Cruise line bosses welcome more passengers and predict bigger profits

//Cruise line bosses welcome more passengers and predict bigger profits

It’s beginning to look like the financial worst is over for cruise lines; good news for shareholders, less good for passengers looking for bargain basement fares.
Two days before he’ll be taking delivery of his latest billion dollar baby, Allure of the Seas, Royal Caribbean chairman Richard Fain predicted that the company will rake in record profits in 2011, helped by tighter cost controls and the increased capacity the new ship will bring.
He also forecast that 2010 earnings per share will reach $2.47, compared with a July prediction of $2.35. The figure for 2011 is expected to be higher than the previous record of $3.26 per share.
In the corporate language which Wall Street demands, Fain said: “Profitability momentum moving into 2011 is quite strong with our newest vessels performing exceptionally well and our management team controlling costs very effectively.
He managed to sneak in one appropriate reference when he added: “The economy is still tough, but even facing such headwinds our outlook is remarkably encouraging.”
The company’s shares rose by 14.5 per cent to $40.23 on the announcement, and encouraged by the figures shares in rival company Carnival Corporation rose by 4.3 per cent – up 114p to £27.68 – on the London Stock Exchange.
Meanwhile Norwegian Cruise Line, the third major player in the cruise industry, followed this week’s confirmation of a £1.2 billion order for two new ships with another announcement which has been expected for some time.
Currently part-owned by venture capitalists and a Hong Kong casino operator, the company has taken the first steps towards a public share offering.
Just like Royal Caribbean, NCL has added capacity – their biggest ship, the 4,100-capacity Norwegian Epic launched in the summer – and is keeping tight control of costs.
“Both improved ticket pricing across our fleet and the introduction of Norwegian Epic into regular service contributed to our strong results for the quarter,” according to a statement. The company said it continues to “keep a razor-sharp focus on our cost discipline and containment measures.”
Accepting that globally there are fewer new ships on the order books, NCL added: “We believe that improving leisure travel trends along with a relatively low supply outlook in the near term from the major North American cruise brands lead to an attractive business environment for our company to operate in.”
It might sound like financial jargon to you and me but it all means one thing: cruises are going to get more expensive next year. But don’t panic: they’ll still represent some of the best value-for-money holidays you can find.

By | 2017-06-15T16:00:18+00:00 27 October 2010|Cruise News|0 Comments

About the Author:

John Honeywell is a travel writer specialising in cruise ships and cruise travel. Winner of CLIA UK's Contribution to Cruise award 2017.

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