Norwegian 2008 Full Year Earnings Results

Norwegian Cruise Line (NCL) has reported a net loss of $211.8 million on revenues of $2.1 billion for the year ended Dec. 31, 2008, compared to a net loss of$227.0 million on revenues of $2.2 billion for 2007. Excluding one-rime charges, including the cancellation of the contract to build a second F3 ship, NCL would have reported a loss of $83 million, compared to a net Joss of $224.4 million for the prior year, according to company filings.


For the fourth quarter ended Dec. 31, 2008, NCL reported a net loss, including one-time charges, of $210.9 million on revenues of $430.9 million, compared a net loss of $133 million on revenues of $498.5 million for the same period last year. Excluding one-time charges, the Joss for Q4 would have been $83 million compared to $133 for the same quarter the previous year.


NCL reported strong bookings for the first months of 2009, with a 15 percent increase year-over-year through March 15.

NCL also stated that it has been exploring alternatives to optimize its capital structure and in conjunction with an equity investment of $100 million by its shareholders has refinanced approximately $800 million of debt coming due in 2009 and 2010.

According to NCL, the company completed its  strategic restructuring in 2008, including the appointment of a new senior management team; realignment of its Hawaii operations; full implementation of Freestyle 2.0; improvements in the way it does business with travel agents through Partnership 2.0; and a restructuring of its building program (from two to one ship). 

This year, NCL will return the Norwegian Majesty to Star Cruises, completing what it calls the transformation of its fleet into purpose-built Freestyle cruising vessels.

“We worked diligently in 2008 to transform the company with the implementation of a variety of measures and initiatives,” said Kevin Sheehan, CEO, in a prepared statement.

“The result is a new company, one that is extremely focused on customer service, financial performance and is well poised to come through this difficult period,” Sheehan added.


NCL’s numbers are difficult to compare, as last year’s result also included its larger Hawaii operation, at least until mid-spring. On top of that is fuel, but fuel costs affected all the cruise lines. In addition, NCL has the impairment cost from cancelling its second F3 ship.

Sheehan was named president and CFO last summer and added CEO to his title in the fall, while Roberto Martinoli was named president and COO this past winter.

NCL maintained its fleet in 2008 following the introduction of two new ships in 2007, the Norwegian Pearl and the Norwegian Gem. Norwegian Dream left the fleet in 2007, and the Majesty is slated to leave this fall, before the introduction of the Norwegian Epic in 2010.

NCL’s passenger capacity is estimated at 1,172,066 in 2009, according to Cruise Industry News, and 1,308,500 in 2010.


For 2008, NCL reported ticket revenues of $1,501,646 compared to $1,575,851 for 2007. That translates into $150.00 and $159.86 per passenger day, respectively.

For the fourth quarter, NCL reported average ticket revenues of $137.85 per passenger day last year, compared to $144.10 the previous year.

Passenger spending was $63.63 per day in 2008, compared to $60.97 in 2007. During the fourth quarter of 2008, passenger spending was $59.57, compared to -$58.00 for the same period in 2007.

Fuel-costs were up from $193.2 million in 2007 to – $258.3 in 2008, but dropped from $60 million in the fourth quarter of 2007 to $46.5 million in the fourth quarter of 2008.

NCL listed cash and cash equivalents at $185.7 million as of Dec. 31, 2008, and total current assets, including cash, at $249.7 million. Total liabilities were listed at $3.5 billion.

Star’s Side

In related news, Star Cruises, which owns 50 percent of NCL, reported a net loss of $100.5 million for 2008, including $104.1 million from its interests in NCL, on revenues of $436.6 million, compared to a loss of $210 million on revenues of $2.6 billion for 2007 (when Star included NCL’s revenues as well.)

Star said in its filings that the increase in net revenue for NCL in 2008 was primarily due to higher ticket pricing and onboard revenues, partially offset by a decrease in capacity days resulting from the departures of the Norwegian Wind, Norwegian Crown, Norwegian Dream and the Marco Polo in 2007 and 2008, as well as the re-flagging of the Pride of Aloha, which was withdrawn from service in May and returned as the Norwegian Sky in July. The decline in capacity was partially offset by the addition of the Norwegian Gem, entering service in October, according to Star.

The increase in onboard revenue came primarily from gaming operations and the art auction concessionaire.

Star said that SG&A expenses per capacity day increased 8.5 percent in 2008 mainly due to additional professional foes incurred in connection with legal costs and management consulting projects.

Ship operating expenses per capacity day for 2008 increased 3.5 percent over 2007, mainly due to higher fuel costs offset by lower payroll and expenses related to the re-flagging and redeployment of the Pride of Hawaii and Pride of Aloha from Hawaii to the international market.

The biggest change is in Hawaii, where NCL had an estimated 12.6 percent of its capacity in 2008, down from 20.0 percent in 2007 and more than 29 percent in 2006 and 2005.

The other big change is in the Caribbean where NCL has been growing its capacity back up to previous levels, and there has been a steady growth of capacity deployed in Europe, including the Norwegian Jade sailing year-round from Barcelona.

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