Star Cruises 2006 Q2 Results

Despite generating nearly 10 percent more revenue per passenger day and improving operating income per passenger day by more than 41 percent over the second quarter last year, the Star Cruises Group posted a loss of $33.9 million, or $0.64 per share, on revenues of $590 million in the second quarter ended June 30, 2006, compared to net income of $6.2 million, or $0.12 per share, on revenues of $452.3 million in the second quarter of 2005.

According to Star, the net loss was $3.4 million before non-cash foreign currency debt translations and impairment losses, while last year similar items resulted in a net gain.

The revenue increase year-over-year was attributed partially to a 21.2 percent capacity increase and to a 2.6 percent net revenue yield driven by higher ticket pricing and onboard spending in the NCL Group.

Operating expenses, however, were up 14.5 percent per passenger day year-over-year, of which fuel costs accounted for a large share. Average fuel prices in the quarter increased approximately 33 percent from Q2 05.

Star Cruises

According to Star, net revenue for the Star Cruises brand was 2.4 percent higher on a 28.5 percent capacity increase which was partially offset by a 19.2 percent lower net revenue yield.

The lower net revenue yield and occupancy were primarily due to the lower occupancy on the Superstar Libra in her first season in India and the Eastern Mediterranean.

While Star said it was able to reduce operating costs per passenger day, the decrease was partially offset by higher fuel costs.

The Superstar Libra is returning to India after her Mediterranean season, and with what Star called certain changes to her itineraries to better cater to the market, the company expects improved occupancies and per diems in her second season.

NCL Group

Net revenue was 30.5 percent higher on a 19.5 percent increase in capacity, according to Star.

The capacity increase was due to the introductions of the Pride of America, Norwegian Jewel and Pride of Hawaii, partially offset by the transfer of the Norwegian Sea (Superstar Libra) to Star Cruises.

The revenue increase was also driven by higher ticket prices and onboard spending.

The occupancy in Q2 06 was 107.3 percent compared to 106.8 percent in 05.

While the NCL was able to gain operating efficiencies, payroll and fuel costs were up.

Star said that softer pricing in the Caribbean combined with higher fuel prices, increased interest costs, and continued higher operating costs in Hawaii will continue to put pressure on the company’s results in the second half of 2006.

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