American Classic
cruise line signs
megaships deal

Each $400 million vessel
will be about 71,000 tons
and 840 feet long

By Russ Lynch
Star-Bulletin

American Hawaii Cruises has taken a big step toward putting two massive new U.S.-built ships into its round-the-islands cruise business.

American Classic Voyages Co., the company's parent, has signed a letter of intent with a Mississippi shipbuilder to construct the two largest passenger ships ever built in the United States, at a cost of $400 million each.

Each ship will be about 71,000 tons and 840 feet long and carry 1,900 passengers. That would dwarf American Hawaii's current lone vessel, the 51-year-old S.S. Independence, which displaces about 20,000 tons, is 682 feet long and carries up to 1,021 passengers. The new ships would be bigger than the 67,000-ton Queen Elizabeth 2, although not as big as some of the newer foreign-built liners.

Chicago-based American Classic said it has selected Ingalls Shipbuilding of Pascagoula, Miss., after a competition in which 10 U.S. shipbuilders submitted bids. Contracts have yet to be signed for Ingalls to design and build the vessels but that is expected by April, said Philip C. Calian, president and chief executive officer of American Classic.

The first ship should be in service in late 2002, Calian said, adding that they will be the first passenger vessels of significant size built in the United States in 40 years.

The construction is made possible by an act of Congress last year, sponsored by Sen. Daniel K. Inouye. The act creates an exemption from an old U.S. law that restricts passenger trade between U.S. ports to U.S.-built vessels. It will allow American Hawaii Cruises to use a foreign-built ship in the meantime, provided it signs firm contracts to build U.S. ships.

In return for its commitment to build new ships in the United States, American Hawaii gets a 20-year monopoly in interisland cruise-ship operations.

Calian said the bidding competition was close and all the companies that entered proved they were capable of building fine U.S. cruise ships. The partnership with Ingalls, a division of Woodland Hills, Calif.-based Litton Industries Inc., will "revitalize America's shipbuilding industry and dramatically improve our Hawaii business," said the head of American Classic, which also owns the New Orleans-based Delta Queen Steamboat Co.

Terri Monaghan, American Classic vice president of corporate communications, said the company still has to choose a foreign vessel to fill in in the Hawaii trade while the new ships are built. "All the attention has been focused on the deadline for the contracts for the new builds," she said.

As soon as the contracts are signed, decisions on the foreign ship will be made, she said.

The foreign-flag exemption requires American Hawaii to divest itself of the foreign-built ship two years after it receives its second U.S.-built liner.

Meanwhile, American Hawaii Cruises continues to operate the S.S. Independence on island cruises, offering itineraries of three, four and seven nights, she said.

The new ships should be a major boost for Hawaii, as well as for U.S. shipbuilding, American Classic said.

James McIngvale, public relations director for Ingalls Shipbuilding, said details of the design will be worked out in ongoing contract negotiations.

The final agreement is expected to include an option to build a third vessel for American Hawaii, he said.