Princess Q3 profits gain on flat revenues

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NEW YORK -- P&O Princess Cruises, the London-based parent of Princess Cruises, reported third-quarter profits of $163 million on revenues of $776 million compared with profits of $150.6 million on revenues of $778.1 million for the same period in 2000.

But Princess' gains came from the tax man rather than its operations: pre-tax profits were $171.5 million vs. $175 million for the period last year. The reason for the difference was that P&O Princess changed several of its ships from Liberian to British registry near the end of 2000 and benefitted in 2001 from the British government's more lenient tax code for shipping lines.

Third-quarter occupancy for the company's North American fleet, which accounts for 75% of P&O's business, was 99.9%, compared with 101.6% for the same period in 2000. Net revenue yields were 5% below the third-quarter 2000 totals.

P&O's chief executive officer, Peter Ratcliffe, said P&O Princess saw an overall decrease of 8,000 bookings in the two weeks following the Sept. 11 attacks. P&O had historically averaged a gain of 12,000 bookings during those weeks, he said.

"The Sept. 11 events clearly had an impact," Ratcliffe said in a conference call with analysts. "There is no way to gauge the medium-term impact it will have."

Ratcliffe said promotional rates offered in the wake of the attacks are stimulating bookings. P&O also is well-positioned for the fourth quarter. "Cancellations have not been as high as one might have expected in the circumstances," said Ratcliffe.

But the earnings outlook for 2002 is "uncertain," said Ratcliffe, and cruising's January to March "Wave" period will be more important than ever in driving the company's overall performance in 2002. "The political and economic situation will determine the success of the Wave period," he said.

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