Available Lower Berth Days (ALBDs) increased by 3.1% for the three months ended May 31, 2025, contributing $115 million to the increase in passenger ticket revenues. This growth was supported by new ship entries and transfers, notably a Carnival Cruise Line 4,130-passenger ship and a Cunard 2,960-passenger ship, offsetting some ship sales.

In March 2025, the company sunset the P&O Cruises (Australia) brand, integrating its operations into Carnival Cruise Line. This strategic realignment aims to optimize brand portfolio and operational efficiencies, as it resulted in the departure of a 2,000-passenger capacity ship from the fleet.

As of May 31, 2025, new ship growth capital commitments totaled $12.5 billion through 2033, with $0.9 billion for the remainder of 2025 and significant allocations in subsequent years. This indicates a clear strategy of continued investment in new vessels and fleet enhancements.

Management successfully decreased interest expense, net of capitalized interest, by $109 million (24%) to $341 million for the three months ended May 31, 2025. This was primarily due to a decrease in total debt, lower average interest rates achieved through repricing senior secured term loans (margin from 2.75% to 2.00%), and strategic debt issuances to redeem higher-cost notes.

Operating expenses were partially offset by $40 million from lower fuel prices and $32 million from lower fuel consumption per ALBD for the three months ended May 31, 2025. Fuel consumption per thousand ALBDs decreased to 29.9 in 2025 from 31.9 in 2024, demonstrating effective operational efficiency initiatives.

Customer deposits increased significantly to $8.5 billion as of May 31, 2025, up from $6.4 billion as of November 30, 2024. This substantial increase reflects strong booking trends and customer confidence, providing a solid base for future revenue recognition and liquidity.

The company became subject to the EU Emissions Trading System (ETS) on January 1, 2024, incurring $46 million in costs for 2024, covering 40% of emissions. This cost is projected to increase significantly, impacting 70% of emissions in 2025 and all in-scope emissions in 2026, posing an escalating regulatory financial burden.

While the company believes the ultimate outcome of the Havana Docks lawsuit and class actions in Australia and Italy will not have a material impact, these legal proceedings continue to require defense efforts. Additionally, potential civil penalties for Clean Water Act violations are being addressed, highlighting ongoing regulatory risks.

The 10-Q explicitly states that the 'substantial debt could adversely affect our financial health and operating flexibility' and that 'many of these risks and uncertainties are currently, and in the future may continue to be, amplified by our substantial debt balance incurred during the pause of our guest cruise operations.' While debt is being managed, it remains a material risk.

The company reported higher ticket prices driven by 'continued strength in demand,' contributing $169 million to passenger ticket revenues for the three months ended May 31, 2025. This ability to increase prices suggests a strong competitive position and robust consumer appetite for cruises.

Occupancy percentage remained high at 104% for both the three and six months ended May 31, 2025, consistent with the prior year. This sustained high occupancy indicates efficient utilization of the fleet and strong demand relative to available capacity, reinforcing the company's market standing.

The company is actively managing its fleet, adding new, larger capacity ships (e.g., Cunard 2,960-passenger ship) while strategically selling older, smaller capacity vessels (e.g., Seabourn 460-passenger ship). This ongoing optimization aims to enhance the company's competitive offering and efficiency in key markets.

Operating expenses for the three months ended May 31, 2025, were partially offset by $103 million in gains from the sales of one North America segment ship and one Europe segment ship. These sales, while reducing capacity, contribute to fleet modernization and improved financial efficiency.

Lower fuel prices contributed $40 million in savings, and lower fuel consumption per ALBD saved $32 million for the three months ended May 31, 2025. The fuel cost per metric ton consumed decreased to $614 in 2025 from $684 in 2024, demonstrating effective fuel management and procurement strategies.

Operating expenses increased by $72 million for the three months ended May 31, 2025, due to higher repair and maintenance expenses, including dry-dock expenses. This indicates ongoing investment in fleet upkeep and enhancements, which is crucial for operational reliability and guest satisfaction.

Capital expenditures of $1.5 billion for the six months ended May 31, 2025, were primarily attributable to ship improvements and developments in port destinations and exclusive islands. While not explicitly R&D, these investments likely include technological upgrades to enhance guest experience and operational capabilities.

The company manages fuel price risk through 'fleet optimization, energy efficiency, itinerary efficiency, and new technologies and alternative fuels.' This highlights an ongoing commitment to leveraging technology to address significant operational costs and environmental regulations.

The company lists 'failure to keep pace with developments in technology' as a risk factor that could adversely impact business operations and guest satisfaction. This indicates an awareness of the continuous need for innovation and investment in technology to maintain competitiveness.

The company issued $4.1 billion in new long-term debt while repaying $5.1 billion, resulting in a net reduction. Key actions include repricing senior secured term loans to reduce interest margins (from 2.75% to 2.00%) and issuing new notes (e.g., 5.75% due 2030, 6.13% due 2033, 5.88% due 2031) to redeem higher-interest debt and extend maturities.

Capital expenditures amounted to $1.5 billion for the six months ended May 31, 2025, primarily directed towards ship improvements and port developments. This substantial investment, alongside $12.5 billion in future ship commitments through 2033, underscores a strategy focused on enhancing and expanding the core cruise business.

In June 2025, the company entered into a new $4.5 billion unsecured multi-currency revolving credit facility, replacing the previous one. This facility matures in June 2030 and includes an accordion feature for up to $1.0 billion in additional commitments, providing enhanced liquidity and financial flexibility for future operations.

The company is facing rising costs due to the EU Emissions Trading System (ETS), with an impact of $46 million in 2024 (covering 40% of emissions). This is projected to increase to 70% of emissions in 2025 and 100% in 2026, indicating a significant and growing financial commitment to environmental compliance.

In managing fuel price risks, the company highlights its efforts in 'fleet optimization, energy efficiency, itinerary efficiency, and new technologies and alternative fuels.' This indicates a strategic approach to reducing environmental footprint and improving sustainability through operational and technological advancements.

The company notes that 'inability to meet or achieve our targets, goals, aspirations, initiatives, and our public statements and disclosures regarding them, including those related to sustainability matters, may expose us to risks.' This highlights the importance of transparent reporting and the potential for reputational or financial impact if ESG goals are not met.

Despite general macroeconomic concerns such as inflation and higher interest rates listed as risk factors, the company experienced 'continued strength in demand' leading to higher ticket prices and increased onboard spending. This suggests the cruise market is resilient and demand for Carnival's offerings remains robust.

The 'Red Sea rerouting' was cited as a factor impacting the return to normal operations for ships in the Europe segment in the prior year. This demonstrates how ongoing geopolitical risks directly influence operational planning and capacity deployment in certain regions.

The implementation of the EU Emissions Trading System (ETS) in 2024, with escalating impact through 2026, represents a significant new regulatory cost. This indicates a tightening environmental regulatory environment that will continue to affect the company's operating expenses in European markets.