Star Cruises 2007 Q3 Earnings

The Star Cruises Group posted a loss of $21.3 million, or $0.29 per share, on revenues of$733.7 million for the third quarter ended Sept. 30, 2007, compared to net income of $60.4 million, or $1.03 per  share, on revenues of $688.6 million for the same  quarter last year. 

Star attributed the result to a non-cash Euro denominated debt translation loss of $41.7 million.  According to Star, Q3 2007 would have generated net income of $20.4 million, excluding the debt translation  loss, compared to $32.9 million, excluding a debt  translation gain last year. 

While revenues were up, due to increased net revenue yield and increased capacity, operating income, however, was down year-over-year, $78.0 million this  year, compared to $82.7 million last year.

For the nine-month period ended Sept. 30, 2007,  Star posted a loss of $77.3 million on revenues of  nearly $2.0 billion, compared to a loss of $8.6 million  on revenues of $1.8 billion last year.

According to Star Cruises, the group achieved higher net revenue in Q3 2007 due to a 6.3 percent increase in capacity and a 3.3 percent increase in net revenue yield due to an increase in ticket prices, offset by lower onboard gaming revenue in Star’s Asia fleet.

The capacity increase was driven by the Norwegian Pearl which entered service in November 2006.

Ship operating expenses increased, Star said in a prepared statement, due to the timing of maintenance and repair expenses, higher fuel costs and an increase in payroll and related costs, as well as charter fees for the Norwegian Crown and the Marco Polo.


Star Cruises had 21.4 percent more capacity in Q3 2007 over 2006 because of the addition of the Superstar Aquarius, which commenced service in June 2007. Net revenue was up 9.8 percent, according to Star, driven by the capacity increase, but offset by a 7.2 percent lower net revenue yield as a result of lower
passenger spending on gaming.

Occupancy was 92.6 percent, compared to 83.7 percent last year.

Ship operating costs were up.

Norwegian Cruise Line (NCL)

Net revenue increased 9.2 percent in Q3, according to Star, driven by a 6.3 percent increase in net revenue yield and a 2.8 percent increase in capacity due to the addition of the Norwegian Pearl, which was partially offset by the transfer of the Norwegian Wind to Star (Superstar Aquarius). The increase in net revenue yield was primarily due to higher ticket prices and increased demand.

Occupancy was 111.2 percent in 2007 up from 107.8 percent in Q3 2006.

Star also reported a decrease in net revenue yield for NCL for the nine-month period, which it said was due to a decrease in passenger ticket prices, and to a lesser extent, lower onboard revenues.

The decrease in ticket prices was primarily due the downward pressure on pricing in Hawaii during the first half of the year. The decrease in onboard revenue was due to lower amounts spent per passenger on art due to a change-over of the line’s art concessionaire, partially offset by an increase in amounts spent per passenger on other onboard activities.

Star did not break down actual figures for onboard spending.

North America, Asia, Europe

According to Star, Q3 2007 revenues were driven by $528.5 million generated by North American passengers, $114.4 million from Asia and $90.8 million from Europe, compared $505.7 million, $97.5 million and $85.3 million, respectively, last year.

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