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Carnival Katrina pact draws fire from lawmaker: WSJ

October 21, 2005

NEW YORK (Reuters) – A senior House Democrat said documents
from Carnival Corp. show the cruise line company is making more
money leasing ships to the U.S. government for Hurricane
Katrina relief than it earns from their normal use, the Wall
Street Journal reported Friday.

In a letter to Homeland Security Secretary Michael
Chertoff, Rep. Henry Waxman of California said he uncovered
information that may undercut Carnival’s defense of its $236
million contract to provide emergency housing for 7,100 people
aboard three cruise ships, the paper said.

Carnival has said the price of the contract was justified
by the company’s need to recoup revenue lost when it had to
cancel passenger reservations.

But the Carnival “financial review” obtained by Waxman
appears to paint a different picture, the paper said.

In the January 2002 document, Carnival pegs its revenue for
the three ships leased to the government at $25 million a
month. That means Carnival’s normal monthly revenue from the
ships would be about $150 million over the life of its federal
contract, far lower than the $236 million it stands to receive.

The potential profit from the deal could be higher because
the documents show the ships normally carry 800 more employees
than are on board now, lowering its costs, the paper said,
citing Waxman.

A Carnival spokeswoman defended the contract and said the
revenue figures cited by Waxman were unusually low because they
were from the period right after the September 11 terror
attacks. The company said the deal was priced to be profit
neutral.




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