HONOLULU -- American Classic Voyages (AMCV) is running into trouble
with its plan to bring two new ships to Hawaii in 2003 and 2004 for
interisland cruises.
Deadlines are a key issue: AMCV said it will seek binding
arbitration with Mississippi-based Northrup Gruman/Ingalls
Shipbuilding if the two fail to reach an agreement on a timetable
for construction of the two ships.
Nevertheless, AMCV officials reassured investors during an
earnings conference call that business is turning around following
heavy second-quarter losses.
During that call, chief executive officer Philip Calian said
AMCV and its builder are blaming each other for the construction
delays for the shipbuilding project, known as Project America.
"Northrup claimed we were responsible for the delays. We
continue to deny that we are responsible," Calian said, adding, "we
are extremely committed" to getting the ships into the market.
A spokesman for Northrup Gruman/Ingalls Shipbuilding declined to
comment on the dispute, saying that it would be "inappropriate" in
light of the ongoing negotiations.
Meanwhile, Sen. John McCain (R-Ariz.), in a letter to President
Bush, criticized AMCV's Project America shipbuilding program for
being significantly over budget and far behind schedule.
McCain said the $1.1 billion project to build two
1,900-passenger U.S.-flag ships for the Hawaii market is "in
serious trouble" and said taxpayers could end up footing the bill
because construction of the ships is being funded in part through
government loan guarantees.
AMCV reported a loss of $7.7 million during the quarter ended
June 30, compared with a gain of $1.3 million for the same period
in 2000.
The decline was particularly striking considering the U.S.-flag
operator's revenue for the quarter was $78.1 million, a 28%
increase compared with the second quarter of 2000.
Calian attributed the earnings loss to a "weak Hawaii leisure
market, poor cruise pricing and the general economic downturn."
However, Calian predicted a "marked occupancy improvement for
the second half of the year in Hawaii."
Bookings for Hawaii ships, the Independence (run by AMCV's
American Hawaii Cruises) and the Patriot (run by AMCV's United
States Lines), are at 104% in the third quarter and 88% in the
fourth quarter, according to the line.