CARNIVAL TO RAISE EUROPEAN CAPACITY BY 22%

Carnival Corporation is to raise capacity in Europe by 22% next year on the back of record 2007 profits of $2.4 billion.

The US cruise giant's annual net profits were up from $2.3 billion in 2006 as earnings in the fourth quarter ending November 30 were held back by increased fuel costs and higher dry dock outlay.

Net profits for the final three months of the company's financial year dropped by almost 14% or $58 million to $358 million, blamed on "significantly higher" costs of fuel.

Chairman and CEO Mickey Arison said the group's European brands – which incorporate the Carnival UK business of P&O Cruises, Cunard Line and Ocean Village – enjoyed another record year "absorbing substantial new capacity and driving significant improvement in unit operating profit".

Overall capacity will grow by nine per cent in 2008, mainly driven by the introduction of five new ships across five brands.

Advance bookings for the first half of next year are "well ahead" with those for the second half "shaping up in a similar fashion".

"While our North American brands will grow capacity at a moderate rate of three per cent, our European brands will increase capacity by 22% next year, including the full year operation of our new Spanish cruise line, Ibero Cruises," said Arison.

"As we grow our European brands, we will be able to achieve economies of scale which will have a favourable impact on our unit costs and profitability."

Fuel expenses are expected to rise by $409 million in 2008.

by Phil Davies