Last month, the Sun Sentinel reported that Carnival’s earnings "continue to be hurt by a series of embarrassing mishaps and softened demand for certain cruises that has kept fares low." The world’s largest cruise operator reported a 30 percent drop in third-quarter profits.
Critics have attributed Carnival’s woes to damage to its namesake cruise line’s "Fun Ship" image after several cruise ships caught fire and/or lost power at sea. The most serious incidents involved loss of propulsion and power to the Carnival Splendor and the Carnival Triumph, stranding many thousands of passengers under unsanitary and unpleasant conditions.
This summer Micky Arison stepped down as Carnival CEO and a businessman, Arnold Donald, formerly of chemical giant Monsanto, stepped in as the new cruise CEO to try and right the ship. In June, Forbes magazine published an article about Mr. Arnold. The magazine quoted him saying the following about Carnival: "Here’s what success looks like. Our employees feel very confident in the future of the company. They legitimately feel like winners . . ."
But Forbes didn’t share the CEO’s gushing enthusiasm. In order to be successful, Forbes cautioned, "Donald has to cut costs."
Yesterday I wrote that Carnival embarked on a major cost-cutting campaign by freezing all of the retirement benefits for the crew members working for Carnival Cruise Lines. There are some 24 Carnival Cruise Line cruise ships with over 20,000 crew members working aboard the ships. Cutting an average of just $5,000 per crew member may result in a savings of $100,000,000 over the next few years.
But at what cost in loss of morale? I doubt that the affected crew members "feel very confident in the future of the company" now, considering the comments to our article yesterday:
A comment from a crew member: ". . . This is terribly disadvantageous and unfair if not outright discriminatory to the more than 6,000 Filipino crew members who have been working hard for Carnival Cruise Lines all these years. This retirement benefit is so important and is the very reason crew members chose to stay with Carnival for at least 10 years . . ."
A comment from a former crew member: "I retired from Carnival 4 years ago in order to pursue a university education. At that point I was at cross roads whether to stay or go. I am glad I choose go."
A tweet by a cruise fan: "This will trickle down 2 to me the passenger & not in a good way. Carnival could become the Self Serve Cruise Ships."
As of publishing this article, Carnival still describes its "Fun Ship Retirement Plan" as providing a "lump-sum benefit upon team members’ retirement from Carnival, provided they have at least 10 years of continuous service . . . The longer a team member is employed beyond the initial 10-year period, the faster the benefits increase. Simply put, the longer you stay with Carnival, the larger your benefit payment will be upon your retirement."
But that’s no longer true.
Carnival announced over the last two years that it is investing hundreds of millions of dollars in its ships in technology, equipment and safety systems to avoid a repeat of the Splendor and Triumph mishaps and the Concordia disaster. But it is taking money out of its loyal crew members to do so. It’s no different that robbing Peter to pay Paul.
There’s not much the crew can do. The last time Carnival crew members went on strike for protesting low wages and the cruise line’s withholding of their tips, they were all terminated, sent back to India, and blackballed from ever working on the cruise industry.
Do Carnival crew members feel like the "winners" Mr. Arnold described this summer? Should the crew feel confident in their future with Carnival?
I suspect right now that the crew members feel like losers, cheated by the company which still promises on its website that ship employees will benefit by staying longer at Carnival.
Photo Credit: Local10.com