Costa to build two ships for Europe

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NEW YORK -- Costa Cruises, Europe's largest cruise operator, signed a letter of intent to build two 105,000-ton ships at Italy's Fincantieri shipyard.

The 2,720-passenger ships will be built at Fincantieri's Genoa-based Sestri yard (where the famous Italian liners Rex and Michelangelo were built in the 1930s and 1960s, respectively), at a cost of $400 milion each. Delivery of the vessels is slated for late 2003 and late 2004.

Carnival Corp., in late September, completed the purchase of the remaining 50% of Costa owned by Airtours plc, which also is part-owned by Carnival.

In July, Costa launched 84,000-ton CostaAtlantica, the line's first new ship since CostaVictoria was launched in 1996.

With Carnival Corp. facing increasing competiton from other major suppliers with strong ties to Europe (particularly Princess Cruises' owner P&O, which has growing cruise brands in the U.K. and German markets), Carnival has clearly targeted Costa as the key to its growth on the increasingly cruise-conscious continent.

"The signing of the letter of intent represents Carnival's continuing strategy of expanding its cruise business in Europe," said Micky Arison, Carnival's chairman. "Costa is the largest cruise company in the fast-growing European market," said Arison, with "the newest and most modern cruise fleet in Europe."

Creating a strong European presence is more important than ever for major North American cruise operators.

According to statistics from the Cruise Lines International Association, major cruise operators have expanded their European deployment 14% since 1999 and 88.6% since 1987.

Not only are more North Americans cruise vacationers opting to sail in Europe, but European vacationers are increasingly opting for cruise travel and cruise suppliers are in the midst of the biggest building cycle in the industry's history

"Obviously the future of Europe is very good," said Dino Schibuola, president of Costa's North American division. While the Italian market is Costa's largest, "as we continue to expand the fleet we will make deeper inroads into other European markets and the U.S. as well," he said.

The new ships' size will not prevent them from calling at major European cruise ports, said Schibuola.

Indeed, Princess cruises' 110,000-ton Grand Princess spent the past summer in Europe, calling at ports including Barcelona, Spain; Venice, Italy; Istanbul, Turkey, and Monte Carlo, Monaco.

"We haven't set itineraries yet, but these ships are not much larger than CostaAtlantica," said Schibuola. "We should have no problem cruising in Europe."

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