Royal Caribbean Cruises Ltd. reported that net income for the first quarter of 2005 was $135.3 million, or $0.63 per share. This compares to $95.8 million, or $0.47 per share, for the first quarter of 2004. Revenues for the first quarter of 2005 increased 10.0% to $1.2 billion from revenues of $1.1 billion in the first quarter of 2004. The increase in revenues was attributable to an improvement in cruise ticket prices, a 3.3% increase in capacity and increases in occupancy and onboard revenues. Gross Yields and Net Yields for the first quarter of 2005 increased 6.5% and 8.2% from the first quarter of 2004, respectively. Occupancy reached a record level for the first quarter, at 105.7%, up from 104.2% in the first quarter of 2004.

The pace of bookings and consumer demand remains positive and on track with the company`s previous expectations. First quarter Net Yield performance allows the company to narrow its full year Net Yield guidance to an increase in the range of 6% to 7%. The company currently expects Net Yields for the second quarter of 2005 will increase approximately 6%.

We are very pleased with our first quarter results, said Richard D. Fain, chairman and chief executive officer of Royal Caribbean Cruises Ltd. All key elements of the business performed very well, but the high cost of fuel is a major focus. During the quarter, the company passed an important milestone. Net debt to capital dropped to below 50%, demonstrating solid progress in the company`s program to strengthen its balance sheet.

For the first quarter of 2005, Gross Cruise Costs and Net Cruise Costs per APCD increased 4.6% and 6.0%, respectively, compared to the same quarter in 2004. Inflationary pressures, especially related to fuel costs, are the primary driver of these cost increases. During the first quarter of 2005, at-the-pump prices of fuel were approximately 30% higher than those experienced in the first quarter of 2004 and represented approximately 6.1% of total revenues.

Also during the quarter, the company announced that one of its ships experienced a breakdown in its propulsion unit which is estimated to reduce 2005 earnings per share by approximately $0.03-$0.04, divided roughly evenly between the first two quarters. Because of excellent bookings during the beginning of the year, the company decided to defer certain expenses, including its marketing spend, to later in the year. Partially offsetting these changes, the company incurred higher than expected payroll and benefit expenses. Despite these expenses and costs incurred in connection with the cancellation of a 10-night Hawaiian cruise, the increase in Net Cruise Costs per APCD was in-line with the company`s previous guidance.

Fuel costs continue to be the most important variable impacting Net Cruise Costs and make forecasting very difficult. In the company`s last update, it estimated that at-the-pump fuel prices for the first quarter would increase about 11% over the average level for 2004. The company also estimated that if that 11% figure continued for the full year it would cost an additional $23 million (net of hedges). Fuel prices for the first quarter were 11% higher than the 2004 yearly average. However, since then, at-the-pump fuel prices have continued to rise despite the fact that crude oil prices have actually fallen slightly. Currently, at-the-pump fuel prices are 20% higher than the 2004 yearly average. If prices for the remainder of 2005 remain at today`s level, that price increase would cost the company $26 million in addition to the $23 million previously disclosed. Based on this assumption, Net Cruise Costs per APCD for 2005 would increase approximately 5% to 6% compared to 2004. The price increase in fuel accounts for approximately 3 percentage points of this increase.

Based upon the above, management expects full year 2005 earnings per share to be in the range of $2.65 to $2.85. On the same basis, second quarter 2005 earnings per share are expected to be in the range of $0.55 to $0.60.

In early April, the company announced its order with Finnish shipbuilder Aker Finnyards for a third ship in its Freedom class. Destined for the Royal Caribbean International fleet, the three 158,000-GRT ships will each carry approximately 3,600 passengers double occupancy when completed. This is approximately 15 percent larger than its Voyager class predecessors. The third Freedom class ship is expected to enter service in early 2008.