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TUI AG cruise operations improve results as Hapag-Lloyd recovers and TUI Cruises shine

TUI AG, the German tourism group, has reported an improved performance for its cruise operations that comprise of Hapag-Lloyd Kreutzfahrten and a 50% stake in TUI Cruises on the recovery of the first-named company and continued strength of TUI Cruises.

“Following a weak performance in the first half of the year, additionally impacted by two dry-dock periods of Europa, Hapag-Lloyd delivered a positive development in the third quarter of 2013/14. TUI Cruises continued to record a very successful business performance, also driven by the commissioning of Mein Schiff 3 in June 2014,” the company said in a statement.

In the third quarter of its financial year, TUI’s cruise operations generated revenues of €63.9 million, slightly down from €67.4 million in the same period a year earlier. Operating result (EBITA) improved to €1.7 million from €0.8 million.

Fos the first nine months of the 2013-14 financial year, the revenues reached €213.1 million, an increase from €188.0 million year-on. EBITA improved to negative by €1.7 million compared to a figure negative by €59.2 million in the same period a year earlier.

“TUI Cruises commissioned the first new built vessel, the ‘Mein Schiff 3’; the fleet expansion is now being turned into action with the two vessels on order to be delivered until 2017. The rising demand for the luxury cruise segment of Hapag-Lloyd Kreuzfahrten in the third quarter, sup- ports the turnaround in the Cruise Sector in the full financial year,” the company said.

Sharp increase in turnover in the nine month period was driven by the capacity expansion due to the commissioning of the Europa 2 that joined the Hapag-Lloyd fleet in the summer of 2013. “As the joint venture TUI Cruises is measured at equity in the consolidated financial statements, no turnover is shown for TUI Cruises,” TUI AG said.

“In the first nine months of 2013/14, the Cruises Sector had to carry adjustments of €16.0m for the utilisation of provisions formed in the prior year for pending losses from occupancy risks at Hapag-Lloyd Kreutzfahrten,” TUI AG pointed out.

In the first nine months of 2013/14, occupancy of the fleet operated by Hapag-Lloyd Kreuzfahrten declined by 4.1 percentage points versus the prior year to 66.8%. “A total of 314,993 passenger days were generated, up 10.0% year-on-year. This was mainly attributable to the operation of Europa 2, which had been commissioned in May 2013 and therefore not yet been fully included in the relevant prior-year reference period. The accumulated average rate per passenger per day grew by 3.2% to €422 in the first nine months,” TUI AG said.

Following the scheduled decommissioning of Columbus 2, which has  been redelivered to Oceania Cruises and for whom it has re-entered service as Insignia following a refit, from the fleet in the third quarter 2013/14, Hapag-Lloyd will focus on luxury and expedition cruises in future. “It will engage in international marketing activities in each of the segments with Europa 2 in the luxury segment and Hanseatic in the expedition cruise segment. Europa and Bremen will only be offered in the German-speaking market in future,” TUI AG said

In the first nine months of 2013/14, TUI Cruises continued to record a very positive development of the operating indicators of its fleet. At 101.0%, occupancy rose by 0.9 percentage points year-on-year (based on double occupancy). The continued high load factor was driven by Mein Schiff 1 and 2 with their trade lanes Caribbean and Canaries (winter season 2013/14) and Nordland/Baltic Sea (summer season 2014). Mein Schiff 3, the third ship of the fleet, started its operation towards the end of the period under review in June 2014 with its maiden voyage to

10 Majorca. In the first nine months of 2013/14, TUI Cruises recorded a total of 1,070,835 passen- ger days. The average rate per passenger per day was €158, up 7.5% year-on-year.

Regal Princess to be named by original Love Boat cast members

It’s been nearly forty years since the iconic television show The Love Boat went on the air and introduced viewers to modern day cruising and, in the process, made Princess Cruises and its ships synonymous with vacations at sea.

As Princess prepares to celebrate its milestone 50th anniversary year in 2015, the company is honoring the role that The Love Boat played in its history by selecting the original Love Boat cast members to serve as godparents for its new cruise ship Regal Princess. All six Love Boat cast members - who played the roles of Captain Stubing, Gopher, Isaac, Doc, Julie and Vicki – will reunite to christen the new ship on November 5 in Fort Lauderdale.

The ceremony will officially launch the golden year anniversary celebrations for Princess Cruises, which will celebrate five decades of operation throughout 2015.

The actors include Gavin MacLeod (Captain Stubing) Fred Grandy (Gopher, the chief purser), Ted Lange (Isaac, the bartender), Bernie Kopell (Doc, the ship’s doctor), Lauren Tewes (cruise director Julie) and Jill Whelan (Vicki, the captain’s daughter).

“We can think of no more suitable godparents for our newest ship than the cast of the show that put Princess Cruises on the map,” said Jan Swartz, the line’s president. “The show has been such a visible part of our company’s history, it made sense to kick off our anniversary celebrations with this special tribute.”

The pilot episode of The Love Boat, shot aboard Princess’ 730-passenger original Sun Princess in 1977, began the relationship between Princess Cruises and the show, which for ten seasons eventually became one of the highest rated and longest-running shows on television. The Pacific Princess and Island Princess were the primary floating stars of the show, while later episodes and specials were filmed aboard many of Princess’ other cruise ships in destinations around the globe.

“I’m absolutely thrilled that my former cast mates and I will be part of Regal Princess’ U.S. debut,” said Gavin MacLeod, who has been Princess Cruises’ ambassador since the show ended in 1986. “The fact that The Love Boat continues to air in international syndication around the globe is a testament to the show’s longevity and the world’s fascination with romance on the high seas.”

The 3,560-guest Regal Princess, which entered service in May of this year, is arriving in Fort Lauderdale to begin her maiden season of Caribbean cruise vacations. Among the special features found on board is a dramatic multi-story atrium serving as the social hub of the ship, offering a host of dining and entertainment options; an over-water SeaWalk, a top-deck glass-bottomed walkway extending 28 feet beyond the edge of the ship; plush private poolside cabanas that appear to be floating on water; the Princess Live! television studio; the largest pastry shop at sea; a special Chef’s Table Lumiere, a private dining experience that surrounds diners in a curtain of light; and balconies on all outside staterooms.

“The ship’s naming ceremony is just the beginning of the celebrations that will mark our company’s golden anniversary,” said Swartz. She added that beyond the Regal Princess festivities, guests sailing on any of the line’s fleet of 18 cruise ships during 2015 will enjoy a wide range of anniversary experiences.

Cruise Business Commentary: Meyer's Finnish acquisition important for all parties

Meyer Werft's acquisition of a 70% stake in STX Finland and its Turku yard combined with an order for two more cruise ships, with an option for further two, from TUI Cruises in Hamburg that were both unveiled on 4 August are important developments for all the parties concerned.


Meyer Werft group and Turku yard

The acquisition means that the Turku yard, a major facility for the construction of cruise ships and ferries, has a reliable and financially solid owner that is committed to build ships there and to develop the business of which will be called Meyer Turku Shipyard.

Many of the previous owners over the past 25 years have either not been committed to do either as they have diversified to numerous other businesses, or as in the case of STX Offshore & Shipbuilding, have faced deep financial problems as a result of expansion that had not been successful.

The TUI order with its options secures work for the yard so that it can re-establish itself as a reliable business partner and provide employment for its staff.

For Meyer Werft itself, the acquisition means the company can now accept orders for vessels that can exceed the size of ones that can be built at its facilities in Papenburg.

The Turku yard has built ferries too, which Papenburg has not focused on, so Meyer may take more interest in that sector of passenger ship building in the future than what has been the case in recent years.

Cruise ship building sector in general

In a broader concept, the focus will now move to the future of STX France. The French government owns a 34% stake in the company, but its Korean owner has put its shares in the French unit up for sale.

Last year, Fincantieri acquired the shares of STX OSV, a listed company spun off from the STX Europe unit of STX Offshore & Shipbuilding, so it might buy the controlling interest in STX France as well. If so, then two builders would virtually share the cruise ship building market between them. In the long run, that could encourage competition from outside.

TUI Cruises

The Hamburg based TUI Cruises currently has three ships in service, with a fourth due next Spring. The two firm orders plus the two options unveiled on 4 August will pave the way for the company's expansion, not only on the German speaking market, but also e.g. in the UK, where the management has indicated TUI Cruises could expand in the future

Royal Caribbean Cruises Ltd (RCCL)

RCCL, the world's second largest cruise shipping group, recently unveiled objectives to improve profitability and to expand its business. In order to meet these objectives, it needs the input of TUI Cruises too, of which it owns 50%. A six to eight ship operation can deliver more than a fleet of just four ships.

In connection with its second quarter 2014 interim results, RCCL published the Double-Double Programme, which it said is designed to achieve two important goals by 2017: increasing the company's Return on Invested Capital (ROIC) to double digits and doubling 2014 earnings per share (EPS).  In 2013, EPS amounted to $2.14.

The company also said it 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 Programme sets demanding, but realistic targets, against which we will measure our continued progress."

By Kari Reinikainen

Carnival Corporation to develop $70 million port facility in Tortuga, Haiti

"Carnival Corporation & plc signed a memorandum of understanding on July 31, 2014, that calls for the development of a new cruise port in Tortuga, an island just off the northern coast of Haiti," says David Candib, Vice President, Development & Operations, Global Port & Destination Development Group at Carnival Corporation & plc.
"The amount of investment, per the Letter of Intent, is $70 million and represents the largest cruise industry investment ever made in Haiti, providing a new and exciting destination for ship itineraries traveling in the Caribbean. This also represents a major commitment to the people of Haiti by Carnival Corporation - the largest cruise company in the world, with nine industry-leading brands and dozens of ships operating in the Caribbean, the world's most popular region for cruise vacations.
The development will create an exciting opportunity for our guests to enjoy a new, secluded and stunning destination on the island of Tortuga that the company expects will become a highly popular place for guests to enjoy for years to come. At the same time, this commitment will initially stimulate significant development and construction activities, and then tourism business once the port is open, that will create a tremendous economic impact for the people of Haiti. Our initial estimates indicate we will employ more than 900 people directly and indirectly, and the project will be an anchor for further development on the island. We are working together with the Haitian people and government to build Tortuga into a popular and economically sustainable Caribbean destination.
This commitment to Haiti is part of Carnival Corporation's larger investment in the Caribbean as a whole. The Caribbean is a crucial market for the success of Carnival Corporation and the cruise industry in general - and we remain committed to creating new and exciting products in the region. The Caribbean is not only the most popular region for cruise vacations, but it is also where Carnival Corporation's roots are, and where the company's nine brands deploy a large number of ships and set sail with millions of guests every year.
As we work to develop more diverse itineraries in the region, this new port will complement other popular destinations in the area, including our other Carnival-owned ports of Mahogany Bay, Half Moon Cay, Grand Turk, Puerta Maya and Amber Cove, another new Carnival Corporation port being developed in Puerta Plata, founded by Christopher Columbus on the north coast of the Dominican Republic and scheduled to open with much anticipation in 2015."

TUI Cruises orders two ships, with two options, at Meyer Turku Yard


Photo credit: Jouni Saaristo

TUI Cruises has agreed to order two more ships from Meyer Turku Yard, now sold to a consortium of Meyer Werft and the Finnish government, the Finnish minister of the economy and employment told a news conference.

The ships would be similar to the two 99,300 gross ton vessels the company has ordered from the Finnish builder before; Mein Sciff 3 was delivered in the spring and Mein Schif 4 is due to enter service in the spring of 2015.

The exact price of the orders was not disclosed, but the figure would be in the region of €1 billion, Vapaavuri stated. Securing future workload for the yard was a key part of the acquisition of the yard by Meyer Werft and the Finnish government, which was also unveiled today.

TUI Cruises is joint venture between Royal Caribbean Cruises Ltd (RCCL) and TUI AG, the German tourism company.

Meanwhile, TUI Cruises said in a statement TUI AG and Royal Caribbean Cruises are substantiating their expansions plans for the company. The Mein Schiff fleet shall grow from now three to six ships and then 14,000 beds by 2017. TUI Cruises is strengthening its already sound and dynamic position in the German cruise market.

Mein-Schiff-3-2 1000px

Photo credit: Jouni Saaristo

Both the Boards of TUI AG and Royal Caribbean Cruises have decided to order the two newbuilds. The Mein Schiff 4 is currently being built and with the now decided new orders of Mein Schiff 5 and Mein Schiff 6 TUI AG and Royal Caribbean Cruises are investing in touristic growth markets. The parent companies of Hamburg-based TUI Cruises expect a sustained high demand in the cruise sector and therefore, in good time, came to the decision to expand further.

Friedrich Joussen, CEO of TUI AG: "In Germany and in Europe the interest in cruises is increasing. The Mein Schiff fleet of TUI Cruises has set a new premium standard in the market and it won new target groups for cruise holidays. The ships are excellently booked to capacity and the company is growing. TUI Cruises and its vessels are a pivotal pillar for our differentiation and growth strategy. Cruises meet the trend and are being discovered by new customer segments." At the presentation of the TUI AG half-year results Joussen had already called the prospects for the cruise segment as highly attractive and alluded to an expansion of the Mein Schiff fleet. This expansion is now being turned into action with the two vessels on order.

Only recently, in June 2014, the Mein Schiff 3 as the first newbuild of the fleet was commissioned by TUI Cruises. Already prior to the launching ceremony on 12 June, the vessel had been nearly fully booked.

The now decided two more ships are on order and expected for delivery as soon as 2016 and 2017. The new cruise liners will be sister ships of the previous newbuilds Mein Schiff 3 and Mein Schiff 4: 295 metres long spanning 15 decks with 1,250 cabins. The majority of the "well-being" ship s cabins, 90 per cent, will be outside cabins with 82 per cent having balconies. The 99,300 Gross Registered Tons (GRT) new build will carry approximately 2,500 guests based on double occupancy.

Both new ships will be built at Meyer Turku Yard, Finland, the majority of which will be in hands of Meyer Werft GmbH. This acquisition is subject to approval by the cartel authority and financing. Richard J. Vogel, CEO TUI Cruises: ''We are pleased that a positive outcome of the negotiations between STX and MEYER WERFT has been achieved. This step ensures that TUI Cruises keeps the valuable know-how of the shipyard. It is the foundation to successfully enlarge the unique cruise products of the Mein Schiff fleet." As Managing Director Richard J. Vogel was responsible for building up TUI Cruises from the very start. By 1 October he will be succeeded as CEO of the Hamburg-based cruise company by Wybcke Meier.


Viking Star