What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-06-26 compared with 2026-03-27 · 141 added, 54 removed, 135 unchanged (59% of the section changed)

26 unchanged sentences

• Factors associated with sustainability and the impact of greenhouse gases and other emissions on the environment could have a material impact on our business and operating results.

• We may not successfully complete the proposed unification of our dual listed company (“DLC”) structure and the migration of Carnival Corporation’s legal incorporation to Bermuda, or, if we do, we may not realize the anticipated benefits and will be subject to Bermuda law, which differs in some respects compared to our current jurisdictions.

The ordering of the risk factors set forth above is not intended to reflect our indication of priority or likelihood.

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In addition, substantially all of Holland America Princess Alaska Tours’ revenue and operating income is generated from May through September in conjunction with Alaska’s cruise season.

Proposed DLC Unification and Redomiciliation

On January 27, 2026, Carnival Corporation filed a Registration Statement on Form S-4 with the SEC, as amended by Amendment No.

1 filed on February 20, 2026 (the “S-4”), in connection with the proposed unification of the dual listed company structure under a single corporate entity, Carnival Corporation, with Carnival plc as its wholly-owned UK subsidiary, and the shifting of Carnival Corporation’s legal incorporation from Panama to Bermuda, as previously disclosed.

The SEC declared the S‑4 effective on February 27, 2026 and the definitive joint proxy statement/prospectus relating to the S‑4 was filed with the SEC on February 27, 2026.

Known Trends and Uncertainties

We believe changes in the cost of fuel, fluctuations in foreign currency exchange rates and new and evolving regulatory requirements related to the reduction of greenhouse gas emissions are reasonably likely to impact our profitability in both the short and long-term.

Recent geopolitical tensions and related concerns have and could continue to impact our profitability and may heighten other risks discussed in “Item 1A.

Risk Factors,” included in the Form 10-K.

In addition, while fuel prices have recently moderated, any renewed disruptions or escalation could result in increased fuel costs and adversely impact our profitability.

We became subject to the EU Emissions Trading System (“ETS”) on January 1, 2024, which includes a three-year phase-in period.

The impact of this regulation in 2025 was $91 million, which represented costs associated with 70% of emissions under the ETS operational scope.

In 2026, all in scope emissions will be impacted.

Recent geopolitical uncertainty may impact our results of operations and may heighten other risks discussed in “Item 1A.

Risk Factors,” included in the Form 10-K.

In 2026, all in scope emissions are impacted.

We believe fluctuations in foreign currency exchange rates and evolving regulatory requirements related to the reduction of greenhouse gas emissions may adversely impact our profitability in both the short and long term.

Statistical Information

Three Months Ended

May 31, Six Months Ended

2026 2025 2026 2025

Passenger Cruise Days (“PCDs”) (in millions) (a)

25.7 25.3 50.2 49.6

Available Lower Berth Days (“ALBDs”) (in millions) (b) (c)

24.7 24.2 48.4 47.8

Occupancy percentage (d) 104 % 104 % 104 % 104 %

Passengers carried (in millions)

3.4 3.4 6.5 6.5

Fuel consumption in metric tons (in millions)

0.7 0.7 1.4 1.4

Fuel consumption in metric tons per thousand ALBDs 28.2 29.9 28.6 30.1

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ALBDs assume that each cabin we offer for sale accommodates two passengers and is computed by multiplying passenger capacity by revenue-producing ship operating days in the period.

(c) For the three months ended February 28, 2026 compared to the three months ended February 28, 2025, we had a 0.5% capacity increase in ALBDs comprised of a 1.4% capacity increase in our North America segment and a 1.3% capacity decrease in our Europe segment.

• Our North America segment’s capacity increase was caused by a Princess Cruises 4,310-passenger capacity ship that entered into service in September 2025, partially offset by a P&O Cruises (Australia) 2,000-passenger capacity ship that left the fleet in February 2025.

• Our Europe segment’s capacity decrease was caused by more ship dry-dock days in 2026 compared to 2025.

(c) For the three and six months ended May 31, 2026 compared to the three and six months ended May 31, 2025, we had a 2.0% capacity increase and a 1.2% capacity increase in ALBDs.

(d) Occupancy, in accordance with cruise industry practice, is calculated using a numerator of PCDs and a denominator of ALBDs, which assumes two passengers per cabin even though some cabins can accommodate three or more passengers.

Percentages in excess of 100% indicate that on average more than two passengers occupied some cabins.

Three Months Ended February 28, 2026 (“2026”) Compared to Three Months Ended February 28, 2025 (“2025”)

Three Months Ended May 31, 2026 (“2026”) Compared to Three Months Ended May 31, 2025 (“2025”)

Passenger ticket revenues made up 64% of our 2026 total revenues.

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This increase was caused by:

• $80 million - 2.0% capacity increase in ALBDs

• $61 million - higher ticket prices

• $60 million - net favorable foreign currency translation impact

• $42 million - higher ticket prices driven by continued strength in demand

These increases were partially offset by a decrease of $36 million in air transportation revenue.

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• $76 million - higher onboard spending by our guests

• $49 million - net favorable foreign currency translation impact

• $53 million - 2.0% capacity increase in ALBDs

North America Segment

Passenger ticket revenues made up 60% of our North America segment’s 2026 total revenues.

Passenger ticket revenues increased by $17 million, or 0.7%, and were $2.4 billion in 2026 and 2025.

This increase was caused by:

• $35 million - 1.4% capacity increase in ALBDs

• $22 million - higher ticket prices driven by continued strength in demand

These increases were partially offset by a 1.3 percentage point decrease in occupancy, representing $31 million.

Passenger ticket revenues increased by $74 million, or 2.9%, to $2.7 billion in 2026 from $2.6 billion in 2025.

This increase was caused by a 3.4% capacity increase in ALBDs, representing $87 million, partially offset by a 1.1 percentage point decrease in occupancy, representing $27 million.

The remaining 40% of our North America segment’s 2026 total revenues were comprised of Onboard and other revenues, which increased by $124 million, or 7.6%, to $1.8 billion in 2026 from $1.6 billion in 2025.

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• $55 million - 3.4% capacity increase in ALBDs

These increases were partially offset by a 1.3 percentage point decrease in occupancy representing $19 million.

Europe Segment

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This increase was caused by:

• $158 million - net favorable foreign currency translation

• $60 million - net favorable foreign currency translation impact

• $49 million - higher ticket prices

• $17 million - 1.1 percentage point increase in occupancy

• $20 million - higher ticket prices driven by continued strength in demand

These increases were partially offset by a decrease of $27 million in air transportation revenue.

The remaining 23% of our Europe segment’s 2026 total revenues were comprised of Onboard and other revenues, which increased by $18 million, or 3.9%, to $493 million in 2026 from $474 million in 2025.

This increase was driven by a net favorable foreign currency translation impact of $49 million.

Operating Expenses

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This increase was caused by:

• $126 million - net unfavorable foreign currency translation

• $75 million - higher repair and maintenance expenses (including dry-dock expenses)

• $121 million - higher fuel prices

• $103 million - nonrecurrence of gains from the sale of one North America segment ship and one Europe segment ship in 2025

• $82 million - 2.0% capacity increase in ALBDs

• $44 million - net unfavorable foreign currency translation impact

• $30 million - higher cruise Payroll and related expenses driven by higher crew travel costs resulting from the Middle East conflict

These increases were partially offset by:

• $44 million - lower fuel prices including the impact of emission allowances

• $42 million - lower repair and maintenance expenses (including dry-dock expenses)

• $23 million - lower fuel consumption per ALBD

Selling and administrative expenses increased by $47 million, or 5.8%, to $863 million in 2026 from $816 million in 2025.

This increase was driven by increased investment in advertising, higher compensation expense and higher information technology expense.

Depreciation and amortization expenses increased by $31 million, or 4.4%, to $723 million in 2026 from $692 million in 2025.

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• $87 million - 3.4% capacity increase in ALBDs

• $35 million - higher repair and maintenance expenses (including dry-dock expenses)

• $85 million - higher fuel prices

• $46 million - nonrecurrence of a gain from the sale of one ship in 2025

These increases were partially offset by:

• $35 million - lower fuel prices including the impact of emission allowances

• $20 million - lower fuel consumption per ALBD

• $18 million - lower repair and maintenance expenses (including dry-dock expenses)

Selling and administrative expenses increased by $21 million, or 4.4%, to $493 million in 2026 from $473 million in 2025.

3 unchanged sentences

This increase was caused by:

• $129 million - net unfavorable foreign currency translation

• $57 million - nonrecurrence of a gain from the sale of one ship in 2025

• $44 million - net unfavorable foreign currency translation impact

• $35 million - higher fuel prices

• $19 million - higher cruise Payroll and related expenses driven by higher crew travel costs resulting from the Middle East conflict

These increases were partially offset by $24 million of lower repair and maintenance expenses (including dry-dock expenses).

Selling and administrative expenses increased by $11 million, or 4.6%, to $260 million in 2026 from $248 million in 2025.

Depreciation and amortization expenses increased by $16 million, or 8.5%, to $203 million in 2026 from $187 million in 2025.

Operating Income

Our consolidated operating income decreased by $83 million to $851 million in 2026 from $934 million in 2025.

Our North America segment’s operating income decreased by $33 million to $658 million in 2026 from $691 million in 2025, and our Europe segment’s operating income decreased by $42 million to $326 million in 2026 from $368 million in 2025.

These changes were primarily due to the reasons discussed above.

Nonoperating Income (Expense)

Interest expense, net of capitalized interest decreased by $56 million, or 16%, to $285 million in 2026 from $341 million in 2025.

The decrease was caused by a decrease in total debt and lower average interest rates.

Six Months Ended May 31, 2026 (“2026”) Compared to Six Months Ended May 31, 2025 (“2025”)

Passenger ticket revenues made up 65% of our 2026 total revenues.

Passenger ticket revenues increased by $359 million, or 4.5%, to $8.3 billion in 2026 from $7.9 billion in 2025.

This increase was caused by:

• $218 million - net favorable foreign currency translation impact

• $104 million - higher ticket prices

• $96 million - 1.2% capacity increase in ALBDs

These increases were partially offset by a decrease of $62 million in air transportation revenue.

The remaining 35% of 2026 total revenues were comprised of Onboard and other revenues, which increased by $330 million, or 7.8%, to $4.5 billion in 2026 from $4.2 billion in 2025.

This increase was driven by:

• $181 million - higher onboard spending by our guests

• $68 million - 1.2% capacity increase in ALBDs

• $67 million - net favorable foreign currency translation impact

These increases were partially offset by a 0.1 percentage point decrease in occupancy, representing $20 million.

North America Segment

Passenger ticket revenues made up 60% of our North America segment’s 2026 total revenues.

Passenger ticket revenues increased by $91 million, or 1.8%, to $5.1 billion in 2026 from $5.0 billion in 2025.

This increase was caused by:

• $121 million - 2.4% capacity increase in ALBDs

• $35 million - higher ticket prices

These increases were partially offset by a 1.2 percentage point decrease in occupancy, representing $57 million.

The remaining 40% of our North America segment’s 2026 total revenues were comprised of Onboard and other revenues, which increased by $219 million, or 7.0%, to $3.3 billion in 2026 from $3.1 billion in 2025.

This increase was caused by:

• $171 million - higher onboard spending by our guests

• $75 million - 2.4% capacity increase in ALBDs

These increases were partially offset by a 1.2 percentage point decrease in occupancy, representing $36 million.

Europe Segment

Passenger ticket revenues made up 77% of our Europe segment’s 2026 total revenues.

Passenger ticket revenues increased by $265 million, or 9.0%, to $3.2 billion in 2026 from $3.0 billion in 2025.

This increase was caused by:

• $218 million - net favorable foreign currency translation impact

• $69 million - higher ticket prices

• $53 million - 1.8 percentage point increase in occupancy

These increases were partially offset by:

• $47 million - decrease in air transportation revenue

• $25 million - 0.8% capacity decrease in ALBDs

The remaining 23% of our Europe segment’s 2026 total revenues were comprised of Onboard and other revenues, which increased by $86 million, or 9.7%, to $973 million in 2026 from $887 million in 2025.

This increase was driven by a net favorable foreign currency translation impact of $67 million.

Operating Expenses

Operating expenses increased by $512 million, or 6.7%, to $8.2 billion in 2026 from $7.7 billion in 2025.

This increase was caused by:

• $170 million - net unfavorable foreign currency translation impact

• $103 million - nonrecurrence of gains from the sale of one North America segment ship and one Europe segment ship in 2025

• $101 million - 1.2% capacity increase in ALBDs

• $65 million - higher fuel prices

• $38 million - higher cruise Payroll and related expenses driven by higher crew travel costs resulting from the Middle East conflict

• $34 million - higher repair and maintenance expenses (including dry-dock expenses)

These increases were partially offset by a 1.3% capacity decrease in ALBDs, representing $16 million.

• $28 million - higher emission allowance costs due to a greater volume of emissions subject to the ETS in 2026 compared to 2025

• $24 million - higher port expenses

These increases were partially offset by:

• $49 million - lower fuel consumption per ALBD

• $31 million - lower Commissions, transportation and other expenses driven by lower air transportation expenses

Selling and administrative expenses increased by $123 million, or 7.4%, to $1.8 billion in 2026 from $1.7 billion in 2025.

Depreciation and amortization expenses increased by $72 million, or 5.4%, to $1.4 billion in 2026 from $1.3 billion in 2025.

North America Segment

Operating expenses increased by $200 million, or 4.0%, to $5.2 billion in 2026 from $5.0 billion in 2025.

This increase was caused by:

• $121 million - 2.4% capacity increase in ALBDs

• $48 million - higher fuel prices

• $46 million - nonrecurrence of a gain from the sale of one ship in 2025

• $21 million - higher cruise Payroll and related expenses driven by higher crew travel costs resulting from the Middle East conflict

These increases were partially offset by $39 million of lower fuel consumption per ALBD.

Selling and administrative expenses increased by $36 million, or 3.7%, and were $1.0 billion in 2026 and 2025.

Depreciation and amortization expenses increased by $54 million, or 6.1%, to $937 million in 2026 from $884 million in 2025.

Europe Segment

Operating expenses increased by $277 million, or 11%, to $2.8 billion in 2026 from $2.5 billion in 2025.

This increase was caused by:

• $173 million - net unfavorable foreign currency translation impact

• $57 million - nonrecurrence of a gain from the sale of one ship in 2025

• $23 million - higher emission allowance costs due to a greater volume of emissions subject to the ETS in 2026 compared to 2025

• $20 million - higher port expenses

• $17 million - higher fuel prices

• $17 million - higher cruise Payroll and related expenses driven by higher crew travel costs resulting from the Middle East conflict

These increases were partially offset by:

• $35 million - lower Commissions, transportation and other expenses driven by lower air transportation expenses

• $21 million - 0.8% capacity decrease in ALBDs

Selling and administrative expenses increased by $44 million, or 8.9%, to $543 million in 2026 from $499 million in 2025.

This increase was caused by higher compensation expense, increased investment in advertising and higher information technology expense.

Depreciation and amortization expenses increased by $41 million, or 12%, to $397 million in 2026 from $356 million in 2025.

This increase was caused by net unfavorable foreign currency translation impacts.

This increase was caused by net unfavorable foreign currency translation impacts and fleet enhancements.

Operating Income

Our consolidated operating income increased by $64 million to $607 million in 2026 from $543 million in 2025.

Our North America segment’s operating income increased by $54 million to $569 million in 2026 from $516 million in 2025, and our Europe segment’s operating income increased by $30 million to $170 million in 2026 from $140 million in 2025.

Our consolidated operating income decreased by $19 million and was $1.5 billion in 2026 and 2025.

Our North America segment’s operating income increased by $20 million and was $1.2 billion in 2026 and 2025, and our Europe segment’s operating income decreased by $12 million to $496 million in 2026 from $508 million in 2025.

These changes were primarily due to the reasons discussed above.

1 unchanged sentence

Interest expense, net of capitalized interest decreased by $141 million, or 20%, to $577 million in 2026 from $718 million in 2025.

The decrease was caused by lower average interest rates and a decrease in total debt.

Other income (expense), net changed by $59 million, to $(47) million in 2026 from $12 million in 2025.

The decrease was substantially all due to foreign currency remeasurement.

The decrease was caused by a decrease in total debt and lower average interest rates.

Other income (expense), net changed by $66 million, to $(70) million in 2026 from $(4) million in 2025 principally due to foreign currency remeasurement.

Liquidity, Financial Condition and Capital Resources

As of February 28, 2026, we had $5.9 billion of liquidity including $1.4 billion of cash and cash equivalents and $4.5 billion available for borrowing under our multicurrency revolving credit facility .

As of May 31, 2026, we had $6.7 billion of liquidity including $2.2 billion of cash and cash equivalents and $4.5 billion available for borrowing under our multicurrency revolving credit facility .

In additio n, we had $10.8 billion of undrawn export credit facilities to fund future ship deliveries .

We had a working capital deficit of $8.7 billion as of February 28, 2026 compared to $8.9 billion as of November 30, 2025.

We had a working capital deficit of $8.9 billion as of May 31, 2026 and November 30, 2025.

We operate with a substantial working capital deficit, largely due to our business model in which guest cruise deposits and the advance purchases of onboard and other services are collected ahead of the sailing date and recorded as a liability until recognized as revenue.

These customer deposits are used alongside other cash sources to fund operations, service debt, and support capital investments.

We have agreements with a number of credit card processors that transact customer deposits related to our cruise vacations.

Certain of these agreements allow the credit card processors to request, under certain circumstances, that we provide a capped reserve fund in cash.

In addition, we have a relatively low level of accounts receivable and limited investment in inventories.

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Operating Activities

Our business provided $1.3 billion of net cash flows from operating activities during the three months ended February 28, 2026, an increase of $0.3 billion, compared to $0.9 billion provided for the same period in 2025.

This was caused by an improvement in our earnings with $263 million of net income in 2026 compared to $75 million of net loss in 2025 and other working capital changes, partially offset by the nonrecurrence of losses on debt extinguishment.

Our business provided $3.9 billion of net cash flows from operating activities during the six months ended May 31, 2026, an increase of $575 million, compared to $3.3 billion provided for the same period in 2025.

This was caused by an improvement in our earnings with $801 million of net income in 2026 compared to $494 million of net income in 2025, which includes the nonrecurrence of gains from the sale of one North America segment ship and one Europe segment ship in 2025, partially offset by the nonrecurrence of losses on debt extinguishment in 2025, as well as other working capital changes.

Investing Activities

During the three months ended February 28, 2026, net cash used in investing activities of $597 million was driven by capital expenditures of $566 million substantially all attributable to ship improvements and development of our portfolio of exclusive destinations.

During the three months ended February 28, 2025, net cash used in investing activities was $605 million.

This was caused by capital expenditures of $607 million primarily attributable to ship improvements and developments in our port destinations and exclusive islands.

During the six months ended May 31, 2026, net cash used in investing activities was $1.5 billion.

This was caused by:

• Capital expenditures of $1.4 billion substantially all attributable to ship improvements, our ongoing new shipbuilding program and development of our portfolio of exclusive destinations

• Advances of $46 million to one of our equity method investments

During the six months ended May 31, 2025, net cash used in investing activities was $1.2 billion.

This was driven by:

• Capital expenditures of $1.5 billion primarily attributable to ship improvements and developments in our port destinations and exclusive islands

• Proceeds of $312 million substantially all from the sales of one North America segment ship and one Europe segment ship

Financing Activities

During the three months ended February 28, 2026, net cash used in financing activities of $1.2 billion was driven by:

• Repayments of $945 million of long-term debt

• Payments of cash dividends of $208 million

During the three months ended February 28, 2025, net cash used in financing activities of $690 million was driven by:

During the six months ended May 31, 2026, net cash used in financing activities of $2.1 billion was driven by:

• Repayments of $1.2 billion of long-term debt

• Dividends of $414 million

• Share repurchases of $381 million

During the six months ended May 31, 2025, net cash used in financing activities of $1.2 billion was caused by:

• Repayments of $5.1 billion of long-term debt

• Debt issuance costs of $41 million

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2026 2027 2028 2029 2030 Thereafter

Future export credit facilities at February 28, 2026

Future export credit facilities at May 31, 2026

$ — $ 1.3 $ 1.3 $ 1.7 $ 1.5 $ 4.9

Our export credit facilities contain various financial covenants as described in Note 3 - “ Debt ”.

At February 28, 2026 , we were in compliance with the applicable covenants under our debt agreements.

At May 31, 2026 , we were in compliance with the applicable covenants under our debt agreements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis