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Can a Name Change Save Costa Cruises?

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Earlier this week, we reported on the continuing struggles of the cruise industry, which faced everything from robberies to fires to captains who won’t get back on their sinking ships. Well, while things are bad across the board, they’re downright terrible for Costa Cruises, Europe’s biggest cruise brand.

The good news, today, is that the Costa Allegra has docked safely in the Seychelles. Passengers have described conditions as hot, dirty and even deplorable, but so far no one appears to have been seriously hurt.

The bad news is, basically, that, six weeks after the sinking of the Costa Concordia, I’m writing the above paragraph.

According to USA Today, Costa Cruise bookings fell by about one-third following the Costa Concordia disaster. Some industry experts are now suggesting that the company, which has been around for sixty years, may need to change its name to survive. A bailout from parent company Carnival (CCL) is another option.

Of course, it’s impossible to know what the actual impact of these two disasters will be—beyond the disabling of two ships from the Costa fleet—until Carnival releases its quarterly results next month. While the company has certainly lost a lot of money in the two disasters, some in the industry think that it can survive.

Roberto Corbella, the president of Italy’s tour operator industry group, is quoted saying that: “We have seen that longtime cruise-goers are unfazed, they continue to make reservations. It is the first-time cruise-goer who is waiting to reserve until they feel more confident.”

We’ll see. At the very least, Costa Cruises seems to have done a fairly good job with the Allegra situation.

Meanwhile, claims that the Costa Concordia crash was entirely, or almost entirely, the fault of Captain Francesco Schettino, gained more credibility recently with the release of five thousand pages of court documents. The upshot: Schettino was sober the night of the accident.

However, other accusations include prostitution on board the ship, open and frequent use of cocaine by crewmembers and a crew that was often drunk. Sounds safe.

It’s unclear if these revelations will be worse for Schettino or for the company. One nurse interviewed said she worked on three Costa ships, “one worse than the other.”

Vado a bordo? grazie.
POSITION:  No positions in stocks mentioned.