Aker Yards France confirmed last week that it was involved in a dispute with NCL Corp. over construction costs of Norwegian Cruise Line's F3-class ships.

Aker Yards, the Norwegian shipbuilder that was acquired by South Korea's STX Shipbuilding and is being renamed STX Europa, said it was in a dispute with NCL over the cost of the first of two $1 billion, 4,200-passenger F3 ships, which is slated for a 2010 delivery.

It was the first statement made by either party since rumors first surfaced this month that NCL was trying to cancel the order entirely.

"We regret that we have a situation with a dispute," Jacques Hardelay, president of Aker Yards France, said in a statement. "While we are in the middle of this process, it would not be correct to speculate on the outcome or on possible alternatives. Our focus is to find a solution."

NCL still had not commented on the situation as of last week. Earlier, it had issued a statement saying it would "not comment on commercial or legal disputes."

Aker would not say what the dispute was specifically about, but some industry insiders said that working with the yard in St. Nazaire, which has experienced several changes in ownership over the past few years, has been difficult for NCL. Others said that the problem stemmed from a significant number of changes made to the design after construction had started.

Other clients of Aker, such as Royal Caribbean Cruises Ltd. and MSC Cruises, were rumored to be looking at the ship's hull to determine if it could be transferred to their brands.

Negotiating for resolution

Aker would only say that while it was negotiating with NCL to resolve the dispute, it continued working on the first of the two F3 ships, which is approximately 25% complete, at its St. Nazaire yard.

Hardelay also said that such disagreements were not uncommon for complex projects such as the F3.

"Aker Yards France is in a process to find solutions to the dispute, including a dialogue with NCL and its involved subsidiaries, with the objective of establishing an agreement," Aker said.

The F3 ships are to be NCL's largest to date. At 150,000 gross tons each, the ships would be NCL's first vessels to break the 100,000-gross-ton mark.

The line has said that the ships' interiors would include innovative features such as cabins with curved walls and a bar where the tables, chairs and walls would be made of ice.

According to UBS equity analyst Robin Farley, a cancellation of the F3 order could actually benefit the cruise industry by slowing capacity growth in 2010 to 4.7%, down from historical growth averages of 7% to 8%.

"If the contract were canceled, this, combined with the strengthening U.S. dollar, could potentially lower shipyard newbuild prices for all cruise lines and reduce capacity increases in the market overall," Farley wrote.

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