INTRODUCTION
Fuel is one of the biggest costs for a cruise company, and fuel prices have risen sharply this year. Yet Carnival, Royal Caribbean and Norwegian Cruise Line Holdings all reported strong third-quarter earnings. The interesting part is not just that they did well. It is that they got there in completely different ways.
WHAT HAPPENED
All three companies beat expectations in their latest quarters despite higher fuel prices. Carnival reported record net income of $1.9 billion. Royal Caribbean beat earnings-per-share expectations, though it narrowly missed on revenue. Norwegian beat on both revenue and earnings, reporting revenue of $2.9 billion and adjusted earnings per share of $1.12.
Oil prices have risen sharply since mid-year. Brent crude, a global benchmark, settled at $116.72 per barrel on a recent trading day, a six-month high, driven by tensions in the Middle East. All three cruise operators expect fuel costs to keep rising in the fourth quarter.
WHY IT HAPPENED
The companies use two different strategies. Royal Caribbean and Norwegian use hedging. In simple terms, hedging means locking in a fuel price in advance using financial contracts, so that if market prices rise, the company is partly protected. Royal Caribbean said it is a little over 60% hedged for 2026. Norwegian has hedged about 48% of its fuel consumption for 2026.
Carnival does the opposite. It does not hedge fuel. Instead, it tries to use less fuel. Chief executive Josh Weinstein has said that cutting fuel consumption is the best way to deal with expensive fuel, because fuel is an input cost, and using less of it directly lowers the bill. Carnival says it has cut its unit fuel consumption rate by 26% since 2019, and estimates that saved about $700 million in 2026.
KEY FIGURES
- Brent crude: $116.72 per barrel, a six-month high
- Carnival third-quarter net income: $1.9 billion, a record
- Carnival fuel spending: $615 million in the quarter, about 7.3% of revenue; $640 million projected for the fourth quarter
- Carnival fuel consumption cut since 2019: 26%, saving an estimated $700 million in 2026
- Royal Caribbean fuel spending: about $347 million, about 6.2% of revenue; $379 million projected for the fourth quarter
- Royal Caribbean hedging: a little over 60% of 2026 fuel
- Norwegian revenue: $2.9 billion; adjusted earnings per share: $1.12
- Norwegian fuel spending: about $196 million, about 6.6% of revenue
- Norwegian hedging: about 48% of 2026 fuel consumption
WHY IT MATTERS
Fuel is a good example of how there is rarely one right answer in business. Hedging protects a company when prices rise, but it costs money and can backfire if prices fall, because the company is locked into a higher price. Cutting consumption helps no matter what prices do, but it takes years of investment in more efficient ships and smarter routes.
For passengers, the difference matters too. A company that is fully exposed to fuel prices is more likely to feel pressure to raise ticket prices or add extra charges when oil spikes. A company that has locked in prices has more breathing room, at least for a while.
WHAT HAPPENS NEXT
All three companies expect fuel costs to rise further in the fourth quarter. Royal Caribbean projects fuel spending of $379 million, Carnival projects $640 million, and Norwegian expects its fuel consumption to rise as well.
The real test will come if oil stays high for a long time. Hedging only covers part of the fuel bill, and hedges eventually run out. Carnival’s efficiency gains, on the other hand, do not expire. The question for 2027 is whether Carnival’s long-term approach or its rivals’ hedging gives them a steadier result when the next fuel shock arrives.
FINAL THOUGHTS
Three companies, one problem, two very different answers, and all three worked this quarter. That is the lesson here. In business, a strategy is not good or bad in theory. It is good if it fits the company’s situation and holds up when conditions get tough. For now, both approaches are holding. The next oil spike will show which one holds up better.
Related post: https://thefinanceclass.wordpress.com/2026/10/30/norwegian-cruise-shares-jump-earnings-beat/
Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice.
Sources: CNBC, https://www.cnbc.com/2026/10/29/royal-caribbean-carnival-norwegian-fuel-costs.html ; Binance Square summary of CNBC reporting, https://www.binance.com/en/square/post/10-29-2026-carnival-royal-caribbean-and-norwegian-cruise-line-holdings-differ-on-fuel-cost-strategies-382586356239218
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