Cruise industry celebrates first visit to Auckland

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Written by Teijo Niemelä Teijo Niemelä

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Published: 12 August 2022 12 August 2022

New Zealand’s cruise industry has set a course for recovery, celebrating the arrival of the first international ship to sail into Auckland’s Waitematā Harbour in more than two years.

P&O Cruises’ Pacific Explorer is in Auckland today as part of a South Pacific cruise from Sydney, becoming the first international vessel to carry passengers to New Zealand since the start of the pandemic. It follows the New Zealand Government’s decision to open the international maritime border after July 31.

Cruise Lines International Association (CLIA) Managing Director Australasia Joel Katz said the New Zealand cruise community could now begin rebuilding an industry that was previously worth almost NZ$570 million a year to the New Zealand economy.

“New Zealand has now joined the rest of the world in a careful resumption of cruise operations,” Katz said. “We now have an opportunity to revive a sector that previously supported many thousands of jobs in communities right around the New Zealand coast.”

Cruise lines have extensive health and safety protocols in place in response to the global pandemic and have worked closely with New Zealand health authorities to confirm requirements for local operations.

“While no setting is immune from Covid-19, the cruise industry’s health measures have been shown to be effective in more than 100 other countries where cruising has already resumed,” Katz said. “The experience on cruise ships overseas has shown significantly lower levels of serious illness and hospitalisation than on land,” he said. Pacific Explorer is the first ship to visit as part of a gradual resumption of operations in New Zealand that will continue with visits by other vessels in the spring and summer.

“The sight of Pacific Explorer in Waitematā Harbour will be cause for celebration for the many New Zealanders who rely on cruise tourism for their livelihoods, and for the wider tourism industry as New Zealand approaches the summer cruise season ahead,” Katz said.

Norwegian Cruise Line Holdings reports second quarter 2022 financial results

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Written by Teijo Niemelä Teijo Niemelä

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Published: 11 August 2022 11 August 2022

Norwegian Cruise Line Holdings Ltd. reported financial results for the second quarter ended June 30, 2022 and provided a business update on August 9

“We are encouraged by the continued strong consumer demand we are experiencing which is reflected in our record pricing, accelerating booking volumes, especially for 2023 and beyond, and highest ever onboard revenue generation. Having emerged from the pandemic and returning to more normal operations, we remain steadfast in our strategy and commitment to protect our brands’ positioning and industry-leading pricing, which we firmly believe is the best way to maximize long-term value for all our stakeholders,” said Frank Del Rio, president and chief executive officer of Norwegian Cruise Line Holdings Ltd. “As the leading operator in upscale cruising, our three award-winning brands are particularly well-positioned to capitalize on our target consumers’ continued desire for travel and experiences led by our unique and compelling value propositions versus land-based vacation alternatives. Our world-class fleet has been further enhanced by the recent addition of Norwegian Prima, the first of six ships in the ground-breaking Prima Class for Norwegian Cruise Line."

Operations update

In early May, the Company was the first major cruise operator to complete the phased relaunch of its entire fleet with all ships in operation. Occupancy in the second quarter was 65%, in line with previously outlined expectations, and a 17-point improvement over the prior quarter. Numerous voyages, across several key markets, achieved occupancy levels north of 100% during the quarter. Consistent with its core strategy to focus on maximizing long-term pricing, the Company continues to expect quarterly occupancy levels to sequentially increase and reach historical levels for the second quarter of 2023. Occupancy is expected to average in the low 80% range in the third quarter of 2022 with July voyages averaging approximately 85%.

The Company continues to experience strong ticket pricing and onboard revenue generation with total revenue per Passenger Cruise Day up nearly 20% in the second quarter of 2022 versus 2019. For the third quarter of 2022, the Company expects total revenue per Passenger Cruise Day to increase high-single digits versus 2019, despite the significant impact of the Russia-Ukraine conflict on certain premium-priced European itineraries in the current year.

Momentum continues in terms of financial performance, with the Company generating positive Operating Cash Flow of approximately $260 million for the second quarter of 2022 after turning positive in March. The Company expects to reach another milestone in the second half of 2022 with slightly positive Adjusted EBITDA. The Company continues to target exceeding historical record Net Yield and Adjusted EBITDA levels for full year 20231.

Improving public health and regulatory environment

The Company continues to benefit from significant improvements in the public health environment, allowing it to align its SailSAFE health and safety protocols closer to those of the rest of the travel, leisure and hospitality industry worldwide. The Company was pleased with the recent decision of the U.S. Centers for Disease Control and Prevention (“CDC”) to recognize the success of the cruise industry’s mitigation protocols and discontinue its voluntary COVID-19 Program for Cruise Ships.

On August 8, the Company announced SailSAFE protocol changes which will be effective September 3rd, subject to local regulations2. Vaccinated guests aged 12 and over will no longer have any pre-cruise COVID-19 related protocols and unvaccinated travelers may embark with a negative COVID-19 test taken within 72 hours prior to departure. Guests aged 11 and under will be exempt from all vaccination and testing requirements. The Company will continue to evaluate its protocols and modify them as needed as the public health environment evolves.

These protocol revisions, in conjunction with continued easing of travel restrictions and reopening to cruise in more ports around the globe, are meaningfully positive as it reduces friction, expands the addressable cruise market, brings variety to itineraries, and provides additional catalysts on the road to recovery.

Booking environment and outlook

As expected, the Company’s current cumulative booked position for the second half of 2022 remains below the comparable 2019 period but at higher prices even when including the dilutive impact of future cruise credits (“FCCs”) and despite the impact in the third quarter of the Russia-Ukraine conflict on premium-priced Baltic and Eastern Mediterranean itineraries.

Booking trends for full year 2023 remain positive with cumulative booked position in line with a record 2019 inclusive of the Company’s 20% increase in capacity. Pricing continues to be significantly higher than that of 2019 at a similar point in time and thus at record levels for full year 2023.

Sequentially, net booking volumes continue to increase as the Company’s brands ramp up to sail at historical load factor levels.

The Company’s advance ticket sales balance, including the long-term portion, increased approximately $0.3 billion in the quarter to $2.5 billion as of June 30, 2022, an all-time record high for the Company. This includes approximately $0.4 billion of FCCs or 16% of the total deposit balance. Approximately 75% of the FCC balance outstanding has already been applied to future sailings. Gross advance ticket sales build was approximately $1.5 billion during the quarter, an approximately $0.5 billion increase versus the prior quarter and the highest level since the start of the pandemic.

Liquidity and financial recovery plan

The Company continues to prioritize enhancing liquidity and financial flexibility in the current environment while seeking opportunities to optimize its balance sheet and reduce leverage. As of June 30, 2022, the Company’s total debt position was $13.2 billion and the Company’s liquidity was approximately $2.9 billion, consisting of cash and cash equivalents of $1.9 billion and a $1 billion undrawn commitment.

In July 2022, the Company amended its existing undrawn $1 billion commitment and extended it through March 31, 2023. The Company has not drawn, and currently does not intend to draw, under this commitment, however, the Company believes extending the facility was prudent given the current volatile macroeconomic and strained capital markets environment.

“Our entire team is united around our key priorities which include accelerating our ongoing operational and financial recovery, delivering outsized top and bottom-line growth from our disciplined and cash-accretive newbuild pipeline, and preserving liquidity and financial flexibility against a rapidly evolving macroeconomic backdrop,” said Mark A. Kempa, executive vice president and chief financial officer of Norwegian Cruise Line Holdings Ltd.

Second quarter 2022 results

GAAP net loss was $(509.3) million or EPS of $(1.22) compared to net loss of $(717.8) million or EPS of $(1.94) in the prior year. The Company reported Adjusted Net Loss of $(478.3) million or Adjusted EPS of $(1.14) in 2022. This compares to Adjusted Net Loss and Adjusted EPS of $(714.7) million and $(1.93), respectively, in 2021.

Revenue increased to $1.2 billion compared to $4.4 million in 2021 due to the resumption of cruise voyages.

Total cruise operating expense increased in 2022 compared to 2021, due to the resumption of voyages, which resulted in higher payroll, fuel, and direct variable costs of fully operating ships, compared to the prior year when no voyages operated during the second quarter. Costs were also impacted by inflationary pressures and continued COVID-19 related costs including testing.

Fuel price per metric ton, net of hedges, increased to $836 from $673 in 2021. The Company reported fuel expense of $181.2 million in the period.

Interest expense, net was $144.4 million in 2022 compared to $137.3 million in 2021. Interest expense in 2021 reflects a $20.4 million gain recognized from extinguishment of debt. Excluding this gain, interest expense decreased as a result of lower interest expense in connection with recent refinancings, partially offset by higher debt balances and higher LIBOR rates.

Other income (expense), net was income of $31.0 million in 2022 compared to $25.5 million in 2021. In 2022, the income primarily related to gains on foreign currency remeasurements.

Outlook

As a result of the COVID-19 pandemic, the effects of the Russia-Ukraine conflict and current macroeconomic conditions, while the Company cannot estimate the impact on its business, financial condition or near- or longer-term financial or operational results with certainty, it will report a net loss for the third quarter of 2022. The Company does not provide certain estimated future results on a GAAP basis because the Company is unable to predict, with reasonable certainty, the future movement of foreign exchange rates or the future impact of certain gains and charges. These items are uncertain and will depend on several factors, including industry conditions, and could be material to the Company’s results computed in accordance with GAAP.

Capital expenditures

Anticipated non-newbuild capital expenditures for 2022 are expected to be approximately $500 million including approximately $250 million in the second half.

Newbuild-related capital expenditures, net of export credit financing, are expected to be approximately $0.6 billion, $0.5 billion and $0.7 billion for the full years ending December 31, 2022, 2023 and 2024, respectively. Net newbuild-related capital expenditures for the remainder of 2022 are expected to be $0.5 billion.

Other guidance

Occupancy is expected to be in the low 80% range in the third quarter of 2022. Capacity Days are expected to be 5 million in the third quarter of 2022 and 5.1 million in the fourth quarter of 2022.

Total revenue is expected to be $1.5-$1.6 billion in the third quarter of 2022. Total revenue per Passenger Cruise Day is forecast to increase high single digits versus the third quarter of 2019.

Adjusted Net Cruise Cost Excluding Fuel per Capacity Day is expected to decrease by approximately 10% in second half of 2022 versus first half of 2022.

Interest Expense, net is expected to be approximately $160 million for third quarter of 2022 and $615 million for full year 2022, excluding losses on extinguishment of debt.

Depreciation and Amortization is expected to be approximately $190 million for third quarter of 2022 and $745 million for full year 2022.

Viking Saigon begins inaugural season in Southeast Asia

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Written by Teijo Niemelä Teijo Niemelä

Category: More News More News

Published: 11 August 2022 11 August 2022

Viking has announced that its newest river ship, the Viking Saigon, has begun its inaugural season in Southeast Asia. Purpose-built for the Mekong River, the 80-guest ship sails between Kampong Cham, Cambodia and Mỹ Tho, Vietnam as part of Viking’s popular 15-day Magnificent Mekong itinerary. With the 2022-2023 season now underway, regular sailing dates are available through March 2023; the 2023-2024 season begins in July 2023.

“The fascinating cultures of Vietnam and Cambodia have always made this region a favorite destination among our guests,” said Torstein Hagen, Chairman of Viking. “We are also pleased to welcome back to Southeast Asia our first guests since early 2020. With arrival of the Viking Saigon, we look forward to introducing even more curious travelers to this iconic waterway in the coming years.”

Global Ports Holdings continues to expand with three ports in the Canary Islands

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Written by Teijo Niemelä Teijo Niemelä

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Published: 10 August 2022 10 August 2022

Global Ports Holding Plc, the world’s largest independent cruise port operator, has announced that Global Ports Canary Islands S.L. (GPCI), an 80:20 joint venture between GPH and our local partner Sepcan S.L., has successfully completed the competitive RFP process for certain Canary Island cruise ports having received final acceptance for the concessions for three cruise ports in the Canary Islands: Las Palmas de Gran Canaria, Arrecife (Lanzarote) and Puerto del Rosario (Fuerteventura).

This follows GPH’s announcement on 11 July 2022 that GPCI had agreed terms for the Las Palmas Cruise Port concession, and GPH’s announcement on 10 November 2021 that GPCI had been awarded preferred bidder status in the RFP process for these concessions. The concession for Las Palmas, the largest port among the three, is for 40 years and the concessions for the two other ports are 20 years.

GPH expects to take over operations of the three cruise ports in calendar Q4-2022, ahead of the peak winter season for Canary Island cruises. The addition of these ports takes the total number of cruise ports in GPH’s network to 24 across the Caribbean, Mediterranean, South Atlantic, Asia and Northern European cruise regions.

GPCI will invest approximately €40 million into constructing a new cruise terminal in Las Palmas and modular terminal facilities in Marmoles pier in Arrecife and Puerto del Rosario in Fuerteventura. The debt financing for these projects is expected to be secured by local banks, and GPH is in advanced discussion regarding the financing. The debt metrics are expected to align with the Group’s historical precedents.

Global Ports Holding Chairman and CEO, Mehmet Kutman, said: “The addition of these ports to our network is a testament to the strength of GPH’s proposition as the world’s largest independent cruise port operator. We help create well-run, well-invested world-leading cruise port facilities for the benefit of all stakeholders.

Las Palmas, located in South Atlantic at the Canaries, is very popular for winter cruising thanks to the archipelago’s mild climate. A major cruise port, Las Palmas is also a year-round destination thanks to its international air connections. With its sandy beaches and beautiful turquoise waters, Las Palmas brings together culture scenery.

The GPH team warmly welcomes these ports into our network. We look forward to working in partnership with all stakeholders to increase the economic benefit of cruise tourism in their localities.”