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Saga Group books deep loss on insurance, cruise operations on track

Details: Written by Kari Reinikainen Kari Reinikainen; Category: Top Headlines Top Headlines; Published: 05 April 2019 05 April 2019

Saga Group plc, the UK based listed financial services to travel group that caters for those over the age of 50, has booked a deep loss for 12 months to 31 January 2019 on issues at its insurance business, but its cruise sales remain on track with projections.

"Over recent years Saga has faced increasing challenges from the commoditisation of the markets in which we operate, especially in Insurance. This has had an impact on both customer numbers and profitability,” CEO Lance Bachelor said in a statement. We proved in 2018 that our Cruise strategy is working and we will accelerate our efforts in Tour Operations to match the progress we've made in Cruise,” he added.

Group revenues increased by 2.2% to £841.5 million, but Saga booked a net loss of £134.6 million compared to a profit of £139.4 million in previous financial ywar due to a 3310 million impairment charge it booked in its 2018 accounts.

The groups two ship cruise operation increased revenues by 9.5% to £96.6 million in 2018-19 and its underlying profit increased by 2.4% to £6.9 million.

The cruise business delivered a 9.5% increase in revenue to £96.6 million, reflecting an increase in passenger days of 11,000 including fewer maintenance days and an increase in per diems as demand for Saga Pearl II in her final year was higher than expected. There were no scheduled maintenance days in the year compared with 19 days of maintenance on the Saga Pearl II and 20 days of maintenance on the Saga Sapphire in the prior year.

Revenue per diem improvements £262 from £249 in 2017-18 have offset £2 million of additional fuel costs, net of fuel hedges, arising from higher market prices in the year. The increased marketing spend was expected and supports demand for the new ships. This was offset by cost savings from operational efficiencies.

“We have seen the extraordinarily rapid build, to schedule, of Spirit of Discovery, our first ever purpose built cruise ship during 2018. Spirit of Discovery will carry her first passengers in July 2019. Our second new ship, Spirit of Adventure, is due to be delivered in summer 2020. Forward bookings for both ships are on track. They are each expected to deliver c.£40m EBITDA per annum. This will be transformational for the future profit trajectory of our Travel business,” Bachelor stated.

“Our strategy in Tour Operations will be to accelerate our move away from undifferentiated, low value products, such as short haul, to higher value, more differentiated segments such as escorted tours, third party cruises and river cruises,” Bachelor said.

“We are starting to renew our river ship fleet, and have recently ordered two purpose built vessels on long-term lease agreements. While we do not expect significant growth in Tour Operating revenues, this forward transformation is expected to lead to improved margins in the next few years,” he noted.

Meyer Turku profit fell, revenues increased in 2018

Details: Written by Kari Reinikainen Kari Reinikainen; Category: Top Headlines Top Headlines; Published: 04 April 2019 04 April 2019

Costa Smeralda before its recent float-out

Meyer Turku Group, the privately owned Finnish cruise ship builder, has reported a fall in net profit but higher revenues for 2018 compared to the prvious year.

Net profit fell to €29.0 million from €32.5 million in2017, but revenues increased to €969.7 million from €808.2 million. The net profit equaled 3% of revenues last year, which was one percentage point less than in 2017.

“We are on a good path to meet the goals we have set. We need to, however, double our production in the next four years to meet the demands in our order book. Investments to the facilities and our personnel with first-in-series ships have impacted our profitability in 2018 and will continue to do so during the next couple of years,” CEO Jan Meyer said in a statement.

In 2018 Meyer Turku delivered one ship, the 111,500 gross ton Mein Schiff 1, to TUI Cruises in Germany. The second unit of the class, Mein Schiff 2 was handed over to the same owner in January 2019.

Last year also saw the start of hull production for Costa Cruises Costa Smeralda and the start of production for Carnival Cruise Lines Mardi Gras, both in excess of 180 000 gross tons and LNG powered. The current orderbook of the company comprises seven large cruise ships.

More newbuilds for American Cruise Lines

Details: Written by Teijo Niemelä Teijo Niemelä; Category: Top Headlines Top Headlines; Published: 03 April 2019 03 April 2019

American Cruise Lines, the largest coastal and river cruise operator in the U.S., continues to accelerate its new build program across its diverse fleet – adding new ships to its new Modern Riverboat Series as well as its fleet of new coastal ships and Victorian-style paddlewheelers. American’s aggressive building program has expanded exponentially in the past two years; introducing a new ship in 2017 and two new ships in 2018. The line has no plans to slow down, as American’s latest new ship will go into service this summer, and the line has two more new builds coming in both 2020 and 2021.

In August 2019, American Harmony, the second of five ships in American’s Modern Riverboat Series, will begin service on the Mississippi, bringing American’s fleet of U.S. built ships to 11. By 2021, American’s fleet will have increased to 15 ships. American Song, the 1st modern riverboat in the U.S., began cruising in October 2018 and is already sailing out West on the Columbia & Snake Rivers. The 3rd modern riverboat, to be named shortly, will be completed in 2020, and is already well under construction at Chesapeake Shipbuilding in Salisbury, MD where all American’s ships are designed and built.

American Cruise Lines is the only U.S. line offering three distinct ship styles and all the Line’s ships are infinitely more advanced and environmentally friendly than anything else on U.S. Rivers. American builds only new ships and each of their ships possess the newest safety technology and showcase stunning interior design. American’s series of five modern riverboats in particular, meet the highest new emissions standards and have the smallest carbon footprints in the industry. American’s modern riverboats are the perfect complement to the Line’s beautiful Victorian paddlewheelers and fully stabilized coastal ships – the new modern riverboats provide an exciting and refreshing new option for U.S. river cruisers.

American’s modern riverboats showcase soaring multi-story glass atriums and more glass throughout, than other U.S. riverboats--ensuring spectacular views from everywhere on the ship. The ships have huge standard cabins (at over 350 sq/ft), all outward facing, with full sliding glass doors and private furnished balconies. Each new ship in the series possesses the unique (patent-pending) opening bow and retractable gangway, which enables these riverboats to make bow landings wherever necessary. In addition to numerous comfortable lounges and gorgeous sundecks, the modern riverboats also feature casual cafes, in addition to the grand dining rooms found aboard all American’s ships.

While every ship in the Modern Riverboat Series shares the underlying modern design premise, each new ship is unique and will be slightly different than the one that came before it. The 1st ship, American Song, has 5 decks and showcases enormous 900 sq/ft Grand Suites with wrap-around private balconies. The 2nd ship, American Harmony, has 6 decks and features a 5th deck exclusively housing ten huge Veranda Suites. The 3rd modern riverboat will be slightly larger than the 1st and 2nd, but all the modern riverboats are under 200 passengers.

American Song, American Harmony and the upcoming 3rd, 4th & 5th ships in the Modern Riverboat Series are the very first ships of their kind available in the U.S. and response to 1st modern riverboat, American Song, has been tremendous as guests are delighted by the new style. In the past few years, the company has enjoyed record sales across its diverse fleet and continues to grow--adding new exceptionally designed, American-built ships year after year.

About American Cruise Lines: In 2018, American Cruise Lines celebrated its most award-winning year ever, winning 13 travel awards, including Conde Nast’s Readers’ Choice Award, for Top Small Cruise Lines; and Cruise Critic’s Cruisers’ Choice Award for Best River Line in the U.S. & Canada. American operates the largest and newest fleet of coastal cruise ships, Victorian paddlewheelers, and the only modern riverboats in the U.S. All ships are between 100-200 passengers and are built, crewed and registered in the U.S.A. With over 35 itineraries to 25 states, including many theme and holiday cruises, American cruises along the rivers, as well as the coastal and inland waterways of New England, Alaska, the Pacific Northwest, the Mississippi River system, and the Southeast.

Genting Hong Kong cut cruise and shipbuilding losses in 2018

Details: Written by Kari Reinikainen Kari Reinikainen; Category: Top Headlines Top Headlines; Published: 02 April 2019 02 April 2019

Genting Hong Kong cut cruise and shipbuilding losses in 2018

Genting Hong Kong, the Hong Kong listed company which owns three cruise brands and the German MV Werften shipyard group, has reduced losses from both its cruise and shipbuilding activities last year.

The group’s cruise operations that comprise Crystal Cruises, Dream Cruise and Star Cruise, increased revenues to $1.35 billion from $1.02 billion in 2017. Net loss narrowed to $24.7 million from $186.1 million.

The sector’s performance was helped by 12% increase in gross yield and 15% increase in net yield, while net cruise costs increased 11%, mainly due to increase in capacity days but net cruise costs per capacity day were reduced by 6.5% due to efficiencies of scale.

Last year was the first one with two 151,000 gross ton Dream Cruises ships in service for the full year, which lifted the number of capacity days by 18.5%, the company said.

The groups shipyards, on a standalone basis, recorded an EBITDA of $3.6 million in 2018 versus a loss of $82.5 million in the year before due to higher shipyard utilisation rate with 36% completion of the Crystal Endeavor and 20% of the first Dream Cruises Global Class ships in 2018.

“However, as the shipyard is wholly owned by the Group, certain revenues and expenses relating to shipbuilding for the Group have to be eliminated during consolidation of accounts, resulting in a lower loss of $59.6 million in 2018 as compared with 2017 loss of $102.6 million for the shipyard segment,” Genting Hong Kong said.

Looking ahead, the company said cruise segment results should continue to improve in 2019 due to the low penetration rate in Asia and reduction in cruise capacity in China. The shipyard segment is expected to improve with 82% of the Crystal Endeavor and 65% of the first Global Class ship due to be completed by the end of 2019. “With that, the Group results should continue to improve in 2019,” Genting Hong Kong said.

TUI AG to take at least €200 million hit from Boeing 737 MAX grounding

Details: Written by Kari Reinikainen Kari Reinikainen; Category: Top Headlines Top Headlines; Published: 29 March 2019 29 March 2019

TUI AG, the Hannover based travel company that has a large foothold in the cruise industry, said it would book a one off charge of about €200 million as a result of grounding of Boeing 737 MAX passenger jets following two major accidents.

The company said it has 15 of these in its fleet of 150 aircraft. TUI AG owns Hapag-Lloyd Cruises and Marella Cruises in full and has a 50% stake in TUI Cruises.

The news sent shares in the company, which have their main listing London, sharply lower and at around 1000am local time, they traded at 8.1% lower at £7.07. They had hit a low of £6.86 earlier in the session. The company issued a profit warning – not related to its cruise operations – in January, which accounted for another sharp price fall. TUI AG shares have lost almost two thirds of their value since hitting a peak of just under £18.00 in may 2018.

“Assuming 737 MAX flight resumption latest by mid-July, the Group currently expects to see a one-off impact on underlying EBITA1 rebased of approx. €200 million in connection with the 737 MAX grounding. This impact is especially attributable to costs related to the replacement of aircraft, higher fuel costs, other disruption costs, and the anticipated impact on trading,” the company said in a statement.

Consequently, the Executive Board of TUI AG has decided to update the guidance and now expects an underlying EBITA1 rebased for FY19 of approx. minus 17% (previously “broadly flat”) compared with FY18 of €1,177 million.

“Should it not become clear within the coming weeks that flying the 737 MAX will resume by mid-July, TUI will need to extend the abovementioned measures until the end of the summer season. The current assumption for this additional one-off impact until 30 September 2019 is up to €100 million. For this scenario the Executive Board of TUI AG has also decided today to update the guidance for the underlying EBITA1 rebased for FY19 to up to minus 26% compared with FY18 of €1,177 million,” the company said.