Shares Fall In Cruise Company After Tragedy

The parent company behind the Costa Concordia cruise liner, which ran aground off the Tuscan coast, fears the disaster will cost it nearly $100m (£65.3m).

Carnival said its earnings for 2012 will be hit by up to $95m (£62m) from the Concordia cruise ship being out of service, in addition to "other costs to the business that are not possible to determine at this time".

Market strategist David Jones told Sky News the firm was exposed to additional costs from lost bookings and lawsuits.

Insurance premiums related to the sinking will cost the British-American company $40m (£26.1m), with analysts suggesting a profits could fall by 10% this year.

Shares fell 18% as markets opened for the first time after the Costa Concordia capsized.

The accident comes during what is typically the peak booking period for cruise holidays, between January and March, and after Carnival had already been hit by a decline in bookings for its cruises over the coming year due to the weak economic climate.

Customer confidence will be further dented by safety worries - several people have died as a result of the accident which the company said may have been caused by "significant human error" by the ship's captain.

But Pier Luigi Foschi, the chairman and chief executive of Costa, said: "In the short term it could have an impact on the cruise industry...but I do not think it will have a lasting impact in the long term, as far as confidence in the industry is concerned."

More than 15 million people took cruises in 2010, up from less than two million in 1980, according to the Cruise Lines International Association (CLIA) industry group, and although bookings may dip this year, the industry is set to continue growing albeit slowly.

In its most recent trading update, Costa's parent company Carnival revealed had fallen by 12.5% to $217m (£141.9m) for the quarter ending November 30, compared to the previous year's $248m (£162.1m).

Its chairman Micky Arison said the firm's priority at present was the safety of their passengers and crew.

"We are deeply saddened by this tragic event and our hearts go out to everyone affected by the grounding of the Costa Concordia and especially to the families and loved ones of those who lost their lives," he said.

"They will remain in our thoughts and prayers."

Carnival is the world's biggest cruise ship operator, with 11 cruise lines including Cunard Line and P&O Cruises in the UK.

It is listed in both the UK and US, and has headquarters in Southampton and Miami, after the controversial merger in 2002 with Britain's P&O Princess Cruises.