NCL 2008 Q3 Earnings

NCL Corporation has announced net income of $171.2 million on revenues of $639 .0 million for the third quarter ended Sept. 30, 2008, compared to a net loss of $8.6 million on revenues of $632.5 million for the third quarter of last year.

NCL attributed the increase in revenue to a slight increase in capacity as well as higher ticket prices and onboard revenue, partially offset by lower air add-ons due to changes in the line’s Hawaii deployment.

Year-over-year cruise fuel cost increases were offset by reduced payroll and related expenses due to the reflagging of the Pride of Hawaii and the Pride of Aloha to the company’s international fleet as the Norwegian Jade and Norwegian Sky, respectively. The company also benefited from lower interest rates and favorable exchange rates.

In a prepared statement, NCL CEO and President Kevin Sheehan said that the Hawaii operation, which has been reduced to one ship, is now profitable. He also said that the company is positioned very strongly for the future, but did not offer any forward guidance, nor ilid he offer any information on the F3 dispute.

Sheehan recently added the CEO title. He has been president and chief financial officer since last summer. Colin Veitch, who has been president and CEO since 2000, first relinquished his president title and aalso his CEO title, and “will be transitioning his existing responsibilities and assume a new advisory role to the board of directors,” according to NCL. In related news, Andy Stewart has been appointed executive vice president of global sales and passenger services.


NCL increased its revenues by about $6 million from last year’s third quarter and reduced operating expenses by about $17 million, generating operating income of approximately $100 million over $77 million last year. Thus, as NCL stated, the operating income gain came largely from lower costs, especially the add ons and payroll, offset by higher fuel costs.

The big difference to the bottom line, however, was in non-operating income and expenses, where NCL reported income of $70.6 million this year, compared to expenses of $85.5 million last year. The income was derived from a non-cash foreign exchange translation gain related to the company’s euro-denominated debt.

Without foreign currency gains or losses, NCL would have posted net income of $66.6 million (on revenues of$639 million for a 10 percent margin.) And without the payroll gain, which is assumed to be one time, net income would have been $45 million.

Comparing Numbers

NCL reported revenues of $250.27 per passenger day, compared to $282.02 for Carnival Corporation (CC) and $275.59 for Royal Caribbean Cruises (RCL).

Broken down by ticket revenue, NCL reported $183.22 per passenger day, compared to $214.30 for CC and $200.11 for RCL.

In terms of onboard spending (and other), NCL reported $67.05 per passenger day, compared to $67.72 for CC and $75.48 for RCL. Total operating expenses were $210.87 per passenger day for NCL, compared to $195.02 for CC and $213.90 for RCL.

Operating income per passenger day was $39.40 for NCL and $87.00 for CC and $61.69 for RCL. Net income was $67.05 per passenger day for NCL, compared to $78.09 for CC and $55.01 for RCL.

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