- FleetPro to manage Haimark's Saint Laurent
- SuperStar Aquarius to include calls in Puerta Princesa City with its second season at Kota Kinabalu
- Britannia to feature largest spa in P&O Cruises’ fleet
- Viking Line suffers sharp weakening of second quarter and first half interims
- Lloyd Werft appoints Petersjohann to head engineering and offshore
- Reuters: Norwegian Cruise Line could acquire Prestige Cruise Holdings
- Quantum class ships to float on bed of air bubbles, waste glass etc. frozen to prevent bacteria growth
- Quantum class Two70 windows to become video screens, Bionic bar robots mix drinks
- Quantum to offer six times faster Internet than other cruise ships, allows streaming video, use of Facetime, Skype
- Quantum of the Seas to introduce robotic entertainment, eliminates check in counter in host of high tech firsts at sea
- Cruise Business Commentary - Persistent perception problem highlights inadequacy of supply driven business model
- UK cruise sector “under pressure to fill capacity” unless conceptions change - report
- Category: Top Headlines
- Published on Monday, 28 July 2014 21:03
- Written by Teijo Niemelä
Norwegian Cruise Line today reported results for the quarter ended June 30, 2014, and provided guidance for the third quarter and full year 2014.
“This quarter marks the first full quarter with both Breakaway-class ships in operation,” said Kevin Sheehan, president and chief executive officer of Norwegian Cruise Line. “Along with Norwegian Epic, these newer, premium, earnings-rich ships now comprise a little over a third of our capacity and contributed to the doubling of earnings in the quarter” continued Sheehan.
For the second quarter of 2014, the Company reported Adjusted EPS of $0.58, on Adjusted Net Income of $121.1 million, compared to $0.29 for the same period in 2013. On a GAAP basis, diluted earnings per share and net income were $0.54 and $111.6 million, respectively.
Net Revenue in the period increased 23.6% to $595.7 million driven by a 19.6% increase in Capacity Days and a 3.3% improvement in Net Yield (3.0% on a Constant Currency basis). The increase in Capacity Days was primarily from the addition of Norwegian Getaway and Norwegian Breakaway to the fleet in January 2014 and April 2013, respectively, and was partially offset by the planned dry-dock of Norwegian Jewel. The Net Yield improvement was due to higher Occupancy Percentage, higher onboard and other revenue and benefits from initiatives to reduce our cost of sales. Revenue for the period increased to $765.9 million from $644.4 million in 2013.
Adjusted Net Cruise Cost Excluding Fuel per Capacity Day decreased 2.3% (2.7% on a Constant Currency basis). The Company’s fuel price per metric ton, net of hedges, was $622 compared to $686 in 2013. Fuel consumption per Capacity Day in the quarter decreased 5.1%.
Interest expense, net was $31.9 million for the quarter. Interest expense, net in the same period in 2013 was $103.7 million which included $70.1 million of charges related to the refinancing of certain credit facilities and the redemption of certain of the Company’s senior unsecured notes. Excluding these charges, Adjusted Interest Expense, net was $33.6 million in 2013.
2014 Guidance and Sensitivities
In addition to the results for the second quarter, the Company also provided the following guidance for the third quarter and full year 2014, along with accompanying sensitivities.
“We are pleased to reiterate full year earnings guidance given the current promotional environment,” said Sheehan. “We are taking advantage of opportunities to strategically invest in initiatives to increase brand awareness and enhance the guest experience to drive long term returns.”
As of June 30, 2014, the Company had hedged approximately 76%, 59%, and 37% of its remaining 2014, 2015 and 2016 projected metric tons of fuel purchases, respectively.
Future capital commitments consist of contracted commitments, including future expected capital expenditures for business enhancements and ship construction contracts. As of June 30, 2014 anticipated capital expenditures together with amounts for ship construction and related export credit financing were as follows (in thousands, based on the euro/U.S. dollar exchange rate as of June 30, 2014):
Company Updates and Other Business Highlights
The Company recently announced an order for two Breakaway Plus-class ships with export credit financing in place. The contract price for the 164,600 gross ton, 4,200-berth vessels is euro 1.6 billion, with deliveries scheduled for spring 2018 and fall 2019. This latest order brings the total number of newbuilds under contract with Meyer Werft to four, with Norwegian Escape scheduled for delivery in October 2015.
In April, the Company announced the authorization by its Board of Directors of a three-year, $500 million share repurchase program. During the second quarter, the Company repurchased approximately 2.4 million shares at an average price of $33.02 per share under this program.
In May, the Company announced Norwegian NEXT, a two-year, $250 million investment in “new enhancements, experiences and transformations” across the fleet. The program is aimed at elevating the guest experience through ship revitalizations, enhanced dining and beverage programs, enriched entertainment and destination experiences and technological advances. The program also includes initiatives aimed at reducing the Company’s impact on the environment, including the installation of exhaust gas scrubbers on six of the Company’s current ships and all four of its upcoming newbuilds. Fleetwide enhancements to the dining program include new menus with expanded offerings in complimentary dining venues, the rollout of the popular O’Sheehan’s Neighborhood Bar & Grill and Moderno Churrascaria concepts and the addition of Carlo’s Bake Shop treats to cafes across the fleet. Beverage program enhancements include a new wine list developed in partnership with the Michael Mondavi Family, destination-specific cocktail menus created by the James Beard Award-nominated mixologists at Bar Lab and the expansion of the Sugarcane Mojito Bar concept. Regarding entertainment, the Company’s new, state-of-the-art rehearsal facility, Norwegian Creative Studios, will be the source for new production shows while the Company expands its Nickelodeon family offerings to include new activities and dining experiences with one’s favorite characters. Investments in technology include an enhanced pre-cruise booking experience and interactive digital displays positioned in strategic locations throughout every ship allowing guests to reserve dining, shore excursions and other activities. The Company is also investing in improvements to its private island in the Bahamas, Great Stirrup Cay, with new venues such as the Bacardi Bar while construction continues on its upcoming eco-friendly western Caribbean destination in Belize, Harvest Caye.
CRUISE BUSINESS COMMENTARY – Why Fred. Olsen’s Poison, Murder and Mystery cruise is worth a few lines
- Category: Top Headlines
- Published on Friday, 25 July 2014 12:51
- Written by Kari Reinikainen
When the top brass of Fred. Olsen Cruise Lines – including its chairman Fred. Olsen Snr. that rarely appears in public - on 24 July took to the stage at the Tower of London, they wanted to talk about one cruise only: The Poison, Murder and Mystery cruise (see separate article under More News for details) that is scheduled to depart from the Scottish port of Rosyth on 10 July next year.
Also present at the event was Her Grace The Duchess of Northhumberland, whose idea the cruise actually was. The Duchess told Cruise Business that she had met Olsen and it emerged that they both had poison garden, Her Grace at the ducal family’s country seat at Alnwick in the North East of England and Olsen in Teneriffe in the Canary Islands in Spain.
Professional actors will set the pace to the events on board the 880 passenger Boudicca as it sails south from its Scottish base to Spain, Portugal and the Atlantic islands. A professional author will write a storyline, based on developments of the murder mystery that forms the backbone of the entertainment of the cruise. Passengers are active encouraged to participate in the story by assuming a character in it and dressing in 16th century Florentine dress, the period and location in which the story is set.
It is here that the concept becomes interesting.
Passengers on cruise ships are largely consumers of entertainment: they watch shows, comedians and listen to concerts and singers etc. True, activities like sport include active participation by the passengers, but these are mainly daytime functions. In the evening, an overwhelming majority of the passengers watch professional entertainers to perform.
The Poison, Murder and Mystery cruise promises to change that. Nathan Philpot, marketing director at Fred. Olsen Cruise Lines said the company has contacted Guinness Book of Records to make this cruise with the largest number of participants in on board entertaining ever seen on any ship.
Fred. Olsen operates a fleet of four medium sized vessels. In recent years, it has diversified its product by offering longer stays in port, often overnight in key ones, plus widening further its already extensive portfolio of cruises by adding shorter ones, with extended port stays.
The company’s ships were built between 1973 and 1994, so none of them is exactly new and as they range in size from 23,000 to 45,000 gross tons, they are not particularly large either. Hence they cannot provide a Wow! effect with stunning size and facilities of the ships, no matter how well they are maintained and how well they are run. And they are, both.
Instead, their smaller size invites more interaction between those on board for the simple fact that you are more likely to meet the same passenger or crew member than on a megaship.
The company arranged a Titanic memorial cruise in 2012, when it became 100 years from the tragedy. Passengers were encouraged to dress in period attire, many did and it is on this positive experience the company wants to capitalise as well.
The cruise industry is supply driven: lines that build new ships market them aggressively and usually gain a large degree of interest from the public as a result. What Fred. Olsen Cruise Lines is planning to do is to take a completely different tack: as its old slogan used to say, “It’s All About the People.”
- Category: Top Headlines
- 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
- Category: Top Headlines
- 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."
- Category: Top Headlines
- 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.
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
- 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