Norwegian Cruise Line Holdings has found another $100 million in cost savings, according to executives speaking on the company’s second quarter earnings call.
The new initiatives revolve around technology vendor consolidation and outsourcing.
This follows over $300 million in shipboard cost savings found between 2023 and 2026, and another $125 million announced earlier this year in SG&A expense cost savings following Elliott Management’s involvement as an activist investor.
The additional savings were identified during the second quarter and bring the cost actions announced over the past two quarters to roughly $225 million in annualized cash savings, said John Chidsey, CEO of Norwegian Cruise Line Holdings.
“During the quarter, we identified an additional $100 million of annualized savings in cash benefits,” Chidsey said. “Combined with the $125 million of annualized run-rate savings we announced last quarter, this brings the actions announced over the past two quarters to approximately $225 million of annualized savings in cash.”
Chidsey said the company had “not let up on cost discipline and organizational efficiency,” even as it works to rebuild demand and sharpen marketing across its brands.
Mark Kempa, executive vice president and chief financial officer, tied the latest savings to vendor consolidation and headcount efficiencies.
“This quarter, we have identified another $100 million of annualized savings and cash benefits related to the consolidation of technology vendors and other employee compensation,” he said.
The vast majority of the benefits relate to capital expenditures, Kempa said, with the remainder tied primarily to salary and benefit efficiencies.
“These savings build on the $125 million of savings announced last quarter and the approximately $300 million of saving efforts identified from 2024 through 2026, which brings total savings over the past three years to more than $500 million,” Kempa said.
The cost work is not finished, he added.
“We expect these cost actions to benefit the business over time, supporting both margin expansion and free cash flow as the top line recovers,” Kempa said.
“We continue to see additional savings opportunities across the business, both within SG&A and on the shipboard side, and we expect to build on these efforts going forward.”
Asked whether more nine-figure cost programs could follow, Chidsey said additional opportunities remain and pointed to technology rather than the guest-facing product.
“We continue to see meaningful cost opportunities. Not really going to size them, but I would say they’re meaningful,” he said. “They’re not guest focused at all. It’s just inefficiencies and ways we can use technology better.”
Kempa pointed to sourcing as a further area for more savings.
“Our global sourcing initiatives program is still in its early stages, so we certainly believe that there’s broader opportunity around that,” he said. “Our aim, as we’ve done the last three years, is really to deliver subinflationary or better unit cost performance.”
