NCL loses $28 million in first quarter

[Jason]

NCL Corp. Ltd. lost $28.1 million in the first quarter as rising payroll costs with its Hawai'i cruise ships and higher fuel costs more than offset an increase in revenue.

NCL's loss compared to net income of $6 million in the same quarter a year earlier. Revenue in the first quarter rose to $349 million, a 21.1 percent from the same period a year earlier.

NCL said net cruise costs per capacity day increased 6.4 percent, largely because of higher fuel costs as well as payroll growth associated with U.S. crew for NCL America's Hawai'i interisland cruises. The Hawai'i cruise operations began with one ship in June 2004 and will grow to three ships with the Pride of Hawai'i arriving here this month.

"Consistent with our expectations, the first quarter continued to feel the effects of higher fuel costs and the impact of significant start-up costs associated with our NCL America operations," said Colin Veitch, president and CEO of NCL Corp. "While the NCL America start-up costs continue to be challenging, we expect to see some stabilization of these costs after Pride of Hawai'i begins revenue service and our three-ship deployment is complete."

Miami-based NCL Corp oversees the operations of Norwegian Cruise Line, NCL America and Orient Lines.

Source: The Honolulu Advertiser

[JoeyandDavid]

As I interpret this press release; they are saying, they lost $28.1 million in the first quarter mainly due to rising payroll costs with its Hawai'i cruise ships and higher fuel costs more than offset an increase in revenue.

They say they will become profitable again when they have full deployment (three ships), in the region.

I have to ask … Do they expect that payroll will flatten with an American crew. Do they feel Fuel Prices will stabilize?

Could someone explain how a third ship will turn a 28.1 million dollar loss around?

[Mebert]

JoeyandDavid,

They probably mean an increase in fares to offset expenses.

[JoeyandDavid]

But correct me if I am wrong ... dont they stand a chance of pricing themselves out of the market?

[rogue]

What they're saying is that they lost a significant amount of money from the start-up costs from their Hawaiian operation which includes a significant amount of money from the third ship in their American fleet. Since this ship has yet to produce any revenue, it's a giant drain. When the ship begins to bring in the revenue that they expect it will, their costs will begin to decrease.

[JoeyandDavid]

we will see Howard ;)

[rogue]

i can't disagree with you. I think there is a major flaw with the whole project. I think that NCL was counting on Americans going with an American company, but with the name Norwegian Cruise Line, most people don't really think of it as an american company (even if you do add "America" to the name). People go on cruises for certain things such as good food and good service, and from the reviews I read, people are not satisfied they are getting either.Their prices will go up.

[Dan]

Part of their expense in Hawaii right now is that the 2 current ships are being over-staffed to train crew for the third ship. In fact they probably have those crew spread over the entire NCL fleet, but still they are getting paid.

Plus, I don't know if they are going to get the higher rates from passengers that they need to pay the higher US payroll. People don't much care that it is a US-flagged vessel, staffed by Americans. If it going to cost more than cruises sold by Carnival, Princess or RCI, then NCLA is going to have problems competing.

[JoeyandDavid]

I think you hit the nail Dan.. That’s the problem.... I don’t think NCLA can do it......(unless they hire illegal aliens) :grin: