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NCL Corporation cuts final quarter loss, full year profit rises almost sixfold

  • Written by Kari Reinikainen
  • Category: Top Headlines

NCL Corporation, the Bermuda domiciled parent of Norwegian Cruise Lines and NCL America, reduced net loss in fourth quarter 2011 to $1.9 million from $40.0 million in the same period last year, while revenues increased to $488.6 million from $483.6 million. However, full year net profit soared to $126.9 million from $23.0 million in 2010 on a 10% rise in revenues that reached $2.20 billion, the company said in a statement.

President and CEO Kevin Sheehan did not give guidance for this year, but referred to investments ion both new tonnage and upgrades to the existing product and stated: ”. These investments in developing our assets, improving our travel agent relationships and enhancing the guest experience will provide benefits in 2012 and onward.”

Operating income for the year ended December 31, 2011 increased 37.1% to $316.1 million from $230.6 million in 2010. Net Revenue for the year increased 10.8% primarily due to the addition of Norwegian Epic to the fleet in June 2010 along with a 3.0% increase in Net Yield, or 2.4% on a constant currency basis. The improvement in Net Yield came primarily from higher ticket pricing as well as increased onboard spend per Capacity Day. Adjusted EBITDA for the year increased 24.9% to $506.0 million from $405.1 million in 2010 and revenue increased 10.3% to $2.2 billion from $2.0 billion.

Continuing business improvement initiatives resulted in a 1.8% decrease in Net Cruise Cost per Capacity Day, or 2.0% on a constant currency basis. Fuel price per metric ton remained elevated versus prior year increasing 14.2% to $571 from $500 in 2010. Excluding fuel, Net Cruise Cost per Capacity Day decreased 4.4%, or 4.7% on a constant currency basis.

Interest expense, net of capitalized interest, increased to $190.2 million from $173.8 million due to a full year of interest on the debt related to Norwegian Epic along with higher average interest rates. Other income was $0.9 million versus an expense of $34.0 million in 2010, which included a non-recurring charge of $33.1 million related to foreign exchange contracts associated with the financing of Norwegian Epic.

As far as the final quarter of 2011 is concerned, adjusted EBITDA in the quarter increased 38.7% to $88.3 million from $63.6 million in 2010. This improvement was a result of an increase in Net Revenue to $361.8 million from $355.2 million and a decrease in Net Cruise Cost to $274.8 million from $292.5 million in 2010. A 2.5% increase in Net Yield, the same on a constant currency basis, as a result of improved pricing and higher onboard spend per Capacity Day drove the increase in Net Revenue. Net Cruise Cost per Capacity Day decreased 5.4%, or 5.8% on a constant currency basis, due to lower dry-dock costs and more normalized repairs and maintenance costs and other operating expenses. The price of fuel in the quarter increased 15.8% to $573 per metric ton from $495 in 2010.

 

Interest expense, net of capitalized interest, decreased to $45.8 million in the quarter from $54.7 million primarily due to a write-off of certain deferred financing fees in 2010.

 Net loss for the quarter narrowed to $1.9 million on revenue of $488.6 million versus a loss of $40.0 million on revenue of $483.6 million in 2010.

 

Carnival Cruise Lines return to UK with 17 Carnival Legend cruises from Dover 2013

  • Written by Kari Reinikainen
  • Category: Top Headlines

Carnival Cruise Lines, which is part of Carnival Corp & plc group,  has announced a return to cruising in UK waters for the first time since 2008 with the deployment of Carnival Legend to Dover, Travel weekly reports in a newsletter.

The 2,600-capacity ship, which was built in 2002 will operate 17 cruises from the Kent port between 22 April and 31 October  2013. The decision to bring a ship back to the UK reflects Carnival’s ambitions to significantly grow brand awareness under new managing director Adolfo Perez.

Carnival was forced to abandon plans to establish a permanent base in the UK when the financial crisis hit in 2008 after it named Carnival Splendor in Dover. But Perez said the line believes now is the right time to re-establish its global expansion with the UK being one of its key markets outside of the US.

“Our goal is to grow the cruise market by attracting new-to-cruise,” said Perez. “The fact we are putting a ship in the UK’s backyard gives us access to UK guests and our marketing campaign is going to drive the brand.”

As well as Baltic cruises Carnival Legend will also sail in the Norwegian Fjords and around the British Isles as well as some Mediterranean cruises, the report said.

Carnival Cruise Lines to transfer Splendor to New York, Miracle moves to West Coast

  • Written by Teijo Niemelä
  • Category: Top Headlines

Carnival Cruise Lines announced several exciting itineraries for the 2013 season designed to offer more fun and memorable cruise options on both coasts.

Next spring, the company will reposition Carnival Miracle to the West Coast following a special Panama Canal voyage, and bring Carnival Splendor to New York, following three spectacular South America cruises.

The 2,124-passenger Carnival Miracle will shift to the West Coast in spring 2013 to operate the line's Alaska and Hawaii cruises, currently offered on the Carnival Spirit, which is being repositioned to Australia to operate the line's first cruises from that country. Carnival Miracle will also operate a seasonal Mexican Riviera program featuring the seven-day itinerary currently available on Carnival Splendor.

In turn, the 3,006-passenger Carnival Splendor will reposition to New York to assume Carnival Miracle's year-round eight-day Caribbean schedule beginning in March 2013, representing a capacity increase of 41 percent with this newer vessel. Before making its Big Apple debut, Carnival Splendor will offer three 13- to 18-day South America voyages from February to March 2013.

"Carnival Miracle, which recently emerged from a refurbishment that included the addition of an exclusive Serenity adults-only retreat and other enhancements, will provide guests with a fresh and exciting choice for West Coast cruising," said Gerry Cahill, Carnival president and CEO. "At the same time, Carnival Splendor will provide a newer, larger ship on our year-round program from New York and during the course of its repositioning will offer three South America cruises that visit some of the region's most spectacular and sought-after destinations," he added.

UK cruise bookings partly recover to 15% below last year in latest week after 29% fall on Costa Concordia

  • Written by Kari Reinikainen
  • Category: Top Headlines

Cruise bookings in the UK fell by as much as 29% in the week after the Costa Concordia disaster on 13 January and have since partly recovered so that they were 15% down year-on in the latest week, a report in Travel Weekly's newsletter says.

Industry analyst GfK Ascent reported cruise bookings in the week to January 21, immediately afterthe Concordia tragedy, down 29% against the comparable week a year ago, the report said.

Sales remained 24% down year on year in the following week to January 28, but the market recovered to just 15% down in the week to last Saturday, February 4.

 Bookings were forecast to fall in the aftermath. However, GfK Ascent reports the cruise market for the year remains just 2% down on the same point in 2011.

The analyst reported total holiday bookings for the summer 2012 season down almost 9% on last year to the end of last week - in line with capacity reductions at the big-two groups Tui Travel and Thomas Cook.

Package holiday sales fared better at 7% down year on year for the season to date. The GfK Ascent figures show sales improving since a poor start to January, with bookings down 10% year on year in the last week and 11% down the week before. Summer bookings over the first four weeks of January were 15% down on January 2011.


 

 

 

 

 

 

RCCL says booking activity fell sharply from high level after Costa Concordia

Royal Caribbean Cruises Ltd (RCCL), the world’s second largest cruise shipping group, said that new booking activity fell sharply from a high level in the wake of Costa Concordia accident on 13 January, with European bookings falling more than those originating in North America. The company forecasts 2012 earnings per share in the range of $1.90 to $2.30 compared to $2.77 achieved in 2011.

“Because the tragedy in Italy is having such a significant near term effect on bookings and because that impact on the company's earnings is so uncertain, the company first described the situation prior to the event and then discussed the possible consequences,” the company said in a statement.

Booking patterns at the end of 2011 were strong and WAVE season was off to an excellent start.  During the two weeks prior to the tragedy, bookings averaged 5% more than the same period last year and at higher prices.  Booked load factors and pricing were ahead of the same time last year in all four quarters. 

Based on the bookings in hand at that time and the pattern of forward bookings through the period, the company anticipated Constant-Currency yield improvement in the mid single digits for the year.  This figure was influenced by two unique factors: 

Firstly, the company made some changes related to its International distribution system in 2011 which carry on into 2012 and will increase yields by about 130 basis points.  The changes also increase expenses, but the bottom line impact is not material.

Secondly, the company has increased its commitment in certain deployment initiatives which increase revenues but also increase related expenses. For example, China represents a strategic market initiative the company is augmenting significantly.

Altogether, these factors are expected to cause both Net Yields and NCCs for the full year 2012 to increase approximately 200 basis points and 300 basis points, respectively.  Absent these factors, the company estimates that its "normalized" Net Yield growth would have been in the range of 2% to 4% on a Constant-Currency basis.

 Impact of Costa Concordia

 It is very difficult to assess the impact of the incident on our revenues.  It has been the subject of extensive media coverage and world-wide attention.  In addition, we curtailed our marketing activities as did most cruise lines and travel agencies.  We believe that most observers and potential guests understand that cruising is safe and that this incident was a very rare anomaly in an otherwise reliably safe vacation.  But in the near term it has a significant impact on our bookings. 

 "We are pleased to note that there has been no material change in cancellation activity which has remained within normal levels.  However, new booking activity has been hurt.  Overall booking volumes from North America have fallen by low to mid-teen percentages versus same time last year for the last few weeks.  In Europe, where media coverage has been more extensive, the decline has been higher, though results vary significantly by country.  In aggregate the company's other markets, including Asia/Pacific and Latin America are down slightly.  For the year as a whole, notwithstanding the recent slowdown, booked load factors and pricing are still higher than they were at the same time last year.  This reflects the very robust starting position the company was in before the incident,  RCCL said.

 The impact on bookings has been greatest in the first three quarters and wanes as the year progresses.  On the other hand, the first quarter also has more of its capacity booked making it less affected by changes in booking patterns.  Spring and summer sailings are showing the largest declines in new bookings, while longer term bookings remain healthy.  In addition, the company noted that the impact is much greater for first time cruisers compared to experienced cruisers.  This reflects the greater knowledge experienced cruisers have about cruise vacations and ships.

 Including the contribution from distribution changes and deployment initiatives noted above, the company currently anticipates yield improvement for the full year 2012 to be in a range between 1% and 5% on a Constant-Currency basis and between flat and 4% on an As-Reported basis versus the prior year.

Already, bookings have started to recover, particularly in North America and the company does not expect that this event will have a significant long term impact on its business. Taking into account the high degree of uncertainty surrounding current booking patterns, current fuel pricing and currency exchange rates, and the factors detailed above, the company anticipates 2012 earnings to be in the range of $1.90 to $2.30 per share.       

 The company's booked load factors in the first quarter were already very strong prior to the incident.  Subsequently, the quarter experienced a big percentage decline in new activity, but the bookings already in hand mean the company still expects yield improvements of 5% to 7% on a Constant-Currency basis (+4% to 6% As-Reported basis.)  This estimate includes approximately 300 basis points relating to the previously referenced distribution and deployment items.

 "We are still on track to achieve our original projections for the first quarter, but there is a high degree of uncertainty and it is difficult to judge the impact of the tragedy on the balance of the year," said Brian J. Rice, executive vice president and chief financial officer.  Rice continued, "We have clearly lost some of our positive momentum in the short term.  Fortunately, we had a very strong order book before the tragedy; our brands are back in the market advertising and we do not expect any significant long term impact to our business."

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