Starting isle cruises drags down NCL's earnings

NORWEGIAN Cruise Line's parent said yesterday its net income fell 9.3 percent in the third quarter largely because of expenses associated with its expansion in Hawaii.

NCL Corp.'s earnings fell to $36.6 million from $40.3 million a year earlier while revenue gained 20.5 percent to $495.3 million from $410.9 million.

"The expansion of our Hawaii operations and the rising price of fuel negatively impacted the quarter's results," said Colin Veitch, president and chief executive of NCL.

NCL, based in Miami, operates two U.S.-flagged ships -- the Pride of Aloha and the Pride of America -- for interisland cruises in Hawaii. Another vessel, the Pride of Hawaii, is scheduled to be delivered in April.

The cruise line operator said its growth in payroll and related expenses were primarily attributable to increased costs associated with the U.S. crew used in the interisland cruises. The Pride of Aloha began sailing in June 2004 and the Pride of America started earlier this year.

NCL said its net cruise costs per capacity day during the quarter rose 8.8 percent from a year earlier, with payroll and related expenses accounting for 4.7 percentage points. Average fuel costs during the quarter increased 44 percent to $297 per metric ton from $206 per metric ton.

"Despite these cost pressures, our year-to-date operating income per capacity day increased a very encouraging 19 percent," Veitch said. "We are excited about our future as we continue to focus on our strategy to renew our fleet and expand our Hawaii operations."