Princess Cruises post profits up 8%

NEW YORK-London-based P&O's Princess Cruises division posted an operating profit of $168.4 million for the six months ended June 30, up 8% over the same period in 1999, according to a P&O interim report released Sept. 26.

Capacity for the six months was up 19% for the period, due primarily to the introduction of 1,950-passenger Ocean Princess, said Sterling, and occupancy remained high at 99.0%

Higher fuel prices were blamed for adding $19 million in costs during the period. Princess' net revenue yields for the period fell 1% compared with 1999 results.

Lord Sterling, P&O's chairman, said year 2000 revenue yields in Europe were ahead of 1999 results while yields in Alaska remained flat and Caribbean and Panama Canal yields were lower due to intense price competition. Fourth-quarter market conditions would be "challenging," he said, and revenue yields for 2000 would decline 4% compared with 1999 figures.

Sterling also warned that cruise-rate discounting and low valuations of cruise stocks would likely continue into 2001. "The rate of revenue reduction will be less," in the first quarter of 2001, he said, "and for 2001 as a whole.

We remain cautious, but there are a number of positive factors." Indeed, Sterling said P&O's previously announced de-merger of Princess Cruises, which will make Princess a separate company with a U.S. stock exchange listing, was on schedule to proceed on Oct. 23.

P&O will also buy out the remaining 49% of Aida Cruises, the German operator of which P&O acquired 51% last November. Sterling said P&O will also transfer 1,590-passenger Crown Princess to its German fleet in May 2002.

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