NCLH: New Transformation Office Driving Cost Cutting

Norwegian Star

Harry Sommer, president and CEO of Norwegian Cruise Line Holdings, said that the company’s strong focus on costs in 2023 will not just be a one-year exercise.

“Rather, it is a cultural shift in the way our entire company looks at cost to ensure that we are operating as efficiently as possible while delivering experiences our guests truly value,” he said, speaking on the company’s fourth quarter earnings call.

“This company-wide focus should allow us to not only continue to reduce costs but even more importantly, create operating leverage to enhance profitability, which will be foundational for our long-term success,” he added.

“Our recently established transformation office is allowing us to monitor and track these changes holding each area accountable for their initiatives. We believe this is apparent in our guidance where we expect our core cost to be flat in 2024 versus 2023.”

Sommer said that the company had a relentless focus on cost optimization, that had produced four straight quarters of net cruise cost per capacity day cost reduction.

Mark Kempa, CFO, said the transformation office was running full speed ahead in identifying operating inefficiencies and opportunities for improvement across all areas of the company in order to enhance the acceleration of margin recovery and related cash generation.

Among the examples, Kempa said the company had made a big leap in the optimization of its fuel bunkering strategy that allows Norwegian to maximize price leverage across the various ports and suppliers it sues during a season and in many cases even during a single voyage.

“We believe this will drive double-digit millions in savings in the first year alone,” Kempa said. “This is just one of the many examples that support our relentless drive to improve our unit costs and leverage our scale all without impacting the guest experience.”

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