NCL Expansion Plan

Norwegian Cruise Line (NCL) and sister company Orint Lines will add a total of four new ships and 7,050 more berths – representing a berth increase of 41 percent over the next two years – thanks to newly announced fleet transfers from parent Star Cruises combined with existing growth plans.

According to NCL President Colin Veitch, Star will be transferring the first of its Libra-class newbuilds at meyer Werft to NCL instead of the Superstar Leo, which had formerly been slated to begin seven­ night Hawaii service this December. The 91,000-ton, 2,200-passenger newbuilding, to be called the Norwegian Star, will debut there instead. The second ship in the Libra class, which has also been transferred to the NCL fleet, will be called the Norwegian Dawn and will be launched in late 2002. In addition, NCL will be welcoming the new 80,000-ton, 2,000-passenger Norwegian Sun, to be delivered by builder Lloyd Werft  this summer.

Veitch also announced that Star will be transferring the 37,012-ton, 650-passenger Superstar Aries (ex-Europa) to the Orient Lines fleet in June 2002. The ship will be renamed the Ocean Voyager and according to Veitch “will be dedicated to longer voyages, roughly 30 days in length, which can be combined back-to-back into at least two around-the­ world cruises (per year), and can also be split up into smaller segments of roughly 15 days each.”

The decision to bring the new Norwegian Star into Hawaii versus the Superstar Leo was made after new legislation disallowed the possession of gaming machines on any vessel both embarking and disembarking in a Hawaiian bomeport. Instead of pulling the Leo into an unplanned drydock to convert the casino, explained Veitch, Star opted to make the changes aboard the new ship “which didn’t have a casino yet, and we’ve been assured by the yard that the design can be modified and the ship delivered on time.

“The Norwegian Star was originally designed with two casinos,” he explained. The space formerly allocated to the smaller casino will be used for a “nightclub cum cabaret lounge,” while the larger will be transformed into a 20,000-square-foot shopping mall selling everything from fashion to art to children’s toys.

Overall the ship will feature 10 restaurants, one of which bas two different menus. Of those, the two main dining rooms, one alternative restaurant and the lido cafe will be free of charge, while the remainder will charge a fee.

Veitch said bookings for NCL’s new seven-night Hawaii cruises represented “the best bookings for any of NCL’s ships for the spring of 2002.” That positive performance bolstered NCL’s confidence in changing from the 2,000-passenger Leo to the 2,200-passenger Norwegian Star. The baseline prices – “which will be quite competitive” – will not change as a result of the deployment shift, but Veitch noted that the new ship has some higher grade suites aboard (than the Leo).

NCL’s other Hawaii operation in 2001, the seasonal 10-night cruises aboard the Norwegian Sky this fall, will require the company to physically dismantle the ship’s casino after its Alaska season and reinstall the gaming devices prior to the following Caribbean season.

The loss of casino revenue aboard the larger Norwegian Star “is modest but material,” said Veitch, who noted that the company would only have been able to operate the casino four nights per week anyway under previously existing Hawaiian law, and that drink revenue from the new lounge and retail revenue from the new shopping area would partially offset the loss.

While commenting on the latest ship developments, Veitch also released new details on NCL’s year-end 2000 results:

Occupancy increased from 98.3 percent to 101 percent year-over-year, net revenue yields increased 7.1 percent, while operating costs increased 9 .5 percent. An operating profit of $103 million for 2000 (versus $75.3 million for 1999) includes several one-off charges not expected to recur in 2001, including $10.7 million in restructuring and severance-package costs, and an $8.4 million loss related to the Australian joint venture Norwegian Capricorn Line.

Of the 2001 Wave Period, Veitch maintained, “It bas been reasonable, but not great. Broadly speaking, it has been in line with what we would have expected, given the amount of business already sold. It has been positive this year compared to last year,” be continued, noting, however, that “this year we have had less inventory to sell.” In terms of the general market, “it is very competitive,” he said. “The first quarter, to us, shows a continuation of the price pressures we saw in the fourth quarter (of 2000), although maybe not quite as much.” Veitch concluded, “It’s too early to tell whether it will be a good year or not.”

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