LOS ANGELES – Carnival Corp., the cruise operator beset by mishaps at sea this year, will spend $600 million to $700 million on fire protection and backup systems across its entire 101-ship fleet.
Carnival is installing additional emergency generators and reinforcing shipboard systems to prevent a loss of power like that on its Triumph liner in February, the Miami-based company said Wednesday. The company, the world's largest cruise operator, will also invest in new fire prevention, detection and suppression systems.
The Triumph's engines failed after a fire in February, leaving 3,100 passengers adrift off the Mexican coast for several days without working toilets and electricity. The mishap was the first of at least three incidents this year involving separate ships.
"Safety is our highest priority," Howard Frank, vice chairman and chief operating officer, said at the company's annual meeting. "We've learned much in the past several years and we continue to learn."
The company's 24-ship Carnival Cruise Lines unit is creating a Safety & Reliability Review Board that will include outside experts, the company said. In addition, the company will more than double the capacity of a training facility in the Netherlands to accommodate 7,000 employees a year.
The spending will probably take place over the next three years, Steven Wieczynski, a Stifel, Nicolaus & Co. analyst, wrote in a research note Wednesday. The company had been spending about $650 million annually on maintenance, he said.
"Without clarity on the [capital] spending levels, investors couldn't get comfortable," write Wieczynski, who recommends buying the shares.
Carnival plans to earmark about $300 million of the spending for its namesake unit, according to the statement. The company had about $2.3 billion in capital spending last year.
