Despite the financial challenges that face parent company Ambassadors International, Windstar Cruises is "probably in a better position right now than we’ve been in a year," said Windstar President Diane Moore.
Moore was responding to a Travel Weekly report about Ambassadors' going-concern warning in its first-quarter earnings report.
The company said it might be forced to extend vendor payment terms, suspend or curtail planned operations or seek bankruptcy protection "if we are not able to sell our remaining non-Windstar Cruises assets, raise additional financing and/or renegotiate existing debt obligations."
Moore noted that reporting such risks is a formality required by the Securities and Exchange Commission, adding that the statement did not necessarily reflect the current reality at Windstar.
"We, as a public company, have to disclose any risk. It doesn’t mean it’s eminent," said Moore.
In February, Ambassadors announced plans to sell off all assets except Windstar. Subsequently, the company sold off most of its travel and events division in April. In May, Ambassadors sold its marine group.
What’s left is the three Windstar yachts that are all in operation, a portion of the events division and river cruise ships that until last fall sailed as part of the now-defunct Majestic America Line.
The company handed over the Empress of the North and the American Queen to the U.S. Department of Transportation’s Maritime Division last year, four of the river ships are in drydock and the Delta Queen has been leased out for use as a hotel.
A plan was laid out in February to unload all but Windstar and focus efforts there. Windstar is now executing on that plan, Moore said.
"We’ve got our 2010 schedules in place," Moore said. "We are current on commissions. We pay our
bills. We’re in compliance with our debt."
She added that the week ended May 16 was the highest net revenue week, after cancellations, that Windstar has booked since August 2008.
Windstar reported an 87% increase in sales for the five weeks leading up to April 27, compared with the same period in 2008, resulting in the decision to open its call center on Sundays to handle demand.
When the decision to wind down its other businesses was announced, Ambassadors decided to reduce overhead by moving its corporate headquarters from Newport Beach, Calif., to Seattle, where Windstar is based.
The move, currently under way, includes human resources, IT and accounting departments.
During the process, Ambassadors has overhauled its executive team. Cruise veteran Art Rodney is interim CEO, replacing Joe Ueberroth. Mark Detillion is CFO, replacing Laura Tuthill.
Moore emphasized that despite the changes at Ambassadors, Windstar management "has not varied at all."
"Nobody’s running to look for new jobs," she said. "We believe in the product and the product delivery, and we are focused on keeping it that way."
Windstar, however, faces challenges.
Ambassadors reported that Windstar's first-quarter revenue fell $4 million, a 16% drop from the year before, Moore said. Of that drop, approximately 10% was due to lower occupancy, and 6% to lower yield, Moore said.
Windstar reported 85% occupancy in the first quarter, compared with 95% in the first quarter of 2008.
Consequently, the line is taking steps to reduce costs and boost revenue.
Ambassadors said it has identified three major areas of improvement for Windstar: increasing sales and marketing efficiencies to drive more sales; increasing onboard margins and guest satisfaction by replacing and/or directly managing onboard services; and reducing operational costs by renegotiating key contracts.
For example, Moore said, Windstar has brought the management of its onboard shops in-house, and plans to re-evaluate other vendor contracts in the coming months.
Windstar’s marketing strategy is predominantly to use direct mail with key national accounts.
"We’ve been very focused on finding ways to operate more efficiently," Moore said.
Windstar owns and operates three luxury yachts: Wind Star, Wind Spirit and Wind Surf. The line offers cruises in the Caribbean, Europe, Costa Rica and the Americas, and the Greek isles, plus transatlantic cruises.