NCL’s Q2 Results – Income Up, Revenue & Yields Down
Open Jaw

Norwegian Cruise Line has reported results for its second quarter ended June 30, 2009. EBITDA in the period improved by 87% to $84.2 million versus $45.1 million for the same period in 2008. Net income in 2009 rose to $15.4 million on revenue of $478.4 million compared to a net loss of $27.0 million on revenue of $525.0 million in 2008. These improvements in earnings were achieved despite a decline in Net Revenue in the second quarter of 9.3%. This decline resulted from a 7.7% decrease in Net Yield and a 1.8% decrease in Capacity Days. The decrease in Net Yield was primarily due to continued weakness in passenger ticket pricing versus 2008 and was partially offset by an increase in Net Yield from onboard and other revenue. The decrease in Capacity Days resulted from the departure of Norwegian Dream from the Company's fleet in November of 2008. Occupancy Percentage for the second quarter of 2009 was 109.6% compared to 107.9% in the prior year and, following the trend in the first quarter of 2009 and is the highest for a second quarter since NCL introduced the Freestyle Cruising concept.

Net Cruise Cost per Capacity Day decreased 20.5% in the second quarter of 2009 compared to the same period in 2008. The decrease in these costs is primarily attributable to lower fuel costs across the fleet, lower crew payroll costs per Capacity Day primarily due to cost savings from the re-flagging of Pride of Hawai`i and Pride of Aloha from the U.S. flagged fleet to the international fleet as well as cost control initiatives. For the quarter, average fuel costs decreased 38.2% to $356 per metric ton from $576 per metric ton in 2008.

Interest expense, net of capitalized interest, decreased to $26.6 million in the second quarter of 2009 from $34.4 million in 2008, primarily due to lower average interest rates in the period, partially offset by an increase in average outstanding borrowings.

"I am very pleased with our performance this quarter especially given the current economic climate. Despite the weakness in ticket pricing, we are continuing to achieve improvements in our earnings and have begun to demonstrate consistency in our performance," said Kevin Sheehan, chief executive officer of Norwegian Cruise Line. "Our continuing razor focus on all aspects of our operation, from revenue management to shipboard and shoreside operations, has resulted in record-setting EBITDA for the quarter and an enormous turnaround from our performance just a year ago. Our entire organization has rallied together to achieve these excellent results. I am very proud to be part of this great organization."

Capacity for the remainder of 2009 is substantially booked, although at prices below last year, particularly in the third quarter. "Although I believe we are moving beyond the low point with regard to ticket pricing, we must maintain our diligence in controlling costs and carrying out our strategic initiatives," said Sheehan.

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