The world's largest cruise company, it runs eight cruise lines—Carnival, Princess, Cunard, Holland America, Costa, AIDA, P&O, and Seabourn—sailing millions of vacationers to destinations across the globe. It began in 1972 when Ted Arison founded Carnival Cruise Line with a single converted ocean liner, the Mardi Gras, which famously ran aground on a sandbar during its very first voyage and turned into an accidental 24-hour party at sea.
Carnival's Q2 operating income fell 9% to $851M as cost increases and the absence of prior-year ship sale gains outweighed higher ticket prices and onboard spending.
fell for the first time in over a year, even as continued to climb. Revenue rose 5.3% to $6.66 billion on higher ticket prices and onboard spending, but a $339 million increase in operating expenses—driven by higher fuel costs and the nonrecurrence of $103 million in prior-year ship sale gains—pushed operating income down 8.9% to $851 million. The quarter shows that cost growth is now outpacing the pricing gains that have driven the recovery.
Key takeaways
fell 8.9% to $851 million, as a $339 million rise in operating expenses—including higher fuel prices and the absence of $103 million in gains on ship sales recorded a year ago—outpaced the $333 million increase in .
Passenger ticket rose 4.1% to $4.3 billion, driven by a 2% capacity increase, higher ticket prices, and favorable currency translation, partially offset by lower air transportation revenue.
Onboard and other increased 7.4% to $2.4 billion, primarily from higher guest spending and the capacity increase.
Section summaries
Management's Discussion and Analysis
Q2 FY2026 revenue rose 5% on higher ticket prices and onboard spending, but operating income fell 9% due to cost increases and prior-year ship sale gains.
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Consolidated passenger ticket grew 4.1% to $4.3B, driven by a 2% capacity increase, higher ticket prices, and favorable currency translation, partially offset by lower air transportation revenue.
Onboard and other increased 7.4% to $2.4B, primarily from higher guest spending and the capacity increase.
fell 5.0% to $537 million, or $0.39 per diluted share, as the decline in was partially offset by a 16% drop in net to $285 million, reflecting lower total debt and average interest rates.
rose 13.9% to $1.76 billion, and increased 9.9% to $2.63 billion, providing internally generated cash for continued debt reduction.
fell 9.5% to $23.4 billion, and rose 29.7% to $13.0 billion, as the company continued to prioritize balance sheet repair.
What changed
The prior quarter flagged the record $7.2 billion in customer deposits at FY2025 year-end as a leading indicator of pricing power for the peak season; this quarter's 4.1% increase in passenger ticket , driven by higher pricing, confirms that demand translated into realized price gains.
The prior quarter noted that 16% of the debt portfolio remained exposed to floating rates; this quarter, floating-rate exposure fell to 15% of the portfolio, with fixed-rate debt now at 84%.
The EU Emissions Trading System was cited in prior filings as a known cost starting in 2026; this quarter, management confirmed the impact is increasing as all in-scope emissions become subject to the regulation, though no specific dollar impact was quantified for the quarter.
The proposed DLC unification and redomiciliation to Bermuda, expected to close in Q2 2026, was flagged in the prior quarter; the filing does not report its completion, suggesting the outcome remains pending.
What to watch
Whether the cost pressures that drove the 8.9% decline in —specifically higher fuel prices and the absence of ship sale gains—persist into Q3, the seasonally strongest quarter, and whether pricing can re-accelerate enough to restore operating income growth.
The level of customer deposits reported in Q3 2026 as a leading indicator of booking demand and pricing power for the FY2027 season, following the record $7.2 billion at FY2025 year-end.
The pace of further debt reduction and its effect on , given that floating-rate exposure has fallen to 15% and the company continues to prioritize balance sheet repair.
The completion and terms of the proposed DLC unification and redomiciliation to Bermuda, which was expected to close in Q2 2026 but was not reported as completed in this filing.
Consolidated decreased 8.9% to $851M, as a $339M rise in operating expenses—including higher fuel prices and the nonrecurrence of $103M in prior-year ship sale gains—outpaced growth.
North America fell 4.8% to $658M, while Europe segment operating income declined 11.4% to $326M, both pressured by higher fuel costs and the absence of 2025 ship sale gains.
, net, decreased 16% to $285M due to lower total debt and average interest rates, and liquidity remained strong at $6.7B, including $2.2B in cash and $4.5B in availability.
The company cited the EU Emissions Trading System as a known cost , with the impact increasing in 2026 as all in-scope emissions become subject to the regulation.
Quantitative and Qualitative Disclosures About Market Risk
For a discussion of our hedging strategies and market risks, see the discussion below and Note 10 - “Fair Value Measurements, Derivative Instruments and Hedging Activities and Financial Risks” in our consolidated financial statements and “Item 7. Management’s Discussion and Anal…
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For a discussion of our hedging strategies and market risks, see the discussion below and Note 10 - “Fair Value Measurements, Derivative Instruments and Hedging Activities and Financial Risks” in our consolidated financial statements and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” within our Form 10-K. There have been no material changes to our exposure to market risks since the date of our 2025 Form 10-K.
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Table of Contents
Interest Rate Risks
The composition of our debt was as follows:
May 31, 2026
Fixed rate 52 %
EUR fixed rate 32 %
Floating rate 5 %
EUR floating rate 10 %
To the extent disclosure is required by Part II. Item 1 of Form 10-Q, the legal proceedings described in Note 4 – “Contingencies and Commitments” of our consolidated financial statements, including those described under “Regulatory or Governmental Inquiries and Investigations,”…
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To the extent disclosure is required by Part II. Item 1 of Form 10-Q, the legal proceedings described in Note 4 – “Contingencies and Commitments” of our consolidated financial statements, including those described under “Regulatory or Governmental Inquiries and Investigations,” are incorporated in this “Legal Proceedings” section by reference. Additionally, SEC rules require disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that we believe will exceed $1 million for such proceedings.
The risk factors that affect our business and financial results are discussed in “Item 1A. Risk Factors,” included in the Form 10-K, and there has been no material change to these risk factors since the Form 10-K filing. These risks should be carefully considered, and could mate…
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The risk factors that affect our business and financial results are discussed in “Item 1A. Risk Factors,” included in the Form 10-K, and there has been no material change to these risk factors since the Form 10-K filing. These risks should be carefully considered, and could materially and adversely affect our results, operations, outlooks, plans, goals, growth, reputation, cash flows, liquidity, and stock price. Our business also could be affected by risks that we are not presently aware of or that we currently consider immaterial to our operations.