Star Cruises 2004 Q3 Earnings

The Star Cruises Group has reported net income of $46.4 million, or $0.81 per share, on revenues of $478.7 million for the third quarter ended Sept. 30, 2004, compared to net income of $51.6 million, or $1.04 per share, on revenues of $437.5 million for the third quarter of 2003.

Group revenue was up despite a 3.9 percent reduction in capacity year-over-year primarily due to higher pricing and higher occupancy levels. The capacity reduction resulted mainly from the sales of the Superstar Capricorn and the Superstar Aries earlier this year.The occupancy was 108 percent this year compared to 100 percent last year.

But increased revenues were offset by what Star called the “expected higher cost structure for the NCL America fleet.

Star also reported higher SG&A expenses due to the “negative scale economy arising from the reduction in capacity and the additional shoreside expenses in Hawaii.”


Norwegian Cruise Line (NCL) had an 11.7 percent increase in capacity in Q3 as a result of the Norwegian Spirit (ex-Superstar Leo) joining its fleet. Occupancy levels rose from 106.8 percent to 108.9 percent. Ship operating expenses were up due to what Star called “operational challenges during the start-up of the Pride of Aloha in Hawaii and higher-thanbudgeted manning costs of that ship.”

Star Cruises

The Star Cruises brand had 41.2 percent less capacity in Q3 04 compared to Q3 03 (due to the sale of two ships and the transfer of the Leo to NCL), and generated higher revenues driven by higher occupancies as well as improved onboard revenues. Occupancy for Q3 04 was 102.2 percent compared to 85.1 percent in Q3 03 which saw the tail end impact of SARS. Q3 02 occupancy was 95.9 percent.

Ship operating expenses were reported to be higher due to higher crew payroll expenses.

For the first nine months of 04, Star reported net income of $28.2 million, or $0.49 per share, on revenues of $1.2 billion, compared to net income of $14.5 million, or $0.29 per share, on revenues of $1.2 billion for the first nine months of 03.

Star said that 2003 was impacted by the war in Iraq and SARS in Asia.

With an 8.3 percent decrease in capacity year­ over-year, Star was able to maintain revenue (which was up slightly at 2.8 percent).

Fleetwide occupancy was 103.7 percent this year, compared to 95.7 percent last year.

Operating and SG&A expenses per passenger day were up year-over-year “in large part due to the start-up expenses and higher expenses relating to NCL America and lay-up expenses for the Norway,” according to Star.

For NCL, capacity year-over-year was down 1.8 percent, with the withdrawal of the Norway and the arrival of the Norwegian Spirit. Occupancy level rose to 106.5 percent from 104.3 percent. Net revenue yield rose 5.9 percent.

Increased expenses were attributed to shoreside costs for the new Honolulu operation and, during the early part of the year, television ad campaigns in California and New York to support the new Hawaii operation and year-round New York operation. Both of these markets are targeted for considerable growth in NCL’s future deployment plans.


Star has indicated that NCL is seeing higher prices for 2005 compared to last year.

Cruise Industry News was not able to reach NCL or Star executives for comments regarding the sales status of the Norway or about reports about Star being in discussions with a new partner.

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