The Royal Caribbean cruise ship Majesty of the Seas lies docked at the Port of Miami, Monday. Royal Caribbean Cruises Limited is the world's second-largest cruise operator. - file

Cruise operator Royal Caribbean Cruises Limited reported sharply lower second-quarter earnings Monday, blaming higher fuel prices, and said it would cut 400 jobs.

Royal Caribbean earned US$84.7 million, or 40 cents a share, in line with Wall Street expectations. In the same period a year ago, it earned US$128.7 million, or 60 cents a share.

Although demand for cruises remained high in the quarter, fuel prices soared 55 per cent. As a result, the company said it would take several steps to cut costs by about US$125 million, including eliminating jobs.

"Too much of our profitability is being eroded by the increase in fuel prices," CEO Richard Fain said in a statement. "This is unacceptable and we are evaluating everything we do to find ways to do it more efficiently and effectively."

Royal Caribbean will eliminate approximately 400 shore-side positions. Also, it is getting rid of some non-core operations, such as 'The Scholar Ship', an educational programme for college students to study abroad at sea.

The company expects to incur approximately US$15 million, or seven cents a share, in charges in the third quarter related to restructuring.