Comment – Capex landscape changing as refits, technology gain focus

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 31 October 2019 31 October 2019

The capital expenditure landscape of the cruise industry is changing as refits and technology investments are gathering pace, while billions are needed to cover existing new building orders.

This message has come from the Finnish technology group Wartsila and Royal Caribbean Cruises, Ltd (RCCL), the world’s second largest cruise shipping group.

Most cruise ship building yards have full orderbooks far into the future, which means long lead times for new orders. The existing orderbook may also satisfy the industry’s capacity needs for the time being.

As RCCL made clear in its third quarter result presentation, upgrades of existing ships will include adding more cabins and other sources of revenue. This trend, which also means at least a gentle decrease in space ratio, has been evident for a few years now.

Such investments,, plus ones in technology and e.g. destinations on land, may have a shorter depreciation profile than newbuildings, which means that the impact is felt on the bottom line sooner.

The industry’s capital expenditure may continue to rise even if not a single newbuiding contract was place for several years as growing needs of ship upgrades and technology will add to those of massive orderbooks for newbuildings.

EU launches Fincantieri-Chantiers merger investigation with deep concerns

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Written by Kari Reinikainen Kari Reinikainen

Category: Top Headlines Top Headlines

Published: 31 October 2019 31 October 2019

The European Commission  said it has opened an in-depth investigation to assess the proposed acquisition of Chantiers de l'Atlantique in France by the Italian shipbuilder Fincantieri, under the EU Merger Regulation.

“The Commission has preliminarily concluded that it is unlikely that a timely and credible entry from other shipbuilders would counteract the possible negative effects of the transaction,” the European Commission said in a statement.

“The transaction may therefore significantly reduce competition in the market for cruise shipbuilding, which could lead to higher prices, less choice and reduced incentives to innovate. The Commission has also preliminarily concluded that large customers would not have sufficient buyer power to counteract any risk of price increases as a result of the transaction,” it said.

Commissioner Margrethe Vestager, responsible for competition policy, said in the statement: “Demand for cruise ships is booming globally. Chantiers de l'Atlantique and Fincantieri are two global leaders in this sector. This is why we will carefully assess whether the proposed transaction would negatively affect competition in the construction of cruise ships to the detriment of the millions of Europeans taking a cruise every year."

According to the agreement between Fincantieri and the French government, would acquire a 50% stake in Chantiers de l’Atlantique, which has a large shipyard in St Nazaire, from the French state, which   also agreed to lend a 1% stake to Fincantieri to allow it to take effective control on condition the company makes commitments on jobs, governance and intellectual property, Reuters reports.