AIDA Cruises reports 20% rise in 2013 passenger volume to 763,700

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AIDA Cruises, the German unit in Carnival Corp & plc group, said it carried 763,700 passengers last year, an increase of 20% on 2012. "This means that the cruise company has grown twice as fast as the market as a whole. A new study by the CLIA (Cruise Lines International Association) and the DRV (German Travel Association) shows that the German market for ocean cruises grew by 9.2 percent in 2013 to 1.69 million passengers," the company said in a statement.

"Interest in ocean cruises remains high. Since we offer exceptional value for money, the best service, and innovative product ideas, we are consistently able to persuade new target groups to take a cruise with AIDA, without losing sight of our regular guests," said Michael Ungerer, President of AIDA Cruises, on the occasion of the world’'s leading tourism fair, ITB, in Berlin. "This success would not be possible without our many partners in the travel agency business. I thank all of them for our excellent working relationship."

The cruise company is also set for further growth in the coming years. The AIDA fleet – one of the most modern and energy efficient in the world – will increase in size from its current ten vessels to twelve by 2016. The first ship of the new AIDA Generation, AIDAprima, will be inaugurated and put into service in 2015.

AIDAprima’'s maiden voyage will take place from March 22 – June 16, 2015, taking it on a unique 86-night journey from Yokohama, Japan to Hamburg. AIDA guests will have a chance to visit 39 ports in 22 countries on three continents. From June 20, 2015, the port of Hamburg will be the start and end point for AIDAprima'’s 7-night round trips to the metropolises of Western Europe.

Cruise Business Commentary - Next few weeks in Ukraine hold key to Black Sea season

The cruise industry is waiting on its toes to see what way events in the Ukraine will develop and the next few weeks in the region will play a decisive role for the cruise season in the Black Sea, an industry expert says.

"So far, the events (in Ukraine) haven't had an impact, because the cruise season hasn't started yet. The next few weeks will be decisive," said Peter Wild, head of G.P. Wild (International), the UK based consultancy company.

"I am fairly sure that cruise lines are reviewing their itineraries," he told Cruise Business.

In case that the situation does not calm down, lines may be forced to redeploy vessels at a short notice. This has happened quite a few times in recent years as political unease in Northern Africa, from Tunisia in the west to Egypt in the east, has compromised plans of cruise operators.

A continued turmoil in the Ukraine is unlikely to affect the Mediterranean as such, because the Black Sea is viewed as a separate market. In addition, Turkey remains on the map of international tourism despite political upheavals there too.

The Eastern Mediterranean market continues to suffer from developments in Egypt, whereas the much more violent situation in Syria has not had much of an effect as that country has not been a mainstream destination of cruise lines, Wild pointed out.

The recently concluded winter Olympics in Sochi brought the Black Sea region into the spotlight and several ports in the area have actively promoted themselves as cruise destinations. Yalta in Crimea is one of the marquee ports in the region and it is located in the area affected by current turmoil. Odessa in the Ukraine is another core destination of Black Sea cruise itineraries.

Cruise Business Commentary - FOCL impairment charge highlights valuation concerns

KEY POINTS:

1.Company books NOK411 million impairment charges against fleet of four ships

2. These include 1993 built Braemar and 1988 built Balmoral

The decision of Fred. Olsen Cruise Lines to book an impairment charge against the value of its ships did not come as a surprise after All Leisure group in the UK had earlier this month booked a £6.7 million impairment against the value of its 1972 built Discovery of 20,636 gross tons.

However, what is noteworthy in the decision of Olsen is that it includes two ships that younger than 30 years, which is regarded as the depreciation time of major capital assets like ships. The company has reported losses for some time and as the valuation of any asset is ultimately dependent on its ability to generate profits for its owner, this could be understood.

Furthermore, all ships in the Olsen fleet have received major upgrades in the past decade, the two oldest units have been re-engined, while Braemar and Balmoral have been lengthened. This must have increased their book value.

A question that arises from today's news is whether the book values of third generation cruise ships, such as the Fantasy class of Carnival Cruise Lines and Sovereign class of Royal Caribbean Cruises Ltd. will require an impairment.

These ships that largely lack balcony cabins must obtain markedly lower yields than more modern tonnage that features more balconies. The question of valuation may, therefore, refuse to go away from the agenda.