Royal Caribbean Cruises (RCC) has reported net income of $77.5 million, or $0.88 per share, on revenues of $659.8 million for the first quarter ended March 31, 1998, compared to net income of $38.5 million, or $0.58 per share, on revenues of $394.6 million for the same period last year.
The increase in revenue is mostly due to RCC combining the results of Royal Caribbean International (RCI) and Celebrity Cruises, which was acquired last summer, and the new ships the lines introduced last year.
Meanwhile, the increased earnings are due to better pricing and better efficiencies offered by the new ships and the combined fleets and organizations. (Last year, Celebrity posted a loss in the first quarter.)
RCC reported 2,807,504 passenger cruise days for the first quarter of this year for a load factor of 104.6 percent, compared to 1,689,496 passenger cruise days and a load factor of 103.4 percent last year.
According to Richard Glasier, CFO, and Mark Silverman, assistant treasurer and director of investor relations, who spoke to analysts on a conference call, bookings for the rest of the year are said to be strong in all markets. Glasier also said that the first quarter of 1999 looks good and that he expects the current pace to continue.
Glasier explained how RCI by the end of a given year usually has 50 to 55 percent of next year’s business on the books, but that the company is now driving forward bookings by holding back inventory (in anticipation of getting higher prices).
Future strategy also includes more expansion into seasonal markets “such as Alaska and Europe.”
“We are constantly looking to expand the product,” Glasier said. “And we will be doing new itineraries.”
Overall RCI will be adding more than 15,000 berths thus boosting its capacity some 50 precent between 1999 and 2000. In addition, the company has options on two more ships.
According to RCI, the company got an excellent price for the Song of America and it expects to post a net gain in the second quarter of 1998 between $30 million and $35 million from the sale of the ship.
Next in line to be sold is the Viking Serenade which is the only ship left in the RCI fleet older than 10 years.
Meanwhile, RCI executives continue to duck questions about acquisitions despite strong rumors about its interest in both American Hawaii Cruises and Crystal Cruises.
“Anything is possible,” quipped Glasier. “We have an aggressive management team looking for profitable opportunities, but nothing in terms of an acquisition is around the comer.”
Integration of Celebrity
Executives on both sides say that the integration of Celebrity has gone extremely well and, according to Glasier, “yield and occupancy for Celebrity exceeded our expectations.”
Glasier said that RCI has “not touched the Celebrity product,” which he described as excellent in the areas of food, entertainment and Celebrity’s unique butler service. So far, all of Celebrity’s former concessionaires are still serving the line, only the casino operations have been moved in-house jointly with RCI. This summer, RCI will complete the final step as Celebrity’s reservations and yield management will be integrated with RCI.