American Classic
holds out hope for
return to Hawaii waters

The shipyard has halted work
on the firm's new vessels

---

By Russ Lynch
rlynch@starbulletin.com

American Classic Voyages Inc. said today it still hopes its Project America plan to build two big cruise liners for use in Hawaiian waters will continue.

In its first statement since the Mississippi shipyard building the cruise liners announced yesterday that it had stopped work on the project, the company said it hopes the "temporary suspension will not become a permanent termination of this landmark effort."

A spokeswoman at the company's head office in Miami read a short prepared statement over the telephone.

"Project America represents the first new passenger ships to be built in the United States in nearly 50 years. We have not wavered in our desire to see this historic project continue," said Fran Sevcik.

"We understand, although are disappointed by, Northrop Grumman's decision to suspend work on the ships. We remain hopeful that we and Northrop Grumman and the U.S. Maritime Administration can work together" to get the project moving again, she said.

Northrop's Ingalls Operation shipyard in Pascagoula, Miss., stopped work on the ships because the Maritime Administration withdrew its loan guarantees after American Classic file for Chapter 11 bankruptcy reorganization Friday and stopped almost all of its business operations.

Sen. Daniel K. Inouye, who introduced the special legislation that made Project America possible, said today he is trying to help.

"We're looking into that right now. Discussions are still going on between the federal Maritime Administration and the shipping company and the shipyard," he said in an interview.

"They haven't washed their hands and walked away" from the project, he said, but he acknowledged it is impossible to say right now whether the project might be saved.

With one of the $440 million ships 40 percent completed, there are "possibilities," although they might not involve Hawaii, Inouye said. He speculated the military might be interested in getting the ship completed for use as a rest and recreation facility for troops overseas.

He said it is understandable that the Maritime Administration is being cautious, given the poor condition of the nation's economy.

Northrop said it cannot go ahead with the ships without new financing and loans cannot be obtained without the federal guarantees.

About the only way any shipbuilder could get a loan guarantee now would be by special legislation, Inouye said.

Inouye said earlier he doesn't regret the special legislation he introduced that allowed American Classic to use a foreign ship in Hawaiian waters while it builds the two U.S. ships.

"We took a risk in 1997 when we passed the Project America legislation," Inouye said.

"We wanted to grow an American cruise line industry and an American capability in cruise ship building. I don't regret at all the actions we took and as far as I am concerned, this is not the final chapter on this topic."

In a statement issued yesterday, he said he hopes American Classic will work its way through its Chapter 11 bankruptcy reorganization and emerge stronger and more viable than it was.

American Classic's existing two Hawaii ships, the SS Independence and the ms Patriot, are tied up in Honolulu Harbor and the company has closed its Honolulu offices and laid off 1,150 Hawaii crew members and support staff.