Good morning, everyone, and welcome to our first quarter 2019 earnings conference call. I'm Arnold Donald, President and CEO of Carnival Corporation & plc. Today, I'm joined by our Chairman, Micky Arison; as well as David Bernstein, our Chief Financial Officer; and Beth Roberts, Senior Vice President, Investor Relations. Thank you all for joining us this morning. 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. We delivered first quarter adjusted earnings per share of $0.49. That's higher than the midpoint of December guidance by $0.07 per share and $0.03 per share lower than last year, which includes a $0.03 drag from fuel and currency. For the full year, we're updating our adjusted earnings guidance range, previously $4.50 to $4.80, now $4.35 to $4.55, to reflect the significant drag from fuel and currency moving against us, impacting our full year by $155 million or $0.22 per share since the time of our December guidance. Our guidance reflects continued improvement in operating performance, and we are maintaining the operational guidance we gave for the year with an update for changes in fuel prices and currency. Included in the midpoint of our guidance is $0.25 per share earnings growth from operations over the prior year, which is a reflection of our 120,000-plus employees who go above and beyond every day as well as hundreds of thousands of travel professionals who support our world-leading cruise brands. It is their combined efforts that are helping us to once again withstand multiple headwinds, including cyclones in Australia, Brexit uncertainty in the U.K., heightened political uncertainty in Germany and France as well as ongoing economic malaise in much of Europe, including Italy. Despite those headwinds, wave…

Thank you, Arnold. Before I begin, please note all of my references to revenue, ticket prices and cost metrics will be in constant currency, unless otherwise stated. I'll start today with a summary of our 2019 first quarter results, then I'll provide an update on current booking trends for the remaining 3 quarters of 2019 and finish up with some additional color on our 2019 March guidance. As Arnold indicated, our adjusted EPS for the first quarter was $0.49. This was $0.07 above the midpoint of our December guidance. The improvement was driven by 2 things: $0.02 of favorability in net cruise revenue and $0.06 of favorability in net cruise costs without fuel and other expense items, mainly due to timing between the quarters. Both favorable items were partially offset by a $0.01 unfavorable net impact from fuel price and currency. Now let's look at our first quarter operating results versus the prior year. Our capacity increased 4.1%. Our North America and Australia segment, more commonly known as our NAA brands, was up 5%. While our Europe and Asia segment, more commonly known as our EA brands, was up 2.5%. Our total net revenue yields were up 0.5%. Now let's break apart the 2 components of net revenue yield. Net ticket yields were down 0.4%. Our NAA brands were flat, while our EA brands were down 0.7%. Both segments had tough prior year comparisons. However, I did want to note that Caribbean yields turned positive in the first quarter on an 8% capacity increase, also against tough prior year comparisons. Net onboard and other yields increased 3.1% with similar increases on both sides of the Atlantic. In summary, our first quarter adjusted EPS was $0.03 lower than last year as a result of the net impact of fuel price and…

Thank you, David. Operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Robin Farley with UBS.

Great. And just had a question on the guidance. I think you have previously said that you expected Q2 yield growth would have been higher than Q1 yield growth. And I know Q1 came in higher than flat, but Q2 guidance seems to not be ahead of the prior guidance either for Q1. I wonder if you could talk a little bit about because it sounded like the trends in wave season have been like consistent and how you expected, but maybe it sounds like Q2 wasn't as strong as what you had thought 3 months ago.

Robin, it's good to see you on the front of the queue again.

I know. I work this time.

So, Robin, when we put together our December guidance, the numbers were relatively close. Some of it was driven by the -- in the first quarter by the improvement that we saw, a 3.1% increase in onboard and other revenue. Those numbers are very difficult to pinpoint each quarter. So overall, we are -- we started out the year with about flat the first half of the year. We beat the first quarter. And we didn't see anything changing significantly in the second quarter, so we just maintained the flat yield guidance for the second quarter. The difference between the quarters is small and we're just not that good for 0.5 points between the first quarter and the second quarter.

So is the upside, though, in Q1 mostly came from the onboard? And obviously, you don't have the advance visibility on that. There's -- is there anything about the itinerary differences or anything that -- or trends that -- are you just assuming that the onboard upside won't happen in Q2 until you actually see it? Maybe that -- is that how to think about?

Yes. It's -- so you know that, overall, for the year, I think I said in December, we guide to approximately 2% in onboard overall. The number isn't exactly 2% by quarter, but the overall is approximately 2%. And as I said before, it's very difficult to say exactly what comes in. The itineraries in the markets are very different. There are lots of other factors, new programs we continue to roll out. And we continue to see a strong trend in August in onboard revenue, and we hope we can do better as the -- continue to do better in future quarters as well.

So I think, Robin, just the overall guidance for the year just reinforces what we've seen so far. It just gives us confidence on the guidance we've given for the year, and we certainly don't see any weakening or anything like that in terms of yield.

Our next question comes from Steve Wieczynski with Stifel.

So I guess the first question would be around Europe. And maybe if you could help us think about that market today versus where you were back in December. And I guess what I'm getting at is have things over there gotten better? Have they stayed the same? Or have certain markets weakened? And maybe also if you could talk about the promotional environment over there as well.

First of all, as you know, we've got double-digit capacity increase in Europe in kind of an uneven economic environment. But the reality is the bookings are strong, and we're doing some proactive management. Our management teams have decided to be way ahead on occupancy relative -- given the capacity increases. And so hopefully, we'll have an opportunity to deliver flattish yields or whatever for the course of the year. But the most important thing is to grow earnings, and we are anticipating earnings growth in Europe with a combination of what's going on. But right now, we feel solid in where we are. We feel confident and strong again with the guidance and with the fact we're going to grow our earnings.

I don't think anything materially changed from our viewpoint in December. If anything, it's probably a tad better in Europe. We did split the world that I talked about, the NAA brands being at higher prices. And the EA brands, their booked position being at lower prices. So if you look at our overall yield guidance for the year, it really is a tale of 2 different worlds. The NAA brands are probably looking at guidance for the year that's probably double our overall corporate guidance. Whereas for our EA brands, you're looking at sort of flattish overall yields built in, and that's how you get to the combined 1%. But nothing has materially changed since December, like I said, probably a tad better than we anticipated.

Okay. Got you. And that kind of goes into my second question, David. I guess one of the questions that we've gotten a lot is, so then why would your yield guidance for the year kind of be unchanged? Given the net of 50 basis point beat you had in the first quarter, it seems like the feedback we've gotten from your competitors and the trade relating to wave has been extremely, extremely strong. So what's kind of holding you back from pushing that yield guidance a little bit higher right now?

So the higher yield guidance in the first quarter was worth $0.02. You're just talking about $0.02 in EPS overall, and so there's still a lot left to go and the uncertainty in onboard and other. And so at this point in time, we're maintaining our guidance for the year operationally overall. There's a lot of other unknown factors, hurricane seasons and lots of other things out there, so we always provide for that. And hopefully, we have a good hurricane season. But we're in a good well-booked position. As we had indicated, we're ahead of the prior year on increased -- 4.6% increased capacity, and we feel very good about our overall situation.

Yes. We have less volume to go now than we had this time last year even with the overall capacity increase, so that's again reinforcing what you just said, a very strong indicator of successful demand creation. But we're really focused on earnings, and I understand people look at yields. And it's really difficult to do these comparisons because you've got a basketball orange and a ping-pong ball in terms of peers, and the comparisons aren't that meaningful because we have such a different mix. We have 9 brands with -- some are below the fleet average, some are above and so on and so forth. So those are difficult things. And so we focus on the earnings, growing the earnings and growing return on invested capital. But again, you're right. Things have been strong, and -- but we have a ways to go. We're not all the way through yet, and we're just, as always, allowing for things to happen because there have been headwinds, and there'll probably be future headwinds.

Our next question comes from Felicia Hendrix with Barclays.

So, David, when we look out to the rest of the year and we think through the second half, just by doing the math, the net yields need to be up a couple of hundred basis points to get to your full year. But at the same time, we're seeing kind of the mix of Europe go up. I know some of it is your kind of NAA type of seasonal Europe, but we're also seeing your European-centric capacity also mix up. So I'm just wondering if you can kind of help us think through the second half given the decline and where Europe falls in that.

So for the second half of the year, obviously given the first quarter yield and the second quarter guidance, the second quarter clearly is going to be up over 1% in order to get to the first half...

The second half.

Second half.

Second, sorry, sorry. Second half over 1% in order to get to the average for the year of 1%. That is a combination of onboard as well as ticket in the back half of the year. And we are -- when we look at the overall booking trends, particularly in our NAA brands that which I said were ahead at higher prices, we are seeing that being reflected in the numbers. And we feel confident that we can achieve that. The EA brands are offsetting some of that as we have talked about over the last couple of quarters.

Okay. That's helpful. And then can you just talk about Alaska because it seems like there has been a bit of a change in what you're seeing there since the last quarter? I think last -- on the last call, you said pricing was flat, and now you're saying that pricing is down in Alaska. So can you just walk us through what's unfolding there?

Yes. I mean, we are seeing -- we do have 17 ships in Alaska. We've got an 8% capacity increase. There are -- overall, when you put it all together, the booked position we did say was down versus pricing in line. But keep in mind, in December, it was very, very early for Alaska. As you get into wave season, you see a much more substantial portion of Alaska being booked. And -- but remember that 2018 was record pricing in Alaska. And so overall, we feel very good about our pricing for the various brands we have up there.

Okay. And just last thing on just the baseloading strategy that you're employing in the EA region. And then also, you didn't really comment on the U.K., so I was wondering because your competitors have talked about seeing some volatility there. So I was hoping you could talk about the U.K. also. But in the baseloading that you're seeing there, have you been able to kind of see any kind of increase in pricing as you get closer to the cruises, in other words, to the actual specific cruises? In other words, have your -- has your baseloading strategy kind of been successful? And then if you could just comment on U.K.

Sure. So the revenue management strategy, we feel, has been very successful that we're optimizing the yield for 2019 in total. As I said in my prepared remarks, we did make some revenue management decisions over the last year. We were ahead. In some cases, we were considerably ahead, and we have been seeing good improvement close in and over time. And as far as the U.K. is concerned, we had said -- as Arnold said, there is uncertainty relating to Brexit. The U.K. is doing okay, but clearly was -- had it not been for the uncertainty, we probably would have done perhaps a little bit better in the U.K. It's really hard to -- we'll never know for sure.

Our next question comes from Harry Curtis with Nomura Instinet.

I wish I could diversify the line of questioning here, my apologies. I'm wondering about any -- do you have any evidence of improved pricing sequentially as we look ahead into Europe and Alaska this summer for the balance of the -- for the inventory that you haven't sold? Are you seeing some beginning trends in rising sequential pricing for any given week or any given itinerary?

I would say a couple of things. First of all, when you think about the comparisons to prior year, we had tougher comparisons early. So the second half comparisons are not as difficult. So when we start talking, comparing yields first half, second half, you've got flaws from that. In terms of pure pricing, our revenue yield scientists and deploying yield. And all the tools we're using, they're constantly chasing what's going to create the optimal outcome. And that varies by brand, by itinerary, and it's built up itinerary by itinerary. So the simple answer to your question is, of course, we're seeing pricing strengthening as you get close in. And of course, you are. And so we also are saying we're going to have the second half yield much stronger than the first half yield, but what we're really saying is we're going to drive earnings. And earnings are going to grow this year and in the future. They're going to grow double-digit on average. Earnings are going to grow this year single digits. We're working hard to make sure we do even better and we are going to elevate return on invested capital. So that's the real message. But the yield story for us is relatively complex. We've got luxury brands, premium brands. We have w 9 brands, different world markets, et cetera. And even when within a brand, there can be yield improvement. It can weigh down the average for our corporation if that brand is below the fleet average, so it's a complex thing. But overall, the simple answer to your question is, of course, we see strengthening. As we close in, we've got less to book.

So I guess it's sort of the same question repackaged. I'm wondering what level of confidence do you have, particularly in the EA brands, that as we get closer to the third quarter that there's a low risk of you having to do some incremental promotion and pricing coming down.

No. We have less to sell, so I think we're in good shape now in Europe and have been all along. It's just -- again, we are along our original guidance there. We -- nothing has weakened or worsened or anything like that.

Our next question comes from David Beckel with Bernstein Research.

Hearing a lot of emphasis on earnings growth for the long term and sort of how the revenue management system plays into that, but if my math is correct, it looks like even ex fuel and ForEx, you're looking at sort of 6-ish percent EPS growth this year. So I guess in light of what you've done with your revenue management strategy this year, which is to emphasize, I guess, stability and confidence, how should we, as investors, expect EPS growth to improve going forward? Is it really just European structural weakness this year? Or is this lower for longer something that we should expect going forward?

Okay. So let's just focus on earnings because that's the good part. So if you look at the 5%, 6%, that's directionally accurate with what you calculated. We obviously -- this year, we have some ships coming in late in the year. We've got anticipated increased levels of capacity coming for the next several years, so we've, obviously, from a cost standpoint, spent more this year in advance of actually having the capacity. What it will take for us to do double digit, I think 1% of yield is equal to like something like 25% of earnings per share increase, and 1% of cost is like 3%. So some combination of 1 more percent in yield or less and 1% better cost performance, which we are directionally capable of doing, or even better and you're at a double-digit earnings growth with the capacity we have. And so that's why we have the confidence we have. We understand what's happening with the business. But there's not like structural weakness when you use those kinds of words. The fact is we've got double-digit capacity increase in Europe, and the ships are being filled, and they're actually ahead on the booking. We've got significant capacity increase in other markets. Without going into -- we don't give guidance by markets. But historically, what happened so far and what we're anticipating. The Caribbean is super strong. The NAA brands are strong. So there's no real structural weakness. It's just dynamics and artifacts of when you bring in capacity, how you spend in advance, prepare, all of that. Meanwhile, we're still growing earnings now.

Great. That's helpful. So just a side question attached to that then. If, say, Europe is sort of stable for the rest of the year, the expectation, I think, from your point would be to yield up as you go along. How much sort of upside could we expect from this sort of baseloading strategy as that -- if that were to materialize throughout the year?

I think, again, the guidance we've given you for the year reflects what we think, at this point, our best guess for the results would be. And so we've factored all things into our guidance, including knowing there's going to be some headwinds that we haven't seen yet or whatever that happens every year, that's already happened this past quarter. And so we'll work hard to beat the guidance like we always do, but I think the guidance is reflective of what we anticipate, Europe, North America and global.

Got it. And just one quick follow-on. There's some concern about the Costa brand and MSC's introduction of new capacity this year and then going forward. Are you seeing a fairly competitive dynamic from MSC, particularly in Europe as it affects Costa?

While we typically feel that the brands are pretty independent of each other and other cruise companies, we need them to fill their ships and fill them early because there is something that relates in the marketplace, which is the psychology of pricing. And that can be a cap on what you can achieve based on what other companies are charging in the marketplace or whatever. So having said that, if there is a brand that has a competitive set because of the source market and the proximity, I would say MSC and Costa would probably be the closest to having some significant overlap in competitiveness versus, say, most of the other brands compared to any of the other brands. But having said that, we feel confident in Costa. We see opportunity from an operational standpoint to grow earnings this year. We have some capacity increase in Costa that is not newbuild this year in the Costa European part of the business. But next year, we've got Costa Smeralda coming in, and she's booked great so far. I mean, very, very strong, almost double digit kind of improvement opportunity there. And so we see Costa being strong and looking forward to the brand continue to perform well and perform even better going forward.

Our next question comes from James Hardiman with Wedbush Securities.

I wanted to ask a little bit about some of the practical implications of Brexit. We're hearing from British consumers that currency and sort of passport issues are sort of their primary travel-related concerns. Can you maybe speak to those things? Correct me if I'm wrong. But if I'm a British passenger, I don't need to worry about fluctuating currencies if I'm taking one of your ships from the U.K. And then secondly with passports, I know there's a lot of confusion, and I know that the British government is trying to get out in front of that. Are there any practical passport issues associated with the various potential outcomes of Brexit as we move forward?

Okay. So more broadly, even though there's been uncertainty around Brexit and so on and so forth, the U.K. brands are doing well and have withstood the headwind. We'll have to keep monitoring and see what kind of long-term effect. Specific to your 2 questions on currency and passport. On the currency side, with our P&O brand, it's British based. It's in pound sterling, et cetera, so obviously no impact there. And there's 98% British guests sailing on P&O in the U.K. for us. So there, that looks fine. Cunard is a British-based brand, but it's a global international brand that has a number of British guests on it but it has -- but every sailing has guests from all around the world. And it's not pound sterling-based, so there are some currency potential impact there depending on fluctuations either way. On the passport issue, I'm not familiar with the details there. But I don't see -- I haven't heard anything from anyone indicate any extra complications or major problems or where would be a discouragement to cruise or anything like that. So I don't know the details, but I have heard nothing that would suggest there's a problem at all of us.

Okay. That's helpful. I guess what I was getting at there, it seems like maybe cruise is a more favorable way to travel given what's going on than then sort of going on your own with sort of going on your own...

Cruises are a more favorable way to travel under any circumstance.

I like it.

And certainly, I think your point that you're trying to make is if you compare it to a land-based vacation, particularly in the U.K., they're paying in British pounds. And it's British pounds onboard, so there's less uncertainty relative to the currency movement as if they were -- versus taking a land-based alternative.

Yes. That's exactly what I was getting at. And then so the second question here, you've talked about the significant capacity increases in Europe as one of the reasons why you're booking ahead but at lower prices. I guess if we peel that back a little bit between the new capacity coming online in Europe versus some of the older ships, anecdotally, when you talk about the new ships, it seems like the pricing there is really good. So what's happening there? Is it that the new ships are sort of cannibalizing, I know that's a bad word, the older ships in Europe from a pricing perspective? Or are they both maybe feeling the impacts of higher capacity and maybe economy concerns?

In this particular year, there are no newbuilds. And we don't have -- look -- AIDA, yes. So AIDA, yes, we have significant newbuilds there, but it's not cannibalizing or anything. But in terms of Costa, the newbuild is not coming until almost end of this fiscal year. So in AIDA, we have a number of new ships. And AIDA is a strong performer overall. And we don't have any new ships in -- this year in Cunard or P&O.

Arnold said in his prepared remarks, I mean, the ongoing economic malaise in Continental Europe and all of the heightened political uncertainty in Germany and France is clearly affecting our overall market in Continental Europe.

Our next question comes from Tim Conder with Wells Fargo Securities.

Thank you for the color on Europe overall. So I mean, just to summarize that, it sounds like the U.K., little bumpiness with Brexit but doing okay so far. Germany continues to do well, and then the Southern European economy is still ongoing being the most relative drag. Is that a pretty fair characterization?

It's reasonably fair, yes.

Directionally.

Directionally.

The reason why we don't give guidance by brands or markets and stuff, so that's the only reason why you're hearing the directional kind of comments. But go ahead, please.

Okay, okay. Shifting further east, just -- I know it's not a large market but important long term and thrown in with your commentary was Asia. Just any additional color on China in particular given the ongoing trade issues and just what you're seeing year-over-year, over the last 90 days, has that trended better, worse, about the same? And then on Medallion, the success that you're having on the ships that it's on, how -- is there a way that you can accelerate that, either via Medallion or other methods, to further gain those benefits, the customer experience and higher onboard spending? Any additional color you could provide there?

Okay. Thank you. So first of all, in China, it's still a very small part of our business. We're excited about the Costa Venezia going over to join the Costa fleet in China. Overall, things are strengthening there. There's less capacity expansion than there's been in previous years, and we've expanded our distribution approach and have had success with that. And so things are strengthening. Our philosophy there remains the same that we see that as accretive overall. As long as it's accretive, a ship will be there. If it's not accretive, we would move it. And so generally speaking, China, in particular, is definitely strengthening from a yield standpoint, et cetera, all that. But we think this could be choppy for a while, and so we're always prepared to do whatever we need to do. Right now, we think Venezia, in particular, is going to strengthen cruise in China period and definitely be an enhancement to our fleet. And right now, things are going well. With regards to Ocean MedallionClass, we're very pleased with where we are. We have the Caribbean Princess, Regal Princess and Royal Princess are all now up and running. The Caribbean Princess is probably the most fully activated with many of the features capable and Ocean being available to the guests. Regal is not quite as far along. And Royal, which is on the West Coast right now, is just beginning to ramp up. So we see great results, as I mentioned, in terms of guest experience and attitude. And we have several more ships that will be brought up to speed, and those others will get more of the features the rest of the year. But it is new, and we want to experience it. And we want to make certain that in the end, it is driving not just kind of nice conversation but also driving the improvements from both a revenue-generating standpoint and cost standpoint and our crew experience standpoint. And it looks very, very positive. But it's new, and we think we need to -- we're not in a race. We don't have to. Princess is doing fine as the other brands are. The other brands have innovations underway as well that are different. But we're excited about it, but we'll take our time. And once we fully activate it, see where we are. And one thing we are expanding is the fastest Internet at sea, which is MedallionNet, which is part of the overall Ocean platform but is not dependent on the Ocean platform. And that's been a huge hit with guests and crew, and so that's something we are more rapidly expanding in the fleet.

Okay. And then one follow-up, if I may. Australia, I think, Arnold or Dave, you alluded to that given the recent hurricane, there's a little bit of disruption. Anything that was material, I guess, quantifiable there from that?

Yes. We're just talking about a couple of million dollars, so there's probably 6 cruises that were impacted but nothing material. Just your normal -- Brisbane was impacted by the hurricane, and some ships came in late, your normal occurrence.

Our next question comes from Brandt Montour with JPMorgan.

On the back of that question about China, I was just curious on the Venezia, which, historically, it's been difficult to get Chinese consumers to spend onboard at least the same level as we do here in the West. But realizing it's just on its maiden voyage now, what have you done differently with that hardware with that in mind? And -- or is it more of kind of an evolution for you in China to mostly change the distribution side of things?

Well, a lot of things have to be developed because this is an embryonic market. But in terms of the ship itself, we have some fabulous features on that ship. We've got some really customized gaming venues which we think will cater to the Chinese taste. We have a fabulous karaoke area, which we think is going to be a very nice revenue generator for the ship. We have a mahjong area on the ship, which, again, it could be another good revenue generator. So there are a number of things, in addition to some of the specialty restaurants. We have a hotpot restaurant onboard for the comfort food that they would like, and so there is quite a number of revenue-generating features on the ship that we think will help drive onboard.

And there's also significantly more retail space and shops onboard, which is a significant contributor to onboard revenue in that market, high-end shops, in particular.

Got it. That's helpful. And then apologies, I will ask one more Europe question, if I may. David, you mentioned you're obviously sort of [indiscernible] perhaps a tad better. Would you -- would be possible to just break out that last part into ticket versus onboard and what you're seeing?

So when I said tad, I was -- better, I was just referring to the overall booking situation of what I expected in Europe versus -- in December versus what we've actually seen happen over the last 3 months. It's small movements. And clearly, it's been, like I said, a tad positive but nothing that significantly affects our guidance at this point.

Our next question comes from Jared Shojaian with Wolfe Research.

As we look forward to next year, you're selling 2 lower-yielding Costa ships, and you have a lot of capacity coming on, particularly with higher-yielding Princess ships. So are you expecting hardware to be mix positive to yield in 2020? Is that your assumption?

So for 2020, we haven't given out any particular guidance. But I think we've said, overall, in the past, that given the size of our company, any mix overall on a yield perspective for the overall corporation tends to be rather small in our overall numbers. So -- but we will analyze that as we go forward into 2020 and we prepare guidance, and we'll let you know if anything changes.

Okay. And I know you're talking about longer-term double-digit earnings growth, and I know you're not giving any guidance beyond 2019. But was there any reason why we shouldn't be thinking in terms of 2020 being double-digit earnings growth? And I think just to make the math work, in order to get there, you're going to have to see better yields and better cost performance than what you're seeing this year. So maybe you can just talk about a little bit. Is that your expectation? And I guess, really, how should we think about that?

Well, as I've mentioned, we've had some pre-spend to prepare for the capacity coming, not just in 2020, but beyond. And that won't be repeating itself going forward, so there's clearly some opportunity with cost, plus the fact that, as you bring the new ships on, they're inherently more efficient, et cetera. So -- and with the scale you're leveraging, you're amortizing across more scale, so all of that bodes well for the cost picture. That's number one. The number two, we're still focused on creating demand. And as -- and again, we're not giving guidance for 2020 or anything. But as you look at things like the brands that are bringing the ships in and the relative pricing in itineraries and so on and so forth, along with the demand creation, things we're doing, we see opportunity. But the really important thing here is we don't need a lot to be very different to generate. We are engineering and purposely, intentionally on a path to double-digit earnings growth on average year in and year out and elevated sustained double-digit return on invested capital. And so we don't need a lot to be very different. We don't need to dramatically change anything. If we just execute where we're headed, that's what we'll see. And whether it is or isn't in a given year, on average, it will be, but can be influenced by fuel and currency and other things. But operationally, we definitely are on a path to deliver.

Great. And one more follow-up to that, if I may. Are you expecting to get a fuel expense benefit in 2020 just from lower IFO fuel prices from IMO 2020? And then there's been some recent news, just on closed-loop versus open-loop scrubbers and sort of how that debate is going to play out with just some of the regulatory pressure. I'd love to get your take on that and just sort of understand how you could be potentially negatively affected by that closed-loop versus open-loop debate.

Yes. I think I'll do the open-loop, closed-loop first. For us, we have now third-party data. Including the government of Japan did their own studies and everything, and so we have plenty of information to provide to ports around the world and authorities around the world that show that open-loop is a very effective way to have advanced air quality systems operate. And so we're confident. With that, we know there've been some isolated ports that made decisions that I think with the information we have and we can provide, we're optimistic. We're prepared either way, to be honest, not so much we can go closed-loop versus open-loop. But in terms of number of ports now that have [indiscernible], and we plug in anyway and so on. So there are so many dynamics there. We factor all the possibilities into our modeling, and we're confident going forward. In terms of fuel prices, the oil companies can't say what the fuel prices are going to be, so I'll let Dave. He might be able to. I don't know, David. Go ahead.

Yes. No. I won't try to predict the price of HFO or bunker or MGO for 2020. But we have said that in 2019, about 80% of our consumption is bunker, and 20% is MGO. We've also indicated that, as we move into 2020, we do expect to see about 1/3 of our consumption be MGO. So it's really hard to tell. Most people are expecting an increase in MGO and a reduction in HFO price as we move into 2020 for the demand. It depends on the direction of each movement and the balance. It's a close call at this point, whether it will be up or down. We do get the benefit on 2/3 if bunker goes down. And we do have, at the end of this year, we expect to have 88 ships equipped with advanced air quality systems. We'll continue to implement more across our fleet, so that 1/3 of the consumption being MGO, that will decrease over time back to 20% and even below 20% as we move forward.

The next question comes from Assia Georgieva with Infinity Research.

A couple of questions. I do a lot of pricing work, and it seems over the years that for European source passengers, time frame sort of around May is key in terms of their bookings for European-based voyages. Is that something that you have seen? And is there possibly a little bit of caution at this point for the European source business because we haven't gone through that many European wave season?

We have had solid bookings for our European itineraries, both for our North America brands as well as our...

EA.

EA brands. And so I haven't noticed anything in particular in May over the last few years. But I will ask around and see if I can get any more information on that.

And a second question. With the extensive dry dock for the Sunrise, which takes place during this Q2, is that a -- does that have a net impact on yield either way?

No, because you're taking the ship out of service, and there's no ALBDs. It actually has an impact on cost because you do still continue to have some cost for crew and other things during the dry dock period, but there are no ALBDs associated with it.

But once she comes out, she will almost certainly command a yield premium. And so that will be helpful.

Well, we certainly hope for that and expect that.

All right, everyone. Thank you so much. We appreciate it. We're totally focused on delivering for the year, and then beyond, the double-digit earnings growth on average and the increased return on invested capital. So look forward. Thank you, guys, for your interest, and talk to you next quarter.

Ladies and gentlemen, that does conclude the conference call for today, we thank you for your participation and ask that you please disconnect your lines. Have a great day, everyone.