NCL records 43.3% drop in bunker costs

Decrease in fuel costs helps cruise line achieve a rise in net income.

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Updated on 22 May 2009 08:04 GMT

Norwegian Cruise Line (NCL) has reported a significant decrease in fuel costs of 43.3 percent during the first quarter of 2009 compared to the same period last year, as the company's profitability rose despite a decrease in net revenues.

NCL said net cruise costs per capacity day fell 14.7 percent in the first quarter of 2009 compared to the first three months of 2008. This was said to be primarily attributable to lower fuel costs across the fleet and cost savings from the re-flagging of Pride of Hawaii and Pride of Aloha from the U.S.-flagged fleet to the international fleet.

The average fuel cost per metric tonne during the first quarter declined from $526 in 2008 to $298 in 2009, a decrease of 43.4 percent.

Meanwhile, net income rose to $5.2 million in 2009 versus a net loss of $145.0 million in 2008. These increases in profitability came despite a decrease in net revenues for the first quarter of 15.5 percent.

Net revenues declined primarily due to a 7.9 percent decrease in net yields and an 8.3 percent drop in capacity days. The decrease in net yields resulted mainly from weakness in passenger ticket pricing offset by an increase in net yields pertaining to onboard and other revenues.

NCL said the decrease in capacity days resulted from the departure of Marco Polo and Norwegian Dream from the company's fleet in March and November of 2008, respectively. Occupancy Percentage for the first quarter of 2009 was 106.9 percent compared to 106.4 percent in the first quarter of 2008, and is the highest for a first quarter since the introduction of the company's first modern, purpose-built Freestyle Cruising ship less than ten years ago.

Commenting on the results, Kevin Sheehan, chief executive officer of Norwegian Cruise Line said "Although our results reflect the weakness in the overall economy, I am pleased with how our strategic initiatives have softened the impact and continue to position us for the future."

"The restructuring of our Hawaii operation, as well as our focus on our cost structure, have resulted in significant savings which are reflected in our improved EBITDA result. Our fleet renewal program continues with the scheduled departure of the oldest ship in our fleet, Norwegian Majesty, in October of this year, and we continue to eagerly prepare for the 2010 delivery of Norwegian Epic, which goes on sale to the general public on May 21, 2009."

Looking ahead, the company said although pricing continues to be soft, booking levels continue to remain strong and occupancy rates should equal or exceed those of last year.

"As we continue to navigate through this difficult economy, we see signs of improvement. An expanding booking curve, however slight, as well as record occupancy levels are signs that the marketplace is receptive to cruising as a vacation choice. Although we continue to be disappointed with the current pricing environment, we are optimistic that we are introducing new people to our brand and bringing in new cruisers to the market," said Sheehan.