, operating income, EBITDA, and customer deposits. This quarter we also achieved all-time high net income of $2 billion, surpassing our pre-pandemic benchmark by nearly 10%. This is a significant milestone with strong operational execution more than compensating for a nearly 600% increase in net interest expense compared to 2019 on a unit basis. Both operating income and EBITDA reached the highest levels in the better part of 20 years. These record results were delivered on 2.5% lower capacity as compared to the third quarter last year, yet another proof point on our successful delivery of same-ship yield improvement and its marked impact on the bottom line.

[Josh Weinstein, CEO & Director at Carnival]

In fact, yields increased 4.6%, all of which was achieved on a same-ship basis. Yields were also over a point better than guidance, again due to the strength in both close-in demand and onboard spending. Unit costs beat guidance by 1.5 points on continued cost discipline. The outperformance on revenue and costs alongside our refinancing efforts enabled us to take up our full-year guidance for the third time this year. These fantastic results and our team's consistently strong execution delivered ROIC of 13% for the trailing 12 months. This is the first time since 2007, nearly 20 years ago, that returns have reached the teens, another clear testament to the fundamental improvements in our operational performance. Our leverage is now down another notch to 3.6 times net debt to EBITDA, closing in on investment grade leverage metrics.

[Josh Weinstein, CEO & Director at Carnival]

This positions us even closer to using our strong and growing free cash flow to not only continue to responsibly delever but also to return capital to shareholders. In fact, just today we called the remaining converts and using $500 million of cash that David will touch upon to fuel this over the longer term, we believe we have much more opportunity to increase same-ship yields and further close the unbelievable value gap to land-based alternatives, pushing margins and returns even higher over time. In fact, booking trends have continued to improve since our last update, nicely outpacing capacity growth at higher prices and setting a record for bookings made on sailings. Two years out and with nearly half of 2026 already on the books at higher prices, we feel pretty good about next year.

[Josh Weinstein, CEO & Director at Carnival]

We just welcomed Star Princess into the fleet, sister to the highly successful Sun Princess, previously awarded Conde Nast's 2024 Mega Ship of the Year. This new ship class will now represent over 15% of the Princess fleet, a nice tailwind for the brand next year. Of course, we also have the full benefit of Celebration Key and the continued rollout of our destination development strategy as we progress through next year. Celebration Key is as phenomenal as we expected and open to rave reviews. I could not be prouder of both the Carnival Cruise Line and our destination development teams for not only getting this fantastic development done on time and on budget, but also delivering an amazing guest experience right from the start.

[Josh Weinstein, CEO & Director at Carnival]

Since our late July opening, nearly half a million Carnival Cruise Line guests have already passed through the sun-shaped arch in Paradise Plaza, soaking in the largest freshwater lagoon in the Caribbean, heading up to the top of the world's largest sandcastle, zipping down our racing water slides, or enjoying a cool cocktail at the world's largest swim-up bar. While early guest feedback from Celebration Key has been fantastic, we are paying close attention to our guest suggestions and will continue to fine-tune operations and strive for continuous improvement to make the experience for our guests even better. As you may have seen, the media coverage for our new destination has been overwhelmingly positive. Even before opening, we were amongst the most searched cruise destinations and we have clearly built on that success. Our marketing teams have been working around the clock to make Celebration Key a household name.

[Josh Weinstein, CEO & Director at Carnival]

The grand opening alone generated almost $1.5 billion media impressions and we've been activating a ton of live footage from the destination on social media and the like ever since. Celebration Key is sure to increase consideration amongst new to cruise while at the same time giving our repeat guests yet another reason to come back soon. In fact, we expect word of mouth will continue to build with 2.8 million guests visiting Celebration Key next year on 20 Carnival ships leaving from 12 different home ports. This adds up to high utilization rates with a ship in port virtually every day of the year and at least two ships 85% of the time. To that end, our pier extension is in progress and by next fall will accommodate up to four ships at a time, allowing us to maximize the utilization of our existing land capacity.

[Josh Weinstein, CEO & Director at Carnival]

Because I know I will get asked right off the bat, I'll just say in the early innings. The returns of our Celebration Key investment are indeed meeting expectations, all of which were built into our forecast and which we have exceeded. Switching gears to another of our Caribbean gems, mid next year we will also open the pier expansion at Relax Away Half Moon Cay, our pristine Caribbean oasis. This spectacular tropical paradise, already ranked amongst the best private islands in the Caribbean, invites our guests to relax and enjoy our white sand crescent beach and crystal clear turquoise waters. Once both piers are operating, one out of every five Carnival Cruise Line Caribbean itineraries will go to these perfectly paired destinations, providing guests with both the ultimate and the idyllic beach days all in one vacation.

[Josh Weinstein, CEO & Director at Carnival]

Overall, the vast majority of our Caribbean guests will enjoy one of our seven purpose-built Caribbean gems, with half of those guests visiting more than one. As beaches are the number one destination for vacationing Americans, our miles upon miles of some of the most beautiful beaches in the world are the perfect fix. By making targeted incremental investments and stepping up our marketing efforts to support this broad destination portfolio, we believe we have further opportunity to monetize these strategic assets by using them to drive consumer consistency and conversion, taking share from land-based alternatives. Altogether, our exclusive Caribbean destinations will capture over 8 million guest visits next year, almost equal to the rest of the cruise industry combined. Let's not forget our strategic portfolio of brands and assets stretch far beyond the Caribbean.

[Josh Weinstein, CEO & Director at Carnival]

We have by far the most assets in and capacity dedicated to Alaska, which has been incredibly strong this year, as well as the biggest reach into Europe, which has likewise been performing incredibly well for us. Our portfolio of brands and land-based assets are clearly the largest and most diverse in the industry and getting even better every day. While getting to 13% ROIC so quickly is a significant achievement, it's certainly not a ceiling. We have been disciplined in deploying capital towards our highest returning brands with seven ships on order for Carnival and AIDA combined. Keep in mind we have many other brands that are quickly progressing up the internal leaderboard. This year the overwhelming majority of capacity will be at brands delivering double digit returns. Yes, this is already well above our cost of capital, but our brands have much more room to significantly improve.

[Josh Weinstein, CEO & Director at Carnival]

In fact, several of our brands are not yet back to either 2019 levels or the record highs they've reached in the past two decades. We know the latent potential they have. Even the two stars currently atop that internal leaderboard, AIDA and Carnival Cruise Line, have roadmaps to progress. AIDA will continue to benefit from its hugely successful AIDA Evolutions program, which, coupled with new ship orders, will modernize its current fleet. Next month AIDA Luna will enter dry dock, the second of seven ships to receive this proven upgrade. Carnival will also be launching a fantastic new marketing campaign just ahead of wave season, an enhanced loyalty program mid next year, and of course stands to disproportionately benefit from the step up we're making in our Caribbean destinations given their large year round Caribbean presence.

[Josh Weinstein, CEO & Director at Carnival]

While it is incredibly rewarding to see the great progress our teams have made in such a short amount of time, I am equally excited about the opportunities ahead as we create shareholder value through continued progress on profitability and returns. At the same time, further balance sheet improvement should continue. The transfer of enterprise value from bondholders back to shareholders. I would like to again thank our team members ship and shore for the dedication and execution which enabled us to deliver happiness to nearly 4 million guests this past quarter by providing them with extraordinary cruise vacations while honoring the integrity of every ocean we sail, place we visit, and life we touch. Special thanks to our travel agent partners, destination partners, investors, and of course our loyal guests for their continuing support. With that, I'll turn the call over to David.

[David Bernstein, CFO & Chief Accounting Officer at Carnival]

Thank you, Josh. I'll start today with a summary of our 2025 third quarter results. Next, I will provide some color on our improved full year September guidance as well as some key insights on our fourth quarter. I will then provide you with a few things to consider for 2026 and finish up with an update on our efforts to rebuild our financial fortress through refinancing and deleveraging. Turning to the summary of our third quarter results, net income exceeded June guidance by $182 million or $0.13 per share as we outperformed once again and achieved our highest ever net income for the quarter. The outperformance was mainly driven by three things. First, favorability in revenue worth $0.04 per share as yields came in up 4.6% compared to the prior year, and that was on top of last year's robust increase of nearly 9%.

[David Bernstein, CFO & Chief Accounting Officer at Carnival]

This was 1.1 points better than June guidance, driven by continued strong close-in demand resulting in higher ticket prices and a continuation of strong onboard spending. The increase in yields was driven by improvements on both sides of the Atlantic. Second, cruise costs without fuel per available lower berth day, or ALBD, were up 5.5% compared to the prior year. This was 1.5 points better than June guidance and was worth $0.03 per share. The favorability was driven by cost saving initiatives which we firmed up during the quarter. These will flow through to our full year September guidance. Third, favorability in fuel consumption and fuel mix was worth $0.02 per share as our efforts and investments to continuously improve our energy efficiency of our operations, leveraging technology and best practices, paid off once again.

[David Bernstein, CFO & Chief Accounting Officer at Carnival]

The balance of the favorability, $0.04 per share, was a combination of improved depreciation expense and better fuel prices as well as favorable interest income and expense. Customer deposits at the end of the quarter were at a record for the third quarter at $7.1 billion, up over $300 million versus the prior year, driven by higher ticket pricing and increased sales of pre-cruise onboard revenue items. Next, I will provide some color on our improved full year September guidance. Our net income guidance of approximately $2.9 billion or $2.14 per share is a $235 million or $0.17 per share improvement over our June guidance. The full year improvement of $0.17 per share was driven by three things. First, flowing the $0.13 per share third quarter favorability through to the full year.

[David Bernstein, CFO & Chief Accounting Officer at Carnival]

Second, an additional $0.03 per share fourth quarter interest expense favorability as the actions that impacted third quarter interest expense are also creating favorability in the fourth quarter, and third, $0.01 per share from improved fourth quarter fuel prices. Yield guidance for the fourth quarter remained the same as the prior guidance. Cruise costs without fuel for the fourth quarter are flat with June guidance. However, our cruise costs for the fourth quarter did benefit from some of this cost savings we solidified during the third quarter but were offset by higher variable compensation driven by improved operating results. All of this results in over $7 billion of EBITDA, a 15% improvement over 2024, virtually all of which is being driven by same-ship yield improvement as our capacity is only up approximately 1% year over year. Now a few things for you to consider.

[David Bernstein, CFO & Chief Accounting Officer at Carnival]

For 2026, we are forecasting a capacity increase of just 0.8% compared to 2025. As Josh indicated, booking trends have continued to improve since our last update and we now have nearly half of 2026 on the books at higher prices. As we highlighted on our last call, Carnival Rewards, Carnival Cruise Line's new loyalty program, will start in June 2026, impacting results for the second half of the year. As a reminder, while the program will be cash flow positive from day one, it does impact our yields in 2026. The year over year impact is expected to be about half a point. It should also be noted that we do not anticipate any meaningful impact on costs from the new loyalty program when compared to the current program.

[David Bernstein, CFO & Chief Accounting Officer at Carnival]

Our game changing destination Celebration Key, which opened in July 2025, has been delivering an amazing guest experience with a full year of operation in 2026 along with the mid-2026 opening of our new pier at Relax Away Half Moon Cay. We expect that the operating expenses for these destinations in 2026 will impact our overall year over year cost comparisons by about half a point. While it is still early in our planning process, we are expecting to do more work during our 2026 dry docks. The additional expenses will impact our overall year over year assumptions by up to 1 percentage point. Now I'll finish up with an update of our refinancing and deleveraging efforts. During the quarter we continued our refinancing strategy to reduce interest expense and manage our maturity towers while also reducing secured debt by nearly $2.5 billion, leaving just $3.1 billion remaining.

[David Bernstein, CFO & Chief Accounting Officer at Carnival]

We issued two senior unsecured notes and completed one bank loan. The combined proceeds of $4.6 billion from these financings, together with cash on hand, were used to repay over $5 billion of debt. Continuing our deleveraging efforts, we have been working aggressively all year long to delever as well as to simplify and strengthen our capital structure, rebuilding our investment grade balance sheet. Since January, we refinanced over $11 billion of debt at favorable rates and prepaid another $1 billion, accelerating our path to investment grade. We are pleased that our efforts have been recognized with the recent Moody's credit rating upgrade and the maintenance of their positive outlook. Based on our September guidance, we are expecting to end the year with a marked improvement in our net debt to EBITDA ratio, going from 4.3 times at the end of 2024 to 3.6 times at the end of 2025.

[David Bernstein, CFO & Chief Accounting Officer at Carnival]

Looking forward, we are targeting a net debt to EBITDA ratio of under three times. Given the progress we have made and while still a top priority, it is great to be able to say that debt reduction no longer has to be priority 1, 2, and 3. We can soon pivot to diverting some of that effort to returning capital to shareholders as well. In fact, just today we provided a redemption notice for all of our outstanding convertible notes, which if converted, will be settled using a combination of $500 million of cash and equity as we continue to rebuild our financial fortress. The convert redemption will be settled on December 5, just five days after year end, and will result in a $600 million improvement in net debt pro forma for the convert redemption.

[David Bernstein, CFO & Chief Accounting Officer at Carnival]

Our net debt to EBITDA ratio is forecasted to be 3.5 times very early in our fiscal year 2026. This transaction will also result in a lower share count used in the calculation of a fully diluted EPS for 2026 by approximately 13 million shares at a $30 share price. As we near completion of our current refinancing strategy and with no ship deliveries scheduled during 2026 and just one delivery per year for several years thereafter, looking forward, we expect our leverage metrics to continue to improve as our EBITDA continues to grow and our debt levels continue to shrink. With strong investment grade metrics in our future, an upgrade to investment grade should not be far behind, which will result in security release on our remaining secured debt.

[David Bernstein, CFO & Chief Accounting Officer at Carnival]

All of this continues to move us further down the road, rebuilding our financial fortress while continuing the process of transferring value from debt holders back to shareholders now. Operator, let's open the call for questions. Thank you.

[Operator]

I want to be conducting a question and answer session. If you'd like to be placed into the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. We ask you please ask one question and one follow-up, then return to the queue and hit star 1 to be placed into the question queue. Our first question today is coming from Robin Farley from UBS. Your line is now live.

[Robin Farley, MD & Leisure Analyst at UBS Group]

Great.

[Robin Farley, MD & Leisure Analyst at UBS Group]

Thank you very much. Wanted to clarify, obviously very positive forward booking commentary. When you talk about historic price levels, does that mean sort of in line with, or is that actually suggesting prices above? I also thought it was interesting, the comment in the release said something like, now both Europe and North American sourcing brands are at that historic price. Is the implication there that maybe a quarter ago that North American price on the books wasn't at that record level? Like on a combined basis it was, but now North America better. Just wanted to get that clarification. Thanks.

[Josh Weinstein, CEO & Director at Carnival]

Hey, good morning, Robin. What we intended to convey is that both North America and Europe are at historical record high levels in pricing, which is great to see. As far as looking back a quarter ago, I didn't. Nothing dramatic happened along the way. It might be that we just wanted to give more information rather than less. Things are looking great on both sides of the Atlantic across the branch.

[Robin Farley, MD & Leisure Analyst at UBS Group]

Thank you. Just as for the follow up, anything you can quantify with Celebration Key, when you look at the impact on forward bookings, where you could sort of say it's causing an, you know, X% premium in ticket price for ships that are calling on that island versus other ships that aren't calling on it, or any way to just sort of help us think about how that's driving your yields. Thank you.

[Josh Weinstein, CEO & Director at Carnival]

Yep.

[Josh Weinstein, CEO & Director at Carnival]

We're ecstatic with Celebration Key and the impact it's already starting to have on the business. You know, it's kind of hard because it's such a massive set of business. It's actually just shifted and is now inclusive of Celebration Key. It's certainly getting the returns as anticipated when we came up with it a long time ago. As we've been getting closer to fruition, a nice chunk of that is obviously the premium we're getting on the ticket side for any itinerary that's going to Celebration Key. It's still six weeks, actually I guess it's two months, two months into operations, which is, you know, we hit the ground running and early days on the future potential that it's got. It's tracking exactly as we anticipated.

[Josh Weinstein, CEO & Director at Carnival]

As I said in my prepared notes, I knew we'd get this question and the best I'm going to tell you right now is it's certainly meeting expectations and we couldn't be happier.

[Robin Farley, MD & Leisure Analyst at UBS Group]

Great. Thanks very much.

[Josh Weinstein, CEO & Director at Carnival]

Thank you.

[Operator]

Thank you.

[Operator]

Next question today is coming from Brandt Montour from Barclays. Your line is now live.

[Brandt Montour, Director - Equity Research at Barclays]

Great. Thanks for taking my question. I wanted to ask about the. Consumer, your consumer, Josh.

[Brandt Montour, Director - Equity Research at Barclays]

You know, we see lower end consumers sort of fatigued and hurting in several other travel verticals. It doesn't seem like you're seeing it.

[Brandt Montour, Director - Equity Research at Barclays]

Maybe that's why you're not seeing it, because of the value proposition like you talked about.

[Brandt Montour, Director - Equity Research at Barclays]

Are you seeing any sort of behavioral shifts within your loyalty set or people?

[Brandt Montour, Director - Equity Research at Barclays]

May be trading down between shore excursions or sort of any type of. Behavioral changes from your core consumer here?

[Josh Weinstein, CEO & Director at Carnival]

You say the same thing quarter after quarter, which is we've got an amazing business with amazing brands that are doing a phenomenal job of improving on a daily basis. I'm real proud of all of them, regardless of whether that's contemporary, premium, or luxury. I'd say, if you look back, we said in the third quarter we had a pretty great booking 13-week period. We booked more year over year than we had in the third quarter of 2024. In fact, Carnival, for example, booked 8% more in 3Q25 than it did in 3Q24. We feel like we're pushing ahead very well, and as you know and most others know, we don't really have capacity growth.

[Josh Weinstein, CEO & Director at Carnival]

When you think about 2026 with no new ships and then one thereafter for the next couple of years, that's all going to increase demand on a very restrained supply side for our capacity. It's setting us up very well.

[Brandt Montour, Director - Equity Research at Barclays]

Okay, great, that's helpful. Just to follow up on.

[Brandt Montour, Director - Equity Research at Barclays]

The bookings commentary, you know, you're half booked for 2026, sounds like from your tone that that's a place where you want to be. Just thinking about the ebbs and.

[Brandt Montour, Director - Equity Research at Barclays]

Flows of that booking strategy over the last few months. Bookings were choppy back in April.

[Brandt Montour, Director - Equity Research at Barclays]

March and you kind of came back from that. When you look forward and think about how your strategy might change in 2026, do you feel like you want to go in kind of similar to where you were last year, or was there learnings from last year? Where that might not be perfectly optimal?

[Josh Weinstein, CEO & Director at Carnival]

Yeah, that's a great question. I mean, to some extent we need a little bit of a crystal ball, and hindsight's great, but knowing where we were positioned last year as we got towards the end of the year and then what we absorbed and still came out in a pretty great way as we've been talking about over the last few quarters, it is giving us some thought about making sure we're optimizing in light of the volatility that we had last year. There's always something, but it's not an election cycle year, which was the case last year at this time, knock on wood. I think the volatility has certainly been reduced pretty dramatically now. I'm knocking out everybody around this table. It's knocking on wood right now.

[Josh Weinstein, CEO & Director at Carnival]

Knowing that that happened last year and it shouldn't be recreated in a similar way, it does give us some confidence in how we're approaching this and what we were able to do despite the volatility this past year. Excellent. Thanks, everyone. Thank you. Thank you.

[Operator]

Next question is coming from Steve Wieczynski. From Stifel, your line is now live.

[Steven Wieczynski, Managing Director at Stifel Financial Corp]

Hey guys, good morning. Congrats on the strong third quarter and outlook. Josh, want to ask a little bit more about how you're thinking about 2026 versus maybe three months ago. I fully understand you guys aren't in a position to provide guidance yet for next year, but based on your qualitative commentary, it seems like booking trends have actually accelerated, I would say, versus the fear that might be out there in the marketplace that demand is decelerating. Just wondering from a bigger picture perspective, maybe how you're feeling about next year versus back in June. Also, in your slide deck, you mentioned that 2027 bookings are off to, in your words, unprecedented start. Maybe if you could help us think a little more, maybe what that wording means there.

[Josh Weinstein, CEO & Director at Carnival]

Thanks. Yeah, sure. Just because I have a bad memory, let me start with that one. For 2027, what I meant is literally we've never had more bookings in a 13-week window over the third quarter. This is a record for us for 2027, and it was exactly as it was intended to be, unprecedented. With respect to 2026, we feel good about 2026. We obviously are not giving guidance yet. We're not really talking about 2026. We're just trying to give a little bit of an understanding about where we're sitting. I think all the things that we've talked about for quarter over quarter around our brands really trying to just own their space in the vacation market and doing their commercial execution on an improved basis is paying off.

[Steven Wieczynski, Managing Director at Stifel Financial Corp]

Okay, gotcha. Thanks for that. Josh, here's another 2026 question.

[Josh Weinstein, CEO & Director at Carnival]

Thank you for warning me in his answer.

[Steven Wieczynski, Managing Director at Stifel Financial Corp]

Exactly.

[Steven Wieczynski, Managing Director at Stifel Financial Corp]

David did mention, look, there are headwinds out there as you start next year. 50 basis point impact on yields for the Carnival Rewards program, 100 basis points for the dry docks, and 50 basis points, I think he said, for the build out of the rest of the island. You know, basically you guys have a 200 basis point headwind as we start 2026. I guess the question, Josh, is.

[Steven Wieczynski, Managing Director at Stifel Financial Corp]

there anything you didn't mention that you would like to add?

[Steven Wieczynski, Managing Director at Stifel Financial Corp]

Maybe kind of behind the scenes that you guys are working on too. Help kind of mitigate some of those headwinds?

[Josh Weinstein, CEO & Director at Carnival]

Yeah, absolutely. I mean, look, let me give you some pros about 2026. As you said, we're about 50% booked. That's the longest booking curve we've got on record. We just had a better Q3 booking period than we did last year. As I said, there was no election cycle. We get the full year benefit of Celebration Key, half a year of Relax Away Half Moon Cay. OBR strength has continued and we expect that to continue as we look forward. We have no capacity growth, very, very little, I should say, which bodes very well. The strength of our diversified portfolio I think has really been playing out over the last couple of years. I couldn't be more complementary of the work that is happening all over our eight brands to really drive the business forward.

[Josh Weinstein, CEO & Director at Carnival]

We get a benefit on the loyalty side with cash flow, as you know. Putting that aside, we're always trying to figure out how do we become more efficient in what we do and how we do it. As a matter of fact, David and I are going, starting next week, to be meeting with each of our brands to go through the 2026 operating plan and really understand how we can up our game to mitigate cost headwinds that happen every year and we'll try to mitigate as best as we can.

[Steven Wieczynski, Managing Director at Stifel Financial Corp]

Okay, great color. Thanks, Josh. Appreciate it.

[Josh Weinstein, CEO & Director at Carnival]

Thanks, Steve.

[Operator]

Thank you. Next question is coming from James Hardiman from Citi. Your line is now live.

[James Hardiman, Director - Leisure and Travel Analyst at Citi]

Hey, good morning.

[James Hardiman, Director - Leisure and Travel Analyst at Citi]

Thanks for taking my call. Maybe it's sort of a nitpick question, maybe it's a dumb question, but as I think about your forward booking commentary, I think coming out of Q2, you were saying you were in line with respect to load factors. I think in the press release, you spoke to sort of an acceleration in bookings year over year since May, which I would think would mean that you're now ahead on bookings, but I think you're still in line. Maybe it's just too close to call out in terms of the overall numbers. I just wanted to clarify on that point, James.

[David Bernstein, CFO & Chief Accounting Officer at Carnival]

I think you might, I'm trying to recall back from the second quarter. I think the second quarter we were talking about 2025 and the remainder of the year, and this time commentary was on 2026. Maybe you can double check the comments.

[James Hardiman, Director - Leisure and Travel Analyst at Citi]

Okay, I'll definitely do that. As I think about the quarter and really the last couple of quarters, the organic growth has been pretty stunning here. Right. Particularly you don't have any new ships coming online and I think you've had the best yields in the industry, at least the ocean side of the industry. Maybe connect the dots between now some of the programs that you've been talking about, Josh. Right.

[James Hardiman, Director - Leisure and Travel Analyst at Citi]

The AIDA Evolutions program and some of the things going on with Carnival, new marketing, the step up in Caribbean destinations, maybe connect those dots with how that's translating into pricing, and then as we think about moving forward, other low hanging fruit and how we should think about pricing moving forward in the context of sort of the brand level initiatives that are underway. Thanks.

[Josh Weinstein, CEO & Director at Carnival]

Yeah, look, yeah.

[Josh Weinstein, CEO & Director at Carnival]

Where to start, I mean, when you think about something like the AIDA Evolutions program, you know, that's one 2,000 berth ship that's had four or five months of operations, you know, coming out of it, which is going great and it is knocking the COVID off the ball and Felix Acorn should take a bow for everything that he's done with AIDA. In the grand scheme of things, that alone is fairly small. It will get better and better as we get more and more ships through that program over the next several years. I expect actually some of our other brands to be embarking on similar exercises and initiatives to really up the game of their ships that might be 15 years old or so, but they're going to be with us for well over 15 years as far as I'm concerned, more.

[Josh Weinstein, CEO & Director at Carnival]

There's a lot of opportunity for that to run. Celebration Key, you know, we talked about, I think, quite a lot. Couldn't be more proud of the team there for delivering an excellent experience and just giving us tremendous wind at our backs as we look forward into 2026 and beyond. This is fairly broad based. Most of our brands have not had growth for a long time and they are improving their yields year over year, not insignificantly. It is because they can actually execute at a higher level, which is what they've been doing. That will continue. We've made investment on the advertising side. We've made investments into our revenue management systems. We've made investments into our people to make sure we've got the right capabilities and the right leaders doing the right things. I think we've been saying this for a long time.

[Josh Weinstein, CEO & Director at Carnival]

When we came out with Sea Change, we talked about what we needed to do and that was back in June of 2020. The reality is it's just exceeded my expectations on the pace of that execution improvement. The good news is there's a lot more in store.

[James Hardiman, Director - Leisure and Travel Analyst at Citi]

Got it. That's really helpful. Thanks, Josh.

[Operator]

Thank you.

[Operator]

Next question is from Ben Chaiken from Mizuho Securities. Your line is now live.

[Benjamin Chaiken, Equity Analyst at Mizuho Financial Group, Inc.]

Hey, good morning. First on capital return, how are you thinking about timing, leverage, bogeys, and is there any preference between dividends or buybacks, and then kind of like separately, longer term. How do you think about capital return?

[Benjamin Chaiken, Equity Analyst at Mizuho Financial Group, Inc.]

As a percentage of your free cash flow? If that's the way you kind of bucket it. Thanks. One follow up.

[Josh Weinstein, CEO & Director at Carnival]

Yeah.

[Josh Weinstein, CEO & Director at Carnival]

Hey, Ben. You heard what David said in his prepared remarks. I mean, like I was just saying, the acceleration is across the board and that's certainly inclusive then in our ability to start returning cash to shareholders as we get to that 3.5 times leverage metric. We'll be awful close to that at the end of our fiscal year. As David noted, with what we're doing on the convert side, it should pretty much position us very well in early 2026 to get there. I have been fairly, I think fairly clear when I have conversations with anybody who asks about this, that number one, I want to be clear. It's a board conversation and decision which has not happened yet. Two, dividends are very important to us. We see the benefit of establishing, reestablishing our dividend program.

[Josh Weinstein, CEO & Director at Carnival]

I would expect outside of what we're doing on the converts, which is a little bit of a juice buyback because of what we're doing with our cash, it's really going to be reinstating the dividend. It doesn't mean that it's to the exclusion of buybacks over time. We have done both before very effectively and we can do that again in the future. It is a little premature for us to try to telegraph what, when, and exactly how we're going to do that and any type of metrics that we're going to be using to moderate the amount of cash that's going out the door. What I can say in the good news side of the ledger is, again, we got no capacity growth next year.

[Josh Weinstein, CEO & Director at Carnival]

We don't have any new ships coming and we have one a year thereafter for the next several years, which should allow us to take a lot of free cash flow and return it to shareholders in the form of dividends and buybacks over time. Once we've fully turned that corner and can start talking about it, we'll try to give people more of a roadmap about how we're thinking about it. I'd say it's close. It is close. I look forward to be able to talk about it having happened.

[Benjamin Chaiken, Equity Analyst at Mizuho Financial Group, Inc.]

Understood.

[Benjamin Chaiken, Equity Analyst at Mizuho Financial Group, Inc.]

Near term, I think previously there was a pretty healthy acceleration kind of implied between 3Q and 4Q yields. Obviously, 3Q came in better. Maybe talk about what you're seeing with close in demand and how you're thinking about the remainder of the year. Thanks.

[Josh Weinstein, CEO & Director at Carnival]

Yeah, look, Q3 ended on a strong note, and that was, as David said in his notes, it was a combination of close-in demand being stronger than we had forecast, and continued strength in onboard spending. Q4, you saw, we've been fairly consistent since the beginning of the year, actually, about how we were looking at the second half of the year. Given the volatility impact that we had in the spring, it did limit our upside, as I've said before, and we managed to get some out of our third quarter. As always, we're going to work as hard as we can to outperform every quarter, and that includes the fourth. I think I said it last time, you know, whereas we were outperforming in the first half of the year by 2 to 250 basis points on the yield side.

[Josh Weinstein, CEO & Director at Carnival]

That was going to be hard in the second half of the year, and you saw what we were able to do on the third quarter. Ben, you still there?

[Benjamin Chaiken, Equity Analyst at Mizuho Financial Group, Inc.]

Thank you.

[Operator]

Our next question is coming from Matthew Boss from JPMorgan. Your line is now live.

[Matt Boss, Equity Research Analyst at JP Morgan]

Thanks. Congrats on another nice quarter.

[Josh Weinstein, CEO & Director at Carnival]

Thanks, Matt.

[Matt Boss, Equity Research Analyst at JP Morgan]

Josh, could you elaborate on the ample opportunity remaining with net yields, margins, and returns that you cited in the release? I don't know, maybe there's a way to think about what inning you see the overall story in today, or just how would you rank the continued areas. For ample improvement that you noted.

[Josh Weinstein, CEO & Director at Carnival]

You know, having just got to 13% on the return side, I don't see why that cannot make significant improvement on a longer term basis from there. I never looked at 13% as an ending point, never looked at 12% as an ending point, which was our sea change targets, and now we're at 13%. We are planning in our fiscal second quarter, hopefully early on in that second quarter, to be able to give longer term targets, which will probably help give you some clarity around how we're thinking about things. From a margin perspective, from an improvement in yield perspective, I think you should expect us to have a continued track record of improvement over time. That's what we've shown and we expect that to continue. David, helpful color on costs for next year. Are there any constraints as we think. About delivering on your algorithm for costs. To grow below yields, as we think. About puts and takes for 2026 and. Also, as we think multi year?

[David Bernstein, CFO & Chief Accounting Officer at Carnival]

As Josh indicated, we're going to be looking at targets early next year and we do expect to see improving returns and improving margins. That would mean that in the long term, the yields would grow faster than costs over time and any one given year, obviously, that's a difficult metric, but there are things that we can do in difficult circumstances and we will work hard. We have lots of savings opportunities to leverage our scale. As we talked about, we saw things in the third quarter, hundreds of items leveraging our scale across various operating areas and we expect to see that continue into 2026. Some of that is what Josh was talking about before as offsets to the cost increases that I mentioned in my prepared remarks.

[Matt Boss, Equity Research Analyst at JP Morgan]

That's great color. Best of luck.

[Josh Weinstein, CEO & Director at Carnival]

I just add for everybody, the lack of capacity I think is part of our strategy. It also basically means for every dollar that we spend, that's a dollar increase on a unit basis. I'm not shying away from that. That is what it is. We're going to work hard to reduce our costs wherever we see efficiency and we can leverage our scale more. It's a very different environment on the cost side than when you're living with a 6%, 7%, 8% year over year capacity increase, which covers up quite a lot of cost spending underneath the surface. That's on us. We're going to try to perform as well as we can in all circumstances. That's just a reality of a very low capacity environment.

[Operator]

Thank you.

[Operator]

Next question today is coming from Conor Cunningham from Melius Research. Your line is now live.

[Conor Cunningham, Director – Travel & Transports Research at Melius Research LLC]

Hi, everyone. Thank you.

[Conor Cunningham, Director – Travel & Transports Research at Melius Research LLC]

In the prepared remarks, you talked a little bit about the laggard brands moving up the ranks. I'm just hoping you could maybe drill down on that a little bit and talk about what's actually improving there. In the past you've just talked about rationalizing brands and whatnot. I would imagine that there's some sort of investment needed to kind of get those brands back to the 2019 and beyond level. If you could just talk a little about the laggards, that would be helpful. Thank you.

[Josh Weinstein, CEO & Director at Carnival]

Yeah, you know, it is interesting and I'm not going to open the kimono and just tell you everything that you probably want to know, but I would say that, for example, some of the brands that are lagging 2019, well, they were super high up the leaderboard in 2019 and they're already at double digit.

[Josh Weinstein, CEO & Director at Carnival]

They're just not to where they were in 2019 because they were really clicking on all cylinders and they've already got, they're showing improvement, good improvement. I know that there's a way to go. Likewise, there's a couple of brands that have already improved versus 2019, but the 2019 starting point wasn't anything to be raving about. I know that they've gone to even higher heights in the past 20 years and we see a path to be able to help them get there. It is a bit of a mix underneath. When we talk about significant investment though, in order to be able to help brands really get up to the top of that leaderboard, I don't think there's actually anything in particular that is a glaring hole for any of these brands that we've got to fill.

[Josh Weinstein, CEO & Director at Carnival]

We have rationalized, we have right sized many of our brands that needed right sizing and the progress is good and we'll continue to support the brands that need a little bit more help than others to keep pushing up the ranks. I'm ecstatic that, as amazingly as Carnival and AIDA have been doing over the last couple of years, they got to look over their shoulder because there's some that are coming on fast.

[Conor Cunningham, Director – Travel & Transports Research at Melius Research LLC]

Okay, that's helpful. I know that you got.

[Conor Cunningham, Director – Travel & Transports Research at Melius Research LLC]

Asked about 2026, maybe I can ask about 2027. On the dry dock commentary, it seems like there's been a couple issues with that. I mean, you've had a headwind for several years now. Right.

[Conor Cunningham, Director – Travel & Transports Research at Melius Research LLC]

In 2027, I would think that we'd actually start to, like, what holds that back? Is your fleet back to, if you just talk about the dry dock opportunity and come 2027, does it actually start to bend down again? That would be helpful. Thank you.

[David Bernstein, CFO & Chief Accounting Officer at Carnival]

Yeah.

[David Bernstein, CFO & Chief Accounting Officer at Carnival]

In 2027, at the moment, you know, these things move around constantly as we plan things, but at the moment, the plan is for less dry dock days in 2027 than in 2026. I caution you that, you know, things can change as they do all the time. There may be some opportunity there on the flip side, but it's very premature. Yeah, okay, thank you.

[Operator]

Thank you.

[Operator]

Next question is coming from Elizabeth Dove from Goldman Sachs. Your line is now live.

[Lizzie Dove, VP - Equity Research at Goldman Sachs]

Hi there. Thanks for taking the question. Congrats on another great quarter. Obviously, really strong same-ship yields. I'm curious, as you go forward, it feels like you're having really strong returns from things like the AIDA Evolutions program. How do you evaluate when you're thinking about building new ships versus maybe expanding that type of retrofitting program to the other brands and the relative returns there?

[Josh Weinstein, CEO & Director at Carnival]

Yep.

[Josh Weinstein, CEO & Director at Carnival]

I'm not going to tell you which one, but I sat through a session last week with another one of our brands to be doing something similar vein to how AIDA is thinking about their midlife shift refurbishment program. We are actively in the middle of that. Most of our brands have no new builds on order, so making sure that we're maximizing the assets that we've got and investing in them when the returns make sense is part of how we're thinking about the world going forward. It's one of the reasons why our dry dock costs are higher than they have been in the past, but they're giving us the return. We do look at it. I would look at it very, very similar to a new build. Right.

[Josh Weinstein, CEO & Director at Carnival]

What's the incremental amount that they want to spend, incremental to what would be normal just to run the ships in the normal course, and what are we going to get for it? AIDA has shown us a template for getting significantly outsized returns on that type of investment. I would say, you know, stay tuned, there'll be more to come in this space.

[Lizzie Dove, VP - Equity Research at Goldman Sachs]

Got it. That's helpful. Shifting gears, in Galveston, I think you're still the leading cruise line there in terms of volumes, number of ships there, etc. You do have one of your peers mainly, I suppose, trying to get more active in that space over the next few years. How does that impact or does it impact how you think of your go to market there? There's been a lot of expansion on islands in the eastern Caribbean, which I know you can reach from Galveston. Whether it's more developments with the western Caribbean or Mexico, Puerto Maya that you have, Isla Tropical, how do you just think about keeping that competitive edge in Galveston?

[Josh Weinstein, CEO & Director at Carnival]

Yeah, you know, Galveston has been a tremendous market for us for decades and we expect that to continue. We've got some fairly loyal guest faces all throughout Texas, which is always appreciated. It's certainly more crowded. I mean, we find that everywhere. People see successful operations and they want to emulate, to do the same when they see it from others. We're going to try to keep upping our game and the guest experience that we have, the ships that we put there and where we can take them. We're always looking at opportunities, Lizzy, for how to diversify the offerings for our guests and we'll continue to do that. Every market is important, every home port is important. One of the things that we get with our scale and our size and that diverse portfolio is a lot of things are clicking well for us.

[Josh Weinstein, CEO & Director at Carnival]

The Caribbean is about a third of our business. It's an important third. Europe is, I think, getting pretty damn close to 30% of our business. Alaska is inching towards double digit and primarily over the third quarter. We really do have a diversified portfolio that we've been, I would say over my tenure, it didn't start in a lot of folks' minds as a positive. It was a drag because North America started out the gate so quickly when we came out of our pause. I can tell you that diversification and the strength of that portfolio all over the world is a huge benefit for us and we continue to enjoy the results.

[Lizzie Dove, VP - Equity Research at Goldman Sachs]

Great. Thank you.

[Operator]

Thank you. Next question is coming from David Katz from Jefferies. Your line is now live.

[David Katz, Managing Director at Jefferies]

Morning everybody. Thanks for taking my question. David, in some of your earlier remarks about capital allocation, there was some reference to, you know, a bit of a transition to getting to return capital. Should we think about leverage having to get inside of that three times before there'd be more substantial recurring, whatever adjective we'd like to put on it? How are we thinking about the progression from here before we'd see maybe a buyback and other forms? Thanks.

[David Bernstein, CFO & Chief Accounting Officer at Carnival]

I think it's wonderful we're having this conversation. It is that we're in with a strong, you know, with a strong balance sheet, getting stronger every day. As Josh said, it is a board decision and we do have to have some conversations with the board. We are looking at, you know, given our circumstances, as I said, we can begin to think about returning capital to shareholders and we will do that. As we go along throughout 2026, we will make decisions as to how much, when, where and how. It's a little premature to make any statements relative to the size or magnitude of anything in terms of that right now.

[Josh Weinstein, CEO & Director at Carnival]

Yeah, one thing, David, I think you misspoke or you misread the release in that we're not looking to get to three times before we start doing that shareholder return of capital. It's as we have our line of sight on three and a half times is where we can start pivoting and doing more. We don't. Even though our long term target is under three, once we get to that three and a half times, we can walk and chew gum and we can do both.

[David Katz, Managing Director at Jefferies]

Understood. That's what I intended. Just to follow up, thinking about other potential large capital projects or investments that may come our way.

[David Katz, Managing Director at Jefferies]

Is there any, I know this is not always the best place for hypotheticals, but just thinking about what might get in the way or defer any of that leverage come down, anything out there we should just consider or be aware of?

[Josh Weinstein, CEO & Director at Carnival]

No, the only thing I'd say is, as we've been talking about a little bit on this call, is part of what we do is invest in ourselves on the capital side. If we see opportunities for midlife ship, significant refurbishments like we're doing with AIDA, that will certainly come into effect. There's the opportunity for phase two of Celebration Key, as we've talked about. None of that is even close actually to the price of a new build.

[Josh Weinstein, CEO & Director at Carnival]

We're talking about things in any, you know, over the coming years that we think are accretive to the business, but in the grand scheme of things, are significantly smaller than the types of investments that an individual new build will have us make.

[David Katz, Managing Director at Jefferies]

Understood. Thank you.

[Operator]

Thank you.

[Operator]

Next question is coming from Sharon Zackfia from William Blair. Your line is now live.

[Sharon Zackfia, Group Head–Consumer at William Blair & Company, L.L.C]

Hi.

[Sharon Zackfia, Group Head–Consumer at William Blair & Company, L.L.C]

Thanks for taking the question. I think at the beginning you talked about early learnings on Celebration Key, kind of things that maybe you can amplify. Or improve.

[Sharon Zackfia, Group Head–Consumer at William Blair & Company, L.L.C]

I’d be curious on what you’re hearing from guests there. Secondarily, on the loyalty hit to yields next year, I assume that’s all kind of second half weighted just given when loyalty kind of rolls out. If you could clarify that, thanks.

[Josh Weinstein, CEO & Director at Carnival]

Yep. Hey, so on the Celebration Key side, some of this is us being a little bit more thoughtful about exactly how we schedule the arrivals and departures of our ships when we've got multiple ships in port to make sure that everybody's got time and space to have an amazing time because there are so many folks going ashore, which is amazing. We need to get some more shade lounges and more umbrellas, which is actually happy to do some more shading in the island. There are some things that structurally we are working on. There's a rocky stretch of the beach that we want to make less rocky over time. We just got to see how the natural flows of the environment are working in a little bit more of an extended period to make those types of decisions.

[Josh Weinstein, CEO & Director at Carnival]

Tweaks all over the place on the F&B offerings, the type of things we offer, where we offer them. It's all going to be in play. I say this with a lot of love for the team at Carnival Corporation & plc Worldwide who have been participating in this. The fact that we've hit the ground running as hard as we have from opening to pretty much full is pretty phenomenal. We'll take the learnings as we go and we'll just feed it in, really. No different from a new ship, no different from new functions. You just got to listen, get feedback and move on. As far as the loyalty hit, you want to.

[David Bernstein, CFO & Chief Accounting Officer at Carnival]

Yeah, the loyalty, it is the second half after the implementation of the program in June 2026. Thank you.

[Operator]

Thank you.

[Operator]

Next question is coming from Christopher Stathoulopoulos from Susquehanna International. Your line is now live.

[Christopher Stathoulopoulos, Senior Equity Research Analyst at Susquehanna]

Good morning, everyone. I'm going to keep it to one question, really more of a strategic view. Josh, I know you're not talking about 2026, but this is more of a high level as we think about the industry and really about Carnival Corporation & plc's ability to, I would say, protect pricing power and brand equity in the Caribbean. You have a competitor who's going to be adding on a lot of new hardware and pivoting to funding some itineraries, as well as another who recently announced a new class of ships beyond their icons.

[Christopher Stathoulopoulos, Senior Equity Research Analyst at Susquehanna]

As we think about the Caribbean market, and maybe you want to kind of contextualize this in terms of the mix of premiums, so balcony and suites and alike, I'm guessing this is going to be growing year on year, low single digits for next year, perhaps at the same level through end of decade. What is the plan for Carnival Corporation & plc to protect its ability to push yield to maintain its share? I realize you have two private destinations coming online, so maybe you could contextualize that in terms of a premium for that itinerary versus non. I want to understand how you're thinking about the Caribbean, particularly as the market looks to evolve and capacity perhaps grow at a rate that we haven't seen for some time. Thanks.

[Josh Weinstein, CEO & Director at Carnival]

Yeah, no, thanks for the question. I wish we could say we haven't seen this growth for a long time, but that's just not the case. The fact is, the Caribbean market has for 20 years been growing at rates that people did not think was sustainable. Lo and behold, it is. We do grow less. We are growing less than some of our competitors. At the end of the day, I think the first thing we got to contextualize is that we are all competing for land, alternative vacations, and guests that would otherwise be going somewhere else. Whether that's Orlando, whether that's a beach resort, whether that's going across to Europe, whatever that might be, that's what we're competing against. In that context, we are all tiny.

[Josh Weinstein, CEO & Director at Carnival]

I mean, we are just incredibly insignificant in the grand scheme of the vacation market, which actually is a plus because the better we've gotten at reaching into the mainstream, more consideration being given by those who do not cruise, the better off we are. Now keep in mind, it doesn't mean we're standing still. Carnival has got two XL sisters coming in, one in 2027 and one in 2028. We're building for Carnival. We also have announced our own new class, the Ace Class, which is going to carry more guests than anything that exists in the world today. That's also for Carnival and helping to protect its position in general, but it has been the mainstay in the Caribbean forever. This is just nothing new in the grand scheme of things.

[Josh Weinstein, CEO & Director at Carnival]

We just got to keep doing what we're doing, investing in the things that we think make a difference, leaning into the destination strategy, certainly Celebration Key, Relax Away Half Moon. Those things are going to help. We're always looking at different opportunities like that. The other thing is, ultimately what we see is with a lot of our competitors, they view the Caribbean differently. They view it as something that is more transient in nature than we do. Caribbean for Carnival, that is who they are, that is what they do. They're amazing at it. I'm not taking anything away from our competitors. Some of them have made a great go of it and they're doing similar things, but they also look at the Caribbean as something like good enough until something better comes along. We position ourselves very well being there for the long term.

[Josh Weinstein, CEO & Director at Carnival]

Thank you for the question. We have time for one more, operator.

[Operator]

Thank you.

[Operator]

Our final question today is coming from Vince Cipiel from Cleveland Research. Your line is now live.

[Vince Ciepiel, Senior Research Analyst, Partner - Lodging, OTA's, Cruise, and Luxury at Cleveland Research Company]

Thanks. Just wanted to think a little bit. Longer term about the opportunity. I know in the multi-year goal. You guys are targeting low to mid. Single-digit type per diem growth.

[Vince Ciepiel, Senior Research Analyst, Partner - Lodging, OTA's, Cruise, and Luxury at Cleveland Research Company]

When we look at occupancy here still, I think about a point shy of where 2019 shook out, and I imagine something like 20% of the fleet might be newer and we think it's over. Indexing to balconies and maybe have higher.

[Vince Ciepiel, Senior Research Analyst, Partner - Lodging, OTA's, Cruise, and Luxury at Cleveland Research Company]

Occupancy levels in terms of opportunity. How are you thinking about the multi-year opportunity ahead in the occupancy side of the yield equation?

[Josh Weinstein, CEO & Director at Carnival]

Yeah, look, there's nothing, I mean, truly when I say this, there's nothing magic about the occupancy number that we hit exactly this year versus 2019. We're encouraging our brands to optimize between the price that they can achieve and the occupancy. We know we can get occupancy. It's really easy to sail completely full. It's just a matter of how much you can charge to do it. We want to make sure our brands are focused on the total revenue and not just occupancy to hit it.

[Josh Weinstein, CEO & Director at Carnival]

There is opportunity for our brands to improve on the occupancy position that we found ourselves at the end of the third quarter, which isn't far off from 2019, which was a high watermark and is above the historical range. In the grand scheme of things, there'll be incremental things that we do brand by brand to make the trade-off between that price and occupancy and getting more folks on at the right price.

[Vince Ciepiel, Senior Research Analyst, Partner - Lodging, OTA's, Cruise, and Luxury at Cleveland Research Company]

Great. Thanks.

[Josh Weinstein, CEO & Director at Carnival]

Thank you very much.

[Josh Weinstein, CEO & Director at Carnival]

With that, I'll say thank you very much. Look forward to talking in December when we could probably talk a little bit more about 2026. Thanks, everybody. Have a good day. Thank you.

[Operator]

That does include today's teleconference webcast. You may disconnect your line at this time. Have a wonderful day. We thank you for your participation today.

Participants

Executives

• Beth Roberts, SVP - IR
• Josh Weinstein, CEO & Director
• David Bernstein, CFO & Chief Accounting Officer

Analysts

• Robin Farley, MD & Leisure Analyst at UBS Group
• Brandt Montour, Director - Equity Research at Barclays
• Steven Wieczynski, Managing Director at Stifel Financial Corp
• James Hardiman, Director - Leisure and Travel Analyst at Citi
• Benjamin Chaiken, Equity Analyst at Mizuho Financial Group, Inc.
• Matt Boss, Equity Research Analyst at JP Morgan
• Conor Cunningham, Director – Travel & Transports Research at Melius Research LLC
• Lizzie Dove, VP - Equity Research at Goldman Sachs
• David Katz, Managing Director at Jefferies
• Sharon Zackfia, Group Head–Consumer at William Blair & Company, L.L.C
• Christopher Stathoulopoulos, Senior Equity Research Analyst at Susquehanna
• Vince Ciepiel, Senior Research Analyst, Partner - Lodging, OTA's, Cruise, and Luxury at Cleveland Research Company