Travel agents react to bankruptcy sale of Windstar Cruises

Travel agents had mixed reactions to the news that Windstar Cruises' parent, Ambassadors International, filed bankruptcy April 1 and sold the line's assets to its largest creditor, Whippoorwill Associates.

At an April 5 hearing, the U.S. Bankrupcy Court in Delaware granted permission for Windstar and Ambassadors to maintain customer programs, meaning its ships will continue sailing and agency commissions and employee salaries will be paid.

Also, the bankruptcy court granted interim approval for both companies to arrange $5 million in new working capital.

However, several agents across the country said they now would be nervous about booking Windstar, operator of three masted ships: the Wind Spirit, Wind Star and Wind Surf.

"I wouldn’t be comfortable with that," said Dennis Sanchez of Sailaway Cruises in San Francisco. "With today’s economic downturn, anything like this would make you think twice."

Barbara Mielke, of USTravel in Seattle, agreed.

"I haven’t booked it lately," Mielke said. "I'd been noticing changes within the company, and when we see significant changes we take a step back and watch."

Among the changes she cited was staffing.

"We knew there were sales reps who had left, and there was nothing positive happening in their finances," she said. "I'm unlikely to put anyone on it now. Windstar was excellent when it was owned by Holland America Line, but it’s been struggling ever since then."

Carnival Corp., HAL’s parent, sold Windstar to Ambassador in 2007 for $100 million.

Windstar had faded from market awareness in the last couple of years, said Sanchez.

"It used to have a stronger presence," Sanchez said. "I haven’t been booking it in quite a while."

He attributed that largely to a lack of marketing: "We get blasted with information from other lines, but there have been no efforts to get the word out about Windstar. It’s just been out of mind."

The proposed sale of Windstar to Whippoorwill is expected to be completed in 45 days. During that time and after, Windstar CEO Hans Birkholz said, it’s going to be business as usual. (Click to read a Q&A with Birkholz.) 

"All of our cruises will operate as scheduled," he said. "The management team is staying in place, our commissions to travel partners will be paid. This is a very positive step for the company."

But some frontline sellers are saying precisely what Birkholz doesn’t want to hear: that they’re taking a wait-and-see attitude about Windstar’s future.

"I’d have to wait for the dust to settle and see if it’s working," said Bill Wodarski, owner of Above & Beyond Travel in Austin, Texas. Wodarski said he would have rather seen Windstar sold to a major cruise company.

"If it’s someone you know, it’s different," he said. "But a private investment company, I don’t know. It’s a bummer, because it’s a great product. I’ve sailed on it."

Agent Tom Kleefish said he would not want to regret putting clients on Windstar.

"I had an inquiry for Windstar recently," said Kleefish, who owns Cruise Planners/American Express Dallas. "I said, 'Look, I'm personally uncomfortable with it.' ... An astute agent looks at a situation like this and knows that it could come back to bite you."

On the other hand, not all retailers agreed that ownership by a private investment firm was a negative.

"Private ownership puts it in the same company as, say, Oceania," said Charles de L'Arbre, president of Santa Barbara Travel in Santa Barbara, Calif., a Virtuoso agency.

"It may very well be a strength. Windstar had been reported to be on shaky ground for two or three years. This probably helps its position. I don't think this would stand in the way of continuing to book them, but I'd strongly recommend that clients take out insurance in the case of supplier default."

However, buying insurance for a Windstar cruise might prove to be a problem. Access America, the largest travel protection provider in the U.S., said it removed Windstar from its supplier protection list in 2009.

Birkholz played down that setback, noting that a consumer who pays for a cruise with a credit card has built-in protection in the event of a default.

Windstar, de L’Arbre observed, has been heavily marketed by Costco, which offered hefty discounts. But the news isn’t good on that front either.

A reporter's call to Costco Travel revealed that the mega-retailer is no longer selling Windstar. A sales representative, who assumed he was speaking with a potential customer, said there had been "a lack of interest in Windstar," and he instead tried to sell the caller a Seabourn, Regent or Crystal cruise.

Whippoorwill has agreed to provide $10 million in new financing under a debtor-in-possession credit facility, which can be used to help support Ambassadors’ and Windstar’s operations during the sale process. Also, the bankruptcy court granted interim approval for both companies to arrange $5 million in new working capital.

With its current cash availability and this additional funding, Ambassadors said it believed it had ample liquidity to meet its obligations to Windstar’s customers, suppliers, agents and employees without interruption.

In addition to Windstar operations, and as part of the sale, Whippoorwill will acquire the assets of Ambassadors’ former Majestic America Line operations, which were discontinued in 2008. Related assets include the river ships Delta Queen and Columbia Queen.

Shelley Greenhaus, president of Whippoorwill, said in a statement immediately following the Chapter 11 filing that once Windstar is "free of its debt burden" it will be poised to grow its market share.

"In its short tenure, the existing management team has made significant strides in transforming Windstar's operations," Greenhaus said. "The various initiatives implemented in the past year have started to turn the business around."

Greenhaus had no further comment on the firm’s longer-term plans for Windstar. A reporter's calls were referred to Whippoorwill's general counsel.