Good morning, and welcome to our business update conference call. I am Arnold Donald, President and CEO of Carnival Corporation & plc. I'm joined today telephonically by our Chairman, Micky Arison, who is in Europe. And here with me in Miami, David Bernstein, our Chief Financial Officer; Beth Roberts, Senior Vice President, Investor Relations; and as part of our previously announced transition, our Chief Operations Officer, Josh Weinstein. Thank you all for joining us this morning. Now before I begin, please note that some of our remarks on this call will be forward-looking. Therefore, I must refer you to the cautionary statement in today's press release. This is my final business update as CEO. While very disappointingly, our share price unfortunately reflects the current market conditions, I am nonetheless very proud of all that the team has accomplished over the last 9 years. I am especially proud of how well we have collectively overcome what seemed like insurmountable obstacles at times these last few years. And I remain very excited about our future. With cash from operations now turning positive, we have reached an inflection point and, in fact, turned the corner and are headed on a positive trajectory. I'm not only excited about, I am also very confident in the future of our company, and I'm looking forward to its continuous success. I strongly believe in this team and we are enjoying a smooth transition. As Vice Chairman, far and away, my number one responsibility will be to support Josh and his management team as they work to build on the current momentum. Josh is a proven executive. He is well respected throughout the company. He served in key leadership roles. He's driven strong business results during his tenure. And he played an integral part in steering the company through the global pandemic. Josh's thorough understanding of our industry, of our operations, and our business strategy puts him in a strong position to lead the next phase of our company's journey. With his vision, intensity, and core values truly aligned with those that characterize our company, I cannot think of anyone better suited for this role than Josh. Now turning to our business results. It is reinforcing to see the continued strength in demand for cruise. We are aggressively, yet thoughtfully, ramping up to full operations, with over 90% of the fleet now in service. And at the same time, we are driving occupancy higher on those ships that have been sailing and we are focused on improving pricing compared to pre-COVID levels. As we had indicated, for the 20 ships that restarted over the last quarter, occupancy has been intentionally constrained. That said, occupancy increased from 54% last quarter to 69% this quarter, while we also increased available capacity by 25%. Now the combination drove an over 60% sequential improvement in passengers carried. In fact, we carried over 1.6 million guests this past quarter. And partly in the month of June, we are already approaching 80% occupancy and, again, on even higher capacity. Now what makes that even more impressive is we were able to achieve that in an environment of uncertainty, given frequently changing protocols, including those that were far more restrictive than those in broader society and that were far more restrictive than those found even in other portions of the travel and leisure sector. While thankfully, vaccination and test requirements are starting to relax given the improvement in the state of the virus, we continue, nonetheless, to face constraints in the pool of potential guests due to ongoing requirements in a number of places. Yet, we have been able to make very meaningful progress. As you know, the CDC recently lifted the testing requirements for reentry into the U.S. for air travel which, going forward, clearly removes some of the friction from our North American brands deployment in both Europe and due to Canadian embarkation Alaska. Usually requiring a longer duration flight, these itineraries are typically associated with longer lead times. Consequently, we expect the real benefit to be realized in 2023 and beyond. Importantly, customer deposits increased by $1.4 billion in the second quarter, topping $5 billion. Now we have seen a continued increase in expressed demand, and we expect to see that demand continue to build as protocols are further relaxed and as society becomes increasingly comfortable managing the virus. Concerning the threat of global recession, while not recession-proof, our business has proven to be recession-resilient time and again. As we have seen in prior cycles, even in downturns, employed people take vacations. And that's even more true in today's environment where people prioritize spending on experiences over spending on things. Cruise remains an especially appealing vacation option during downturns because of its compelling value proposition relative to land-based alternatives. Also, there is pent-up demand for travel globally which is a powerful tailwind. Currently, we are seeing success for close-to-home cruises, with many sailings achieving occupancy at or above 100%, where guests perceive far less friction than with international embarkations. In fact, our Carnival Cruise Line brand, sailing its entire fleet, is expected to reach nearly 110% occupancy during our third quarter. We also saw an improvement in new-to-cruise guests in the second quarter, and we have begun to ramp up our advertising efforts selectively to help support attracting first-time cruisers. Concerning pricing. We remain focused on improving price through next year. We are focused on optimizing the occupancy while preserving long-term pricing. In this current environment of travel restrictions and health protocols where we have cost unavailability, we use OPay channels and limited promotions to capitalize on near-term demand. We are building on our aggressive fleet optimization efforts. Given challenges in parts of Europe, we have reallocated capacity to capitalize on markets where there is stronger demand. In fact, we just announced an especially creative approach that we think holds great promise. The launch of Costa by Carnival. With Costa by Carnival, we bring the ambience and beauty of Italy to Carnival Cruise Line guests. Costa Venezia, Costa Firenze, both newly introduced and both spectacular, will be managed by Carnival Cruise Line, catering to Carnival's guest base beginning in the spring of '23 and 2024, respectively. This new concept will offer a unique experience for Carnival guests to choose fun, Italian style while capitalizing on Costa's beautiful Italian design elements. Deployment for Venezia will be announced shortly and will represent a new itinerary option for Carnival guests. Separately, we also announced the transfer of Costa Luminosa to the Carnival brand beginning in November 2022 catering to Australian guests. Now with these changes, the Carnival brand will replenish capacity that has been removed from recent ship exits and contribute to managed growth for the brand. These new and differentiated product offerings enable us to capitalize on demand among Carnival Cruise Line guests and strengthen return on invested capital across our portfolio. In addition, we continue to further optimize our fleet and have announced a removal of an additional smaller, less efficient ship, bringing the total to 23 ships to be removed from the fleet since 2019. The accelerated removal of these less efficient ships, coupled with the delivery of 9 larger, more efficient ships delivered since 2019 fosters higher revenues over time through a 7 percentage point increase in the mix of premium-priced balcony cabins and an even better platform for onboard revenue opportunities as well as generating a 6% reduction in ship-level unit costs, excluding fuel, moderating the effects of inflation and enabling us to deliver more revenue to the bottom line. Upon returning to full operations, nearly 1/4 of our capacity will consist of newly delivered ships, expediting our return to profitability and improving our return on invested capital. Moreover, next year, our capacity growth compared to 2019 is concentrated in brands with our highest returns. Concerning recent fuel prices, we continue to aggressively manage our fuel consumption. Upon reaching full fleet operations, we anticipate that we will achieve a further 10% reduction in unit fuel consumption and a 9% reduction in carbon intensity as compared to 2019. With our proactive efforts to reduce fuel consumption, we actually peaked our carbon footprint in 2011, and that's despite an over 30% increase in capacity expected through 2023. In fact, we have reaffirmed and strengthened our carbon intensity reduction goals for 2030 and are on an accelerated path to achieve them through our fleet optimization efforts, investing in projects that drive energy efficiency, designing energy-efficient itineraries, and investing in port and destination projects. During the quarter, Carnival Cruise Line broke ground on an exciting new destination project, Carnival Grand Bahama Cruise port. This destination is expected to open in late 2024 and will offer guests a uniquely Bahamian experience with many exciting features and amenities. Now this private guest experience destination will join Princess Cay, Half Moon Cay, Grand Turk, Mahogany Bay, Amber Cove, and Cozumel, securing our strong foothold in the Caribbean. In fact, we benefit from a total of 9 owned or operated private destinations and port facilities, including terminals in Santa Cruz de Tenerife and Barcelona. Again, I believe we have operationally reached an inflection point and we are heading in the right direction with cash from operations turning positive this quarter. We have a strong liquidity position of $7.5 billion and have already managed our debt maturity towers down through 2024. We have 91% of the fleet now operating and at improving occupancy levels, which bodes well for future cash generation. And while to date, travelers perceive uncertainty and friction continues to be a headwind as protocols become less restrictive and society continues to become increasingly more comfortable managing the virus, we expect to see demand continue to build, as we have already seen with the strength for Carnival Cruise Lines closer-to-home cruises. The attractive value proposition relative to land-based alternatives, which is even greater today, and the continued strength in onboard revenues should help foster a good environment for pricing and should help to accelerate our momentum going forward. Once again, I don't have the words to adequately convey how personally rewarding and inspiring the commitment, the dedication, the creative ingenuity, and the phenomenal execution of our Carnival team, shipboard and shoreside around the world has been. And that, of course, includes our Chairman, Micky Arison, and the rest of our Board of Directors. In the face of constantly changing barriers and constraints, in an environment of continuous and extreme uncertainty, our global team of tens of thousands successfully tackled challenge after challenge after challenge, honoring our commitment to our highest priority of compliance, environmental protection, and the health, safety, and well-being of everyone while stewarding the shareholders' assets and positioning us for great success over time. I simply can't thank them enough and it's truly a privilege and an honor to work with them. Thank you also to our valued guests. Their loyalty to our 9 world-leading brands and the countless letters and calls of support are so deeply appreciated. Thank you to our travel agent partners, who are more critical than ever in helping to deliver the great story of our cruise. Thank you to our home port and destination communities who have stood by us throughout these challenges, among other contributions providing vaccines and lobbying for workable protocols. Thank you to our suppliers and other many stakeholders who stood by us and worked hard to meet our needs while facing challenges of their own. And of course, thank you to our shareholders, our bondholders, the banks, and the export credit agencies for their continued confidence in us and for ongoing support. We are indeed poised for a great future because of the efforts and contributions of so many. With that, I would like to take the opportunity to introduce Josh and give him the chance to say a few words before turning the call back to David. Josh?

Thank you, Arnold. And thanks again to Micky and the entire Board of Directors for this great opportunity. I strongly believe in our company and our ability to create happiness by delivering unforgettable and much-needed vacations for our guests. This need is even more important in the current environment given the stresses of the past 2 years and the value that we all place on shared experiences with friends and family. Now we are uniquely placed to deliver on this through our 9 leading cruise brands, each with a focus on meeting their specific guests' needs and wants. We plan on renewing our efforts to ensure each brand achieves clarity of positioning and effectively reaches their target audience. This, alongside providing cruise experiences that really resonate with their distinct guest base, will help each brand optimize its yield and growth aspirations to drive revenue. We also expect to capitalize on our revitalized fleet, our continued portfolio optimization efforts, and our unparalleled destination footprint, particularly in the Caribbean and Alaska. In addition, we have an exciting sustainability road map that underlies all of our efforts. What also gives me tremendous confidence is our determined and resilient team around the world. They've proven time and time again for the last 2.5 years that they can absolutely achieve anything and they do it while staying true to Carnival Corporation's collective values and positive culture. All of this will help us accelerate revenues and returns, drive durable earnings growth and improve the balance sheet. As you said, Arnold, we are clearly at an inflection point and have a bright future ahead. I'm looking forward to putting the perspectives I've gained here in my 20 years in multiple roles to work for the benefit of our shareholders and our many other stakeholders.

Thank you, Arnold. I'll start today with a review of guest cruise operations, along with a summary of our second quarter cash flow. Next, I will touch on our 2024 mandatory auditor rotation. Then I'll provide an update on booking trends and finish up with adjusted EBITDA expectations and our current financial position. Turning to guest cruise operations. During the second quarter 2022, we restarted 20 additional ships, resulting in 74% of our total fleet capacity in guest cruise operations for the whole of the second quarter. This was a substantial increase from 60% during the first quarter 2022. As of today, 91% of our fleet capacity is in guest cruise operations. We were pleased to see that the second quarter 2022 revenue increased by nearly 50% compared to the first quarter 2022, reflecting continued sequential improvement. For the second quarter, occupancy was 69% across the ships in service, a significant increase from the 54% in the first quarter. We were encouraged by the very close-in demand we experienced during the second quarter for the second quarter, resulting in nearly double the close-in occupancy gains in second quarter 2022 versus second quarter 2019, a trend we had anticipated. Revenue per passenger day for the second quarter 2022 decreased slightly from a strong 2019. As Arnold indicated, we are focused on optimizing occupancy while preserving long-term pricing. However, let's not forget the impact due to the future cruise credit, or FCC as they are more commonly called, which cost us a couple of percentage points in second quarter 2022 versus second quarter 2019. Excluding the impact of FCCs, revenue per passenger cruise day for the second quarter would have been higher than a strong 2019. Once again, our onboard and other revenue per diems were up significantly in the second quarter 2022 versus second quarter 2019, in part due to the bundled packages as well as onboard credits utilized by guests from cruises canceled during the past. We have recently expanded our bundled package offering given their popularity. The new bundled offerings require us to make changes to the accounting allocation. As a result, in the third quarter, you will see more of the revenue left in ticket, unless allocated to onboard, impacting the onboard and other revenue per PCD comparisons for the third quarter as compared to the second quarter. Just another reason to add to the list of reasons why the best way to judge our performance is by reference to our total cruise revenue metrics. On the cost side, our adjusted cruise cost without fuel per available lower berth day, or ALBD as it is more commonly called, for the second quarter 2022 was up 23% versus second quarter 2019. The increase in adjusted cruise cost without fuel per ALBD is driven by essentially 5 things: First, the cost of a portion of the fleet being in pause status. Second, restart-related expenses for 20 ships. Third, 24 ships being in dry dock during the quarter, which resulted in over double the number of dry-dock days during the second quarter versus the second quarter 2019. Fourth, the cost of maintaining enhanced health and safety protocols. And finally, inflation. Remember that because a portion of the fleet was in pause status during the second quarter and the higher number of dry-dock days, we spread costs over fewer ALBDs. The first half of 2022 had an unusually large number of ships in dry dock as part of our resumption of cruising ramp-up, optimizing our dry-dock schedule while the ships are not in service and ensuring that the ships were in great shape and worked great when they welcomed their first guests back on board. However, the second half 2022 dry-dock schedule looks more normal by historical standards. We anticipate that many of these costs and expenses driving adjusted cruise costs without fuel per ALBD higher will end during 2022 and will not reoccur in 2023. As a result of all of the above, we expect to see a significant improvement in adjusted cruise costs, excluding fuel per ALBD, from the first half of 2022 to the second half of 2022, with a mid-teens increase expected for the full year 2022 compared to 2019. Next, I'll provide a summary of our second quarter cash flow. We ended the second quarter 2022 with $7.5 billion in liquidity versus $7.2 billion at the end of the first quarter. The change in liquidity during the quarter was driven essentially by 6 things: First, negative adjusted EBITDA of approximately $900 million due to our ongoing redemption of guest cruise operations, an improvement from the first quarter. Second, our investment of $500 million in capital expenditures. Third, $200 million of debt principal payments. And fourth, $400 million of interest expense during the quarter. All of which was more than offset by a $1.4 billion increase in customer deposits during the quarter, along with the $1 billion principal amount of senior unsecured notes we issued last month. Now I will touch on our 2024 mandatory auditor rotation. I wanted to take a moment to explain our situation as it is very different from most publicly listed companies outside the U.K. and the EU. Carnival plc, our U.K. publicly listed company, which is part of our dualistic company structure, is subject to U.K. law which requires mandatory auditor rotation. Therefore, PricewaterhouseCoopers, or PwC as they are commonly called, must be changed as Carnival plc's auditor for the fiscal 2024 audit at the latest. Therefore, we conducted a competitive RFP process for the independent audit of Carnival plc as well as the consolidated entity, Carnival Corporation & plc. As a result of the recently completed RFP process, yesterday, our Board of Directors appointed Deloitte as the company's independent auditor for fiscal 2024. We completed the RFP process in the first half of 2022 to ensure an orderly transition of nonaudit services for the remainder of 2022 and to ensure independence by Deloitte in 2023, as required under U.K. law. Before I continue, I would like to add that the Board of Directors and management of Carnival Corporation & plc would like to thank PricewaterhouseCoopers for its continued service as the company's independent auditor. Now let's look at booking trip. The higher March weekly booking volumes we talked about on our last business update continued throughout the quarter. This resulted in booking volumes for all future sailings during the second quarter 2022 being nearly double the booking volumes during the first quarter 2022. Second quarter 2022 booking volumes for all future sailings were the best quarterly booking volumes we have seen since the beginning of the pandemic, although they were still below the 2019 level. I am happy to report that booking volumes since the beginning of April for the second half of 2022 sailings have been higher than 2019 level. All of this reflects the previously expected extended wave season. And as I said before, we were very encouraged by the close-in demand we experienced during the second quarter for the second quarter, resulting in nearly double the closing occupancy gain in second quarter 2022 versus second quarter 2019, a trend we had anticipated. While the cumulative book position for the second half of 2022 is below the historical range, we believe we are well situated with our current second half 2022 book position given current booking volume, coupled with closer-in booking patterns. We continue to expect that occupancy will build throughout 2022 and return to historical levels in 2023. Pricing on our cumulative book position for the second half of 2022 was lower, with or without FCC, normalized for bundled packages as compared to 2019 sailing. For the full year 2023, our cumulative advanced book position continues to be at the higher end of the historical range and at higher prices, with or without FCC, normalized for bundled packages as compared to 2019 sailings. This is a great achievement given pricing on bookings for 2019 sailings is a tough comparison as that was a high watermark for historical yield. During the second quarter 2022, we once again increased our advertising expense compared to the first quarter 2022 in anticipation of our full fleet being in guest cruise operations and our 8% capacity increase for 2023 versus 2019. Second quarter 2022 was the first time since the pandemic that advertising expense was above 2019 level. I will finish up with our adjusted EBITDA expectations and our current financial position. We all know that booking trends are a leading indicator of the health of our business. With improved recent booking trends leading the way, driving customer deposits higher, positive adjusted EBITDA is clearly within our sights. Adjusted EBITDA over the first half of 2022 was impacted by restart-related spending and dry-dock expenses as 34 ships, nearly 40% of our fleet, were in dry dock during the first half of fiscal 2022. For the third quarter, with over 90% of our capacity back in guest cruise operations and occupancy percentages building, we expect ship level cash contribution to grow. As a result, we expect adjusted EBITDA to be positive for the third quarter 2022 which, after everything we've been through, will be something worth celebrating. With EBITDA turning positive, more liquidity than last quarter, debt maturity towers that have been well managed through 2024, we have already refinanced a portion of our 2023 maturities and we will do the rest over time.

Thank you, David. Operator, please open the call to questions.

. Our first question comes from the line of Steven Wieczynski with Stifel.

Arnold, congratulations, and it was a great run. So thanks for your service. So first question would be around the booking patterns, which clearly here are continuing to strengthen. However, I guess, investors are going to, at this point, based on where your stock is, they're going to look past current booking patterns and they're going to focus on what could come next given an uncertain macro backdrop. And I guess my question is, how would you guys attack a slowdown in bookings or load factors? In the past, you would have typically cut prices in order to keep load factors high. But this time around, if you do see bookings slow, do you think you guys and your peers will be able to stay more disciplined on the pricing side of things, so the recovery wouldn't be as steep on the other side?

A couple of quick comments. First of all, I wouldn't comment on what the others would do. You can talk to them directly. For us, we have, as we've been hit with different variants and the invasion of Ukraine and other things and bringing more capacity on board, we've had to consider all of that. And at this point in time, largely we have done everything in mind of trying to keep our pricing strong going forward because we think that's the right move right now. The positive thing here is that there is pent-up demand. And so even if there was a global recession, the reality is we are, as I said in my comments, recession-resilient historically. And this time, if there was a recession, there's tremendous pent-up demand, which in the past wasn't necessarily the case because it's been a couple of years where people have not been able to travel the way they wanted to. So a combination of things. One is we are naturally somewhat recession-resilient. We have the added tailwind of pent-up demand. And yes, we're focused on doing what we can to ultimately drive the cash we need but, at the same time, do it in a manner where we can maintain pricing strength. David may have a comment.

Yes. Just one thing I'd add to that. Remember, Steve, not every recession is the same. And we are currently in a very strong labor market. And given that, if people have jobs and they feel comfortable in their jobs, they're likely to need a vacation. And remember, vacations are no longer a luxury, they're a necessity in today's world. So I think we will do very well. As Arnold said, we are recession-resilient and we'll do very well in a recessionary environment.

And then there's uncertainty about whether a recession is on the horizon. Savings are currently high, and as David mentioned, employment rates are very low. Therefore, there is economic strength for now. We will see how it unfolds.

Okay. Got you. And then second question I guess, probably for you, David, around the recent debt raise. And we got a lot of questions from investors about why you guys would go out and raise debt north of 10% and maybe what drove you. Or maybe there was an underlying reason as to why you had to raise debt at those levels. And I guess from here, the question is going to be, what is the opportunity moving forward to refinance? Or maybe there is enough chance to refinance given where rates are at this point?

Yes. As I mentioned in the last conference call, we were planning to refinance the $3 billion in 2023 maturities over time. We examined the market and recognized that we're in a rising interest rate environment. We successfully raised $1 billion at 10.5%. The market conditions were challenging, and it was unpredictable what would happen overall. However, despite these conditions, we managed to secure that $1 billion at our desired price on that day, and we are pleased with this outcome. We aim to refinance the remaining $2 billion gradually, as noted. Currently, interest rates are higher than they were a month ago when we proceeded with our bond offering. Overall, we feel confident about our strategy. Although we added 10.5% to our debt, it's important to note that our average interest rate across our portfolio is 4.5%. We've effectively managed the entire portfolio, and this recent debt is merely a small piece of it.

Next question from the line of Robin Farley, UBS.

Great. Arnold, best wishes as this will be your last earnings call. Good luck with everything. I have a question about occupancy. Investors seem to struggle with understanding how much of the lower occupancy is temporary, like the Omicron cancellations in Q1 and new ships entering service at lower levels. I would like to know if you could provide some insight into the sequential occupancy build through Q2. I realize you typically don't disclose that level of detail, but perhaps you could share your visibility for Q3, considering you would usually be 80% to 90% booked by now. Additionally, are you observing any changes in ticket prices compared to 2019 and occupancy levels with this visibility?

Certainly, Robin. I'll let David provide some specifics. However, I want to emphasize that we are seeing substantial strength in occupancy. Initially, we had limited occupancy as we reintroduced ships due to various protocols. Additionally, there were certain instances where we temporarily relocated crew while we were ramping up staffing and managing capacity. Overall, our occupancy rates have shown significant improvement. As we noted earlier, the Carnival brand is anticipating 110% occupancy in the third quarter. We have increased capacity sailing, and occupancy is steadily increasing. As the world adjusts to managing the virus and loosens restrictions, we are trending towards a more normalized operation for the Carnival brand, despite still facing some limitations. David?

Yes. During the second quarter, the variance between the months ranged from 67% to 71%, leading to an overall occupancy of 69% for the quarter. As Arnold mentioned, we're approaching 80% for June. With positive booking trends, we are continuing to grow. However, we started 20 ships in the second quarter, and for several of the cruises, we initially limited occupancy to ensure a positive experience for our guests. This approach paid off by June, and we feel very optimistic about the overall trend. It is moving in a positive direction, and we anticipate continued improvement in the third quarter and into 2023.

Okay. Great. As a follow-up on the expense commentary, you mentioned various factors contributing to the 23% increase, such as pause status, ship restart costs, and dry dock. I know you said this will improve significantly by year-end. Could you quantify how much of that increase was due to inflation in health and safety? Specifically, how many of those 23 points would decrease automatically once the fleet is back in service? This would help us understand where expenses per passenger might land by the end of the year.

Yes. The easiest way for you to assess this is to do your own calculations, which is quite straightforward. We experienced a 24% increase per ALBD during the first half of the year. If you project to mid-teens for the full year, you can deduce our performance for the second half while considering the pause status, the restart, and the dry docks. I mentioned that the dry docks in the latter part of the year will be more typical in terms of dry-dock days. By calculating that, you can determine our performance for the second half of the year, which will provide a better overall picture than the first half. However, there are still some variables due to supply chain disruptions and other factors, and we are actively working to manage those issues. We will achieve this. So, that’s probably the most effective way to analyze it.

I know that simple average would get you to kind of a mid-single digit for the second half. But I guess I was wondering by kind of the end of the year, really thinking about 2023, that's how I was looking for sort of what pieces would maybe go to...

I understand. And I'm not in a position to give cost guidance for 2023 at this point. But I was just trying to give you some directional insights. You can see what the back half is, and we'll manage through all of those items effectively over the next 6 months. And like I always say, we hope to do better. But at this point, it would be premature for me to give you cost guidance.

Our next question comes from the line of Jaime Katz with Morningstar.

I'd be interested in hearing how you guys are seeing differences between domestic and international consumers, particularly because of this transition of Costa ship, maybe being this rebranding with Carnival and whether or not that's signaling anything?

Yes, I think generally, Europe faces greater challenges in consumer demand related to travel compared to North America. The recent move with Costa by Carnival and the transfer of Luminosa to Australia is part of adjusting Costa to better fit the current European environment, which has been complicated by COVID and macroeconomic conditions, partly due to the invasion of Ukraine. All these factors are affecting the European market sector. Consequently, we are reallocating to brands that are in higher demand and in stronger positions. One of the advantages we have is that our assets are mobile. Overall, we still see robust demand in Europe, particularly in the U.K., while certain areas in Germany also show continued strength. We believe there is a solid market in Europe and a strong market in North America, and we are optimizing our brand portfolio to enhance cash generation and prepare for the long term.

If I can build on that a little bit. I did want to point out, so we talked about our bookings in the second quarter nearly doubling what they were in the first quarter. So the North America brands were a little bit over double compared to the European brands, which include Costa, who were a little bit less than double booking. I mean everything is heading in the right direction. There is good, solid, strong demand in all the brands. But the North America brands are doing, from a booking trend perspective, a little bit better than the European brands. I'd also like to point out, add to Arnold's comments, about Costa by Carnival. Because keep in mind, a big chunk of Costa's capacity in 2019 was in China. And so with that market at the moment closed, we rather than take all of that capacity and put it in Europe, we created a new market towards the Carnival guests which we think will expand the market here in North America and we'll be in a much better position overall. So we feel very good about all of our brands and the direction and we are managing it appropriately as you could see, what Arnold talked about the moves of the ships.

Okay. And then David, I don't think it was explicitly noted, but in the past, I think you guys had pointed to 2023 EBITDA above 2019 levels. And do you still feel like the business is tracking in the right direction to achieve that?

I have mentioned this several times. I believe we have the potential for EBITDA in 2023 to exceed that of 2019. However, a significant factor to consider is the rise in fuel prices over the past few months. It's important to keep that in mind. Nevertheless, with occupancy improving over time, there is certainly potential for that outcome.

Our next question comes from the line of Patrick Scholes with Truist.

Arnold, best wishes to you as well. The first question is, can you comment on your potential willingness to sell one or more brands to help improve the balance sheet?

Well, we're very pleased with our portfolio of brands. Having said that, our job is always to keep an open mind and do what's best for the shareholders. And so we would absolutely, again, evaluate any and all options. But we're only going to do what makes sense for the shareholders given our projections of opportunity given the portfolio we have.

Okay, fair enough. My second question is a clarification regarding the earnings release, where it mentioned that cumulative advanced bookings for the second half of '22 are now below the historical range, indicating a decline from the previously stated lower end. Specifically, you mentioned that this situation aligns with the anticipated improvement in occupancy levels for the second half of '22. Could you elaborate on what you mean by this phrase? I'm having trouble understanding how it relates to expected occupancy improvements.

Yes. What we were trying to convey is that, as Arnold mentioned in June, occupancy was nearing 80%. Although we are currently below historical levels, we anticipate that, due to the timing of booking patterns, occupancy in the latter half of 2022 will exceed the 69% we experienced in the second quarter. That's the main point we wanted to communicate.

Next question from the line of James Hardiman with Citi.

Arnold, I wanted to reiterate congratulations and good luck with what's next. Wanted to hone in a little bit on some of the pricing commentary, particularly the revenue per passenger cruise day. I think you said that number was down a little bit. There was a little bit of an FCC headwind there. But I think that same number was up north of 7% in the last quarter. Obviously, there's this growing concern that the industry is going to need to push price a little bit to fill these ships. Maybe speak to that idea. As we continue to fill up the ships in the third quarter and beyond, should we expect that pricing number to go down, down further? And then obviously, we're going to get back to some of that FCC impact. But sort of excluding that piece, how should we think about revenue per passenger cruise day as we continue to raise occupancy?

I think, overall, Arnold mentioned that our focus is on maximizing occupancy while maintaining long-term pricing. We are committed to that goal. In the second quarter, we increased our advertising expenses to drive more demand, and we have noticed an uptick in first-time customers. Our aim is to return to historical occupancy levels in 2023 with improved pricing. As we noted, pricing is up for 2023. However, with shorter booking windows and the use of OPay channels and limited promotions, we are boosting occupancy in the short term to optimize EBITDA and cash flow from operations. While I cannot provide guidance on gross revenue per passenger cruise day for the third and fourth quarters, it's important to remember that we anticipate many children onboard in the third quarter. Typically, this will contribute to overall revenue and profitability, but on a per passenger cruise day basis, it will be lower than for lower berths, both for tickets and onboard spending, as children generally do not spend as much. We are pleased to have them onboard, but there are factors to consider when assessing the trend in revenue per passenger cruise day from the third to the fourth quarter and beyond.

And with the increase in occupancy that we experienced in the second quarter, even with also the capacity increase we had in the second quarter, when you normalize the FCCs, our pricing did not decline.

Next question from the line of Daniel Politzer with Wells Fargo.

And Arnold, best of luck. And Josh, congratulations on the new position. I have a question regarding customer deposits and how we should approach this for the remainder of the year. It was notably strong in the second quarter. Typically, we see a sequential decline. As we consider cash flow for the rest of the year and how customer deposits impact that, can we expect the third quarter to not be cash flow positive due to this sequential decline? Or might the recovery in your bookings and operations mean that the third quarter could still be cash flow positive?

That's a great question, and we've been working on an answer. Since the end of May, customer deposits have been rising, increasing by a few hundred million dollars. In the last 3.5 weeks, that's where we stand. Typically, during the third quarter, we see a decrease because we reach a seasonal peak at the end of May. However, this year, there are factors that we anticipate will offset this trend. With more ships returning to operation and higher occupancy rates, we expect this to lessen the usual seasonal decline. It’s difficult to predict whether it will completely offset it, but there are factors that could mitigate the normal seasonal decrease in customer deposits.

Yes. One more quick one, if I could just squeeze it in. On just the newer cruise product, a lot of your fleet has been refreshed. To what extent have you been able to capture that pricing? Typically, the newer product gets a premium price but this is kind of a weird environment. Have you been able to capture that? And if so, any kind of metrics or a way to quantify that?

Yes. It's very hard to tell. I mean we look at so many things, but...

There's so many variables right now.

So many variables right now, it is just very, very difficult to tell in a comparison going back to 2019. So we look at the total, we manage it appropriately. I will tell you, those new ships are performing very well, high levels of occupancy, generating significant cash flows. And as we move forward, I suspect that we will be able to continue to generate a premium there. Arnold indicated nearly 1/4 of our fleet will be new in 2023 or newly delivered. The average age of our fleet, believe it or not, I think I said this before maybe on one of the previous calls, but from 2019 to 2023, despite the passage of 4 years, the average age of our fleet went down 1 year. So that we've got a lot of new capacity which should help very well both on the revenue side and on the cost side from an efficiency perspective and better fuel consumption. So we are very excited about the future and delivering memorable vacation experiences to probably 14 million people in 2023 as we go for historical occupancy levels.

Our next question comes from the line of Assia Georgieva, Infinity Research.

Arnold, you'll be missed. But Josh, very happy that you received this great position responsibility and triple promotion. So I do have a good question for you, hopefully. With the Costa by Carnival concept, that is obviously something that would be a long-term fixture. We're not just moving ships around for the next 2 or 3 years. Do you believe that this is something that could be expanded? And does the Costa fuel play any role in terms of what ships might actually continue to join the new concept? LNG deliveries have been somewhat difficult, I guess, in Europe. We had issues with Costa in South America last winter season. So how do you see the development of the concept? And what are the key parameters that would actually play into it?

I'm going to have Josh comment on the overall brand positioning and stuff as we go forward. But real quickly on the LNG fuel question. LNG, as you know, is the cleanest burning fossil fuel. It gives us a 20% reduction in carbon emissions, et cetera. But the ships are dual-fuel, so they can also burn MGO. And so that, unto itself, wouldn't impact the future of the Costa brand. We'll burn LNG whenever it makes sense to do so, which we think will be the majority of the life of the ships. But there are times where we'll obviously opt to burn MGO. But in terms of the Costa by Carnival positioning, it's a new concept, and I'll let Josh share his thoughts on it. Go ahead, Josh.

Just one thing to clarify. Obviously, the 2 ships that we're talking about that are going under this Costa by Carnival umbrella are not LNG ships. So that obviously didn't enter into our mindset at all. So just to reiterate Arnold's point. And with respect to the positioning, I think this is a great example of leveraging the scale of this corporation. Because what we could have done is taken those ships, new beautiful ships, solely under the Costa name and try to introduce them into the North American market on a stand-alone basis. But this is actually the opportunity to leverage everything that Carnival does so well here in the United States and Canada for its guest base. So by marrying that along with Costa's beautiful tonnage and onboard experiences, we have the ability to marry that up and make a best go of creating something really special. So the short answer is, we absolutely expect this to be successful and we don't look at this as something short term. But ideally, it will be something that works and we can build upon.

Thank you, everyone. Go ahead. Go ahead. I'm sorry. Okay. Thank you, everyone. Really appreciate it. And looking forward to listening to these as we go forward and hearing the great news coming from Josh and our team. So thank you all very much, and have a great day.

That concludes today's call. We thank you for your participation and ask you to please disconnect your lines.