MIAMI BEACH -- The signing of a contract by American Classic
Voyages to build two 1,900-passenger ships in the U.S., at a cost
of $880 million, signifies not only the rebirth of the luxury
shipbuilding industry in the U.S. but the spread of Caribbean-style
cruising to the Hawaiian islands, according to the company.
The historic order for two of the 72,000-ton passenger vessels
from Ingalls Shipbuilding of Pascagoula, Miss., marked the first
with a U.S. shipyard since Ingalls in 1958 delivered the Brasil and
Argentina to Moore McCormack Lines.
American Classic, parent company of Delta Queen Steamboat Co.
and American Hawaii Cruises, has an option for a third ship and may
negotiate for three more, according to Philip Calian, president of
American Classic, which is traded over Nasdaq.
He said American Classic, under the name Project America, has
been planning to build large cruise liners in the U.S. since 1997,
when Congress passed enabling legislation, called the U.S.-Flag
Cruise Ship Pilot Project Statute.
Project America will be renamed as a cruise line to operate the
new vessels, the first two of which are scheduled for delivery
early in 2003 and 2004, according to Rod McLeod, who last month was
named president and chief executive officer of Project America.
McLeod, a veteran industry executive who was executive vice
president of Royal Caribbean International for many years as well
as senior vice president of marketing for Carnival Corp., is
expected to head the successor cruise line to Project America.
"Our opportunity is to create a new cruise brand, which will be
introduced as a new style of cruising in the Hawaiian islands," he
told a press conference at the Seatrade Cruise Shipping Convention
here.
He said that contemporary, megaliner-style cruising is virtually
unknown in Hawaii, which attracts 7 million visitors a year.
However, the new cruise line will not be limited to itineraries in
Hawaii, he said, and will eventually operate elsewhere in the U.S.,
including possibly Alaska.
Within Hawaii, each ship built by American Classic in the U.S.
will enjoy exclusivity in the market from all other ships above 275
passengers for a period of 25 years, according to the 1997
Congressional legislation. That exclusivity made it worthwhile for
American Classic to take the risk of investing its equity in the
project, according to Calian.
In addition to the investment risk, the company will be
incurring several cost disadvantages by building and flagging ships
in the U.S., according to industry executives, who noted that
American Classic was paying a premium of around $100 million for
each of its $440-million ships, when compared with the cost in
European yards.
The company also will incur added costs by operating under U.S.
labor laws and paying U.S. corporate taxes, they noted.
But another advantage offered by the 1997 law, Calian said, was
the right to reflag foreign-made ships under U.S. registration
starting immediately -- and to operate them in Hawaii for 18 months
after the first U.S.-built ship is introduced into the islands.
In utilizing that right, he disclosed, American Classic is
currently seeking a ship to supplement American Hawaii's
39,000-ton, 840-passenger Independence, which sails for three-,
four- and seven-day cruises in Hawaii.
According to Calian, American Classic intends to retain the
American Hawaii brand name even as it launches a new cruise line to
operate the newly ordered ships.
Ingalls Shipbuilding, a major builder for the U.S. navy, said it
expects to make a $130 million investment in new shipyard
facilities to build the new ships. In addition, Ingalls, which is a
subsidiary of advanced-technology company Litton Industries, said
it has contracted with Finland's Kvaerner Masa shipyards to obtain
essential cruise ship expertise from that company, which is one of
the world's leading builders of cruise ships.
The new ships, which will have a total passenger capacity of
just over 2,200 persons, will feature a four-deck-high atrium, a
1,060-seat dining room, an 840-seat theater, a 590-seat cabaret
lounge and a uniquely Hawaiian outdoor performance stage, according
to McLeod. Of the 950 cabins, 77% will be outside; and 64% will
have private balconies, he said. Special features will be 85,850
square feet of open deck space and 2,100 square feet of conference
space.