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Is Carnival paying the price for skimping on maintainance to boost profits?

There are a lot of images that come to mind when you think about taking a cruise. Sunshine, waterslides, exciting off-boat excursions… and of course the food. Things that we do not imagine on a cruise are fires, raw sewage in the hallways and a lack of food for all the guests.

But that is exactly the reality that cruisers have been living over the past few days on Carnival's (CCL) Triumph. After a fire disabled the ship, it took five days for the vessel trying to make it back to port. It finally arrived Thursday night, three days late.

A total of 4,200 passengers had to endure days of toilets not working, no electricity in their cabins and a fear of running out of food.

It is hard to imagine how horrible the scene was on the ship. As soon as I read that toilets were overflowing and the floors “squished” with urine and feces, I knew that it was not pretty. People reportedly were forced to go the bathroom in plastic bags. Imagine dealing with that situation for five days, especially if you were a family with a young child on board. It must have been a nightmare.

Carnival has tried to make it up to people, giving them a full refund plus an extra $500. Unfortunately, I think that is not going to cut it. Carnival may be trying to do the right thing, but there is reason to believe that it is going to have to dig much deeper in its pockets before all is said and done.

While ships will always have some problems, especially when they have already been in service for 14 years as the Triumph has, the exact same ship had mechanical problems last month, which caused a delay on a similar Mexican cruise. Carnival claims that the two incidents were not related, but since they took place in such close proximity is definitely going to lead to further investigation.

The cruise industry has been rapidly growing in recent years, with 3% of all Americans taking a cruise last year. The industry has been growing at 8% annually since 1980, and it is unlikely that this event will slow it down.

People naturally have the mentality that something like this can never happen to them… until it does. For Carnival, this is just another mishap in a wave of recent problems, including the grounding of a ship in Italy last year that resulted in thirty-two deaths.

The best news to come out of this recent tragedy is that no one was injured. In the end, that it is the most important thing, but Carnival's earnings are going to feel a little pain. The company has already forecast that earnings during the first half of the year will fall between eight and ten cents as a result of ship repairs and cruises it will have to cancel while the ship is out of service.

Perhaps one of Carnival's biggest problems is that it is not investing the money needed to keep its aging fleet of ships in top-sailing condition. Instead of reinvesting its capital into its ships, is the company more interested in beefing up its bottom line to appease investors? It definitely appears that way, and perhaps this will be the wakeup call that Carnival needs to finally spend some money on fixing up its ships.

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va. His articles typically cover big-picture events and forecasting what impact they will have on the stock market. In addition to writing for Fresh Brewed Media, Michael also wrote for AOL's BloggingStocks for three years, focusing most of his attention on the energy and technology sectors. Follow him on Twitter at @MFatMICenter.

Michael Fowlkes

Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va.