OSLO, Norway -- Norwegian Cruise Line Chairman Geir Aune said the
company in 1999 expects to resume forward momentum after incurring
unexpected losses in 1998. Aune, who took over NCL's day-to-day
operations on Jan. 1, said NCL has "taken actions to solve
problems" connected with the losses.
As reported, NCL Holding, the parent company of NCL, reported
losses for the fourth quarter of 1998 as well as the entire year,
disappointing analysts' expectations of a profit. NCL said it lost
$12 million in the fourth quarter, compared with a loss of $7.2
million in the period a year earlier.
NCL said its full-year loss was $2.6 million, compared to a $1
million profit in 1997. Financial analysts had been predicting that
the industry's fourth largest operator would earn as much as $11.8
million in 1998, a year that produced record profits for the
industry's three largest companies.
NCL's losses came in spite of a 15.6% growth in capacity during
the year and a 17.7% increase in revenues to $767.6 million,
including a 16.1% increase to $192.2 million during the fourth
quarter. But NCL said that its operating expenses in 1998 increased
by almost $50 million, due to the capacity expansion of the fleet,
greater advertising outlays and an increased level of commissions
for travel agents above industry norms.
Fleetwide load factors also incurred startling declines, the
company reported, dropping from 103.2% to 95.9% in 1998-and to
89.9% in the fourth quarter, compared to 99.4% in the period a year
earlier. NCL attributed the drops to major increases in pricing,
which increased its net yields per passenger by 11.9% during
In addition to overall increases in expenses, NCL reported that
two ships were responsible for significant losses last year: the
Norwegian Star and the Leeward. The mechanically troubled Norwegian
Star lost $17.5 million in its Houston program before it was
transferred to NCL's Australian joint venture, Norwegian Capricorn
Line. The Leeward, a small chartered ship sailing from Miami on
short cruises to the Bahamas, lost $3.6 million last year and will
be returned to its owner in October. In addition, the Norway
incurred low load factors on some of its European itineraries last
year, the company disclosed.
Aune listed a number of steps to overcome the problems incurred
last year. Among these, he cited a change in the Norway's 1999
European itineraries and a shortening of the season there; an
expected small profit from the Norwegian Sea, the Norwegian Star's
replacement in Houston, and the expansion of the company's group
passenger base for the fourth quarter of 1999.
NCL also reported that it has reduced its agent commission
levels "closer to those of competitors."
In another development, NCL noted that it achieved record new
bookings during the first two months of 1999, following the
announcement of a fleetwide sale late last year, generating a 26%
increase in net ticket revenues. That means that 76% of its
budgeted revenue for 1999 has now been booked, compared to 69% at
the equivalent time in 1998.
NCL said other positive developments for 1999 include the
lengthening of the Norwegian Majesty, which will reenter the fleet
in April; the delivery of the new Norwegian Sky in August;
preparations for an additional Orient Lines ship in 2000.
The line also expects to increase its capacity by 10% this year
and 8% next year, while increasing the percentage of capacity built
since 1992 from 39% to 54%.