Norwegian Cruise Line (NCL) has reported net income of $13.1 million on revenues of $172.6 million for the third quarter ended Sept. 30, 1997, compared to net income of $3.4 million on revenues of $166.7 million for the third quarter of 1996.
NCL reported a load factor of 104.3 percent for the third quarter of this year, compared to 99.7 percent for the same quarter last year. The increased load factor more than compensated for a marginal reduction of prices and a reduction of available capacity, according to NCL.
Fleet Expansion
NCL is enjoying a turn-around which may soon be boosted by additional capacity acquired during the month of September:
The 1996-built 1,200-passenger Aida was acquired for $180 million from the German DSR. The seller has chartered the vessel back for a 12-month period, starting on the scheduled day of delivery which was Oct. 24. The charter price for the period is $27.0 million.
NCL took delivery of the 1992-built 1,056-passenger Royal Majesty which has been renamed Norwegian Majesty.
NCL also took over management of the 1993-built 800-passenger Crown Majesty which sails in the NCL fleet as the Norwegian Dynasty.
Thus, from mid-year 1997 to now, NCL has grown from seven ships and an estimated 8,880 berths to 10 ships and 11,936 berths.
In addition, by May of 1998, the stretching of the Norwegian Wind and the Norwegian Dream will have been completed, boosting the capacity of each ship from 1,250 to 1,750 passengers at a cost of approximately $62 million for each ship, or $124,000 per berth.
Then in 1999, NCL expects to introduce the 2,000-passenger Norwegian Sky, built from the former Costa Olympia hull.
Thus, in the span of two years, NCL will boost its berth capacity by some 75 percent. And next is a series of four newbuildings.
According to Hans Golteus, president of NCL, the company is also looking at other opportunities, but he declined to be more specific.
Global Operator
The added capacity helps NCL move into new markets.
NCL is already strong in Europe and in England through its own long-term office there, plus its more recent agreement with Thomson Tours, which has contracted for a significant part of the capacity of the Norweeian Sea sailing out of San Juan. In addition, British passengers are flown into Jamaica for the Montego Bay-based sailings of the Norwegian Dynasty.
Through the Norway, NCL is also building a strong following in France. Several of the Norway’s sailings in Europe next summer are chartered by French groups.
And, the Aida could make NCL the largest operator in the German market. The Aida sails in Europe during the summer months and out of Santo Domingo, Dominican Republic, during the winter.
In addition, NCL has had a solid marketing and sales effort underway for several years in Latin and South America and the Far East. And this winter, the Norwegian Crown will be sailing in South America, although catering mainly to North American passengers.
Next is the Far East. It is not a question of if but when NCL will base a ship in the Far East, according to Golteus.
NCL’s efforts to differentiate itself through new itineraries are further exemplified by the fact that next summer will be the first time ever that there will not be an NCL vessel sailing out of Miami. The ships will be in Europe, Alaska, Bermuda and in the Southern (San Juan) and Western Caribbean (Houston).
Improved Balance Sheet
The added capacity has provided NCL with better economies of scale, which in combination with the single brand focus, makes the company much more efficient, according to Golteus. In addition, NCL has in the past few months raised significant amounts of new equity which has not only allowed the company to expand but has also brought down its debt from about $1 billion to $550 million, and cut its annual debt service from $90 million to $40 million.
NCL also announced that as of the middle of September, 31 percent of its capacity for 1998 was booked. The corresponding figure last year was 16 percent. And bookings for next year average 11 percent higher net rates.
