NCL Orders New Ship

Norwegian Cruise Line (NCL) has signed a letter of intent with Lloyd Werft for the construction of a $351 million, 80,000-ton, 2,000-passenger sister ship to the Norwegian Sky, for delivery on June 1, 2001. Also included in the letter is an option for a second vessel, priced at $334 million, for delivery on April 1, 2002. Lloyd Werft will not build the hulls, but is currently negotiating with four shipyards to do that work, according to Lloyd Werft general manager Werner Luken.

Meanwhile, the Norwegian Sky is on target for its scheduled Aug. 9 debut and the company’s first-quarter profit of $1 million marked “the first first-quarter profit in nine years,” noted NCL President and CEO Geir Aune, who expected “a significant profit level for the year overall.” Explaining this forecast, he said that out­ of-service time and expense for NCL’s ship-stretching program is now over; capacity will be up 10 percent in 1999 with the mid-year arrival of the Sky offsetting the various drydockings (and the fall end of the Leeward and Norwegiian Dynasty charter deals); and finally, Aune said, “we have reduced the break-even yield by more than 30 percent in the last four years, so we are now in a very good position to profit going forward.”

Profits for 2000 should be fueled by another 10 percent capacity increase, with the full-year sailings of the Sky and no stretching jobs; plus an expected increase in yield resulting from the transfer of the Norwegian Crown to Orient Lines. Growth in 2001 is anticipated with the launch of the sister to the Norwegian Sky, growth for 2002 by the third Sky, and beyond that, a new series of vessels is in the design stages, said Aune.

In the near term, Aune said the company filed for a listing on the New York Stock Exchange (NYSE) on May 13, and could be listed by the end of June under the stock symbol 11 NWY.” He explained that the listing on the NYSE, in addition to the existing Oslo listing, would allow NCL’s stock to be analyzed alongside other cruise companies as part of an overall industry, which is not the case in Norway. Furthermore, he noted that the Oslo exchange is being depressed in value overall by low oil prices.

The CEO also addressed rumors which swirled earlier this year that a takeover bid by P&O was imminent. “We would never sell the company at this pricing,” he said, insisting, “We’re not trying to sell the company. We’re going to develop this company.”

Aune confirmed that one possibility to finance the the new ship would be to sell and/or lease-back the Aida.

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