NCL Drags Down Star Cruises in First Half of 2008

Star Cruises reported that the company narrowed its losses in the first half of 2008, but that NCL Corp.’s performance dragged down results. Star owns 50 percent of NCL. Star lost $49.7 million in the first half of this year, compared with $56 million during the same period of 2007. The company said its NCL operations lost $85.5 million.

Star’s results included a $71.8 million gain realized when Apollo Management acquired 50 percent of NCL. Star said NCL’s revenue during the first half of 2008 increased 4.7 percent, mostly due to increased ticket prices, along with higher onboard revenue and occupancy.

NCL had an 8 percent increase in net revenue yields and a 3.1 percent decrease in capacity from losing the Norwegian Wind, Norwegian Crown and Marco Polo. The Wind went to Star as the SuperStar Aquarius, and the Crown and Marco Polo were sold.

NCL’s ship-operating expenses increased 9.5 percent over the same period of 2007, mainly due to higher fuel prices, which shot up 58.7 percent. The company’s higher fuel costs were partially offset by lower payroll expenses related to the reduction of capacity in NCL’s U.S.-flagged Hawaii operations.

For the Star Cruises brand, revenue was up 5.2 percent on a 29.2 percent increase in capacity. Revenue yield and occupancy levels decreased (occupancy was at 78.8 percent, compared with 84.5 percent in the first half of 2007). In addition, Star said its ships brought in lower gaming revenue.

Operating expenses were up 7.4 percent, mainly due to higher fuel costs, which accounted for 24.7 percent of the ships’ operating expenses, compared with 19.6 percent in 2007.