Norwegian Cruise Line has announced that it is withdrawing another ship of the “white fleet” from service. The Skyward, which presently sails seven-day cruises from San Juan, has been chartered to Constantine Ltd. of Singapore. Scheduled to leave the Caribbean after its October 26 cruise, the Skyward will be sailing seven-day cruises from Singapore.
The 16,254-ton, 730-passenger Skyward was built in 1969. Last month, NCL’s parent company, Kloster Cruise, sold the 676-passenger Sunward II to Epirotiki Lines to be operated in the European market by a new venture formed by Kloster Cruise and Epirotiki Industry reports also indicate that the Southward and the Starward may soon be leaving the NCL fleet.
Temporary Reduced Caribbean Capacity
The re-deployment of the Skyward means somewhat reduced capacity for NCL in the Caribbean. The Starward will replace the Skyward on alternating weeks, however, starting January 26. In the meantime, all cruises on the Skyward itinerary have been cancelled beyond Nov. 2, 1991, including holiday sailings.
The Skyward currently sails Saturdays from San Juan on seven-day roundtrip cruises to Aruba, Curacao, St. Thomas and Tortola/Virgin Gorda.
New Capacity
NCL also announced that the two 41,000-ton, 1,246-passenger sister ships under construction at the Chantiers de l’Atlantique yard in France will be joining its fleet, as expected, under the names of Dreamward and Windward.
The Dreamward will begin sailing seven-day alternating Eastern and Western Caribbean cruises from Port Everglades on December 6, 1992. Ports-of-call include Nassau, San Juan, St. John and St. Thomas on the Eastern itinerary and Grand Cayman, Playa del Carmen, Cozumel, Cancun and NCL’s out-island in the Bahamas on the Western itinerary.
During the summer seasons, the Dreamward will be sailing between New York and Bermuda.
The Windward will be sailing seven-day cruises year-round from San Juan starting May 23, 1993 on alternating itineranes calling at Barbados, Martinique St. Maarten, Antigua and St. Thomas or at Aruba, Curacao, Tortola/Virgin Gorda, St. John and St. Thomas.
It is speculated that the Dreamward’s summer program will replace the Westward, which can then be positioned permanently on the West Coast, leaving the Southward free to be redeployed or sold.
The Windward is expected to be relieving the Starward.
Increased Spending
NCL announced significant increases in marketing and sales budgets to support the two new ships. While executives promised increased advertising expenditures in 1992, they would not release a specific dollar amount. They called the new campaign “trend-setting” within the cruise industry.
NCL also said that it will focus on building relationships with travel agents. The cruise line already has preferred supplier agreements with several large travel agency groups.
NCL also plans to offer travel agents better service through the hiring of more reservations agents and training of employees in better customer relations.
Sponsorship agreements, which includes Universal Studios and the National Football League, will be continued.
In addition, NCL executives promised that the line’s two-for-one discount program will soon be ended.
Executives said the re-organization of the cruise line, increased sales and marketing spending, and its focus on travel agents, will help position it for the 90s.
New NCL
By 1994, NCL is expected to have four ships in the Caribbean market: the 2,044-passenger Norway and the 1,534-passenger Seaward sailing seven-day cruises from Miami; the 1,246-passenger Dreamward sailing seven-day cruises from Port Everglades October through April; the 1,246-passenger Windward sailing seven-day cruises year round from San Juan.
The four ships will have a total of 6,070 berths and an estimated annual passenger capacity of 276,000.
In addition, the Dreamward will also be sailing from New York to Bermuda from May through September, with an estimated seasonal capacity of 24,920 passengers.
NCL will also be operating the 790-passenger Sunward on three- and four-day cruises from Miami and it is expected that the 790-passenger Westward will be sailing three- and four-day cruises year-round from Los Angeles. The two ships will have an estimated annual passenger capacity of 158,000.
Thus, in 1994, NCL is expected to have a fleet of six ships and an estimated total passenger capacity of 458,920 passengers.
In 1991, NCL’s Caribbean capacity is estimated at 245,000 passengers based on four ships, the Norway, Seaward, Starward and Skyward, and includes the November withdrawal of the latter. Total 1991 NCL passenger capacity is estimated at 430,260 passengers.
Drastic Changes
In addition to the changes within NCL, Kloster’s other cruise divisions, Royal Viking Line and Royal Cruise Line have also undergone changes.
The top-of-the-line division, Royal Viking Line, has seen its fleet cut from four to just one ship in a relatively short period of time. Next year the 740-passenger Royal Viking Sun, which was built in 1988, will be joined by the new 212-passenger Royal Viking Queen, which is under construction at Seebeck Werft in Germany. The RVL fleet will have a total of 952 berths and an estimated capacity of 22,632 passengers in 1992, based on an average cruise length of 14 days, increasing to 24,752 in 1993 and 1994 when both ships will be in service for the full year.
The premium division, Royal Cruise Line, which operates the 1,052-passenger Crown Odyssey and the 460-passenger Golden Odyssey will see the addition of the 790-passenger Royal Odyssey this fall. This is the former RVL ship, the Royal Viking Sea.
For 1992, RCL will thus have three ships offering 2,302 berths with an estimated annual passenger capacity of 80,570 passengers, based on average cruise length of 10 days (a mix of seven-, eight-, 10- and 14-day cruises).
By 1994, the total Kloster fleet is expected to include 11 ships with 10,904 berths with an estimated annual capacity of 564,242 passengers.
Bottom Line
While Vard, parent company to Kloster Cruise, has not yet released earnings for the third quarter, ended September 30, 1991, Vard executives have previously “promised” profitability in the third and fourth quarters. The cruise operations posted losses in the first and second quarters of this year.
The extraordinary income generated from the $36 million sale of the Sunward II and the charter of the Skyward should also help boost earnings. The Skyward is chartered on a bareboat basis at $20,000 per day, with an option to purchase after two years for $43 million.
In the meantime, Vard is reported to be in discussions with its bankers for refinancing of its debt. Total outstanding debt is said to be $281 million.
It is also rumored that CEO Trygve Hegnar, who is credited with turning Kloster Cruise around and making it profitable after a shaky period in the mid 80s, is planning to leave his position by the end of next year. Previously, he has said that 1992 will be the best year in the company’s history.
While it is too early to say how management’s changes will affect the future earnings potential of the Kloster fleet, it is clear that Kloster will be losing market share in the next two years. At the same time, Kloster is emerging as a much more streamlined organization, with a renewed fleet.
