From the Newsletter 5/2/08

RCL Q1

In its recent Q1 earnings call, Royal Caribbean Cruises (RCL) executives provided earnings guidance for the year from $2.85 to $3.00 per share, compared to the $3.20 to $3.40 guidance given in its Q1 earnings call in January, and from $0.40 to $0.45 for Q2.

According to RCL, pricing is up for Q2, Q3 and Q4 of this year, and both bookings and pricing are running ahead for Q1 2009 on a year-over year basis.

Wall Street remains jittery, however, in light of the faltering American economy and higher fuel prices affecting Europe as well, and RCL shares were trading below $32 at press time, compared to a 52-week low/high of $30.11/$45.17. The average 12-month price target has also been reduced to $41.67 from $45 to $50 a year ago.

AIDAbella

The AIDAbella was named by supermodel Eva Padberg at the Port of Warnemunde-Rostock this past week.  The Bella is the second of five new AIDA ships being built by Meyer Werft and sister ship the AIDAdiva, which entered service last year. The AIDAluna is next, scheduled to enter service in 2009. AIDA, which is the fifth largest Carnival brand, and dominant in the German market, will be able to carry some 360,000 passengers in 2008, growing its passenger capacity to nearly 800,000 by 2012, according to estimates by Cruise Industry News.

TUI Start Up in 2009

TUI Cruises is set to launch service in spring 2009 with the Celebrity Cruises'  Galaxy which will be transferred to the German brand and renamed, in the joint venture between TUI and Royal Caribbean Cruises. The 1996-built Galaxy will undergo a 50 million euro rebuild during a two-month drydock, according to TUI, during which more balconies will be added to the outside staterooms.  TUI Cruises' President Richard Vogel said that the 78,000-ton, 1,960-passenger ship will be four-star plus and target the German premium market at "affordable prices."

Louis Upgrades

Louis Cruises  has purchased two ships from Star Crusies, the 1992-built, 1,750-passenger Norwegian Dream and the 1992-built, 1,462-passenger Norwegian Majesty for $380 million. Both ships were slated to leave NCL and be transferred to Star as part of NCL's renewal program, and was expected to be part of Star's build-up in Asia. The ships will be chartered back to Star and operated by NCL until November 2008 for the Dream and December 2009 for the Majesty.

Exiting Riverboats

Ambassadors International has announced that it plans to sell Majestic America Line, which the company only acquired less than two years ago, merging different brands and boats under one domestic riverboat umbrella, operating six boats on the Mississippi River and her tributaries and on the West Coast, including Alaska. However, nobody has yet seemed to able to run domestic riverboats profitably. Ambassador’s exit is one of many in this segment of the business.

And there is more

Royal Caribbean Cruises has made a presentation to the government of Antigua for the proposed development and expansion of St. John's; Grand Circle has been taken off the table, and Alan and Harriet Lewis stay on as owners; Port Canaveral is working on expansion plans; Congress is mulling bills requiring ships to report crimes to Homeland Security and extended environmental regulations; fuel surcharges have been rising; and there has been a rush of executive changes.

For the full reports in the May 2, 2008 newsletter, please see subscription information.