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Finland raised export credit, guarantee authorisations to help Icon order

  • Written by Kari Reinikainen

The Finnish government increased the export credit and guarantee authorisations of Finnvera plc, the country’s state owned export credit finance provider, to help Meyer Turku shipyard to win the two ship Icon class order of Royal Caribbean Cruises, Ltd (RCCL) that was unveiled yesterday, the Ministry of Economic Affairs and Employment said in a statement.

Olli Rehn, Minister of Economic Affairs and Employment, emphasised that financing is a key factor in projects of this kind.

“The Government has raised the Finnvera export guarantee authorisations by €10 billion, to €27 billion, which is important for cruise ship exports, and the export credit financing authorisations have been tripled to €22 billion. These increases have been a significant factor in obtaining the orders for Finland,” he said in the statement.

The 200,000 gross ton Icon class vessels will use LNG as fuel and they will be fitted with advanced fuel cell technology, which is a very energy efficient and clean way of making electricity. The price of the ships has not been disclosed.

Royal Caribbean Cruises to order its first LNG-powered cruise ships from Meyer Turku

  • Written by Teijo Niemelä

The newest class of ships from Royal Caribbean Cruises Ltd. will be powered by liquefied natural gas (LNG) and introduce the use of fuel cell technology, ushering in a new era of shipbuilding that will dramatically reduce greenhouse gas emissions.

The ships will join the fleet of Royal Caribbean International, an industry leader in innovation and breakthrough ship design.

RCL said that it has signed a memorandum of understanding with shipbuilder Meyer Turku for the new class of vessel under the project name "Icon." The vessels will be delivered in the second quarters of 2022 and 2024. In the meantime, the company said, it will begin testing fuel cell technology on an existing Oasis-class ship in 2017, and will also run progressively larger fuel cell projects on new Quantum class vessels being built in the next several years.

Royal Caribbean is already known for making steady progress on energy efficiency and reduced emissions through such technologies as air lubrication, which sends billions of microscopic bubbles along the hull of a ship to reduce friction, and AEP scrubbers, which clean exhaust gases before they leave the ship. Use of the new technologies will result in much cleaner emissions, as they produce no sulfur and significantly reduce the production of nitrogen oxides and particulates.

"With Icon class, we move further in the journey to take the smoke out of our smokestacks," said Richard Fain, chairman and chief executive officer of Royal Caribbean Cruises, Ltd. "We are dedicated to innovation, continuous improvement, and environmental responsibility, and Icon gives us the opportunity to deliver against all three of these pillars."

"Our guests expect us to push every envelope we can," said Michael Bayley, president and chief executive officer of Royal Caribbean International. "And on this new class of ship, we began by challenging ourselves to find a new approach to power and propulsion that is safe, reliable, and more energy-efficient than ever before." Bayley added that exciting and innovative new guest experience elements of the Icon class design will be revealed later in the development process.

"Our partnership with RCL has created a number of groundbreaking ship classes, such as Oasis, Celebrity Solstice, Quantum, and Mein Schiff, and we are grateful that Royal Caribbean is again giving us the opportunity to partner with them on a new class of ships," said Jan Meyer, the CEO of Meyer Turku.

The switch to LNG provides further momentum for the technology, which has begun making significant inroads in the maritime industry. "Increasing the commitment to LNG makes it easier for suppliers to make their own infrastructure commitments," said Fain. "As more ships are built for LNG, the number of ports that support it will grow." The Icon ships are expected to run primarily on LNG but will also be able to run on distillate fuel, to accommodate occasional itineraries that call on ports without LNG infrastructure.

The introduction of fuel cells represents another dramatic step forward for the maritime industry, which has only made limited experiments using the technology. "We believe fuel cells offer very interesting design possibilities," said Harri Kulovaara, RCL's chief of ship design. "As the technology becomes smaller and more efficient, fuel cells become more viable in a significant way to power the ship's hotel functions. We will begin testing those possibilities as soon as we can, and look to maximize their use when Icon class debuts."

Kulovaara said RCL had been eyeing fuel cells for nearly a decade, and believes the technology is now at a stage of development that justifies investment. "There is a long lead time for Icon class, and we will use that time to work with Meyer Turku to adapt fuel cell technology for maritime use." Kulovaara said that additional regulatory standards would also need to be developed for the technology.

Because of the long lead time, Kulovaara said that many Icon design elements are in early stages. The Icon ships would likely accommodate approximately 5,000 passengers, he said, but details are still being worked out.

Icon is the first new ship class announced by RCL since Celebrity Cruises' new Edge class, which debuts in 2018. The company is also expanding its fleet with new Oasis- and Quantum-class ships for Royal Caribbean International. Fain said the new ships are in line with RCL's strategy of moderate capacity growth.

This order is contingent upon the completion of contractual conditions, including documentation and financing. Final contracts are expected to be completed by year end. Based upon current ship orders, projected capital expenditures for full year 2016, 2017, 2018, 2019 and 2020 are $2.4 billion, $0.5 billion, $2.6 billion, $1.5 billion and $2.0 billion, respectively. Capacity increases for 2016 through 2020 remain unchanged and do not include potential ship sales or additions that the company may elect to make in the future.

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."

CBR 2/2016 CONTENTS

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