- The Washington Times - Tuesday, March 18, 2003

MIAMI, March 18 (UPI) — The world's largest cruise line fears war in Iraq will further reduce revenue as it readies a merger proposal for its stockholders.

Carnival Cruise Lines said in a document filed with the Securities and Exchange Commission that the conflict with Iraq "would likely have a further negative impact" on its fiscal position.

Carnival is preparing for a meeting April 14 of shareholders who will vote on a merger with P&O; Princes Cruises. Princess shareholders meet two days later and the two companies are expected to close the deal April 17.

The merger would create a company twice the size of Royal Caribbean, currently the second largest.

Princess said its bookings have not been as strong as normal for this time of year and Royal Caribbean said bookings have been disappointing.

Carnival said its bookings are about the same as last year, but they haven't kept up with a 17.4 percent increase in capacity, and fares are plummeting.

Norwegian Cruise Line, No. 3 in the Caribbean market, reports a similar situation.

Prices have been lowered to attract more customers. One line is advertising a seven-day cruise starting at $229. That's $43 a day, compared with $100 a day in happier days.

The industry is expected to introduce more new ships this year, further increasing capacity.

The cruise lines are also looking at developments in the Middle East and elsewhere in terms of safety.

Princess announced earlier this year it was moving its Grand Princess liner from the Mediterranean to the Caribbean.

"It's conceivable there would be itinerary modifications," said spokeswoman Lynn Martenstein of Royal Caribbean.

Carnival owns a number of other companies which have ships in Europe, but none has been moved yet, said spokesman Tim Gallagher.

Some analysts, however, foresee a brighter future when fuel prices go down, the war ends and people start looking for ways to take a vacation again.

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