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Lindblad plunges to loss as dry dock costs exceed yield rise

  • Written by Kari Reinikainen

Lindblad Expedition Holdings, Ltd., the listed expedition cruise operator, has plunged to a loss in the second quarter as the cost of dry dockings exceeded a rise in net yields.

Group net loss in the second quarter of the current year amounted to $4.9 million compared to a $8.8 million profit a year earlier. Revenues rose to 453.8 million from $49.5 million.

In the first six months of the year, Lindblad’s net profit narrowed to $5.9 million from $15.7 million. Revenues rose to $115.5 million from $104.9 million.

Net yield in the quarter for the Lindblad segment amounted to $999 as compared with $963 in the second quarter of 2015. The increase in Net yield was primarily related to price increases, the company said in a statement.

The Lindblad segment had 41,213 Available Guest Nights in the second quarter of 2016 compared with 44,193 in the prior year quarter, and an occupancy rate of 92.0% in the second quarter of 2016 compared with 91.9% in the 2015 quarter.

Adjusted Net Cruise Cost per Available Guest Night for the Lindblad segment amounted to $858 in the second quarter of 2016, as compared with $691 for the same period in the prior year. The increase was primarily driven by higher cost of tours due to the additional drydock days and more extensive maintenance work during the drydocks, as well as an increase in charter hire expense related to additional voyages

“In 2016, both of our blue water vessels, the Explorer and the Orion were drydocked in contrast to 2015 when only one vessel was wet docked for a much shorter period. Our drydock schedules are subject to cost and timing differences from year to year due to the availability of shipyards for certain work, drydock locations based on ship itineraries, operating conditions experienced especially in the polar regions, and the applicable regulations of class societies in the maritime industry, which require more extensive reviews periodically, “ said said Sven-Olof Lindblad, President and Chief Executive Officer of Lindblad.

“The combined effect of lower revenue from fewer operating days and the operating costs of these planned drydocks is the key factor with regard to the year-over-year comparison of revenue and EBITDA in the period,” he added.

“We are currently at 94% of projected guest ticket revenues for 2016 as of July 31, 2016, compared to 103% in the same time in 2015 for the 2015 fiscal year, a reduction of approximately $5.3 million. The reduction is primarily for voyages during the fourth quarter” Lindblad continued.

“We have employed a variety of tactical marketing opportunities for this period to counteract effects seen in specific geographies relating to concerns over the Zika virus and a slowdown in activity on the National Geographic Endeavour, where segments of our audience are waiting for the introduction of our new vessel, the Endeavour II, for our Galápagos operation.”

“We have historically been adept at isolating challenges and developing an effective tactical response while staying focused on our long-term objectives. However, we may be unable to fully eliminate all the effects of the various challenges we face in the short term,” he concluded.

Crystal Cruises concludes SS United States technical feasibility study

  • Written by Teijo Niemelä

Following an intensive, six-month evaluation, Crystal Cruises today determined that while the SS United States is structurally sound, the technical and commercial challenges associated with returning the historic liner to service as a modern cruise ship have unfortunately proven insurmountable. As a show of support for the vessel, Crystal Cruises will be making a significant donation of $350,000 to aid in the Conservancy’s ongoing mission to save the ship. The Conservancy intends to resume its pursuit of stationary redevelopment opportunities for America’s Flagship.

In February, Crystal and the SS United States Conservancy announced they had entered into an exclusive option agreement with the goal of converting the iconic 1950’s-era vessel into a modern, luxury cruise ship that would comply with all modern safety and technical standards – unprecedented for a single vessel refurbishment. Crystal commenced a comprehensive feasibility study and professional evaluation, convening a world-class team of engineers and experts while incurring over $1 million in costs.

“Over the past six months, Crystal has conducted an extensive feasibility study to restore 'America's Flagship' to oceangoing service. Unfortunately, the hurdles that would face us when trying to bring a 65-year-old vessel up to modern safety, design and international regulatory compliance have proven just too great to clear in both a technically and commercially responsible manner,” said Crystal President and CEO Edie Rodriguez.

“While it has been determined that Crystal’s exciting vision for the ship would have required overcoming various technical hurdles and major changes to her historic design, the studies performed have confirmed the ship is structurally sound,” said Susan Gibbs, Executive Director of the SS United States Conservancy. “America’s Flagship continues to hold enormous potential as a stationary mixed-use development and museum in New York or another urban waterfront setting. The SS United States Conservancy remains deeply committed to saving this unique and powerful symbol of the nation’s strength, history, and innovation.”

Led by retired U.S. Coast Guard Rear Admiral Tim Sullivan, Crystal’s impressive team of maritime experts and engineers conducted numerous assessments on the ship in the Port of Philadelphia, where it has been docked for 20 years. The evaluation and testing included in-depth assessments of the ship's structural condition; underwater inspections of the hull by divers; the examination of her fuel and salt water ballasting tanks; and a series of intensive engineering studies to deduce what would be needed to bring her back into service.

Regrettably, the technical feasibility study concluded that while the ship is remarkably intact and structurally sound, modifying the ship for today’s standards for oceangoing service (SOLAS) would require significant changes to the hull that would pose stability challenges. Additionally, the installation of a modern, state-of-the-art diesel electric propulsion plant would have necessitated altering of the existing shaft lines and rebuilding about 25 percent of the hull to reconfigure the ship to a twin shaft-twin rudder arrangement. While it was known that the vessel would need to have been essentially rebuilt from the inside out, these specific challenges, among others, collectively posed significant risk to the success of the project.

“Our company has great affection for this historic and irreplaceable vessel, and we will be making a $350,000 donation which will help support the Conservancy preserve the vessel through the remainder of the year,” said Rodriguez. “We firmly believe the SS United States is an American treasure and deserves to be preserved and redeveloped as a stationary destination for future generations to experience and enjoy.”

The Conservancy will immediately restart its aggressive outreach to qualified developers and investors to secure the ship’s future, while continuing its ongoing mission to educate the public about the legacy of the vessel and building its museum collection and archives. A national reunion of former crewmembers and passengers is planned in Philadelphia on September 17.

“The Conservancy is deeply grateful to Crystal Cruises for recognizing the SS United States’ historic importance and for working so hard on the ship’s behalf,” said Gibbs. “I would also like to thank our members and supporters from across the country and around the world for their continued support. Together we will continue to work tirelessly to save America’s Flagship and honor the legendary liner’s legacy.”

Crystal would like to thank partners and agencies involved in helping complete the feasibility study including: the U.S. Coast Guard; Atlantic Logistics; the U.S. Environmental Protection Agency; the American Bureau of Shipping; the U.S. Maritime Administration; the Seafarer’s International Union and multiple U.S. Congressional committees. Finally, Crystal urges the public to visit to help the SS United States Conservancy continue its efforts to save America’s Flagship and advance its educational and curatorial programs to honor the nation’s only remaining ocean liner.

Pullmantur increases Latin America capacity by 40%

  • Written by Kari Reinikainen

Alan Lam reports

Having recently reduced its exposure to Latin America on account of the softening of that market outlook and re-focused its business on Spain, Pullmantur Cruises seems to have reversed its strategy yet again and decided to increase its capacity deployment in Latin America.

As the market in Spain fails to stage a desirable recovery, the line will increase its Latin America capacity by 40% towards the end of this year. “Latin America is a region extremely important for Pullmantur,” said José Blanco, VP Commercial of Pullmantur Group. “For this reason we are going to increase our capacity in this market year round.”

According to Blanco, the region represents an enormous opportunity for the group despite having suffered various economic challenges that impact on its people’s desire and ability to travel.

In support of this strategy, the group underlines that it needs to “democratize” its products and that cruise is a “choice form of travel”, which enables passengers to see many places in a relatively short time.

For the 2016-2017 season, Pullmantur offers three visa-free itineraries from four Caribbean ports of embarkation - namely Cartagena de Indias, Puerto Limón, Santo Domingo, and Colón.

This second strategic refocus in as many years comes only a month after the group having appointed Richard Vogel as it new President and CEO. It is not unreasonable to assume that this new emphasis is built on the hope of a Caribbean revival - partly because of the refreshed interest in this region due to the thaw in Cuba-U.S. relations - in the wake of the continuing European cruise market stagnation.

“The Caribbean is an excellent destination,” said Blanco, “the most important in the world, not only in terms of cruise passenger numbers, but also its cultural, beach and gastronomical attractions.”

Silversea to invest $170 million in upgrading fleet

  • Written by Kari Reinikainen

Silversea, the Monaco based luxury market brand, has unveiled the biggest fleet-wide refurbishment plan in its history, worth $170 million.

This investment is not aimed at simply maintaining Silversea’s self-imposed high levels of excellence, but to reaffirm the company’s commitment to exceptional standards of guest comfort and timeless elegance, it said in a statement.

The company has a fleet of 10 ships.

“We are thrilled to be moving ahead with these major refurbishments and look forward to welcoming guests aboard and sharing our unique vision of ultra-luxury cruising, both in terms of service and physical environment,” said Manfredi Lefebvre, Chairman of Silversea.

“We pride ourselves on being the reference when it comes to ultra-luxury cruising and this investment reflects our long-term commitment in this regard toward our ships, our guests and our crew,” he said in the statement

Genting Hong Kong warns it will report up to $75 million loss for first half

  • Written by Kari Reinikainen

Genting Hong Kong, the cruise ship, shipbuilding and casino group that is listed in Hong Kong, says t will report a$60 million to $75 million loss in its first half 2016 results due to absence of one off sale gains and higher expenses in its cruise operations

“The board of directors of the Company (the “Board”) wishes to inform the shareholders, investors and potential investors of the Company that, based on the preliminary assessment of the latest unaudited financial information, excluding the share of results of Travellers, the Group is expected to record a consolidated net loss in the range of US$60 million to Us$75 million for the six months ended 30 June 2016 as compared with a consolidated net profit of US$2.1 billion, excluding the share of results of Travellers, for the six months ended 30 June 2015,” the company said in a statement

The company added the expected decline in the consolidated net results of the Group is mainly attributable to firstly, to the absence of a one-off accounting gain of $1,567.4 million recognised arising from the reclassification of the Group’s investment in Norwegian Cruise Line Holdings Ltd (“NCLH”) from “Interest in associates” to “Available-for-sale investments” in May 2015.

In addition, last year the company booked a total gain of $599.6 million arising from the disposals of certain stakes in NCLH in the six months ended 30 June 2015.

Finally, one-time start-up and marketing costs for the launch of new Dream and Crystal cruise brands and products in 2016; and higher overall operating and selling, general and administrative expenses including depreciation and amortisation as a direct result of the integration of the Group's recently acquired businesses.


CBR 1/2016 contents

CBR 3/2015 contents