- TUI Cruises’ third Full Metal Cruise sells out in hour
- Head office of Titanic owner opens as spa hotel
- Germans prefer shorter cruises, river cruise prices fall sharply – survey
- Second annual Rama Rebbapragada Award for Outstanding Contribution to the Cruise Industry in Asia accepting nominations for extraordinary recipient
- Regent Seven Seas reports results for second quarter 2014
- Tallink issues profit warning after sharp deterioration in second quarter and first half results
- TUI AG cruise operations improve results as Hapag-Lloyd recovers and TUI Cruises shine
- Regal Princess to be named by original Love Boat cast members
- Cruise Business Commentary: Meyer's Finnish acquisition important for all parties
- Carnival Corporation to develop $70 million port facility in Tortuga, Haiti
- TUI Cruises orders two ships, with two options, at Meyer Turku Yard
- Meyer Wert to acquire 70%, Finnish Government 30% of STX Finland Turku yard
- Published on Thursday, 24 July 2014 16:10
- Written by Kari Reinikainen
A recovery in the British economy has resulted in a strong recovery of advance bookings at Fred. Olsen Cruise Lines, the UK based destinational operator of four medium sized ships, Mike Rodwell, Managing Director of the company, told Cruise Business Online. The company has made losses since the start of the financial crisis, but Rodwell would not elaborate on how quickly the recovery in bookings would turn the company back to profitability.
Royal Caribbean reports second quarter results, updates 2014 guidance and introduces Double-Double program
- Published on Thursday, 24 July 2014 12:48
- Written by Teijo Niemelä
Royal Caribbean Cruises Ltd. today reported second quarter results, updated full year guidance and introduced its Double-Double Program, a new three-year profitability initiative.
Second Quarter 2014 results:
– Net Yields were up 2.6% on a Constant-Currency basis (up 2.4% As-Reported).
– Net Cruise Costs ("NCC") excluding fuel were down 4.7% on a Constant-Currency basis (down 4.2% As-Reported), better than guidance mainly due to timing.
– Adjusted Net Income of $146.7 million, or $0.66 per share, versus Adjusted Net Income of $34.2 million, or $0.15 per share, in 2013.
– US GAAP Net Income was $137.7 million or $0.62 per share versus $24.7 million, or $0.11 per share in 2013.
Full Year 2014 forecast:
– Net Yields are expected to increase 2% to 3% on a Constant-Currency basis (2% to 3% As-Reported).
– NCC excluding fuel are expected to be flat to slightly down on a Constant-Currency basis (Approx. flat As-Reported).
– Adjusted EPS is expected to be in the range of $3.40 to $3.50 per share. This is a $0.10 increase from the mid-point of the company's previous guidance.
The Double-Double Program is designed to achieve two important goals by 2017: increasing the company's Return on Invested Capital (ROIC) to double digits and doubling 2014 EPS. The company also believes that articulating clear and specific goals helps guide internal decision-making as well as better informing investors of the path of the business.
"Our focus over the last few years on improving investment returns with moderate capacity growth is clearly paying dividends," said Richard D. Fain, chairman and chief executive officer. "Our brands have never been stronger and we are well positioned for continued step change in performance. The Double-Double Program sets demanding, but realistic targets, against which we will measure our continued progress."
SECOND QUARTER RESULTS
Adjusted Net Income for the second quarter of 2014 was $146.7 million, or $0.66 per share, compared to Adjusted Net Income of $34.2 million, or $0.15 per share, in the second quarter of 2013. US GAAP Net Income for the second quarter 2014 was $137.7 million or $0.62 per share, compared to $24.7 million or $0.11 per share in 2013.
Net Yields on a Constant-Currency basis increased 2.6% during the quarter. This was at the high end of the company's guidance driven by strong close-in booking trends for European and China sailings despite continued softness in the Caribbean. Yields were up double digits in Europe and China offsetting the Caribbean's softness.
"Higher pricing for close-in European sailings propelled us above the top end of our guidance for the quarter," said Jason T. Liberty, chief financial officer. "While the environment in the Caribbean remains promotional, our European itineraries continue to resonate well with strong demand from all markets."
Onboard revenue initiatives continue to deliver positive results with a 3% increase for the quarter. This is the tenth consecutive quarter of onboard revenue growth.
Constant-Currency NCC excluding fuel decreased 4.7%, which is 220 basis points better than the mid-point of guidance mainly due to timing. Approximately $16 million of expenses expected to be incurred during the second quarter were deferred to the second half of the year. Bunker pricing net of hedging for the second quarter was $711 per metric ton and consumption was 341,000 metric tons.
FULL YEAR 2014
The company has raised full year Adjusted EPS guidance to a range of $3.40 to $3.50 driven by a successful second quarter. Outperforming the mid-point of guidance for the second quarter by $0.16, with $0.07 related to the timing of expenses, drove the increase. Constant-Currency Net Revenue Yields and Net Cruise Costs excluding fuel are expected to be consistent with our previous guidance of up 2% to 3% and flat to slightly down, respectively.
"It is gratifying to raise our 2014 EPS guidance again," said Jason T. Liberty, chief financial officer. "Overall business has been solid and our equity investments continue to outperform, allowing us to deliver even better returns to our shareholders."
Bookings since the April earnings call have been up nicely and the company continues to be booked ahead of last year in both load factor and APD. Double-digit yield improvement on European and China sailings is helping offset a continued promotional environment in the Caribbean.
NCC excluding fuel are expected to be flat to slightly down on a Constant-Currency basis and approximately flat on an As-Reported basis. Taking into account current fuel pricing, interest rates, currency exchange rates and the factors detailed above, the company expects 2014 Adjusted EPS to be in the range of $3.40 to $3.50 per share.
THIRD QUARTER 2014
Constant-Currency Net Yields are expected to be up approximately 4.0% in the third quarter of 2014. NCC excluding fuel are expected to be flat to up 1% on a Constant-Currency basis. Equity investments for the third quarter are expected to increase, mainly driven by the addition of TUI Cruises' Mein Schiff 3. Based on current fuel pricing, interest rates and currency exchange rates and the factors detailed above, the company expects third quarter Adjusted EPS to be approximately $2.20 per share.
In recent years, the company has focused heavily on improving investment returns with moderate capacity growth. Due to the success of this approach, management believes that now is an appropriate time to publicly articulate long-term goals for both ROIC and EPS.
"We are delighted to see how well our brands are doing in the marketplace," said Richard D. Fain, chairman and chief executive officer. "Our teams have worked diligently to solidify the company's market position while maintaining strong cost discipline. This has allowed us to target double digit ROIC and a doubling of earnings within three years."
- Published on Tuesday, 22 July 2014 10:39
- Written by Kari Reinikainen
Tallink Grupp, the Estonian ferry company, said on 21 July that it had chartered the 1993 built cruise ferry Silja Europa to Bridgemans Services Ltd, the Canadian floating accommodation services provider. This is positive for the cruise ferry market in the Northern Baltic, which has suffered from persistent overcapacity, and for ferry owners as it confirms a trend that ever larger ageing vessels can be employed in this way.
Silja Europa is the second vessel that Bridgemans has chartered from Tallink: the first unit was the 1986 built 34,000 gross ton Silja Festival, which is now employed in the West Coast of Canada. It was converted to accommodation vessel use so that it now has 575 single cabins.
Silja Europa is much larger at 59,912 gross tons and it has 1,152 cabins that can accommodate 3,123 persons. It is likely that all single accommodation will be introduced on this ship as well, which again would mean that its return to cruise ferry service in the future is unlikely.
Cruise ferry business in the Baltic in general and in the northern part of it in particular used to be highly profitable up to the late 1980s. However, early in the 1990s Finland, the main source of passengers, plunged into a deep recession that wiped 15% off its gdp in the three years 1991-93. While recovery after that was rapid, sinking of the ferry Estonia in September 1994 with heavy loss of life derailed recovery in the fortunes of the ferry companies.
As the decade progressed, the travel offerings become more varied as cheap air travel became possible also in northern Europe. Abolition of duty free sales in 1999 in intra-EU travel did not impact major cruise ferry routes in Northern Baltic as most of these could be diverted to call at the Aland Islands, which are Finnish territory but outside the EU’s tax regime.
A major newbuilding boom took place in the turn of the 1980s and 1990s, which resulted in overcapacity at a time when the demand was already drastically weakening due to a recession in Finland from 1991 onwards. Tallink embarked on a newbuilding programme early in the last decade, but its 18 strong fleet still includes some old ships from the early days of the company plus the 2006 acquisition of Silja Line, perhaps the best known mame in the cruise ferry business.
In the years 2008-13, Tallink has generated total revenues of €5.41 billion, but only made €169 million in net profit. Viking Line, its smaller Finnish competitor that has two modern ships in its seven unit strong fleet, produced revenues of €3.10 billion and net profit of a mere €67.9 million in the same five year period.
It is obvious that companies like these two must improve their profitability in order to allow them to replace ageing units in their fleets with modern tonnage. To reduce overcapacity, a curse that has plagued the business for almost a quarter of a century, must be a key element in achieving this. Closing some routes may follow as a consequence, but with new emission control rules due to take effect from the start of 2015 that will result in a marked rise in fuel costs or trigger need to invest heavily in scrubber technology, leaves operators with little choice.
Stockholm, the Swedish capital that has a population of 2.0 million, may be the cruise ferry capital of the world, but Swedes are not excessively keen to sail on the ferries to ports on the eastern side of the Baltic. As some major vessels are close to 30 years old, they certainly have no novelty value. Many customers from the Baltic countries, such as Estonia and Latvia, will probably travel on a stringent budget.
In the past, owners made lots of money by selling tonnage only a few years old to buyers elsewhere in Europe at prices that sometimes exceeded the cost of the ship when new. This funded large part of the cost of newbuildings that followed each other at a quick pace.
This has not, however, been the case for many years any more. If anything, buyers have been difficult to find. With emergence of companies like Bridgemans Services and C-Bed that buy old ferries for use as flosating accommodation, a new window has opened for cruise ferry owners to find employment, and in some cases buyers, for unwanted, aged tonnage.
- Published on Monday, 21 July 2014 06:35
- Written by Kari Reinikainen
Fred. Olsen Cruise Lines, the UK based destinational operator of four medium sized vessels, has reported a deeper net loss for both the second quarter and first half of the year compared to the same periods in 2013, according Bonheur ASA, one of the two listed companies of the Olsen family that jointly own the Ipswich based cruise line.
Net loss deepened to NOK56 million in the second quarter of 2014 from NOK42 million a year earlier, despite a rise in revenue to NOK377 million from NOK340 million. Operating result (EBITDA) became negative by NOK8 million compared to positive by NOK9 million a year earlier.
In the first half of 2014, the company booked a net loss of NOK102 million compared to NOK88 million in the same period last year, while revenues rose to NOK795 million from NOK726 million.
"The UK cruise market’s weak economic conditions continued to result in lower sales. The number of passenger days totalled 274 605 (316 468) for the quarter. Net ticket income per diem was 3% lower compared to the corresponding quarter last year. The average spot price of fuel oil in the quarter was 6% higher than in second quarter 2013," Bonheur said in a statement.
It did not comment on the outlook.
- Published on Monday, 14 July 2014 16:49
- Written by Teijo Niemelä
Norwegian Cruise Line has reached an agreement with Meyer Werft GmbH of Germany to build two new Breakaway-Plus class cruise ships for delivery in the second quarter 2018 and the fourth quarter 2019. Each ship will be 164,600 gross tons and include 4,200 passenger berths.
"Norwegian Breakaway and Norwegian Getaway have proven themselves as industry game-changers and are extremely popular with our guests," said Kevin Sheehan, Norwegian Cruise Line’s chief executive officer. "It was only natural that we build on their success with this new ship order that further solidifies our long-term growth strategy."
The contract price for both ships is approximately 1.6 billion euros. The Company has export credit financing in place for each ship, arranged and underwritten by KfW IPEX-Bank GmbH of Germany.
"We are thrilled that Norwegian Cruise Line has the continued confidence in Meyer Werft to expand their fleet," said Bernard Meyer, managing partner of Meyer Werft. "We are very proud of our longstanding relationship with Norwegian."
Norwegian Cruise Line pioneered the concept of Freestyle Cruising which offers guests the freedom and flexibility to enjoy their cruise vacation on their own terms, including multiple dining venues, relaxed attire, a variety of accommodations and world-class entertainment. The Company took Freestyle Cruising to the next level with the introduction of Norwegian Epic in June 2010 and subsequently launched two game-changing vessels, Norwegian Breakaway based in New York in May 2013 and Norwegian Getaway homeported in Miami in February 2014. These ships incorporate groundbreaking design, including The Waterfront and 678 Ocean Place, a wide range of indoor and outdoor venues on three dynamic decks that create a whole new complex at sea and connect guests with the ocean.
- Carnival Cruise Lines, Port of New Orleans agree to new five-year extension
- MSC Cruises plans to treble UK passengers to 200,000 by 2017, launches agent programme
- Meyer Werft's STX Finland acquisition moves ahead, may win major order from Norwegian
- Fincantieri prices IPO at floor of €0.78 per share, government investment company not selling shares
Ports & Destinations
- High New Zealand costs challenging cruise lines
- Cunard's Queen Victoria makes maiden call at St Raphael on the Cote d'Azur
- Trasmediterranea to provide port handling services in Balearic Islands
- Mein Schiff 3 will inaugurate the lengthened pier in La Gomera
- Construction of Hamburg's third cruise terminal commences
- MSC Cruises offers 'Grand Voyage' and special wine theme cruises this fall
- Royal Caribbean announces unprecedented five-day WOW sale
- American Cruise Lines announces 2014 holiday cruises
- AmaWaterways launches limited-time 'Balcony Celebration' sale
- Compagnie du Ponant publishes 2015-16 South America programme
- STX France begins construction on world's largest cruise ship
- Crystal creates visual magic with water for the AquaTheater on the Oasis and Allure
- Allure of the Seas features 3D digital cinema engineered by FUNA
- Allure of the Seas sails with KONE people flow solutions
- Starbucks and Royal Caribbean to offer first ever Starbucks at sea on Allure of the Seas
Products & services
Air & Sea
- Finnair reveals cabin design for next-generation Airbus A350 XWB aircraft
- Etihad's Alitalia deal to strengthen Rome and Milan hubs
- Delta announces new service from Amsterdam to Salt Lake City
- Etihad to add six new destinations during the first half of 2015
- Enhanced security measures at certain airports for U.S. bound flights