American Classic
Voyages net falls 46%

By Russ Lynch
Star-Bulletin

American Classic Voyages Inc. today reported a 46.4 percent drop in third-quarter profit, but the company said about half the difference was due to expenses as it prepares for a substantial expansion at its cruise businesses.

The Chicago-based company is planning new ships for its American Hawaii Cruises business and its Delta Queen Steamboat Co. unit in New Orleans.

The company had a profit of $1.5 million, or 10 cents a share, in the quarter ending Sept. 30, compared with a profit of $2.8 million, or 19 cents a share, in the year-earlier period.

The latest quarter included expenses of $600,000 for planning of the added ships. Third-quarter revenues were $50.9 million this year, up 2.4 percent from $49.7 million last year.

American Classic said occupancy in its Hawaii round-the-islands cruises, aboard the S.S. Independence, was up 5 percent compared with the 1997 quarter but business was down in its Delta Queen riverboats on the mainland. American Hawaii is 63 percent booked for the first half of 1999 at an average of $213.95 per passenger per night and Delta Queen is 36 percent booked for the first half at $297.45 per passenger per night, the parent company said.

American Classic is rapidly gearing up to add ships, said Philip C. Calian, president and chief executive officer.

At the start of this month, American Classic signed a letter of intent with Ingalls Shipbuilding in Mississippi that it expects will lead to contracts to build two passenger ships for Hawaii interisland cruises, at $400 million each.

"We have made great progress in the past month with Ingalls on our plans to build ships for the Hawaii market," Calian said. The planned 1,900-passenger ships already are attracting a lot of interest from travel agents and prospective travelers, he said.

The company hopes to have the first ship in service by 2002 and the second by 2004.

American Hawaii Cruises expects to use an existing foreign-built ship in Hawaiian waters in the meantime, after the construction contract is signed for the first new one.

They will be the biggest passenger ships built in the United States and the first U.S.-built cruise ships in more than 40 years.

The company said it also has received 10 bids from U.S. shipbuilders to construct 220-passenger vessels that Delta Queen wants to put into service in cruises on the East Coast and the West Coast. American Classic expects to sign a contract in a few months and the first coastal ship should be in service within two years after that, Calian said.