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Carnival Corporation signs agreement with Shell to fuel its first LNG-powered cruise ships

  • Written by Teijo Niemelä

Carnival Corporation & plc, the world's largest leisure travel company, today signed a framework agreement with Shell Western LNG B.V. (Shell) to be its supplier of marine liquefied natural gas (LNG) to power the world's first fully LNG-powered cruise ships. Under this framework agreement, Shell will initially supply Carnival Corporation's AIDA Cruises and Costa Cruises brands with fuel for two new LNG-powered ships expected to launch in 2019 with itineraries visiting popular northwest European and Mediterranean ports.

As part of the agreement, these two ships, built with Carnival Corporation's next-generation "green cruising" ship design, will utilize Shell's infrastructure in cruise ports to refuel with LNG throughout their itineraries. The vessels, equipped with dual-fuel engines, are the first of a new generation of cruise ships fully powered by LNG both while in port and at sea -- an industry first and an environmental breakthrough that will improve air quality with cleaner emissions and produce the most efficient ships in company history.

"We are committed to reducing our air emissions and improving air quality by evaluating new and established solutions such as LNG -- an especially promising option because of its environmental and other benefits," said Tom Strang, senior vice president of maritime affairs for Carnival Corporation. "We are proud to be on the forefront of advancing LNG as a fuel source for the cruise industry and creating an entirely new model for powering next-generation cruise ships. We look forward to a productive partnership with Shell, which has the experience and shared commitment to quality, safety and operational efficiency needed to help us bring this innovative LNG initiative to life with the first fully LNG-powered ships in the global cruise industry."

Pioneering a new era in the use of alternative fuels that reduce air emissions, these ships will be the first in the cruise industry use LNG to generate 100 percent of the ship's power both in port and on the open sea – an innovation that will significantly improve air quality to help protect the environment and support Carnival Corporation's aggressive sustainability goals.

"We have been working closely with Carnival to get to this point in our commercial partnership," said Lauran Wetemans, Shell's General Manager Downstream LNG. "Working together from an early stage is critical in helping the transition to cleaner LNG cruising. This is a unique partnership that will contribute to a robust and reliable LNG fuel supply chain, along with opportunities for future growth."

This agreement builds on the partnership established between Carnival Corporation's AIDA Cruises brand and Shell in April of this year to supply its AIDAprima ship with LNG to power the vessel while docked. The AIDAprima is the first cruise ship in the world to use LNG while in port, leading to a major reduction in emissions. Additionally, the agreement furthers the realization of Carnival Corporation's LNG efforts that began in 2015 with AIDAsol becoming the first cruise ship in the world to be supplied with power by an LNG hybrid barge, which also saw major benefits while in port.

Today's announcement was made on the heels of the company's order in September of three additional next-generation cruise ships that will be fully powered by LNG, bringing its fully LNG-powered ship orders total to seven across four of its 10 global cruise lines. Two of the new LNG-powered ships are designated for the world's most popular cruise brand, Carnival Cruise Line, with delivery dates expected in 2020 and 2022, and one is designated for P&O Cruises UK with an expected delivery date in 2020. The remaining two vessels will also be built for the Costa Cruises and AIDA Cruises brands and are expected to enter service in 2021.

As part of the framework agreement, Carnival Corporation and Shell have the opportunity to partner together on supplying marine LNG fuel to future LNG-powered vessels or additional itineraries. The overarching agreement enables each Carnival Corporation brand to negotiate individual LNG supply contracts with Shell as new LNG-powered cruise ships begin to launch in coming years.

Luerssen acquires repair and refit specialist Blohm+Voss

  • Written by Kari Reinikainen

Family owned and Bremen based shipyard Luerssen has agreed to acquire the Blohm+Voss shipyard in Hamburg from a British private equity company.

“With the acquisition of Blohm+Voss, Luerssen is entering into a long term relationship to strengthen their portfolio in the repair and refit activities for yachts, naval and commercial ships as well as enhancing its naval new build activities within their corporation. The contract between Luerssen and the funds of British private equity investor, Star Capital Partners has been signed and the agreement is currently subject to approval from the German Fair Trade Commission (Bundeskartellamt),” Luersen said in a statement.

“With the acquisition of Blohm+Voss we are taking over a shipyard with a strategically advantageous location and versatile production facilities. We want to use these facilities to complement our existing refit and repair activities and also to offer our customers an ever better service,” explained Peter Luerssen, Managing Partner at Luerssen Maritime Beteiligungen GmbH & Co. KG.

“In addition, we would like to utilise the competence and experience of the shipyard and its employees for the new build of complex naval ships and continue their production at the Hamburg site. The construction of yachts at the Hamburg yard will depend on the overall market situation and it is difficult to judge at this time.”

Pending approval from the German Fair Trade Commission, Luerssen will combine six highly specialised shipyards with approximately 2800 employees in Northern Germany.

The parties have both agreed that the purchase price will be kept confidential. The Star Capital funds acquired Blohm+Voss in December 2011 from ThyssenKrupp.

Carnival raises guidance as booking volumes, prices rise

  • Written by Kari Reinikainen

 Carnival Corporation & plc, the world’s largest cruise shipping company, has raised its guidance for earnings per share (EPS) in the financial year to 30 November on stronger bookimngs and rising prices.

“Taking the above factors into consideration, the company has increased its full year 2016 adjusted earnings per share guidance to be in the range of $3.33 to $3.37, compared to the June guidance range of $3.25 to $3.35 and 2015 adjusted earnings per share of $2.70,” the company said in a statement.

The guidance for the present financial year is now close in line with the $3.20 to $3.40 the company forecast in its first quarter earnings release. It lowered the guidance in the second quarter.

At this time, cumulative advance bookings for the first half of next year are ahead of the prior year at considerably higher prices. Since June, booking volumes for the first half of next year are lower than the prior year, as there is less inventory remaining for sale, at significantly higher prices.

The company continues to expect full year 2016 net revenue yields to be up approximately 3.5% compared to the prior year, on a constant currency basis. It also continues to expect full year net cruise costs excluding fuel per ALBD to be up approximately 1.5% compared to the prior year, on a constant currency basis.

Arnold Donald, President and Chief Executive Officer said in a statenment: "We are well on track to deliver nearly 25 percent earnings growth in 2016. With cash from operations expected to reach a record $5 billion this year, we continue to fund our growth and return cash to shareholders. During the third quarter we repurchased $700 million of Carnival Corporation shares bringing the cumulative total to $2.5 billion in share repurchases over the past year."

Donald added, "Looking forward, we are well positioned for continued earnings growth given the current strength of our booking and pricing trends in 2017."

Carnival reports $1.42 billion third quarter profit, strongest quarter in its history

  • Written by Kari Reinikainen

Carnival Corporation & plc, the Anglo-American cruise shipping giant, says it has reported its strongest quarter ever as net income in the three months to 31 August rose to $1.42 billion from $1.22 billion in the same period last year, while revenues rose to $5.09 billion from $4.88 billion.

In the first nine months of its financial year, the profit increased to $2.17 billion from $1.49 billion as revenues rose to $12.45 billion from $12.00 billion.

Arnold Donald, President and Chief Executive Officer noted in a statement: "We delivered the strongest quarterly earnings in our company's history affirming our ongoing efforts to expand consumer demand in excess of measured capacity increases and leverage our industry leading scale. Revenues during the peak summer season were bolstered by strong performances from both our North American and European brands and across all major deployments including the Caribbean, Alaska and Europe."

Key metrics for the third quarter 2016 compared to the prior year were as follows: Gross revenue yields (revenue per available lower berth day or "ALBD") increased 0.6% . Net revenue yields on a constant currency basis increased 2.7% for the third quarter, toward the top end of the June guidance range of up 2% to 3%

Gross cruise costs including fuel per ALBD decreased 0.2%. Net cruise costs excluding fuel per ALBD on a constant currency basis increased 5.5%, better than June guidance of up 6% to 7%, due to the timing of certain expenses.

Changes in fuel prices (including realised fuel derivatives) and changes in currency exchange rates increased earnings by $0.02 per share, the company said in the statement.

Norwegian yards eye lucrative expedition cruise market, Ulstein offers X-bow designs

  • Written by Kari Reinikainen

Shipbuilders in Norway are eyeing the lucrative expedition cruise market, which has produced orders for eight vessels to the country’s shipbuilders so far this year.

Kleven Maritime group has orders for two expedition cruise vessels from Hurtigruten, a domestic company, while Vard has a contract to build two such vessels to Hapag-Lloyd Kreuzfahrten, which is part of the TUI AG group, and a further four to Ponant, the French expedition cruise ship operator.

Holger Dilling, SVP of Investor Relations and Business Development at the Alesund based Vard group said in a presentation that he expects two more expedition cruise ships to be ordered from the group’s yards before the end of the year.

Fincantieri is the biggest shareholder in Vard with a stake of 55.6% and the Norwegian company benefits from technology transfer in the passenger ship sector from the Italian company, which is the world’s biggest builder of cruise liners.

The company has produced a portfolio of concept designs of its own as a result of a new strategy introduced at the turn of the year. Until then, Vard had focused on the construction of offshore services vessels, but a sharp fall in the price of oil that led to a virtual stop in orders in tis area forced the company to look for a new direction.

The Ulstein Group has also introduced its own portfolio of expedition cruise ship designs called Ulstein Discovery, said Oyvind Gjerde Kamsvag chief designer at the shipyard, which is located on the west coast of the country.

These range in size from 100 to 165 metres in length and include options for fitting out to various levels of standard, depending on the prospective owner’s preferences and positioning on the market.

The designs also feature X-bow and X-stern, both innovations of Kamsvag, which have been used in offshore services vessels and which have shown to produce superior sea keeping qualities compared to traditional designs. A viewing platform can be build on both sides of the hull of an X-bow vessel to bring passengers closer to the sea level and offer better views, he pointed out.

Kamsvag said that the R&D work at Ulstein also looks at various aspects of the operations of expedition cruise tonnage, such as embarkation and disembarkation of passengers to Zodiacs. This is presently a time consuming and not always an easy part of the operations, yet Zodiac excursions are an elementary part of the expedition cruise product.

You can read more about the developments in the expedition cruise ship segment in the Winter 2016 issue of Cruise Business Review magazine, to be published in November.


CBR 1/2016 contents

CBR 3/2015 contents