Cruise Business Commentary – Why Discovery impairment could be significant
- Details
- Written by Kari Reinikainen Kari Reinikainen
- Category: Top Headlines Top Headlines
- Published: 17 February 2014 17 February 2014
Last week, All Leisure group in the UK that owns three niche cruise brands and four ships, said it would book an £6.7 million impairment charge against the 1972 built cruise ship Discovery.
“The market value of mature cruise ships has reduced significantly in the last 12 months and it has been decided that the loss-making mv Discovery will be disposed of at the end of this summer,” All Leisure said in a trading statement issued prior to the release of its 2013 results, which is due on 24 February.
What makes the statement of importance is that despite the fact that several first generation cruise ships, such as Discovery, have been sold for scrap in recent times, many remain in service.
Fred. Olsen Cruise Lines, another UK company, has two units of the long since defunct Royal Viking Line’s 1972-73 original trio, while Phoenix Seereisen in Germany operates the third ship, on charter. Other German and also British tour operators employ several further mature ships.
Another question is that what exactly does the term refer to? If it means ships beyond the age of 30 years, the period in which the asset is expected to be depreciated when ordered, then it also applies to several second generation ships built in the 1980s.
Indeed, in not too distant future, it will also embrace the third generation ships of the late 1980s and early 1990s, much bigger at some 70,000 gross tons or so than the second generation ships of about 40,000 gross tons .
It is interesting to note that excluding intra-group transfers by Carnival and Royal Caribbean, not a single third generation ship has changed hands as yet.
It lies very much in the interest of the cruise shipping industry’s leading players that no such transaction will take at low values: should this happen, then the valuation of similar vessels in the fleets of these companies would probably have to be reviewed as a result.
All Leisure group puts Discovery up for sale after £6.7 million impairment
- Details
- Written by Kari Reinikainen Kari Reinikainen
- Category: Top Headlines Top Headlines
- Published: 13 February 2014 13 February 2014
All Leisure group, the listed British niche cruise shipping company, has decided to put the 1972 built Discovery up for sale after booking a £6.7 million impairment charge against the 20,636 gross ton ship and forecasting a deep loss for 2013.
"Following the annual valuation of the Group’s fleet, the board agreed that market conditions made it necessary to recognise an impairment of approximately £6.7 million to the value of mv Discovery. This non cash item will also be included within separately disclosed items in the results for the twelve months to October 2013," the company said in a statement.
"The market value of mature cruise ships has reduced significantly in the last 12 months and it has been decided that the loss-making mv Discovery will be disposed of at the end of this summer. Following the planned disposal, the company’s underlying profits should benefit from the elimination of mv Discovery trading losses which are currently in the region of £4m per annum," All Leisure said.
This, together with certain other one off items, will lead to a reported unaudited IFRS loss before taxation of between £13 million and £14 million, an increase from 2012 profit before taxation of £0.8m million. Most of the anticipated 2013 losses will stem from non cash items.
Trading has continued as the board had anticipated, the company said. Discovery is operated for most part of the year by Cruise & Maritime Voyages, another British niche cruise shipping company. All Leisure operates cruises under the Swan Hellenic, Voyages of Discovery and Hebridean Island Cruises brand names. The company will publish its 2013 results on 24 February, it said.
TUI's cruise losses mount on continued weakness of Hapag-Lloyd
- Details
- Written by Kari Reinikainen Kari Reinikainen
- Category: Top Headlines Top Headlines
- Published: 13 February 2014 13 February 2014
TUI AG, the German travel company, has reported a deepening of underlying operating losses for its cruise operations on continued weakness of Hapag-Lloyd Kreuzfahrten, the luxury and destinational brand, while TUI Cruises continues to improve its strong performance.
In three months to 31 December 2013, the first quarter of the group's financial year, turnover by Hapag-Lloyd Kreuzfahrten rose by 7% year-on-year to €55 million due to the capacity increase achieved with the launch of Europa 2. "No turnover is shown for TUI Cruises as the joint venture is measured at equity in the consolidated financial statements," the company said.
"Due to the low occupancy and increased capacity in Hapag-Lloyd Kreuzfahrten and the two dry-dock periods of Europa, the operating result of the Cruises Sector decreased to a loss of €16 million (previous year a loss of €11 million). TUI Cruises continued to show a positive development in the period under review. Demand for the two winter lanes, Caribbean and Canaries, was strong," TUI said.
Occupancy of Hapag-Lloyd Kreuzfahrten decreased by 7 percentage points to 60.8% (previous year 68.1%). The average rate per passenger per day fell slightly by 1.3% to €368. " Both indicators were strongly impacted by the time in dock, which caused changes in the cruise programme,the company said.
“In Hapag-Lloyd Kreuzfahrten, we have initiated the turnaround by means of a change in management. In total, I am therefore far more optimistic for this segment than I was a year ago,” said Friedrich Joussen, group ceo, in a statement.
Thomson Cruises, which operates five ships on the British market, is not included in these figures as it is part of TUI Travel plc, a London based company that is listed there and in which TUI AG is the biggest shareholder.
More Articles ...
