Now, listen closely. Last week, I was yapping on about how the airlines are getting a right kicking thanks to the squabble in the Middle East. It’s pushed up the price of that smelly jet fuel, and frankly, people are thinking twice about whizzing off on holiday. But there’s another bunch of companies, bobbing about like corks in a storm, that are faring even worse. These are the ones I want to tell you about. The ones that are truly in a pickle.
I’m talking about cruise lines. Norwegian Cruise Lines Holdings (NCLH 1.30%) is down a whopping 21% since the bother began, and Carnival (CCL 1.38%) (CUK 1.03%) has plummeted a truly dreadful 23%. Now, some folks might see this as a ‘buying opportunity.’ Hmph. Let’s have a closer look, shall we?
The trouble, you see, is the same old story. Rising fuel prices and a sudden lack of enthusiasm for sailing the high seas. These enormous floating hotels guzzle fuel like a greedy giant. A ship can get through 250 tons of the stuff every day, costing more than $100,000. Think of the lollipops that money could buy! And right now, that black, gooey stuff – Brent crude, they call it – is about $27 a barrel more expensive than it was before all the fuss started. That’s a jump of about 38%, and it’s making the bosses of these cruise lines very, very twitchy.
Carnival, bless their cotton socks, don’t bother with ‘hedging’ – a fancy word for trying to protect themselves from price rises. They just hope for the best, which is a bit like hoping a chocolate bar won’t melt in the sun. Norwegian, being a slightly cleverer sort, does hedge, using complicated ‘derivatives’ – little traps they set to catch rising prices. It’s all terribly clever, but doesn’t stop the ship from rocking.
A Worrying Dip in Demand
And then there’s the matter of people actually wanting to go on these cruises. Lots of routes through the Middle East and the Mediterranean have already been cancelled. Analysts (those gloomy people who predict the future) expect bookings to dry up, as holidaymakers get a bit jumpy about sailing near places where things are exploding. Quite sensible, really.
Plus, these cruise lines have a sneaky trick up their sleeve. They reserve the right to slap on ‘fuel surcharges’ – extra costs for passengers. It’s a bit like adding a pinch of poison to your tea, isn’t it? It’ll put people off, guaranteed. And to make matters worse, Norwegian has been underperforming, failing to meet Wall Street’s expectations. A rather clumsy performance, wouldn’t you say?
Just like those noisy flying machines, cruise lines will keep suffering if fuel prices stay high. Where the price of oil will go next is anyone’s guess. Iran doesn’t seem inclined to listen to what anyone says, and they’re stirring up trouble, even launching missiles into Turkey – a country that’s part of NATO, no less! It’s all rather alarming.
So, here’s my advice: steer clear of both airline and cruise line stocks until things calm down, or until we see a proper end to all this. There are far too many unknowns, far too much wobbliness. It’s a risky business, and frankly, there are much better places for your money. Places where it won’t be tossed about like a cork in a hurricane.
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2026-03-10 19:04