Howard S. Frank - Vice Chairman of the Board, Chief Operating Officer David Bernstein - Chief Financial Officer, Senior Vice President Micky Arison - Chairman of the Board and Chief Executive Officer Beth Roberts - Vice President, Investor Relations

Michael Savner - Banc of America Robin Farley - UBS Rick Lyall - John W. Bristol Tim Conder - A.G. Edwards & Sons Assia Georgieva - Infinity Research Hakan Ipecki - Merrill Lynch Nick Thomas - ABN Amro Tim Ramskill - Dresdner Kleinwort David Leibowitz - Burnham Securities Ari Johnson - Exane BNP Paribas Mark Reed - Teather & Greenwood Simon Champion - Deutsche Bank

Ladies and gentlemen, thank you for standing by. Welcome to the Carnival Corporation third quarter earnings conference call. (Operator Instructions) I would now like to turn the conference over to Howard Frank, Vice Chairman and Chief Operating Officer. Please go ahead, sir. Howard S. Frank: Good morning, everyone. With me today is Micky Arison, our Chairman and Chief Executive Officer. Micky is traveling and has dialed into the call but is prepared to answer questions as they may come up after our comments are made; David Bernstein, our Senior Vice President and Chief Financial Officer is with me here in Miami, as is Beth Roberts, our Vice President of Investor Relations. To start off this morning, I’m going to turn it over to David to give you color on and some details on the third quarter and some comments on the fourth quarter that we are currently in. David.

Thank you, Howard. I’m going to start the conference call by reading the forward-looking statements. During this conference call, we will make certain forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties or other factors which may cause the actual results, performances, or achievements of Carnival to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. For further information, please see Carnival's earnings press release and its filings with the Securities and Exchange Commission. For the third quarter, our net income for 2007 was $1.4 billion. Our earnings per share was $1.67. For 2006 third quarter, the earnings per share was $1.49. The nine-month year-to-date results are net income, $2.1 billion; the earnings per share, $2.51; and EPS for the prior year was $2.25. Our EPS exceeded our previous guidance for the third quarter by $0.06 per share. The improvement was primarily driven by stronger pricing on bookings taken close to departure, as well as the lower tax provision as a result of the resolution of certain of tax uncertainties, which helped to the tune of about $0.015. Looking more closely at our third quarter operating results, our capacity increased 9.4%. Net revenue yields in current dollars increased 2.5% in the third quarter. In constant dollars, which eliminates the effect of currency changes, net revenue yields were flat for the third quarter. This was at the higher end of the range of our previous guidance, which we gave three months ago. However, keep in mind that the sale of Swan Hellenic and Windstar brands decreased our net revenue yields by 0.3% in the third quarter, compared to last year, given the fact that these brands have achieved higher yields on average. The sale of Swan Hellenic and Windstar will continue to effect the year-over-year comparisons through the second quarter of 2008. Therefore, on an apples-to-apples basis, excluding Swan Hellenic and Windstar, our net revenue yields in constant dollars actually increased 0.3% in the third quarter compared to the prior year. We saw yield improvements in our North American brands, which was offset somewhat by lower yields in constant dollars in our European brands. However, keep in mind our European brands are being compared against a very strong prior year and despite the lower yields, operating income in constant dollars for our European brands was up. I’m also glad to report that China’s yields improved significantly in the third quarter, driven by both price and occupancy, which resulted from our decision to shift our sourcing strategy for costs to Asia. On the cost side, our third quarter costs per available lower berth day in current dollars were up 3.3% in the third quarter. However, in constant dollars, they were up only 0.8%. This was slightly better than the previous guidance we gave three months ago. For the third quarter, fuel was not a factor versus our guidance. However, fuel prices this year were higher than the third quarter of last year, costing us an additional $20 million. Excluding fuel in constant dollars, cruise cost per available lower berth day were actually down 0.2%. The improvement that we saw in the third quarter versus our guidance was essentially due to the timing of certain expenses between the third and fourth quarter, and as a result, our cost guidance for the year remains unchanged. Before I turn to the outlook, let me update you on our current stock buy-back program. In late July, we resumed stock buy-backs in the U.K. market. During the last two months, we repurchased a total of 4.5 million shares for $195 million. In total, we have repurchased 31.8 million shares for $1.4 billion out of the $2 billion previously authorized by our Board of Directors, leaving $578 million remaining under the repurchase authorization. Yesterday, our Board of Directors increased the remaining repurchase authorization back to $1 billion, effective immediately. Turning to our fourth quarter outlook, as we indicated in the press release, the results of Iberocruceros will be consolidated into the company’s financial statements beginning in the fourth quarter, so the guidance for the fourth quarter that I am about to give includes their forecast. Capacity is forecasted to increase 7.6% in the fourth quarter and does include Iberocruceros. I will skip over the net revenue yields outlook as Howard will touch on that in a few moments. The cruise costs per available lower berth day in the fourth quarter in current dollars is expected to be up 8% to 9% versus the prior year. In constant dollars, it is expected to be up 5% to 6%. However, excluding dry-dock and fuel in current dollars, cruise costs are expected to be flat in the fourth quarter. Cruise costs in the fourth quarter 2007 versus the prior year are obviously significantly impacted by the dry-dock and fuel. Dry-dock timing that benefited us earlier in the year turns around in the fourth quarter to the tune of $21 million. Fuel prices this year, based on the forward curve, are forecasted to be higher in the fourth quarter than last year, costing us an additional $81 million. These two items alone represent a drag on our fourth quarter EPS of $0.12. As a result of these items and others, the best measure of cruise costs changes are on an annual basis. So for the full year, our cruise costs per available lower berth day in current dollars are expected to be up 3% to 4% versus the prior year. In constant dollars, they should be up about 1%, which is toward the higher end of the range of our previous guidance given three months ago, and that change is driven by fuel. Excluding fuel in constant dollars, cruise costs are expected to be essentially flat for 2007, so our forecast for controllable expenses, excluding fuel and currency, remain flat for the year, which is a number that we try to achieve and it’s not easy in today’s world, given inflationary pressures. At this point, I will turn the conference call back over to Howard. Howard S. Frank: Thank you, David. Before I provide some information for the next three quarters, let me give you an update on the overall booking trends and briefly frame the 2008 year. As we indicated in the press release, booking trends in North America and Europe continue to remain strong. In North America, where our 2008 capacity increase will be up a modest 3.4%, increased booking levels for 2008 sailings have been running in the high-teens percentages. In Europe, where our capacity is up 16.8% in 2008, increased booking levels have also been running in the mid-teens percentages. So it is fair to say that the booking environment in both North America and Europe has been quite strong and for most of our brands, booking curves are at their furthest out levels in recent history. In fact, with the strength in bookings and even with the 7.5% increase in capacity over the next four quarters, we have less inventory left to sell than over the same period in 2007. Based on the solid booking patterns, we currently forecast that for the first quarter of 2008, net revenue yields will increase in the 2% to 3% range. On the cost side of the business, the primary variable will be the price of fuel. Currently fuel costs for the first quarter of 2008 are forecasted at $418 a ton versus $301 in the first quarter of 2007. Of course, fuel prices are quite volatile, as we all know, and on our December earnings call I will provide you with the latest estimates for fuel prices for the first quarter and for the year, together with our guidance for the full year 2008 earnings per share. Regarding our European initiatives, as indicated in our press release, we are pleased to report that we have closed the Iberocruceros acquisition, which we expect to be accretive to 2008 earnings per share. Unfortunately, we were experiencing increasing resistance from regulators to our proposed joint venture in Germany with TUI and decided jointly with TUI to withdraw our filing, so that transaction is no longer moving forward. In 2008, our fleet-wide capacity is expected to increase by 7.5%. Breaking it down by quarter, it’s 8.5% in Q1; 6.1% in Q2; 6.6% in Q3; and 9% in the fourth quarter of 2008. That excludes Ibero. If we include Ibero cruises, the 7.5% increase would come up to 8.9% for the year. As I previously indicated, our North American capacity will increase by approximately 3.4% and our European capacity by that 16.8%. North America will represent approximately 66.5% of our total fleet-wide capacity for the group for 2008, and that’s down from 69% in 2007. Europe and the rest of the world will increase to approximately 33.5% to the total group, about one-third. Based on new ships in the pipeline, however, we expect that Europe and the rest of the world will approach 38% of our total capacity by the year 2010. Driving the 2008 capacity increase are five new ships for five of our brands. At the end of this fiscal year, we take delivery of the beautiful new Queen Victoria for Cunard Line, which will start her world cruise in January of 2008. The three queens, the Queen Victoria, the Queen Mary, and the QE2, will be altogether in New York for an historic meeting on January the 13th of 2008 and the entire Carnival Board and organization, senior management team will be there as well. In April of 2008, P&O’s Ventura will be delivered. The Ventura will be the largest U.K. flagship fully dedicated to the British market on a year-round basis. Also in April, the AIDA Bella, the second Sphinx class ship for our highly successful AIDA brand in Germany, will be delivered in June. Holland America’s first signature class ship, the Eurodam, will be delivered and will stay in Europe for the summer season. And later in June, the Carnival Splendor will be delivered and will sail in northern Europe for the summer. This will be the first time that the Carnival brand will have two ships in Europe. So all in all, 2008 is shaping up to be a solid growth year for Carnival Corporation. Having said that, like everyone else, we also recognize the challenging issues facing the U.S. economy -- slowing of the residential housing market, the sub-prime mortgage loan fiasco, and the resultant disruption in the financial markets. At this point, however, we have not seen any clear evidence that these events have affected our business in North America. However, should there be a slowing in the North American economy, we believe we are well-positioned to weather the slowdown, as a large part of our customer base in North America is composed of retirees and other more affluent families that are not dependent on the economic cycles. Also, our strategy of aggressively growing our cruise businesses in the lesser penetrated European holiday market provides a significant buffer for us if the North American economy does slow down. Today, with approximately one-third of our business in Europe, Australia and Asia, a slowing North American economy will not affect those businesses. For all these reasons, we believe that while we are not immune to the effects of an economic slowdown in the U.S., we certainly have considerable resilience to a slowdown. Now I’ll move on to talk about each of the next three quarters and provide you with some additional data. For Q4, David covered pretty much the cost side of the picture. Fleet-wide, our Q4 capacity is up 6.1%. That’s on an apples-to-apples basis from last year. Of that amount, 3.7% is in North America and 11.9% is in Europe. This excludes the Ibero numbers, the additional capacity from Ibero, which would bring the 6.1% up to 7.4%. Of course, all that capacity would go into Europe. In terms of the North American brands to date, in the fourth quarter, 45.5% of their capacity is in the Caribbean, 10% in Europe, and the balance in other trades -- Alaska, Mexican Riviera, Asia-Pacific, et cetera. At this juncture, occupancy for North American brands in the fourth quarter are running 3.5 points ahead of last year and pricing is also stronger. In fact, we have only a small amount of cabin inventory left to sell for the fourth quarter in North America. Similar to the third quarter, Caribbean pricing for North American brands is stronger than last year. Pricing for Alaska and Europe is also stronger, with no inventory left to sell in Alaska, the Alaska season essentially is over, and very few cabins left to sell in Europe. Based on this, we expect Caribbean and overall North American yields for the fourth quarter to come in nicely higher than a year ago. In Europe, over 90% of our European brands are trading in the European trades during the fourth quarter, slightly higher than last year. The remaining 20% is in various other itineraries. Similar to the third quarter, Europe occupancies are flat versus last year, with pricing running behind. We expect to close out the quarter with higher dollar-based yields and slightly lower constant dollar yields than a year ago. Although Europe brands’ local currency yields were slightly lower, it was not unexpected that these companies absorb an 11% increase in capacity during the year. More importantly, though, our European brands have performed very strongly in 2007, with operating earnings significantly higher than in 2006. From an overall standpoint, we expect net revenue yields to be up in the 3% to 4% for the fourth quarter over the 2006 fourth quarter. On a constant dollar basis, excluding the effect of Ibero Cruises, Windstar and Swan, to be flat to slightly up. Earnings per share are forecasted to be in the range of $0.42 to $0.44 for the fourth quarter. The lower year-over-year fourth quarter earnings is largely attributable to the higher fuel costs that David referred to and the timing of the dry dock costs, which together had a $0.12 impact on fourth quarter earnings per share in 2007. Now looking forward to the 2008 year, and just starting with the first quarter, our capacity is up 8.5%; 5.1% of that capacity is a North America increase; 15% of the capacity is in Europe -- that excludes Ibero Cruises. For North American brands in the first quarter, Caribbean capacity as a percentage of North American capacity is 62% versus 68% a year ago. The balance of North American capacity is spread among the Mexican Riviera, Panama Canal, exotics and long cruises. At this time, North American bookings are well ahead of last year, actually by 6.8 points ahead, and pricing is also higher versus last year. Although Caribbean pricing is slightly down in Q1, occupancies are well ahead year over year and similar to the fourth quarter of 2007, we expect Caribbean yields, as well as overall North American yields in the first quarter to be higher year over year by the time we close out the quarter. In Europe, European brand trades in the first quarter are 38% Caribbean, which is approximately the same as last year; 22% in Europe; 12% world cruises; 10% in South America; and the rest spread among other itineraries. Europe brand occupancies are running 3.3 points ahead year over year, with local currency pricing currently flat. We are currently forecasting European brand local currency yields for Q1 will be in line with last year’s first quarter, which is flat. We believe achieving level pricing for our Europe brands while absorbing a 15% increase in capacity is a significant accomplishment and similar to 2007, should lead to improved operating results for our European businesses in 2008. From an overall standpoint in the first quarter, combining North America and Europe, we are forecasting an increase in first quarter of 2008 constant dollar yields in the range of 2% to 3%, which is a nice turnaround from 2007. Turning to the second quarter of 2008, fleet-wide second quarter capacity is up 6.1%, with North American capacity up approximately 2% and Europe capacity up approximately 17%. Even with the lengthening of the booking curve, booking information for the second quarter of 2008 is still in its early stages of development and I caution not to read too much into this data. Looking at North America, Caribbean capacity for North America brands is 52%, down from 55% a year ago. All other itineraries are spread across Alaska, Europe, long and exotic cruises, et cetera. Currently, North American bookings in the second quarter are higher by 6.1 points, following a similar pattern to the first quarter of 2008. Booking momentum in the second quarter has been strong, with the pricing across all itineraries slightly higher. Similar to the first quarter, Caribbean pricing is lower than a year ago but stronger occupancies would suggest that even -- strong Caribbean occupancies would suggest that even at this early booking stage, Caribbean yields and overall North American brand yields should be higher than a year ago by the time second quarter closes. In Europe for our European brands, European itineraries are 57% for the second quarter, up from 52% a year ago, with the Caribbean at 16%, approximately the same; trans-Atlantic cruises are 12% and the balance in various other itineraries. With a 17% increase in Europe capacity, European brand occupancies are running two points higher -- that’s on a capacity-adjusted basis -- than last year, with pricing also running ahead at the current time over last year. We are presently forecasting that Europe brand revenue yield will be in line with the prior year by the time the quarter closes. Overall for the second quarter, although still early in the booking curve, it does appear that the second quarter is following a very similar pattern to the first quarter of 2008, so the total picture looks quite good, at least at the present time. And with that, those comments, I will turn it back, Operator, for questions. Operator, we would like to open it now for questions. Hello, Operator? Just hold on. We are trying to call the Operator and see if we can get him back on.

(Operator Instructions) Our first question comes from the line of Michael Savner. Please go ahead, sir. Michael Savner - Banc of America: Good morning. Thanks very much. You did comment on this during your prepared remarks, but maybe if we could go into a little bit more detail because certainly the results you provided today jives with the proprietary data that we’ve been seeing over the last few months but the most frequent question we are still getting is how do you reconcile the improving fundamental trends that you are seeing this quarter, as well as what you were just talking about for the next few quarters, with growing consumer concern? So maybe a little bit more detail on what you think drove that disconnect this quarter and why you still feel comfortable about it going forward. Howard S. Frank: I do think -- I made the comment, as you said, Michael, in my prepared remarks about our customer base and to a large -- and I’ve talked to a lot of people about it and to a large degree, our customers are not dependent on the economic cycles. I think there is a lot of media hype, especially in the financial press, about the financial issues in the country and I think that to some degree, as it affects the financial community but it doesn’t -- I’m not sure it’s affecting as much the larger community. And some of the data that we’ve seen on bookings I think is similar. I’ve seen some other data that would suggest that certain other businesses in the travel area continue to be strong as well. But I’ve also looked at the retail numbers and we looked at durable good numbers and that sort of stuff and we see that there is some softening in those areas, so we are cognizant of it and that doesn’t mean it couldn’t start to have some effect on us but I think it would, if it does affect us, it is more likely to be for that part of our consumer base I think, which is middle market and feels more the effect of that. But I think as long as employment stays strong and people are confident about their jobs and keeping their jobs, I think our business will hold up quite well and that’s kind of the way we see it right now and that’s how we explain it to ourselves. I mean, all we know is what we are seeing on our books and we are pleased to see it in terms of our booking trends and as you said, you found in canvassing the trade, that they are seeing the same thing as well.

I also think that the weaker yield environment over the last two years translates into greater value. The fact is that over the last couple of years, our pricing hasn’t been up and because of that, in relationship to other vacations, our value relationship is stronger than ever and hopefully that word has filtered into the marketplace. I also think that the fact that globally, countries around the world are growing at a rapid pace. I saw some data I think we presented on the Queen Mary that the percentage of countries growing at a rapid pace is unprecedented, and so we are seeing demand for cruises, particularly in the Mediterranean, from all over the world, not just from North America and Europe, so I think there’s a lot of reasons for it. Michael Savner - Banc of America: That’s helpful, thanks, and if I could just ask a quick follow-up that’s unrelated; if we just drew a quick back-of-the-envelope map on your recent buy-back, it would seem that the pace you’ve been repurchasing shares, there wasn’t any real need for an increase in the authorization at this point. So can we conclude that maybe given the strength of the balance sheet, this is something you are going to accelerate the pace of going forward, or we should not necessarily come to that conclusion? Howard S. Frank: I don’t think you should make any conclusions. I think our feeling was that as we get further on into the year, we might get closer and closer to the authorization, the previous authorization so we felt let’s revise that to get it back up to $1 billion so we don’t have to visit that again for a while. But what our actions are going to be from now forward, I don’t think we are in a position to say. Michael Savner - Banc of America: Fair enough. Thanks very much.

Our philosophy of returning money to shareholders with a combination of dividends and buy-backs, opportunistic buy-backs, has not changed. The principle remains the same. Howard, you may want to remind everybody that we are going to limit it to two questions per person. Howard S. Frank: That you just did.

Our next question comes from the line of Robin Farley with UBS. Please go ahead. Robin Farley - UBS: Thanks. I wanted to just clarify a couple of things; one is can you just give us specifically what Ibero, whether that’s -- there’s a couple of moving parts in your fourth quarter guidance. Obviously yields are higher, boat fuel price is higher, and so you are factoring Iberojet in there now where you hadn’t previously and so is that a -- is Iberojet a net neutral for the fourth quarter? And then also, in your comments about bookings, about pricing, in the release you say constant dollar revenues would be -- or you say current dollar revenues would be up, suggesting that I guess the European pricing on a constant dollar basis would be down. In your specific Q2 comments, you mentioned pricing up. Is that in current dollars? In other words, is that the benefit of currency or is that actual constant dollar demand? Howard S. Frank: Robin, I’ll answer your first question and I want you to rephrase your second question. I got a little bit lost on it. Iberojet is -- it could be a slight positive in the fourth quarter but -- and we’ve got, whatever it is, it is not going to be material to fourth quarter earnings per share. Robin Farley - UBS: Is there any lag, by the way, in terms of the -- in other words, their quarter end is going to match your quarter end? There’s no lag in the reported periods?

There is no lag at all. It will be on the same quarterly basis as Carnival Corporation. Robin Farley - UBS: Okay, great, and then just to clarify -- Howard S. Frank: Go back on the pricing issue again, yeah. Robin Farley - UBS: To clarify that question, the idea is that currency, the weak dollar has been helping your reported revenues coming from Europe and so your forward color, when you were talking about early ’08, you said pricing up from the European brands. Is that because of the currency benefit with the weak dollar? You didn’t clarify in your comment there whether that pricing was up in a same currency basis or not. I’m just curious whether -- Howard S. Frank: The forward pricing information I gave you is all first quarter, is up 2% to 3%.

And that is in constant dollars, isn’t it, Howard? Howard S. Frank: Yes, that’s all constant -- everything I do forward is constant dollar because we don’t know actually what the dollar is going to trade at versus the Euro or the sterling in those forward periods. Robin Farley - UBS: But you’ve sometimes talked about your guidance based on current exchange rates, where you expect it to be but at least that clarifies. You are saying pricing is up in constant dollars in Q2 in your European brands. So in other words, it’s demand that -- Howard S. Frank: No, no, I think I said we expect it to -- it is up today constant dollar wise. We expect it to come in flat.

Overall. Howard S. Frank: Yes. No, in Europe.

In Europe, yes, and then overall North America and Europe is what you said. Howard S. Frank: Overall I said in the -- well, I’m not -- you’re talking about in the second quarter now, Robin? Robin Farley - UBS: Yes, your second quarter. You said pricing up and that’s as of today in constant dollars, but you expect it to be flat just in Europe. Howard S. Frank: Flat just in Europe, yes. Robin Farley - UBS: Okay. Thank you.

Our next question comes from the line of Rick Lyall with John W. Bristol. Please go ahead. Rick Lyall - John W. Bristol: Hi, guys. Nice quarter. The first -- I guess a multi-part pricing question in the U.S.; could you talk about booking trends in the Gulf Coast, in Florida and then California? Those being maybe the most exposed to sub-prime problems. And then also, what the trends were in group bookings? Howard S. Frank: Rick, I --

I’m not sure I can give you the regional outlook, although I’m not aware of substantive differences. I can tell you that the group business has been very strong. Rick Lyall - John W. Bristol: So that gives you pricing power. Has the booking window changed at all?

The booking window is further out and the group bookings have been very strong. Rick Lyall - John W. Bristol: Okay, and the last, kind of an add-on question; is there any change in your dry-dock schedule next year relative to this year, from an expense standpoint?

The quarterly expense? Rick Lyall - John W. Bristol: No, just for the year.

We had this year -- Howard S. Frank: I know it’s higher but I don’t remember what it --

Yeah, we’ve got 25 dry docks next year but remember, not every dry dock is created equal, so all I’ve got at this point is the total number of dry docks for next year. We’ll talk more about the 2008 on the December call.

Just to refresh everybody’s memories, we go through the detailed budgeting process during the fall period, so we really don’t get into specific details for ’08 until our fourth quarter call. Rick Lyall - John W. Bristol: Okay, thanks. Nice job, guys.

Our next question comes from the line of Tim Conder at A.G. Edwards. Please go ahead. Tim Conder - A.G. Edwards & Sons: Thank you. Let me offer my congratulations also on a great execution. A couple here on onboard spend; anything in particular there? I mean, as reported up over 5% here versus last year at the same time, you were up about 2.7? So that’s one comment. And then, again, Howard, just to be clear, I think you gave ’08 yield guidance of up 2% to 3% and everything again is in constant dollars, just to clarify that? Howard S. Frank: Yes, that was first quarter up 2% to 3%, constant dollars. Tim Conder - A.G. Edwards & Sons: Okay, so no annual guidance there? Howard S. Frank: None, no. Tim Conder - A.G. Edwards & Sons: Okay.

And on the onboard spend, it was up a little bit more than 3% in the third quarter. Tim Conder - A.G. Edwards & Sons: Okay, anything different there? I mean, was there -- are you still pulling into places here and there, a fuel surcharge that may be impacting that or anything else that?

It was strong in the U.S. and Europe, which was encouraging. Tim Conder - A.G. Edwards & Sons: Okay, because historically the Europeans have lagged somewhat, correct? And that’s been moving up of late.

Correct. Tim Conder - A.G. Edwards & Sons: Okay, and can I ask one more clarification? The impact of Windstar and Swan on your capacity in the first couple quarters of next year?

Capacity is very small. The problem is they are very -- Tim Conder - A.G. Edwards & Sons: I mean yields. I’m sorry, Micky.

They were a very high yielding business with very little capacity and almost no earnings. That’s why we sold them but they do affect yields.

The yield impact, as I mentioned, in the third quarter was 0.3%, so I wouldn’t believe that -- we don’t have the numbers in front of us but that gives you some guidance for the rest of the quarter going forward. Tim Conder - A.G. Edwards & Sons: Close to those ranges. Okay, thank you, gentlemen.

Our next question comes from the line of Assia Georgieva with Infinity Research. Assia Georgieva - Infinity Research: Good morning. Congratulations on a very good quarter. I had one question, and David, we had -- now that the Alaska season is over, have you been able to look at the impact of the head tax and how that might change future deployment decisions?

If I can comment on that, it obviously cost us $50 a passenger, but our yields were up in Alaska so obviously had it not been for the $50 head tax, our yields would have been up plus an additional $50 had we executed properly, so I could say we were encouraged that the yields were up but it’s unfortunate that we weren’t able to get the yields up as much as we could have had we had the $50 to yield manage. Does that answer your question? Assia Georgieva - Infinity Research: Yes, and Micky, do you think that there might be a change into 2009 or so in terms of what kind of tonnage you put in there, or because Alaska is such a distinctive --

Every brand looks at their ship utilization over a couple of years, over five years, and makes the best decisions they can for the profitability of the brand. This is one of the areas that I constantly harp on that they don’t manage for the yield of the brand; they manage for the profitability of the brand, and whether that will impact Alaska positively or negatively, it’s early to say. Obviously ’08 is done and the ’09 process, the planning is going on now and I don’t -- honestly, I don’t expect a huge impact one way or the other. Assia Georgieva - Infinity Research: Okay, and my second question is with regard to last minute booking patterns. Obviously very helpful, and is that something we can expect to see into ’08 or is it impossible to say at this point? Howard S. Frank: I could barely make you out. Could you --

It was whether last minute booking patterns, can we read the strong last minute booking pattern will continue going forward, and obviously that is very difficult to read. As the booking curve moves out, your availability gets less and as Howard said earlier, the amount of availability we have now looking forward is less than this time last year, so if you have less available capacity, hopefully you are able to yield manage and get some yields. Howard S. Frank: Our yield guidance assumes exactly that, that we will be able to manage the remaining sale of the cabins better than last year and get better yields, and that’s included in the estimates we gave you for the first quarter. Assia Georgieva - Infinity Research: Okay. Thank you.

(Operator Instructions) Our next question comes from the line of Hakan Ipecki with Merrill Lynch. Please go ahead. Hakan Ipecki - Merrill Lynch: Thank you. Two questions; number one is I believe the discussions you made with respect to next year with European pricing trends excludes Iberojet. Can you give us an idea of what would the impact be for next year, and give us an idea on the relative cost structure of the company relative to the overall company?

We closed on Iberojet six days ago, so we’re really not in a position to do that. We have factored in some numbers but hopefully we’ll be in a much better position to give you guidance in the next quarterly call. Hakan Ipecki - Merrill Lynch: Okay, but the current discussions on Europe exclude Iberojet, as far as I can understand, right? Howard S. Frank: Yes, that’s correct. Hakan Ipecki - Merrill Lynch: My other question is about your recent announcement the reduction or the elimination of the airfare commission. Could you just -- what sold that decision and what sort of an impact should we expect on your revenues or cost structure going forward, if any?

This is a complicated and controversial issue. Let me take a pass at it, but it’s going to take a little bit of time. Our philosophy on air sea versus cruise only is that the air sea decision should be income neutral to us. It’s not revenue neutral, obviously but it is income neutral to us, so we price our air sea packages to give us the same yield as our cruise only. I’ll do this in an example but understand we do this over hundreds of city pairs. We don’t do it by single city pair, but I’ll give you a single city pair, try to give you an example so you can understand what the dynamics is happening here. We have a city, let’s say Chicago-Miami, and our people, a year-and-a-half, two years in advance, print a brochure, have to decide on pricing and they do that by negotiating with the airlines, coming up with an unrestricted fare. Let’s say it’s $500, add in the 5% commission and put it to market at $525. The booking curve is four months out, and four months out the customer comes in and the airline is selling some sort of restricted fare at $299 or $199 or some number, obviously significantly lower than what is in our brochure at $525, and that’s why we are only selling 12% potential air sea packages. Travel agents who are able to take advantage of that $199 or $299 are happy to sell it and/or sell the $525, whichever happens to be available. But many travel agents, cruise only travel agents, home-based travel agents, can’t sell the $299 or $199 and have to refer those people to the website for the airlines or refer them because they don’t have the ability to write airline tickets. So it’s a very un-level playing field right now. What we are trying to create is a more competitive environment where we can sell at more competitive prices. And over time, the absolute perfect solution would be that we would be able to sell to the consumer that $299 or $199 fare, or to the travel agent that $299 or $199. That’s our goal. To do that, we can’t be paying commission because the airlines don’t pay commissions. So this is one step in an overall very complicated problem to get to a very level playing field for all travel agents, fairness to all travel agents, without any profit impact to us but hopefully a more competitive price for the customer through all our distribution channels. That is a very complicated answer to what sounded like a simple question, but that’s why in meetings with our entire management team, we concluded that the correct first step was to eliminate commissions as we work toward the ultimate solution, and we are not there yet but we’ve taken the first step. Hakan Ipecki - Merrill Lynch: Okay, and what has been the initial reaction?

The initial reaction is that agents that can write or larger agents that can write airline tickets have complained and we understand their complaint. Hopefully most of them over time will understand that for the betterment of the entire distribution system, and again we’ve been loyal supporters of that distribution system for 35 years, they will understand that we are taking the right decision to grow our business and sell more cruises, which will be -- at higher yields, by the way -- which will be in the better interest of everybody. Hakan Ipecki - Merrill Lynch: Okay, thank you.

Our next question comes from the line of Nick Thomas with ABN Amro. Please go ahead. Nick Thomas - ABN Amro: Hello, there. I wonder if you could just discuss your views on yields in Europe. It’s just the situation where the European brands constant dollar yields have been down in the third quarter and the general outlook you’ve given over the next few quarters, either down or flat. Do you see a concern that as the current Caribbean is recovering, that the difficulties you’ve seen there on yield are actually being exported into Europe --

No, we’re not seeing difficulty on yield in Europe and one of the issues we have, one of the problems we have is that this focus, this over focus on yields has steered people in the wrong direction a lot. A great example of that is people who have focused on yields and talked to travel agents, they for the last -- since the Katrina situation, where we took a big hit in New Orleans and Cozumel and Caribbean went down, everybody knows this story, people have been talking about how a competitor or our competitors are outperforming us because their yields are this or their yields are that. But during the post-Katrina period, we are the only major public cruise line that has made more money, has grown earnings. And the reality is we’ve got great cruise brands in Europe that are not very big and we are growing them at a very big rate. And because we are growing them at a very big rate, they are now creating -- we are now creating in those brands terrific scale. And so they can take a little bit lower yields to establish that scale and to increase their profitability and that’s exactly what they are doing and they are doing a terrific job and we are delighted with their progress. Howard S. Frank: Just to add to that, Micky, even with flat or slightly lower yields, their operating income because they are getting the scale, their metrics, their cost metrics look so much better so that it is conservatively additive to their operating income at the same time they are establishing their market position in those countries. So it is a very positive -- what we see going on in Europe right now, contrary to what some people believe, is a very positive development for us. We are not worried about the yields.

The yields are terrific and the growth rate is terrific and the brands are very, very powerful. Nick Thomas - ABN Amro: Okay. Thank you very much.

Our next question comes from the line of Tim Ramskill with Dresdner. Please go ahead. Tim Ramskill - Dresdner Kleinwort: A few questions for me; firstly, you’ve talked about for the first and second quarters of next year, improvements in occupancy around about 6%, 7%. Could you just give us an indication of what magnitude that means by which the booking curve have moved in a certain number of weeks, or whatever? And then secondly, just in terms of the balance sheet, it looks as if there’s been a switch from some long-term debt into the short-term liabilities. Is that $1.2 billion of convertible debt, does that need refinancing soon? And if so, what is the outlook for the refinancing process? Howard S. Frank: Tim, what I said was, just to -- just a clarification; it’s not a percent increase in bookings. It’s actual booking points, so that if, just to give you an example so you understand, we’re on the same wavelength here, if we are 50% booked, if it is six points up, we are 50% booked this year in some quarter, and I’m not giving any quarter, versus 44% booked in the quarter a year ago, so we are six points up. Obviously as a percentage we are up more than that, but we do not --

Which is capacity adjusted, obviously, because -- Howard S. Frank: It’s adjusted for the increase in capacity, that percentage, yes. But we don’t translate that actually into weeks in the booking curve because remember, we are talking about 12 different cruise brands with different booking curves, so what I was giving really was overall, an overall sense of the extension of the lengthening of the booking curve rather than any particular weeks or periods. Tim Ramskill - Dresdner Kleinwort: I was going to say, if I can ask the question slightly different, I guess what I was trying to get to is the strategy you’ve adopted in the Caribbean by offering greater discounts earlier, how much of an impact has that had on the pattern of the booking curve? Howard S. Frank: Actually, the Caribbean booking curve is further out than probably most other itineraries because we have been more aggressive on price and we have pushed the booking curve, and that’s given us the ability to have less inventory left to sell and to manage that later inventory as it comes up for sale, so we can get overall better yields, so yes, the booking trend -- the curve for Caribbean is further out actually than many other itineraries. On the debt to -- on the movement of the debt numbers, David’s going to respond to that.

There’s two items on the balance sheet. I assume you are referring to the convertible debt line subject to current puts. That currently stands at about $1.2 billion. That number at the end of August represents two of our three convertibles that are out there. We do have a third convert that will be put-able in October of ’08, so at the end of the year, that number will grow because you will have all three converts on that line. Two of the three converts are in the money at the moment and one is out of the money, so predicting as to whether they need refinancing would be predicting the stock price, but that’s the current situation right now. As far as the current portion of the long-term debt, it stands at $1.4 billion, which will be paid off over the next 12 months but keep in mind we do have $1.4 billion of cash from the balance sheet and we also have three committed export credits for $1.2 billion that we’ll be utilizing over the next 12 months as well. Tim Ramskill - Dresdner Kleinwort: Thank you.

Our next question comes from the line of David Leibowitz with Burnham. Please go ahead. David Leibowitz - Burnham Securities: Good morning. Briefly, two unrelated questions; first, given the pound or, excuse, Euro/dollar relationship, obviously you have delayed any new builds for North America or held them to a minimum. How much longer can you continue to do that and at the same time plan for the future of your North American operations?

All I can say is that we have taken a disciplined approach to new buildings. We have very, very favorable contracts through 2010. We continue to talk to yards. I’m here in Venice. I spent the day on the Queen Victoria and spent the day with [Frank Cantari] over the last couple of days. We are constantly talking to yards. We are constantly looking at potential projects and when we have announcements to make, we will make them. But we will be dealing with a disciplined approach and making our investments in the brands and in the markets that can bring us our return hurdles, and we will be patient if necessary. Remember, we are building 30-year assets and we are not trying to manage this business quarter to quarter. We are managing it for the long term. David Leibowitz - Burnham Securities: But you are also at the same time, excuse the interruption, transferring capacity out of existing North American brands, such as the Ibero situation, et cetera. So can you at one and the same time, continue to --

You are right that we have 1,400 beds that we are transferring from Carnival to Iberojet, but at the same time we have 10,200 beds under construction for Carnival, so it’s not like we don’t have beds coming. We have 10,200 beds under construction, at very favorable prices. Howard S. Frank: Let me just add there, David, that I don’t think -- it was the kind of ship that Ibero needed. It wasn’t because Carnival was necessarily desirous of moving that ship out of its fleet. I think Ibero wanted to start with the smaller ships in terms of expanding its fleet and in terms of its strategy, so there aren’t that many 1,500 passenger ships left in the fleet, whether it’s in Europe or in the U.S. David Leibowitz - Burnham Securities: I was talking to the age, Howard. I do apologize if I was misunderstood, but if you look at the number of vessels in the fleet that date back to the ‘80s and early ‘90s before some of the amenities such as balconies became a standard within the trade, you have quite a few of those. But if you move all of that capacity out, what happens starting in 2011, 2012, where you are going to have to make some commitments shortly? And that was the whole point of the question, and I apologize. Let me ask my second question --

I’m not sure what you are talking about because we have in North America one ship that is older than 1990 left. David Leibowitz - Burnham Securities: What I said was late ‘80s and early ‘90s.

In the early ‘90s, if you are talking Fantasy Class, you know we’re doing the evolution of fun investments. We’re investing a lot of money in those ships to make them very competitive for a very long time. David Leibowitz - Burnham Securities: Okay. Second question, if I may, and this is just a point of clarification; when you announced that you were no longer going to be engaging in a merger with our friends in Germany, there was a statement in the press release indicating that talks were continuing about other potential options. Howard, when you spoke this morning, you made it sound as if those talks also have now ended by not referring to them when you said the merger was off. Could you enlighten us which is the proper way to look at this now, going forward? Howard S. Frank: I honestly don’t recall that comment in the press release where we discussed that we were withdrawing the filings, David, but we are not having -- we have discontinued our conversations with -- that doesn’t mean we couldn’t go back and revisit some other strategies with them in the future. It’s a huge company based throughout Europe and in North America as well, but there is nothing currently that we are talking about. David Leibowitz - Burnham Securities: Okay, thank you very much.

I would like to point out though that what we did say was that we will refocus our energies in the German market using Costa as our traditional cruise brand, and I’m happy to say that Costa just yesterday announced that they carried their 100,000th German this year, which shows you how powerful the Costa brand is in Germany. And we intend to redouble our efforts now to establish German Costa as our traditional German cruise brand for that market in an international style product, with AIDA continuing to grow with the club style product. David Leibowitz - Burnham Securities: Thank you.

Our next question comes from the line of [Ari Johnson] with Exane. Please go ahead. Ari Johnson - Exane BNP Paribas: Good morning, everyone. I just wanted to know if you felt whether bookings were helped by the new U.S. passport rule, just some comment on this? Howard S. Frank: I don’t think so. I don’t think we’ve seen any impact recently from any changes in passport regulations or rulings.

I would say we were very concerned about having what happened happen -- in other words, huge backlogs of people trying to get passports and we were very concerned that that could affect our business. When there was the requirement for passport or people expected there was, we didn’t see an effect on our business, and when that was extended and they didn’t, we didn’t see an effect on our business. So there must have been some effect on somebody’s business somewhere, because obviously those backlogs were discouraging people from traveling, but it appears maybe the Caribbean or Mexico had a little bit more effect. But we never really saw anything one way or the other. Ari Johnson - Exane BNP Paribas: Okay. Thank you.

Our next question comes from the line of Mark Reed with Teather & Greenwood Securities. Please go ahead. Mark Reed - Teather & Greenwood: Good morning. Two quick ones; just firstly, can you talk a little bit about the individual source markets in Europe where you are seeing particular strength and weakness? And I’m just wondering on fuel; at what level do you consider alternative structures for fuel as surcharges spill out, hedging, et cetera?

I’ll let Howard answer the individual European markets. I think it is pretty much across the board though, but we have and continue to consider fuel charges, fuel surcharges. We met recently with all the CEOs of our North American brands on the issue of fuel surcharges. We didn’t reach a final consensus. That’s the same meetings where we decided on the air sea issue that I discussed earlier. But as far as we’re concerned, that’s a marketing issue more than anything else and it is still on the table. And if fuel continues to increase or stay at this level for an extended period of time, we will continue to discuss and consider fuel surcharges going forward. Howard S. Frank: On the issue of source markets in Europe and the strength of them, you know, largely as a result of the introduction of these new ships, the Queen Victoria, the Ventura in the U.K., bookings have been very strong in the U.K. I think these new ships are --

I think AIDA’s been tremendous, tremendous to AIDA Viva, tremendous response to Costa Serena -- I mean, we’ve seen it right across the board. Howard S. Frank: Yeah, it’s really, really pretty much across the board. Now remember, what I said is mid-teens; we’ve got something like a 16%, 17% increase in European capacity across the board as well but bookings have been pacing, which has been very positive.

One thing I would like to add, going back to the fuel surcharge to Micky’s comments, is Costa and AIDA have actually implemented fuel surcharges. AIDA implemented it four weeks ago. Costa implemented it in Germany back in April and just recently, they implemented the rest of Europe fuel surcharges. Mark Reed - Teather & Greenwood: Right. Could you give a little bit more flavor on how that, what the initial findings have been to date? Have you been able to pass it all on to consumers?

Yes, the response has been excellent by consumers, completely understanding. We have evaluated that, given that feedback to our North American brands, and that’s why I would say it’s -- based on everything we’ve seen in Europe, that’s why it’s on the table and under consideration. The question in Europe is it’s under a very, very strict set of regulations of when you can put it on, when you can take it off, based on different countries’ requirements on travel pricing, so it is a little bit different in Europe than it is in North America, but it is on the table and under consideration. Mark Reed - Teather & Greenwood: Thank you.

Our next question comes from the line of Rick Lyall with John W. Bristol. Please go ahead. Rick Lyall - John W. Bristol: I just had a follow-up on your comments about China, you know, making so much progress there by changing the sourcing strategy. Is that a transitory strategy until you get a greater critical mass and acceptance in China itself? Or is that likely to be the strategy going forward, and how does that affect your thoughts about adding capacity going forward? Howard S. Frank: I think it’s fair to say, Rick, that we needed to augment the Chinese market piece of this, the sourcing from China for the ships, so that we opened up the ship to the European market, and that’s turned out to be very successful. It’s a very different itinerary, though, then the cruises. It’s a longer cruise itinerary than the cruises we offer in the Chinese market, which tend to be five-night cruises versus, you know, it could be seven, fourteen-night cruises. I think as we build, but I think it’s transitory from the standpoint that as we build the Chinese market, we’ll probably shift more and more of this, and we shift more and more sourcing to China, we’ll then probably add capacity. Whether and how we do that I think is still yet to be determined, but I think we are greatly encouraged by what we are seeing so far in terms of our ability to source more business out of Europe for the Chinese cruises, as well as continuing to build our market share in China, so we are very happy with it. What the future is, I think it is still to be determined but clearly we are very encouraged by what we see so far.

I think the way to view this is that we went into China realizing we’d have to make an investment, maybe made a bigger investment than we thought but understanding that there would be a learning curve and it’s a big learning curve and we are still in the early stages of it, but we’ve learned a tremendous amount in a year and I’m sure we’ll learn a tremendous amount more next year. As we go through that process, I’m sure we’ll continue to adjust and improve our strategies in China, but we believe, as we did from the very beginning, the potential is enormous. We are starting to see passengers from China travel on more than just the China ship. We are starting to see business to a lot of our itineraries. We are very, very encouraged but it is early in the learning curve. I don’t think we are making any final conclusions at this point. I think we are just early in the learning curve and we’ll know a lot more in a year and two from now. Rick Lyall - John W. Bristol: Thank you. Howard S. Frank: Operator, we’ll take one more question, if indeed there is one, and then we’ll have to close it off.

Our next question comes from the line of Simon Champion with Deutsche Bank. Please go ahead, sir. Simon Champion - Deutsche Bank: I’ve got a couple of questions; firstly, do you think the consolidation amongst the major tour operators in Europe has any impact on your ability to distribute product in Europe? I remember Peter used to talk about distributing a significant amount of product through Thomas Cook. And the second question is, could you just give us a reminder where we are in terms of timing of the reconstruction of the Cozumel pier? Thanks.

I’ll take the European distribution. We have excellent ongoing relationships with Thomas Cook and TUI. They are obviously key distributors for us but they are not sole distributors, they are not majority distributors but they are a very important segment of our distribution system. But the way we operate in the U.K. and Germany particularly is we offer our product, just like in North America, all the travel agents, support from lots of travel agents. So we are very happy with our relationships. We reinforced that after the mergers with both Manny and Peter and we are very, very happy with how that’s going. Howard S. Frank: The Cozumel pier is under construction now and the timing is opening up I think fall of ’08, so we are a little bit -- about a year away, a little bit more than a year away. Simon Champion - Deutsche Bank: Thanks. Howard S. Frank: Okay, with that, I am going to close it off. I think you all for listening in and if there are follow-on questions, Beth Roberts is here and she’d be happy to take your call. Have a good day.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and we ask that you please disconnect your lines.