Good morning. At first time, I would like to welcome to the Royal Caribbean Cruises Ltd. second quarter earnings conference call. (Operator Instructions). I will now turn the call over to Mr. Brian Rice, Chief Financial Officer.

I would like to thank each of you for joining us today for our second quarter earnings call. With me here today aboard the new Celebrity Equinox in South Hampton are Richard Fain, our Chairman and Chief Executive Officer; Dan Hanrahan, President and CEO of Celebrity Cruises; Ian Bailey, our Vice President of Investor Relations; and joining us from Miami is Adam Goldstein, President and CEO of Royal Caribbean International. During this call we will be referring to a number of slides which we have posted Investor website, www.rclinvestor.com. Before we get started, I would like to refer you of our notice about forward-looking statements which you will see on the first slide. During this call, we will be making comments which are forward-looking. Forward-looking statements do not guarantee future performance and do involve risks and uncertainties. Examples are described in our SEC filings and other disclosures. Additionally, we will be discussing certain financial measures which are non-GAAP as defined by Regulation G, and a reconciliation of these items can be found on our website. Richard has some opening comments to begin our call, I will follow with a brief recap of the second quarter, update our forward guidance and comment on the recent demand environment. Adam and Dan will then talk more about their brands and then we will open the call for your questions.

Thanks Brian and thanks to all of you for joining us at this earlier then usual hour. Most of us are actually sitting here in one of the suites on board our [inaudible] the Celebrity Equinox, and if I do say so myself, the surroundings are absolutely wonderful. Being ensconced in all this luxury can almost wash away the continued misery of this economic cycle. As I think about it a bit more, having this call on board this vessel is actually quite apropos. Much as a cruise on this ship helps our guests forget their daily annoyances, this vessel almost helps us forget the sting of this economy, the particular effect that its had on Spain and that damn flu. This ship also reinforces my conviction about the painstaking efforts we took in her design process. The innovations here that only provide our guests with more amenities then ever but they also maximize onboard revenue streams and create tremendous scale and technological efficiencies. The introduction of these two Solstice class ships have been about the best received ships that I can remember and that gives me a great deal of comfort for the future. I even get more excited when the math indicates that almost half of our fleet will be comprised of Solstice, Freedom, and Oasis class hardware within a few short years. Solstice class hardware only represents about 5% of 2009’s capacity and even that small amount helped move the needle this year. Imagine what will happen when these ships constitute almost half of our fleet. Another important component of the equation is that all of our new capacity is being dedicated outside the North American marketplace and into our international developmental areas. This is important for two reasons, first our North American supply will actually be…

Thank you Richard, I would like to briefly go through the second quarter results which we have summarized on the second slide. In the second quarter we had a net loss of $0.16 per share. Subsequent to our previous guidance we had provided updates on the impact of the H1N1 virus and adjustments to non operating income. The H1N1 virus cost us approximately $0.05 per share in the second quarter and we [occurred] approximately $0.11 per share in expenses due to below the line adjustments for foreign exchange and hedging ineffectiveness. The largest impact to the non operating income came from a revaluation of our foreign denominated customer deposits, mainly bookings deposited in British pounds and to a lesser extent euro and Canadian dollars. During the quarter the dollar weakened by approximately 15% versus Sterling which increased our liability and consequently produced a loss below the line. Our revenue yields for the quarter were down 17.9%. The impact of the H1N1 virus was approximately one percentage point during the quarter. And adjusting for that we came in consistent with our previous guidance. On slide three we have illustrated by product line how our ticket revenues performed versus our previous expectations. European itineraries benefited quite a bit from the weaker dollar and came in better than our forecast but Mexico was significantly impacted by the H1N1 virus. As you can see aside from these two differences almost all our other product lines were consistent with our previous forecast. Seven night Caribbean and Alaska came in slightly better than forecast and shorter Caribbean came in slightly lower. Recently we have tended to be more bullish on the entry level products and more cautious on the premium ones. In hindsight I think these variances were as much as result of our biases as…

Thank you Brian and good morning everyone. As you have heard market conditions continued to be very challenging in the second quarter as they have been since the fall of last year. We have kept occupancies near our historical levels although as we have described previously our pricing has been aggressive in virtually all markets. Ship board revenue yields have declined meaningfully on a year over year basis although not to the same extent as ticket yield declines. But similar to ticket revenue our forecast hasn’t changed much from our last update. Gaming has certainly been the most negatively effected element of our onboard revenue streams. While our Caribbean products are experiencing yield declines and very close in bookings the yield declines in Europe and Alaska have put the most pressure on 2009. In Europe we face both recessionary conditions and have [absorbed] a noticeable increase in capacity. Although these factors are driving yield declines we are pleased with the rapid expansion of our local market sourcing in all of our priority European markets. These markets are still giving us healthy bookings even for August high season sailings. Our growing presence in Europe and around the world bodes well for the future. In Alaska there is not a material increase in capacity yet the yield decline is more pronounced there then anywhere else. Although we have succeeded in filling our ships in Alaska this summer the degradation in pricing has caused one of the most remarkable geographic sector yield declines in our memory. Because the volume of guests has stayed constant, Alaskans may perceive that not much has changed compared to 2008. In fact the change in the profitability of this market has been dramatic and the correctness of our decision to reduce capacity in 2010 has been underscored. Brian…

Thank you Adam and good morning everyone. As you’ve heard we’re here in South Hampton on the newly launched Celebrity Equinox. Like Celebrity Solstice she’s an absolutely gorgeous ship. We will show Equinox to approximately 10,000 travel agents and press during these pre inaugural events from the UK, Europe, The Middle East, Latin America, and Asia. We’re thrilled with the reaction these ships have received and we continue to see the Solstice class as a game changer for the Celebrity brand. Introducing [break in audio] in the UK is a key part of Celebrity strategy to grow our international sourcing. The UK market in particular is important as Celebrity Equinox will be targeted toward the UK market when she launches next year. Our booking data reaffirms that our Solstice class ships are generating both premium ticket revenue and premium onboard spending even in these challenging times. Speaking more broadly the Celebrity brand is experiencing [close] in demand for summer cruises in both Europe and Alaska and volumes will be a bit higher than we thought on our previous call. However pricing for Alaska has been particularly hard hit. Booking volume for Europe cruises through the summer has also held up well both in the Baltic and in the Med and as I mentioned earlier our Solstice class ships are continuing to command healthy premiums in Europe. We have less visibility for our cruises that operate in Q4 of 2009 and into Q1 of 2010 driven in part by consumers booking their cruises closer to time of departure. Our pricing is below levels we had at the same time last year but are running ahead of where we finished in Q4 and in Q1. We’re seeing a surprisingly high count of bookings coming from outside of the US and our longer Caribbean cruises operating from South Florida this fall and winter and on our ships that will stay in Europe into the fall. It’s a bit early to make any predictions about the 2010 Europe and Alaska season. I would like to mention again the Celebrity brand will achieve a milestone next summer when we launch our first ship dedicated to the UK market with Eclipse operating summer cruises from South Hampton. Early indications for this product are quite encouraging. And as I sit here on Equinox this afternoon, I’m reminded that Solstice class ships will account for almost 40% of Celebrity’s 2010 capacity. Even in these challenging times that gives me reason for optimism.

Thank you Dan, we will now open the call to your questions.

(Operator Instructions) Your first question comes from the line of Timothy Conder – Wells Fargo Timothy Conder – Wells Fargo : If you could comment a little bit given what you’re talking about with the new Solstice and the Oasis class ships, what percentage of your passengers for European itineraries are going to be sourced from Europe this year and what do you think about for next year.

The percentage, I think its possible last call I slightly overstated the percentage, but according to our latest data for this year its 56% are Europeans and probably about two thirds of all of our customers who will be on Europe this summer will not be from the US. Timothy Conder – Wells Fargo : And that’s on the Royal Caribbean brand.

That is actually in general for Royal Caribbean and Celebrity and are combined I believe. Timothy Conder – Wells Fargo : And then any guesstimate looking into 2010 at this point, how you expect that to change.

Well the general trend for our brands and consistent with what Dan just said is that we’ve been increasing the percentage of our customers who are coming from outside the US so other things being equal I expect the percentages that I just gave you to grow slightly. Timothy Conder – Wells Fargo : And then with the formal carve out now of Azamara out from under the Celebrity umbrella how is that going to change the cost structure on a go forward basis.

I think we’re not expecting anything dramatic in the context of the company. We’re making the changes mostly at the top level and Azamara has had a very successful operation, the vessel operation itself and what we’re expecting to do is simply to achieve better awareness and better focus from a management team led by Larry. Timothy Conder – Wells Fargo : So again nothing changing from the marketing.

It won’t be anything materially relevant in here for the cost structure.

Your next question comes from the line of Robin Farley - UBS

On your yield guidance, looking on constant currency without the impact of the dollar weakening it looks like it went from being down 9 to 10 to being down 11 to 12% and I know a percentage point of that since prior guidance was the swine flu impact but it looks like today there’s another percentage point reduction in your yield guidance and is that all being driven by Spain or I wonder if you could just because a lot of the commentary about bookings was quite positive and so I just want to square that with this reduction in yield guidance and then on fuel hedging, are you going to increase the amount that you are hedging for 2010 and 2011 or are you just sort of finishing your hedging further in advance but you’re not going to hedge above previous levels.

On the yield guidance as we tried to show in the second quarter performance the one product that seemed to really do exceptionally well was Europe and that did benefit quite a bit from the FX [break in audio] guidance third and fourth quarter we really haven’t changed much on the core products. We have taken Spain down a little bit. The net impact of that as I recall I said was about $0.07 which would probably equate to about 25 to 30 basis points in terms of the overall impact on the company. FX is a little tougher for us and we’ve tried to create a lot of transparency for you. We have only one brand that is in a different functional currency and that’s Pulmantur and that’s a very easy calculation for us. But as you know if the dollars is weakening and the value of European business increases we may take a decision to actually lower our European business and take a greater share of that business. So we’re trying to give you a lot of information but I’d warn you about reading too much into the FX.

My question was in the constant currency, your reduction in guidance in constant currency, is it still without any impact from the currency would be two percentage points reduction since your last guidance and one point of that was from [inaudible] so I was looking for the other, what’s driving the other reduction that’s not currency.

And the thing, you’re reading in a level of precision into our guidance that probably isn’t that exactly precise. We said that for the year it’s a little over 1% due to swine flu and about $0.07 per share or about 30 basis points due to weakness in Spain. The rest you’re talking really rounding [areas] within the guidance. On the hedging we have hedged 50% as I mentioned for 2010 and 45% for 2011. We do have a theoretical cap in order to get hedge accounting and we try to be a little conservative to ensure that we get that and we’re pretty much at our levels. I think if pricing stays down and we can get more comfortable increasing those slightly we would probably look to but I don’t think you’re going to see any significant increase in our hedge positions for 2010 or 2011.

Your next question comes from the line of Assia Georgieva - Standford Financial Group

I have a question, it seems that the online charge go all the way through July 12 and I wonder what booking volumes have done over the past couple of weeks. There seems to be a significant decline on the 12th, have you seen that trend reverse.

Frankly I have to admit I don’t have slide right in front of me at the moment, but I can tell you we’ve seen a remarkable consistency since the beginning of the year by each quarter. We just pulled up the third quarter slide and you see a little bit of a dip but again that’s a year over year and part of that is getting to the point where we’re running out of inventory for the third quarter. So naturally eventually it has to come back, to equilibrium. I wouldn’t read too much into that.

My concern is that it seems that Q4 EPS and yield guidance seems quite strong at this point and even though yields are expected to be down only mid single-digits and last year you were about break-even it seems that right now you’re guiding a EPS of $0.08 to $0.13 in Q4, is that cost savings, is it on fuel.

If you back into the fourth quarter guidance you are going to see a lot of cost savings that are baked into that. We did say that you could extrapolate that we’re talking about mid single-digit yield declines. And I think its predominantly being driven by the cost savings that we’ve I think proven in the first six months of this year.

And on 2010, European deployment seems to be down a little bit more than 5%, Adventure is joining the rest of the European fleet there and Eclipse obviously will be sailing but for other ships are leaving, is there any specific reason for Alaska I can certainly understand the 20% decline in [CPGDs] but Europe seems to have done relatively well over the past few years so I was a little surprised to see that.

On the Royal Caribbean side obviously you have the number of our capacity is actually continuing to increase. We’re bringing Adventure of the Seas in next year essentially to replace Legend of the Seas which will be full time in Asia. So there’s no particular change there. We continue our ramp up.

We will have as you mentioned we will have Eclipse sourcing out of the UK, sailing out of South Hampton and I can tell you that the last few days here on Equinox has been well worth it. The response has been absolutely terrific from all the UK travel agents and all the UK press. We do have Solstice doing seven nights Caribbean next summer. So that may be what you’re picking up on and that was simply just based on demand that we saw and response from consumers and trade that brought it back here, but nothing about Europe and the way Europe is performing. We continue to be quite happy with Europe.

And you also have Century and Summit that were sailing in Europe in 2009, they’re not going to be there in 2010. It doesn’t seem that there’s a replacement for those two ships.

Well Century and Summit decisions were made quite a while ago. Those were when we published our, that’s why I didn’t reference those, those were when we published our itineraries back in the early part of the summer or late spring. Yes we have Summit going out of Bermuda, and Century doing the 5-5-4 year round. But again we’ve been pleased with Europe and we’re not making any significant strategic changes.

Your next question comes from the line of Felicia Hendrix – Barclays Felicia Hendrix – Barclays : On your Q1 2010 outlook it doesn’t sound like you’ve changed your view since the June 29 update but I just wanted to double check that.

We continue to see a lot of stability as we’ve tried to, I think beat a dead horse here, over the last eight months, and Q1 is very consistent with what we’ve been seeing. We’re very pleased in particular to the response from the new ships and I think the greatest upside in Q1 is really being provided by the easier comparables and the fact that we’re more used to this booking curve and how the consumer is going to behave. The current levels of our pricing compared to where we ended up a year ago in the first quarter where the APDs are substantially higher. Felicia Hendrix – Barclays : And then just on the swine flu issue, could be something that ends up being pretty unpredictable and skews your statistics that you historically rely on, I’m wondering what are you doing to mitigate the current and potentially future impact so that we don’t see a continued volatility in your guidance.

I think we’ve taken a number of steps. We have a very robust program on board to both control it and to make sure that we’re acting appropriately when something does happen. This was a pretty big hit in terms of the numbers. But it was in a short-term and I think what we showed was the ability to react to it and to manage it. Any time we get something that’s a surge is going to have a fairly immediate impact. But I think what we’ve shown is this is a good example, it came, people panicked at first, and then gradually people accepted it and its become [break in audio] that we accept much like the seasonal flu. And I think most people are expecting to see some resurgence of it and we’ll prepare for that. We monitor people coming onto the ships and we’re working very closely with the Center for Disease Control and with the governments of the various islands, particularly in the Caribbean and also our destinations in Europe and elsewhere. In most cases we and the industry trade group have arrangements so that we all know exactly what to do if there is an incident on a ship and how to isolate that and make sure it doesn’t spread to others on the ship or to affect other ships. Felicia Hendrix – Barclays : Just on MSNA, it was higher in the quarter then I thought it would be, you have launches at the end of the year so should we expect to see that run rate higher or in line with, implied with what you reported in the second quarter.

I know we had some timing differences in the quarter but they were not meaningful. We haven’t given any specific guidance on the components within the net cruise costs except for fuel. I can tell you that our G&A continues to be running very efficiently and we’ve seen substantial savings year over year but as we’ve talked about before, we’ve been very committed to our marketing and sales efforts. And we think those are strategic investments that are very important to continue.

Your next question comes from the line of Steve Kent - Goldman Sachs

Can you just talk about what you’re doing more broadly on your yield management systems and the reason I ask it and I know that we’ve now asked this a couple of times but the fact is you’ve had to lower your yield guidance a couple of times and even though you’re saying that things are starting to look better, it doesn’t look like the system really allows you to forecast particularly well. In particular I think it was somebody who mentioned that Alaska was a lot worse then even you all forecasted, maybe even just a few months ago. I guess I just want to understand how you’re adjusting the yield management to get through these difficult times. Also even though it sounds like its going to be a little bit better in 2010 would it still be negative yield in 2010 or at least the first quarter. To me it sounds that way and I think Carnival thinks that. And then finally when you said about 2010 being one third sold out in the first quarter or one third sold in the first quarter is that primarily on the two new ships for the Royal brand.

Let me try to go in reverse order, I think we were fairly clear saying that we anticipate yield improvement in the first quarter of 2010 and I think as we look at easier comps, the impact of the newer vessels and given the current weakness in the dollar we think that we have the right platform for yield improvement in 2010. We’ve been very clear about that and I think again I’ll reiterate we expect a yield improvement in the first quarter.

Does that mean less negative or does that actually mean positive.

We are talking about when we report yields it would not have brackets around it, it would have a plus sign in front of it. And the one third occupancy, we would have a higher occupancy on the newer vessels then we do if you will in the same store sales but our guidance is including the combination of those two things. We certainly are benefiting from the newer vessels but again its easier comps on the same store sales so that helps us going forward in 2010. In terms of our yield management systems I want to be very clear. I don’t think we’ve said that the market has gotten any better. We said that the market has remained [break in audio] since the beginning of the year. Our yield management systems I think are the best in the industry. I think our staff does an absolutely tremendous job and the level of precision that I think we’ve been able to do and our guidance has been quite remarkable when you take out the effects of H1N1 which I don’t think any revenue management system in the world will ever be able to pick up that sort of an impact. And you take into consideration the volatility of the dollar, I think those have been the two biggest impacts we’ve seen. Spain has been a little bit worse then we’ve [break in audio] not materially. You called out Alaska specifically, I’d point you to the slide where we showed the second quarter results that Alaska has been very bad for us this year but at the same time it actually, we’ve raised our guidance on Alaska. So again I think the revenue management system that our people are doing a great job. And we’ll continue to try to refine them but we’re very pleased with what they do.

I’d just like to add one thing on that, I think its important that you and everyone else understand when we talk about our yield management systems, we’re not, we hopefully have never suggested that they are perfect. These are predictions and there is especially in these times but to be within these very low margins of error compared to any other industry you name, I just don’t know of another company that’s able to predict its revenue as accurately as we have been. But its definitely not perfect. There’s a great deal of art and there’s a great deal of science and I think overall its very good but I do not think we ought to leave any impression that we are suggesting that one can perfectly predict these things. We happen to be in an industry where relatively, teeny change makes a huge difference to the bottom line and that makes us more sensitive to it. But there are very few industries that have the level of accuracy that we’ve managed over the years.

Could you just talk a little bit about, it sounds like Carnival might start to build some more ships and increase their supply and that would put you in a weaker market share position in the out years especially as you get to 2012, 2013. Is there some thought by you and the Board that you too may have to start building some more ships as you get further out.

You know, I think we’ve been pretty clear that is isn’t a market share game. There are industries where market share is important and if you increase your capacity and you don’t maintain market share you can, they can actually take customers from you. In our industry that’s simply not an option since was all sail full there is no opportunity to take customers from one brand to another. And we all market on the basis of a brand. And its almost interesting while each of us have grown in different times at different rates, our two biggest brands relative to one another, for example the Carnival brand and the Royal brand, have traded positions off and on and will continue to trade positions off and on. As to which is the largest brand and I think actually, Adam correct me if I’m wrong, Royal is currently slightly larger then the Carnival brand.

It will be when Oasis comes in, yes.

And that will switch back and forth but both are roughly the same size. When you talk about market position in our industry its really you have enough capacity to be relevant to the market and I think in each of our segments the answer to that is a definitive yes. So I think we will look at the decision of building on the basis purely of what’s in our best interest and the best interest of our shareholders, to give us the greatest rate of return. And in today’s market we think the greatest rate of return comes from margin expansion and not capacity growth and that decision we would take independent of what Carnival does or doesn’t do.

Your next question comes from the line of Steven Wieczynski - Stifel Nicolaus

I was a little surprised in terms of the decline you saw in the short Caribbean in the second quarter, can you just give us an idea of what happened there and what you’re currently seeing.

Well as you know the short cruises have the least visibility of all so in terms of our ability to predict that was just being discussed, we would have relatively the least there and so in a late booking environment we’re making our best predictions about when revenue will come in and the short Caribbean sailings although we get strong volume at the end, didn’t come in quite at the price levels that we had had in mind when we were making the previous predictions.

Has that be true so far in the third quarter.

The overall situation is as we’ve been describing it. We start to see more volume or we start to see the volume ramp up about four months prior to sailing on average and there’s I would include the short Caribbean performance in the overall statement of stability with load factors coming in late at lower prices then we would like.

Is there any update in terms of new ship financing, I guess specifically [Alur].

We’re still about 15 months away from delivery of the Alure. We will probably begin looking into that. We just wrapped up the bond offering. We’ll obviously, we have had some preliminary conversations. We feel very comfortable that we’ll be able to get that done in expeditious fashion. I would look more toward the end of the year before we’ll have any formal announcement on that. But we feel very good that the model that we showed with the Oasis financing is a very successful model.

Your next question comes from the line of Janet Brashear – Sanford Bernstein Janet Brashear – Sanford Bernstein: A couple of questions on fuel trends, looking forward how do you anticipate your mix of fuel changing especially relative to tighter European standards on sulfur content and then also as you look at forward booking curves, are you seeing the gap close between WTI pricing and IFOMGO pricing and if so how does that effect your thoughts about the future especially relative to the mix of fuel you’ll use.

In terms of the types of fuel, I think there’s obviously a lot of legislative action occurring out there that will require us to have lower sulfur content. Its something that we’ve begun looking seriously at what our alternatives and options are. At this point in time and for the next few years, we don’t see it having a tremendous impact on us. It is something, we stay abreast of any new technologies. In terms of the spread between IFO and MGO if you wouldn’t mind following up with that and Ian after the call, we don’t have that material in front of us but I can tell you that during the second quarter both IFO and MGO pricing was much more constrained then we saw with WTI.

Your next question comes from the line of [Mickey Shalline] – Ladenburg [Mickey Shalline] – Ladenburg: I want to go back to the H1N1 and I do appreciate your guidance for the impact of the virus and given some of the headlines we’re seeing including the possibility that 40% of the US population could be infected, could you tell me what sort of broad based assumption you’ve made regarding this fall’s flu season which could be much more significant then what we’ve seen so far.

If the flu would be much more significant then what we’ve seen so far then that is not included in the guidance that we’re giving. We are aware of the various scenarios that are being put out there and nobody knows. As Richard was going over before we’re fortunate in that the experience of the last four months has been very helpful not only to ourselves and the industry and the ships in terms of the protocols that we have developed and how to make sure that the spread of illness is limited to the maximum possible extent on our ships, but its also been extremely beneficial to our relationship with islands and countries around the world in terms of our interaction with them, their expectations and what they’re looking for from us. So we’re clearly in a much better position to deal with whatever comes us then we were before H1N1 unfolded several months back but we are expecting things to be as is both economically and otherwise and our guidance is depending on that.

Your final question comes from the line of Timothy Conder – Wells Fargo Timothy Conder – Wells Fargo : You gave us some color on the booked load factors and what was going on regarding first quarter what was your comparable booked load factor, again I know you said it was down year over year but what was the absolute number.

We didn’t give that. I can tell you that the load factors in Q1 are down strikingly similar to what they were down at the same point in time for Q4 and Q3. We’re seeing very similar patterns and pricing reaction elasticity. It really is truly remarkable how consistent the last eight months have been behaving in terms of when we hit that cycle. Timothy Conder – Wells Fargo : And again that’s obviously helps in your yield management system planning going forward. Then you alluded to your likely scenario for the yield should probably be up in both 2010 and 2011 given your mix and so forth, but then you also alluded to a worst case scenario and then mitigation measures, could you expand on that comment a little bit.

I think we obviously modeled quite a bit, but we’re trying to model or base case after what we know basically what we’re seeing from the consumer behaviors in the current economy. Our base case assumes a lot of consistency in that regard. And what I wanted to allude to is the fact that we do prepare for what we actually internally call a worser case scenario where we look at further yield pressure and actual yield declines and do we have adequate liquidity and contingencies that we can do. I don’t want to get real specific with what those contingencies are except to point out the fact that I think we’ve demonstrated a real strong ability to manage our cost structure. I alluded to the fact that we’ve not compromised any of our strategic initiatives. We haven’t touched marketing and sales. We have a very strong balance sheet with a lot of opportunities within that and I think we’ve demonstrated our ability to maintain good liquidity and we’d have further actions available to us if we needed them. I think that wraps it up and so we’d like to thank you for joining us today and even though we are on board the Celebrity Equinox Ian will be available throughout the day for any follow-ups you may have and we wish you all a great day. Thank you.