Hawaii costs weigh on NCL Corp.

Norwegian Cruise Line's parent swung to a loss of $28.1 million in the first quarter as rising fuel prices and costs of expanding its Hawaii operation continued to drag on earnings.

Revenue, though, rose 21.1 percent to $422.5 million from $349 million.

NCL Corp., which had net income in the year-earlier quarter of $6 million, said 37.1 percent growth in payroll and related expenses was linked to the cost of the U.S. crew used in the company's interisland cruises. The first-quarter results also included a foreign-exchange transaction loss of $5.1 million compared with a gain of $4.3 million in the first quarter of 2005.

"While the NCL America startup costs continue to be challenging, we expect to see some stabilization of these costs after Pride of Hawaii begins revenue service and our three-ship deployment is complete," said Colin Veitch, NCL's president and chief executive.

NCL operates three U.S.-flagged ships -- the Pride of Aloha, the Pride of America and the Pride of Hawaii. The Pride of Hawaii, which was delivered in April, won't begin service until the end of this month, though NCL began absorbing expenses for the crewing of the ship during the first quarter, NCL said.

The company said fuel costs jumped 52 percent in the quarter, averaging $337 per metric ton from $222 per metric ton a year earlier.

"The first quarter also felt the effects of softer pricing in the winter/spring Caribbean, both from southern ports and New York," Veitch said.

NCL said booking levels, adjusted for a 17 percent increase in capacity, are running slightly below this same time last year but pricing continues to be ahead.

The company said demand is not as robust as last year, suggesting that consumers may be feeling some impact of higher fuel prices and increased interest rates.

NCL said that with the addition of the 17 percent capacity, it has a better year-over-year mix of higher-yielding itineraries such as Hawaii and Europe. The company said it expects net yields to increase about 5 percent for the full year over 2005.