Norwegian's fourth Breakaway Plus ship bound for China

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Prices for the Norwegian Joy are at a 20% premium to the cruise line's fleet average, said NCLH's CEO Frank Del Rio.
Prices for the Norwegian Joy are at a 20% premium to the cruise line's fleet average, said NCLH's CEO Frank Del Rio.

Norwegian Cruise Line Holdings has decided to devote a second big ship to the Chinese market.

On a conference call for investors, CEO Frank Del Rio said that the fourth ship in the Breakaway Plus class will go to Asia.

The 4,000-passenger ship is due in 2019.

Norwegian is getting close to taking delivery of its first China-specific ship, the Norwegian Joy. The ship due in 2019 will be a sister ship to the Joy, Del Rio said.

Ahead of delivery, prices for the Joy are at a 20% premium to the Norwegian Cruise Line fleet average, Del Rio said. That gives the company encouragement to build a second version, he said.

The first Breakaway Plus ship, Norwegian Escape, currently sails from Miami. The third, Norwegian Bliss, is scheduled to debut in Alaska in the summer of 2018.

Del Rio said that 2017 is off to a solid start, with the best booked position in Norwegian history. Declines in occupancy and pricing in Europe last year have essentially reversed, although Norwegian's mix in Europe is skewed more toward the Baltic and Northern Europe than it was last year. In selling Europe, "clearly the North American consumer is more engaged this year," Del Rio said, lessening sales and pricing pressure on European markets to fill ships in the summer.

Del Rio said Norwegian got very good financial terms on four new ships ordered for 2022 through 2025, with the first two financed at a fixed interest rate of 2.7% and the second two at 1.25%.

Del Rio said bookings for the past eight weeks have been very strong, but the company hasn't based its guidance for 2017 on that strength continuing through the year. "We've seen that movie before," Del Rio said, referring to pricing expectations for its ships in the summer of 2016 that proved to be too rosy.

Last year, NCLH had net income of $633.1 million, up from $427.1 million a year earlier. Revenue advanced 12.2% to $4.9 billion.

For 2017, the guidance for earnings, adjusted for factors that Wall Street considers most relevant, is a range of $854.6 million to $877.4 million.

In 2016, adjusted net income was 22.6% higher than net income calculated according to GAAP (generally accepted accounting principles).

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