Travel Weekly's Cruise E-Letter: November 27, 2001

P&O PRINCESS CRUISES and Royal Caribbean Cruises Ltd. agreed to merge in a $5.9 billion deal that would create the world's largest cruise line. The new company, to be headquartered in Miami, will have a fleet of 41 ships with about 75,000 berths, plus 14 ships on order through 2005. Under terms of the deal, P&O Princess, the third-largest cruise operator in terms of berth capacity, would comprise 50.7% of the merged group, while Royal Caribbean, the second-largest operator, would hold 49.3%. London-based P&O Princess has a market value of approximately $3.11 billion; Royal Caribbean is valued at $2.89 billion. The deal is scheduled to close in the second quarter of 2002, pending regulatory approval. The merged company does not have a name but has been referred to under the code name RCP Cruise Lines. The merged company will be led by Richard Fain, currently Royal Caribbean's chairman and CEO, who will take the same post with the new company. Peter Ratcliffe, who was the CEO of P&O Princess, will become managing director and COO of the combined group. P&O Princess's Nick Luff will be the CFO.

CARNIVAL CORP., meanwhile, isn't likely to make a counter-bid for P&O Princess Cruises, Howard Frank, Carnival's vice chairman, said. Responding to speculation by UBS Warburg analyst Robin Farley that Carnival might launch its own bid for P&O Princess, Frank said, "My initial reaction is, this is something we probably wouldn't do." Nevertheless, a Carnival spokesman, claiming Frank's comment was taken out of context, said, "I think it's still too early to say."

GREEK ISLES specialist Royal Olympic Cruises reported earnings of $16.5 million on revenue of $57.1 million for the third quarter ended Aug. 31, compared with earnings of $17.2 million on revenue of $50.5 million for the same period a year earlier. Despite the earnings decline, the company, in a statement, called the results "a positive outcome when the situation in the eastern Mediterranean and especially in Israel and Palestine and taken into consideration." CEO Yiannos Pantazis called the results "positive signs that our sales and marketing initiative to attract customers from a broader base is starting to pay dividends."

NORWEGIAN CRUISE LINE'S 78,309-ton Norwegian Sun is 85% booked and 91,000-ton Norwegian Star is 95% booked for the first quarter of 2002, said Colin Veitch, the company's president. Speaking at the christening of both vessels in Miami earlier this month, Veitch said booking activity, in general, is experiencing a revival since Sept. 11. "The last couple of weeks we are ahead of last year's bookings in dollar terms," he said, and NCL also has more occupancy booked this year compared with the same period in 2000.

SIX CRUISE LINES agreed to pay penalties to the state for a variety of air-quality violations in the port of Juneau during the past two summers, said the Alaska Department of Environmental Conservation (DEC). The lines -- Crystal, Princess, World Explorer, Holland America, Carnival and Norwegian -- agreed to settlements ranging from $27,500 to $165,000. In all, the six companies agreed to pay $402,500. Under the agreement, a total of $175,000 in penalties was suspended, provided the companies do not violate smokestack emissions standards next summer. The six lines join Celebrity Cruises, which previously paid a $55,000 civil penalty for two violations in 2000. The state and Celebrity are still in discussions regarding alleged violations from last summer. Officials noted that the cruise lines have instituted a number of operational and equipment improvements that have reduced the number of incidents involving excess emissions.

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