Carnival Cruise Case Study

HISTORY

A man named Ted Arison had an idea of refurbishing an old ocean liner. American Travel Services Incorporated, under the direction of Mr. Arison, bought two ocean liners from Canadian Pacific Empress Lines for $6.5 million in 1972. These two ships were named the Mardi Gras and the Carnivale. Unfortunately, the Mardi Gras was very slow and high maintenance. On its first voyage, it ran aground in Miami Harbor. Later, Mr. Arison and American Travel Services Incorporated bought another old liner from Union Castle Lines and named it the Festivale. From 1972 to 1974, Carnival began losing money. To attract new customers each liner began having planned activities, casinos, nightclubs, and discos. Finally, in 1974, American Travel Services was ready to pull out of the joint venture. So, Ted Arison bought out ATSI for $1 cash. Unfortunately, he also acquired the $5 million debt that went along with it. As luck would have it, however, the following month after the buyout by Aris...