The Miami-based company also raised its earnings guidance for the rest of the year and said bookings and pricing were shaping up well for the first quarter of 2008.

The results sent shares up $3.01, or 7.7 percent, to $42.26 on Monday.

In the quarter ended Sept. 30, the company earned $395 million, or $1.84 per share, from $345.4 million, or $1.63 per share, a year ago. Analysts polled by Thomson Financial expected earnings of $1.77 per share, on average.

Quarterly revenue rose 19 percent to $1.95 billion from $1.64 billion in the previous year. Average estimates forecast revenue of $1.79 billion.

Royal Caribbean's portfolio includes 35 ships sailing under the Royal Caribbean International, Celebrity Cruises, Azamara and Pullmantur brands. Among its cruises are those to Hawai'i.

"It was a very encouraging finish for the quarter and augurs well for upcoming periods," said Richard Fain, chairman and chief executive officer.

The results, combined with signs of future improvement in bookings and pricing in the vital Caribbean market, bode well for the cruise industry — especially when framed against Carnival Corp.'s strong fiscal third-quarter results, analysts said.

"RCL did corroborate (Carnival's) comments about increased confidence in the market with a stabilizing Caribbean booking environment and strengthening close-in bookings," UBS Investment Research analyst Robin Farley wrote in a research note Monday.

The uptick in Caribbean demand could be due at least in part to a slower hurricane season compared to 2004 and 2005, though the Mexican port at Costa Maya is currently out of commission due to damage from Hurricane Dean, said Adam Goldstein, president of Royal Caribbean International.

Royal Caribbean 2008 booking levels and ticket prices were up for the first quarter and full year versus 2007. The company expects that net yields for the first quarter 2008 will increase around mid-single digits compared to the first quarter of 2007. Yields are a key profitability gauge that measure net income earned from passengers per day from cruise tickets and onboard sales

"The first quarter in particular is shaping up nicely," chief financial officer Brian Rice said on a conference call.

Rice also said that Europe continues to be a growing market, reflected by the introduction of the Southampton, England-based Independence of the Seas in April 2008.

One challenge that cruise lines will keep facing is fuel prices, which were up 7 percent for Royal Caribbean compared to the third quarter of 2006. The average price for the quarter was $473 per metric ton versus $442 per metric ton in 2006.

If fuel prices for the fourth quarter remain current levels, fuel costs for the quarter will be $137 million or $440 per metric ton.

Royal Caribbean said third-quarter net yields, excluding results from Spanish cruise and tour operator Pullmantur, climbed 1.6 percent over the prior-year period. Including Pullmantur, net yields rose 4.1 percent.

In the nine months ended Sept. 30, Royal Caribbean reported net income of $532.6 million, or $2.49 per share, compared with earnings of $587.3 million, or $2.70 per share, in the same period a year ago.

Despite higher crude oil prices, Royal Caribbean raised its earnings guidance for the rest of 2007 to the high end of its previous guidance. The company expects fourth-quarter earnings in a range of 32 cents to 37 cents per share, with full-year net income between $2.80 and $2.85 per share.