Princess cheer as bid ruling looms

P&O Princess Cruises has declared it could beat City profit forecasts for the year, just hours before European Union Commission watchdogs were expected to approve rival Carnival's £3.5bn.

The expected green light for Carnival's hostile bid will enrage Royal Caribbean chief Richard Fain, with whom Princess originally agreed a merger. And it will mark a 180-degree turn from Competition Commissioner Mario Monti's previous stance.

News that prices of its cruises had not fallen as far as expected make Princess even more tempting for both suitors. Yields for the year were likely to come in only 5% down on last year despite the impact of 11 September. In April, chief executive Peter Ratcliffe had warned of a reduction of up to 6%.

Pre-tax profits in the three months to 30 June came in at $98.9m (£63m) against $93.8m a year previously on turnover of $638.1m against $647.6m last time.

Ratcliffe said: 'This is the third quarter since 11 September that we have increased profits year-onyear. Not many companies can say that. We're not in the best environment but bookings are strong. Prices have fallen less than we thought three months ago. We believe we can exceed market expectations.'

Princess shares leapt 15 1/2p to 375p in early trade.