AMCV reports slide in 2nd-quarter earnings

NEW YORK -- U.S.-flag operator American Classic Voyages (AMCV) reported a 592.3% decline in second-quarter earnings, losing $7.7 million during the period ended June 30, compared with a gain of $1.3 million for the same period in 2000. AMCV's revenues for the quarter were $78.1 million, a 28% increase over the second quarter of 2000.

In a conference call with analysts, chief executive officer Philip Calian attributed the earnings decline to "a weak Hawaii leisure market, poor cruise pricing and the general economic downturn."

However, Calian predicted a "marked occupancy improvement for the second half of the year in Hawaii."

Advance bookings for the Independence and the Patriot, both deployed year-round in Hawaii, are at 104% in the third quarter and 88% in the fourth quarter, with yields for the second half of the year 10% to 15% higher than in the second quarter, said the AMCV chief.

Calian expects American Hawaii Cruises' yields to be in the $115 to $120 range for the full year vs. previous estimates of $100 to $115.

"I don't see another cruise line looking forward to that kind of yield improvement," he said.

Yields on the company's Delta Queen river boats and coastal vessel will average between $195 and $205 for the year, said Calian.

AMCV may seek arbitration on 'Project America' delays

NEW YORK -- AMCV will seek to implement binding arbitration if ongoing discussions with Northrup Gruman/Ingalls Shipbuilding regarding "issues affecting construction" of the two 1,900-passenger cruise ships fail to result in an agreement, said Philip Calian, chief executive officer.

AMCV is building the ships with partial funding from U.S. government loan guarantees.

"It was clear to us the program [widely known as "Project America"] was running behind schedule. Northrup claimed we were responsible for the delays," Calian told analysts during Tuesday's conference call. "We continue to deny that we are responsible, and we have entered into discussions with Northrup to resolve the issue."

While work on the ships continues during the talks, Calian said the Mississippi-based yard may have underestimated the demands of the project after spending decades building naval vessels.

"The challenges of [Ingalls'] transition from naval work [to] the tighter construction deadlines of commercial work are proving very real," said Calian. "If we cannot resolve these issues, we intend to go to binding commercial arbitration. [But] we are hopeful that the product of these discussions will be new ships for Hawaii. We are extremely committed."

Calian said the ships, originally slated for delivery in Jan. 2003 and Jan. 2004, are behind schedule because of difficulties in Ingalls' "ability to fabricate and process steel, complete the outfitting process and design requirements and coordinate these processes."

Calian added, "They need to make a commitment to the contract they signed."

Officials at Ingalls were not immediately available for comment.


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