Cruise line's loss widens to $60.8M
NCL Corp. says Hawaii operations contributed to the quarter's net loss
Norwegian Cruise Line's parent posted a wider first-quarter loss than last year on continued strain from higher interest rates, the weakening U.S. dollar and price pressure in its Hawaii operations.
NCL Corp. said it had a net loss of $60.8 million compared with $28.8 million a year earlier. Revenue increased 15.1 percent to $490.8 million from $426.6 million.
"Our first-quarter results reflect the challenges we have faced in Hawaii and that we will continue to face for the majority of the year," said Colin Veitch, president and CEO of NCL.
NCL, a Miami-based unit of
Star Cruises Ltd. of Hong Kong, said in April it was sending Pride of Hawaii, its largest and newest U.S.-flagged ship, to Europe. The move is meant to bolster pricing in the Hawaii market.
NCL operates three U.S.-flagged ships -- the Pride of Aloha, the Pride of America and the Pride of Hawaii -- for interisland cruises in Hawaii.
Norwegian Cruise Line's parent widened its first-quarter loss from a year ago as it continued to feel the impacts of higher interest rates, the weakening U.S. dollar and price pressure in its Hawaii operations.
NCL Corp. said yesterday it had a net loss of $60.8 million compared with $28.8 million a year earlier.
Revenue, though, increased 15.1 percent to $490.8 million from $426.6 million.
NCL, a Miami-based unit of Star Cruises Ltd. of Hong Kong, operates three U.S.-flagged ships -- the Pride of Aloha, the Pride of America and the Pride of Hawaii -- for interisland cruises in Hawaii. The Pride of Hawaii is scheduled to leave the islands in February.
Prior to the latest earnings report, NCL had announced several measures designed to improve the pricing of NCL America's product, further improve its product delivery and reduce crew turnover, said Colin Veitch, president and chief executive officer of NCL.
NCL, which also blamed Hawaii operations for its widening corporate losses last quarter, announced in April that it would stem the financial bleeding by sending Pride of Hawaii, its largest and newest U.S.-flagged ship, to Europe, to be renamed Norwegian Jade.
Robert Kritzman, executive vice president and managing director for NCL America, had said that the change is meant to bolster pricing in the Hawaii market, which saw dramatic downturns after Pride of Hawaii joined the fleet last summer.
"Our first-quarter results reflect the challenges we have faced in Hawaii and that we will continue to face for the majority of the year," Veitch said. "However, despite the challenging operating environment and the impact on pricing of sharply increased capacity in Hawaii, we remain committed to the Hawaiian market and believe that the various measures announced since the fourth quarter of last year will collectively result in a significant improvement by the same time next year."
The absence of start-up costs in 2007, combined with a decrease in crew turnover on the U.S. fleet resulted in lower training and recruitment costs for the company.
Average fuel costs during the quarter decreased 3.3 percent to $333 per metric ton from $345 per metric ton in 2006.
NCL's financial woes spilled onto the balance sheet of parent Star Cruises, which operates under its own brand as well as NCL, Orient Lines and Cruise Ferries. Star said yesterday its own first-quarter net loss widened because heightened competition forced the company to lower ticket prices.
Net loss in the first three months was $79.4 million, compared with $35.1 million a year earlier, the company said in a statement to Hong Kong stock exchange yesterday. Sales rose 10 percent to $565 million.
Star said NCL "continues to experience a very competitive pricing environment, especially in the Caribbean and Hawaii."
The company, controlled by Malaysia's Genting Bhd., is battling larger rivals including Royal Caribbean Cruises Ltd. and Carnival Corp. for market share.
Bloomberg News contributed to this report.