NCL faces 'challenging road ahead' in Hawaii
NCL Corp., parent of Norwegian Cruise Line, said yesterday it has returned to profitability, but its president noted "a challenging road ahead" in Hawaii, where the company operates three U.S.-flagged ships.
The Miami-based cruise-ship operator posted $49 million in profit on revenues of $592.3 million during the third quarter, versus net income of $41.2 million on revenues of $495 million in the same quarter last year.
The company, which operates the Pride of Aloha, the Pride of America and the Pride of Hawaii in the islands, lost $35.1 million in the second quarter of this year, citing the costs of expanding its fleet in Hawaii.
Such costs, as well as crew turnover and fuel prices, continued to press on the parent's finances in the third quarter, said Colin Veitch, president and chief executive officer of NCL.
The period was the first full quarter in which all three ships were operating in Hawaii, which meant the Hawaii operations accounted for a larger portion of the company's overall fleet.
"In the near term, we still have a challenging road ahead of us in Hawaii, but with the stabilization of our NCL America fleet we expect to achieve operating improvements in 2007," Veitch said.
The company said strength in its international business offset downward pricing pressure in Hawaii, which was driven by a 64 percent increase in capacity from adding its third ship, the Pride of Hawaii, as well as increased costs of providing air travel to Hawaii customers.
Fuel prices in the most recent quarter averaged $368 per metric ton, up 20 percent from $306 per metric ton in the third quarter of 2005, pushing overall fuel costs up by $10.1 million. But the company was able to cut marketing, sales and administrative costs, it said.
Overall, NCL said gross yields increased 3.9 percent from the third quarter of 2005, but warned that that figure is likely to drop next quarter.
Bookings are closer to the sailing date than at the same time last year, and NCL said it sees pressure on prices continuing.