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American Classic
Voyages loses $6 mil amid
marketing, renovation
expenses

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Star-Bulletin staff

Expenses from renovating the cruise ship ms Patriot and introducing it to the Hawaii cruise market helped produce a $6 million fourth-quarter loss at American Classic Voyages Co., the company reported today.

Also contributing to the loss were expenses for marketing other ships that had not yet gone into service.

Chicago-based American Classic reported start-up costs of $3.9 million in the quarter ending Dec. 31, primarily from the Dec. 9 beginning of the Patriot's round-the-islands cruises.

The company also spent $2.8 million in the quarter in pre-marketing costs for other vessels. The net loss in the year-earlier quarter was $33,000. The fourth-quarter per-share loss was in line with analysts' estimates at 28 cents, vs. less than one cent a share a year earlier.

American Classic's stock closed down 75 cents, or 4.6 percent, to $15.50 today on the Nasdaq.

Revenues in the latest quarter were $61.9 million, up 11.5 percent from $55.5 million in the year-earlier period.

The company said year-over-year comparison of its Hawaii business was distorted by the 140 percent capacity increase from bringing in the 1,212-passenger Patriot, the first vessel under its new United States Lines brand, in addition to the existing 860-passenger SS Independence, which operates under the American Hawaii Cruises flag.

Discounted fares to promote the Hawaii market also clouded the picture.

The company said its fares for Hawaii bookings for the first half of 2001 are running $172 per passenger per night, down 24 percent from $131 a year earlier.

"We have implemented aggressive pricing structures across all of our brands, which can be adjusted quickly as demand changes," said Phil Calian, chief executive officer. He said that while the overall fare income for the first half of this year will be lower than it was in the first half of last year, the company has the flexibility to raise fares in the second half as demand increases.

For all of 2000, American Classic reported a loss of $10.1 million, or 49 cents a share, on revenues of $221.6 million, compared with a 1999 loss of $1.75 million, or 10 cents a share, on revenues of $208.7 million.

American Classic is the largest owner and operator of U.S.-built passenger ships and will get a lot bigger. The United States Lines subsidiary will bring a new 1,900-passenger liner into the Hawaii market in early 2003 and another in 2004.

Its Delta Queen Steamboat Co. operates cruises on U.S. inland waterways and it has another subsidiary, Delta Queen Coastal Voyages, operating on the mainland coasts. The coastal services brought two new vessels into service last year and will add a third in May.