Carnival, Royal Caribbean Cruises in Focus on Ebola Fears - Analyst Blog

Cruise operators are now facing the same crisis that has shaken the airline industry. Yes, we are talking about the Ebola outbreak.  The share price of Carnival Corporation (CCL) declined in the pre-market trading session on Oct 17 after news of a health care worker, who had handled a specimen of Thomas Eric Duncan — who died of Ebola in Dallas — was reportedly traveling on one Carnival’s cruise ships. The share price of Royal Caribbean Cruises Ltd. (RCL) another cruise company declined on similar concerns.

Carnival’s ship left Galveston, TX, on Oct. 12.  It attempted to dock at Mexico and Belize to enable the woman to fly back to the U.S. for observation but was denied permission by local authorities. As a result, the cruise returned to Galveston on Oct 19 as scheduled earlier. Concerns regarding Ebola in the U.S. have intensified after two nurses from the Dallas hospital where Duncan was admitted tested positive for Ebola. It has killed nearly 4,500 people, mostly in West Africa.

However, share price of these cruise companies increased after it was revealed that the woman did not exhibit any Ebola symptoms after she boarded the ship. It was found that the woman did not have direct contact with Duncan and already 19 days had passed since she examined the patient’s fluid samples. This means that the health worker is very close to the 21-day maximum incubation window for Ebola. This thereby reduces the chances of the woman being affected by the disease.

The alarming outbreak of the Ebola virus has been taking a toll on global markets over the past few weeks.  Airline stocks like Southwest Airlines Co. (LUV), JetBlue Airways Corp. (JBLU), Delta Air Lines, Inc. (DAL), United Continental Holdings, Inc. (UAL) experienced a decline in their share prices last week after the second Ebola case in the U.S. was detected.  

The victim, a Dallas nurse, had taken a Frontier Airlines flight from Cleveland to Dallas a day before her diagnosis. In fact, share prices of hotels and cruise companies have reportedly been declining over the last month since Duncan traveled to Texas and was tested positive for the deadly disease.

Leisure companies like The Walt Disney Company (DIS) and Marriott International, Inc. (MAR) have been also affected and lost significant value over the past few months as a large number of people have put their travel plans on hold.

Nevertheless, cruise and airline companies are taking all possible steps to prevent the spread of this deadly virus. They are increasingly monitoring passengers and denying boarding to guests and crew from countries for which the U.S. Centers for Disease Control and Prevention has issued travel warnings.

We need to wait and see whether passengers shy away from cruise travel in view of the virus scare or whether the safety measures adopted by the companies manage to convince them to carry on with their travel plans.

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