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Carnival and the Fema deal

Discussion in 'Carnival Cruise Lines' started by randk, Sep 28, 2005.

  1. randk

    randk Guest

    This is a story being reported by the Washington Post in regards to Carnival and Fema. I remember some post discussing FEMA using a couple of ships from Carnival and the "good thing" Carnival was doing. I questined the goodwill than and now. It was pure profit, nothing wrong with that as I work and expect to make a profit in my business also, but let's call it what it is.

    By Jonathan Weisman

    Updated: 11:41 p.m. ET Sept. 27, 2005
    On Sept. 1, as tens of thousands of desperate Louisianans packed the New Orleans Superdome and convention center, the Federal Emergency Management Agency pleaded with the U.S. Military Sealift Command: The government needed 10,000 berths on full-service cruise ships, FEMA said, and it needed the deal done by noon the next day.

    The hasty appeal yielded one of the most controversial contracts of the Hurricane Katrina relief operation, a $236 million agreement with Carnival Cruise Lines for three ships that now bob more than half empty in the Mississippi River and Mobile Bay. The six-month contract -- staunchly defended by Carnival but castigated by politicians from both parties -- has come to exemplify the cost of haste that followed Katrina's strike and FEMA's lack of preparation.

    • Special report: Gulf Coast hurricanes

    To critics, the price is exorbitant. If the ships were at capacity, with 7,116 evacuees, for six months, the price per evacuee would total $1,275 a week, according to calculations by aides to Sen. Tom Coburn (R-Okla.). A seven-day western Caribbean cruise out of Galveston can be had for $599 a person -- and that would include entertainment and the cost of actually making the ship move.

    Story continues below ↓


    "When the federal government would actually save millions of dollars by forgoing the status quo and actually sending evacuees on a luxurious six-month cruise it is time to rethink how we are conducting oversight. A short-term temporary solution has turned into a long-term, grossly overpriced sweetheart deal for a cruise line," said Coburn and Sen. Barack Obama (D-Ill.) in a joint statement yesterday calling for a chief financial officer to oversee Katrina spending.

    Carnival's bid totaled $192 million over six months, plus $44 million in reimbursable expenses, such as port charges, fuel, food and docking costs. To Carnival executives, the contract will ensure only that the company breaks even when it pulls three ships from holiday operations. About 100,000 passengers had their vacations canceled to accommodate the government's needs, said J. Michael Crye, president of the International Council of Cruise Lines, who has been answering questions about the deal for Carnival.

    "In the end, we will make no additional money on this deal versus what we would have made by keeping these ships in service," said Jennifer de la Cruz, a Carnival spokeswoman. "That has been our position from the outset, and it has not changed."

    ‘Pretty good value’
    Government contracting officials defended the deal. "They were the market," Capt. Joe Manna, director of contracts at the Sealift Command, said of Carnival. "Under the circumstances, I'd say we're getting a pretty good value."

    Coburn and Obama disagreed. "Finding out after the fact that we're spending taxpayer money on no-bid contracts and sweetheart deals for cruise lines is no way to run a recovery effort," they said in the statement.

    The Carnival deal is only one of several instances in which a lack of FEMA preparation may have left federal taxpayers with an outsized bill. Despite its experiences with last year's busy hurricane season, FEMA found itself without standing contracts for standard relief items such as blue tarps to cover damaged roofs, according to Thomas A. Schatz, president of Citizens Against Government Waste.

    "It is ridiculous that they can't have the supply on hand for these basics that you know you'll need in every instance," Schatz said.

    But the Carnival deal has come under particular scrutiny. Not only are questions being raised over the contract's cost, but congressional investigators are examining the company's tax status. Carnival, which is headquartered in Miami but incorporated for tax purposes in Panama, paid just $3 million in income tax benefits on $1.9 billion in pretax income last year, according to company documents. "That's not even a tip," said Robert S. McIntyre of Citizens for Tax Justice. U.S. companies in general pay an effective income tax rate of about 25 percent, analysts say. That would have left Carnival with a $475 million tax bill.

    Carnival's public records boast "that substantially all of our income in fiscal 2004, 2003 and 2002 . . . is exempt from U.S. federal income taxes," largely because it maintains that its operations are not in the United States but on the high seas.

    ‘Special treatment’
    Carnival does not want to see that tax status jeopardized just because three major ships are clearly operating in the United States. After it won the FEMA bid, Carnival appealed to Treasury Secretary John W. Snow for a waiver of U.S. taxes. "We do not want to jeopardize our tax exemption, nor do we want to interrupt our relief efforts for failure to secure this assurance from the Treasury Department," wrote Howard Frank, Carnival's chief operating officer.

    Cruise line council President Crye said the company will reduce its billings under the contract by the amount of income taxes forgiven. The waiver would spare Carnival and its employees the paperwork of filing tax returns.

    But critics say Carnival deserves to be treated no differently than a hotel housing relief workers under a FEMA contract. "Carnival should be contributing to the relief effort just like all other taxpayers are," McIntyre said. "Why should they be singled out for special treatment, just because they've been so good at tax avoidance in the past?"

    Treasury spokesman Taylor Griffin said the matter is under review.

    But Congress's main focus remains on cost and how the Carnival contract came to pass. After a one-day competition, Sealift Command had bids from 13 ships, but only four met FEMA's requirements, which included full meal service, between-meal snacks, linen and maid service, medical support, even prescription refills. Four ships -- the Ecstasy, Sensation and Holiday, all owned by Carnival, as well as the ferry the Scotia Prince -- landed the contracts.

    More than half empty
    The ships are not holding nearly the number of people FEMA had expected. Many evacuees said they saw the ships as a dead end, far away from any job or potential new life. The Ecstasy and Sensation have become the homes of New Orleans first responders who have stayed at their posts, said FEMA spokesman James McIntyre. At the peak, the ships did house around 2,000 such workers and their families.

    The Ecstasy and Sensation had to set sail for safer seas as Hurricane Rita rolled in. They re-docked Monday. By Tuesday morning, 625 were aboard the Ecstasy, a fraction of the 2,544 passengers once registered. An additional 820 were aboard the Sensation, down from 2,579.

    And those ships have fared better than the Holiday, docked in Mobile, Ala., with 342 on board. FEMA had hoped for 1,800. McIntyre said the ship has been waiting for repairs to the Mississippi port of Pascagoula, where more evacuees are expected to board. FEMA expects the Holiday to steam for Pascagoula this week, McIntyre said.
  2. Lisa Flyer

    Lisa Flyer Guest

    I would take anything reported in the Washington Post with a grain of salt. It is a very biased newspaper that makes no rebuttle to the fact they are pro-democrat and anti-republican. Any slant at all that will make the government look bad- you can count on the WP to report it. Remember- this is the same paper that praised Jane Fonda for her Vietnam trip...
  3. Mike's wife

    Mike's wife Guest

    Thank You Lisa for pointing that out. I just groweled this morning reading that on the front page of MSN this morning. It just makes me so mad that journalism can be so biased.

  4. Cori

    Cori Guest

    Hmm... why am I not surprised that someone would turn this into a democrat-republican thing?! PLEASE...
  5. randk

    randk Guest

    Hey, I am not saying this is a dem or rep item. I am just saying and showing what alot of folks including myself where saying and thinking when this was announced right after the hurricane. No need to make it politicol. that is not the itent of this post. Just take the info and deceide for yourself what it says and means to you. As you can see by my signature I do sail on and support Carnival, (yes we own some shares). Just some more info thats all.
  6. Cori

    Cori Guest

    I know, randk, and I agree. It just irks me to no end when any bit of info that questions the president or government must be "biased." All that SHOULD matter is, IS it true or ISN'T it?!?!

    I guess we would all be better served if every newspaper and TV news broadcast went around posting nothing but "rah-rahs" for how wonderful the government is handling things, 100% of the time, wouldn't that be nice?

    To paraphrase Teddy Roosevelt, "to announce that there must be no criticism of the government, or that we are to stand by the government right or wrong, is not only unpatriotic and servile, but is morally treasonable to the American public."
  7. Smilingtman

    Smilingtman Guest

    From above post

    To critics, the price is exorbitant. If the ships were at capacity, with 7,116 evacuees, for six months, the price per evacuee would total $1,275 a week, according to calculations by aides to Sen. Tom Coburn (R-Okla.). A seven-day western Caribbean cruise out of Galveston can be had for $599 a person -- and that would include entertainment and the cost of actually making the ship move.

    first the $599 is the low end of the scale for price.

    Now take in the fact that no one is leaveing tips that would be $70 person for 7 day cruise.

    When I took my last cruise 4 day I it cost me another $650 (not including tips) + on the ship 650/4=162.5 person
    and that is not inclusing any cash i use on the ship and only $100 in the casino (would of been more but was a trip for my kids and not me)

    599 + 70 + 162.5 = $831 per person

    now not knowing what they make from the ports they visit that would most likely add a couple of hunred dollaors plus what the casino makes is most likely a couple of hunder dollars. OH yes what they sell on the ship like shirts and things like that. so that $1,275 looks like a lot but when broken down it doesnt look like that much.

  8. randk

    randk Guest

    You make some good points there smilingtman, but let's consider this also. there is no or a small amount of fuel being used which is a very large cost, I know i am in the transprotation industry. they are using shore power while docked. There is no muscial shows or other types of entertainment cost invovled, maybe half the crew is being used, there are other cost that they are not incurring at this time. So the bottom line has been changed. Let us also look at the tax exempt situtation. They are a floating hotel makeing lots of money at a US dock off the US government (US = you and me) and yet they do not want or have to pay taxes on that money. Not a good deal for us but for them yes. Again, I understand the need and the desire to make a profit. But again lets call it what it is and not whitewash it. Since the ships are not being used to full capicity, why not give the ships back pay what is owed up to this time, give them another 2 weeks worth of pay and transfer the business to land based hotels that will also have to pay taxes on the income earned. I am sure it would and could be far less than what has been paid so far to Carnival. Beside hotel rooms are far larger than most of the cabins on the ships including the suites. Cat 11 and 12's.
  9. Lisa Flyer

    Lisa Flyer Guest

    I am a Carnival fan- and my post was just to say "don't believe everything you read"- good/bad/indifferent. The state of journalism today is sorry in my opinion. I won't even start on that topic...

    Do I think the cost is a lot? Yea, but in a quick fix, you have to pay a little more- also, we are forgetting to count in all the comps that will be given out for those 100,000 cruisers, as well as lost customers who won't be going back to Carnival. I would venture to say that when all the math is all said and done, I bet there's not a lot sitting in Carnival's pockets.

  10. randk

    randk Guest

    I sure hope that I am right that Carnival will be makeing money on this little deal, my stocks would love to go even higher. I still say that they will make a profit on this and I hope they do. Just call it what it is. i would hate to think that they went into this without considering us stock holders. We have invested in the company to make a profit not lose one.
  11. Good luck to all who will actually try to add and end up with real amounts here... and that does include my dear Obama...

    Another thing, the press needs to make up their mind... say it was a NO BID offer, or that CARNIVAL WON THE BID... can't really have both in the same article, MSN.
  12. randk

    randk Guest

    Now now Coppertone Girl, you cant blame the press for getting the story wrong. they where the ones that were telling of rapes murders and such with no proof. And only now are they admitting they were only reporting what they were told. So they are only repeating what Obama told them...he even is not sure what he said but as you can tell he is covering all the bases. LOL Still a profit is a profit, some not as large as others, but a dollar over cost and expense is still a profit. That my dear friends has always been my point.
  13. This deal is gouging, pure and simple. The government had enormous pressure at the time to do something, anything. Carnival took advantage of that. Carnival also took advantage of the suffering of the entire city of people that were suddenly homeless.

    Carnival obviously felt no obligation to the city that had served as home port for some of it's ships.

    Carnival obviously felt no obligation to be a good corporate citizen, and lease the ships at a reasonable price, say, the average price that it would have made otherwise.

    Carnival obviously felt an obligation to fatten it's wallet to the maximum extent possible, without regard for ethical considerations.

    While other corporations line up to contribute millions to the relief effort. Carnival made the cold blooded decision to GOUGE the American taxpayers and take obscene advantage of a tragic situation.

    This is the ethically deficient mindset of those who put profit above conscience.

    Now, before those of you who can only see red and blue start your knee-jerk sputterings, let me say that I am a good conservative, and have been since I volunteered for the Barry Goldwater campaign. So let's dispense with the accusations of a far left bias here.

    This has to do with greed, and nothing else.

    I'm taking my family on a cruise in January, 4 cabins reserved on Carnival. I just cancelled that cruise, and will never sail with Carnival again. Worthless protest? Maybe so, but I won't support such a company.

    Ask yourself, should you?
  14. randk

    randk Guest

    To be very honest with you, Bigdaddt I have been considering selling my stocks in carnival and taking my profits and spending them on a few other cruises with a differnt line.
  15. Bigdaddt,

    Are you kidding me. Did you forget that Carnival won the bid. That means they must have been the cheapest, and bid against other lines. If I remember right the government asked them. Carnival ddint go to the government and say hey we will give you three ships. Should Carnival say hey here is 234 million dollars. We dont need it. Randk, you are saying you may sell your stocks because of this. Well your stocks wouldnt be worth much if they did what I just mentioned. Why in the heck turn this into something more than it is. There is always someone who complains about sill things. Yes, I am sure Carnival is making money on this. They are smart business people. You cant blame them for that. There wouldnt be a cruise line to go on if they werent. If you want to blame someone for this blame or sweet president. I am not turning this into democrat vs republican because i am neither. This guys a joke. Good appointment he made for FEMA. Really qualified for the job.

    Back to Carnival though. Look at this situation. They are losing customers over this. How can you say Carnival isnt taking a huge risk doing this. They are giving full refunds and giving future ship credits and or discounts on future cruises. Carnival is incurring all expenses on this. Could Carnival know there would be another Hurricane, and they would have to up and move the ships. They are also paying there staff now. Most employees make strictly tips. You think they are making any tips now. So who pays them? Do you know what some of the ships may look like when they are done with this. They have already announced Sensation has to go in for drydock when its done.

    You know I might get rambling about things so I will stop. It just drives me crazy when someone goes way overboard and starts talking about things they dont know about. They only read it in some stupid paper, and here one independant side of it. they dont look at the full scope of the problem. How in the world Carnival can be blamed for anything is Ludicrous. Just ludicrous.
  16. One other thing. Your so quick to jump at Carnival. Let me guess its Carnivals fault that the people that were all given 2,000 by the government went and spent it at topless bars, and are buying alcohol with that money to. If we had any government at all that we could count on than we wouldnt complain and spout off about stupid little things. There are so many problems in our society I just wish people that complained about things like this would put as much effort into things that matter. This is why more people stay in the background and dont help and do things. You can never make anyone happy. There are always people that complain and moan about everything.

    Keep this in perspective. Carnival just gave the government 1.5 billion dollars of its property. Your right they are horrible people. Just terrible.
  17. Cruizer

    Cruizer Guest

    I think Scott Malinowski's comments might be a little strongly worded, but I have to agree with him. Making a profit is not a crime, and Carnival did not force FEMA to accept the bid.
  18. randk

    randk Guest


    Please read all of my post on this thread. You will see that I have nothing against making a profit. I am all for it. i bought stock in carnival a few years ago for 22.50 per share it is now 49.07 per share down from a high of 59.00 per share. I just think due to all this heck raising it is time to sell before it drops more than I care for it to. I am all for profit, espically when it comes to me making some. LOL I have never belived that carnival did this to be kind and loving. They did to help but also make some money. they do have stock holders that they must be concerned with also. A good business takes care of the stock holders and carnival has and I am sure it continue to do so. the ships they are using where schudled to go into dry dock before this, they have now extended that date. No since in wearing out the new stuff with non paying guest. I think that the above shows how our government works, and how little planning there really is. I also belive this is a fine time for people to realize one other thing, I know this will be hard on some but here goes, Take care of yourself and your family depend on one another, help each other, and never ever depend on the government to do something for you that You yourself can do. Stop asking the government for help and direction for your lives. do it yourself and ask the government to butt out of your everyday lives. The less they have control of the better off we all will be, regardless of what party is in the white house.
  19. Cruzman

    Cruzman Guest

    Just a couple of comments; Because I live near Mobile and have observed the Holiday docked at the cruise terminal downtown on at least three occasions recently, I can assure everyone that the generators on board are steadily running and there is no evidence of any shore power being supplied to the ship. Secondly, the entire complement of the crew on board these ships are being paid during the lease period. After all, they all had contracts of their own with Carnival at the time of the contract with FEMA. I must confess that I fail to understand why FEMA plans to move the Holiday 40 miles to Pascagoula in the hopes that more people will board the ship. Most of the people on board now are from Mississippi and my understanding is that any school aged children on board are now attending school in Mobile. I guess that is what this thread is all about; figuring out the why's and wherefores of FEMA.
  20. There, right there... is the biggest loss that Carnival KNEW about.
    Now, do you mean to say that Carnival WENT to the Governmnt, instead of how it has been reported (that FEMA went to Carnival)?

    I think this is going to be the important issue here... WAS IT A "SWEETHEART DEAL" as it has bee splattered all over teh Miami Herald, or was Carnival put between a rock and a hard place?

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