Norwegian 2009 Q1 Results

Norwegian Cruise Line (NCL) has reported net income of $5.2 million on revenues of $424.5 million for the first quarter ended March 31, 2009, compared to a net loss of $145.0 million on revenues of $511.5 million for the first quarter of 2008.

The turnaround was attributed to the restructuring of NCL’s Hawaii operation, as well as increased focus on costs, according to CEO Kevin Sheehan.

And the earnings were achieved despite lower ticket prices, partially offset by an increase in onboard and other revenues, and a 8.3 percent decrease in capacity days. The Marco Polo and the Norwegian Dream left the fleet in March and November of 2008, respectively.

Occupancy for the first quarter of 2009 was 106.9 percent, compared to 106.4 percent last year, and is the highest for a first quarter since the introduction of purpose-built Freestyle Cruising ships slightly less than IO years ago, according to NCL.

Net cruise costs per capacity day was down primarily due to fuel costs dropping 43 percent and lower payroll and related costs due to cost savings from the reflagging of the Pride of Hawaii and the Pride of Aloha.


NCL said that although pricing continues to be soft, booking levels remain strong and occupancy rates should equal or exceed those of last year. The booking curve has lengthened slightly, although it is shorter compared to historical levels. “We see signs of improvement,” Sheehan said. “An expanding booking curve, however slight, as well as record occupancy levels are signs that the marketplace is receptive to cruising as a vacation choice. We are optimistic that we are introducing new people to our brand and bringing in new cruisers to the market,” Sheehan said.

In related news, NCL recently announced that it is reducing its Alaska capacity from three to two ships in 2010. The Norwegian Sun will instead go to Europe, assuming the itinerary that was previously announced for the Norwegian Jewel, sailing to the Baltic from May through September.

“After carefully weighing the of the cost of deploying three ships in Alaska and taking into account the recently enacted legislation, in particular the $50 head tax, we felt it was necessary to redeploy the Sun,” Sheehan said in an earlier statement.

The Norwegian Pearl and Star will continue their Alaska deployment next summer.

Following her Caribbean season, the Jewel will go to New York, sailing a combination of seven-day cruises to the Bahamas and Florida, 10-day cruises to Canada and New England and 10-day Eastern Caribbean cruises from April 2010 through April 2011.

More on Q1

“Although our results reflect the weakness in the overall economy, I am pleased with how our initiatives have softened the impact and continue to position us for the future,” Sheehan commented. ‘Our fleet renewal program continues with the scheduled departure of the oldest ship in our fleet, the Norwegian Majesty, in October of this year, and we continue to prepare for the 2010 delivery of the Norwegian Epic, which goes on sale to the general public on May 21, 2009.”

In the quarter, the average ticket price per passenger day dropped to $125.11 from $146.01 the previous year. Onboard revenue was up, but only by 11 cents per passenger day, according to Cruise Industry News estimates.

Fuel expenses dropped from $27.32 in the first quarter of last year to $14.36 this year. And operating expenses, excluding fuel, dropped from $136.28 per passenger day last year to $122.68 this year.

Interest expenses were also down in addition to a gain from foreign currency translations, resulting in non-operating expenses of $7.8 million in 2009 versus $140.1 in 2008.

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