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New orders cannot be expected before 2023, yard capacity must be reduced – Meyer officials

Details: Written by Kari Reinikainen Kari Reinikainen; Category: Top Headlines Top Headlines; Published: 16 April 2020 16 April 2020

The cruise ship building industry is facing severe overcapacity as new orders cannot be expected for a few years and the Meyer group of shipyards needs to adjust its capacity to a new normal, two senior officials of the group said.

Due to the severity of the crisis, no new orders can be expected before 2023 or 2024, said Thomas Weigend, CEO of Meyer Werft, the German unit of the group, in a video message to the staff.

Bernard Meyer, Chairman and Owner, stated on the same video that it would take up to 2030 for the newbuilding market to return to the levels seen last year, before the crisis.

Cruise shipping companies would book massive losses for this year and break even in 2021 before probably returning to profit in the following year, he added.

Only between a half and three quarters of the global cruise ship fleet of some 400 ships would resume service this year, Weigend forecast.

Given the severity of the crisis, the lines will also seek to postpone deliveries and in order to avoid cancellations of orders, the Meyer Group will have to reduce its capacity. At Papenburg, this means cutting one large ships per year from the present output of two large and one smaller ship per year, Weigend continued.

In order to adapt to the new normal, Weigend said the company plans to reduce the hours worked by its own staff, reduce the use of contractors and to stop overtime and weekend work.

The cruise industry has experienced four major shocks since he started at the family owned company in 1973. The first one was the oil crisis the same year Meyer started his shipbuilding career and from which it took the global shipbuilding industry two decades to recover.

The 911 terrorist attacks in 2001 and the financial crisis seven years later were both major events, but neither of these brought the entire global cruise fleet to a standstill as has been the case with the coronavirus, said Bernard Meyer.

P&O Cruises' Iona departed Meyer Werft last month. New delivery date is not set yet. Photo credit: Meyer Werft

Royal Caribbean cuts its workforce by 26 percent

Details: Written by Teijo Niemelä Teijo Niemelä; Category: Top Headlines Top Headlines; Published: 16 April 2020 16 April 2020

Royal Caribbean Cruises Ltd. has announced drastic cuts to its workforce due to the pandemic.

"Earlier today, we told our employees the difficult news that we were laying off or furloughing approximately 26 percent of our more than 5,000 coworkers in the US," the company said in a statement.

"We earlier announced the early conclusion of many crew contracts.

The circumstances of the pandemic made this action unavoidable, and it hurts to part ways with so many good and talented people."

Enchanted Princess delivery delayed

Details: Written by Teijo Niemelä Teijo Niemelä; Category: Top Headlines Top Headlines; Published: 15 April 2020 15 April 2020

Princess Cruises confirms that the delivery of Enchanted Princess is delayed. A new delivery date has not been determined since the Fincantieri (Monfalcone, Italy) yard remains closed.  Voyages through July 31 have been canceled.

 The delivery delay is due to the country-wide lock down imposed by the Italian government and public health officials in response to the COVID-19 outbreak. 

The naming ceremony scheduled to take place in Southampton, England on June 30 has been canceled. Inaugural activities are under review in conjunction with changes to the ship deployment.

US cruise bookings for 2021 stage sharp increase – report

Details: Written by Kari Reinikainen Kari Reinikainen; Category: Top Headlines Top Headlines; Published: 14 April 2020 14 April 2020

Cruise bookings in the US for 2021 have risen sharply in the past few weeks and three of four passengers whose cruise had been cancelled due o the coronavirus pandemic have accepted credit towards future cruise, a media reports said.

“In the past 45 days — as multiple cruise ships had serious COVID-19 outbreaks onboard — the cruise booking site CruiseCompete.com saw a 40% increase in its bookings for 2021 over its 2019 bookings,” BusinessInsider.com said on its website.

“A recent report from UBS also found that 76% of the people who had a canceled cruise in 2020 have chosen to accept credit towards a future cruise in 2021 as opposed to 24% who accepted a refund,” the same source stated.

Both are good news for the cruise industry that has been badly hit by the pandemic. Recovery of the demand is one of the key questions that the industry faces in the months to come.

Although credits towards future cruises are debt on the balance sheets of the cruise shipping companies, these do not put stress on their liquidity as the debt will be cleared by performing cruises rather than by settlements in cash.

Arne Wilhelmsen, a founder of Royal Caribbean Cruises Ltd., dies at 90

Details: Written by Teijo Niemelä Teijo Niemelä; Category: Top Headlines Top Headlines; Published: 12 April 2020 12 April 2020

Arne Wilhelmsen, a founder of Royal Caribbean Cruises Ltd. and a visionary strategist of the modern cruise industry, died Saturday, April 11, 2020, in Palma, Spain. He was 90. The entire Royal Caribbean family extends its heartfelt condolences to the Wilhelmsen family.

Wilhelmsen was a constant influence on the company from its founding, serving more than three decades on the company's board of directors. Together with the company's first CEO, the late Edwin Stephan, Wilhelmsen saw possibilities for the nascent cruise industry that others did not.

"At a time when the rest of the world thought cruising was a niche use for old transatlantic liners, Arne was already seeing glimmers of the growth that was possible," said Richard Fain, RCL's chairman and CEO. "He had a vision of the modern cruise industry when the 'industry' might have been a dozen used ships, total."

Their key insight: building new ships uniquely designed for cruising in warm weather. The industry did not grow from New York, the traditional transit hub; it came to Miami, helping the region itself grow as the public discovered an entirely new way to take a vacation.

Wilhelmsen saw the potential for cruising to become the fastest growing segment in a growing vacation industry. A believer in economies of scale, he once recalled, "My initial challenge was to convince my partners and management in Miami to build bigger and more efficient ships in order to grow the company." True to his vision, the company now sails 61 ships calling on all seven continents and its fleet features the largest cruise ships in the world.

Born on June 15, 1929, in Oslo, Norway, Wilhelmsen earned his MBA at Harvard Business School and worked as a chartering assistant for Norway's EB Lund & Co. and later as a shipbroker in New York. After joining the family business in 1954, he became its president in 1961. The scion of a leading Norwegian shipping concern – Anders Wilhelmsen & Co AS – he spent most of his life in the family business, including an early stint as a deckhand.

"Arne was a steady presence and source of wisdom on our board for decades," Fain said. "And in 2003, when he was ready to step back, he was succeeded on the RCL board by his son, Alex, who has carried the involvement of the Wilhelmsen family in charting our company's course into its sixth decade. Our high standards as a company, our insistence on excellence in operations and design, and our determination to persevere all owe a great deal to the long-term vision of Arne, Alex and the Wilhelmsen family. We salute our friend, and we will miss him dearly."