The NCL Group, which includes Norwegian Cruise Line (NCL), has reported a net loss of $4.4 million on revenues of $154.0 million for the first quarter ended March 31, 1998, compared to net income of $1.1 million on revenues of $156.9 million in the first quarter a year ago. (Net income of $2.2 million in 1997 reported on page 2 was for NCL and not the group.)

NCL attributed the decrease in revenue and the loss to the Norwegian Wind and the Norwegian Dream being out of service in the first quarter for 85 days and 30 days respectively due to the lengthening of the vessels. Their absence was only partly offset by revenue from the Norwegian Majesty and charter revenue from the Aida which were added to the fleet in September and October of 1997.

The occupancy rate was also down for the remainder of the fleet which posted a load factor of 95.1 percent in the first quarter of this year compared to 104.5 percent in the same period last year in spite of increased advertising and selling costs in 1998.

But NCL also said that net passenger revenue per capacity day increased year-over-year due to higher realized prices. In addition, NCL said that for the remainder of the year it expects to achieve a load factor approximately in line with the previous year.

NCL also announced that Geir Aune, who was CEO of NCL Holding, parent company to NCL, has also now assumed the position of CEO of NCL.


NCL has unveiled plans to build four new ships at an estimated cost of $325 million each. A letter of intent has been signed with Lloyd Werft Bremerhaven to build a 76,000-ton, 2,000-passenger sister ship to the Norwegian Sky, which is presently under construction there. The letter of interrt includes options on three more ships.

The Norwegian Sky will be delivered in the summer of 1999 and the first of the new sister ships in the summer of 2000. The additional ships will be delivered in 2001, 2002 and 2003.

In addition, Aune confirmed that NCL will lengthen the Norwegian Majesty next year, increasing capacity by approximately 40 percent, from 1,056 to 1,436 passengers.

Further Expansion

According to Aune, NCL has filed registration documents with the Securities and Exchange Commission and expects to list its shares on the New York Stock Exhange later this year.

Pending the share price, Aune said that NCL may also issue more shares in conjunction with the listing.

The company can issue up to 106.4 million new shares - although Aune underscored that an offering of that size would not be made - which at today's evaluation in the Norwegian market would raise close to $500 million.

At the end of the first quarter of this year, NCL had a total of 205.2 million common shares outstanding, compared to 134.9 million at the same time last year. NCL has raised new equity through share offerings as well as new bank financing.

Aune said that the new share issue was not linked to the company's newbuilding program, but was intended to give the company more "flexibility in terms of its future growth strategy."

He explained that the offering would give the company flexibility to carry out acquisitions similar to that of Orient Lines, but would not comment on who the cand idates might be, if any.


While NCL is acquiring ships and building ships, its core fleet may also lose ships. First of all, the Norwegian Star will be transferred to its new joint venture, Norwegian Capricorn Line, in Australia. Secondly, it is expected that another NCL ship will be transferred to Orient Lines to help it grow its market share in the premium market.

Beyond that, NCL's charter of the Leeward expires in 1999 along with its management contract for the Norwegian Dynasty. Aune said that no decision had been made yet whether to renew the agreements or buy the vessels.

Thus, pending developments, NCL may see a temporary fleet reduction in 1999 in spite of the arrival of the Norwegian Sky.


NCL' s challenge is to make money. While it is difficult to predict second quarter results, NCL will see a significant capacity increase with the lengthened Norwegian Wind and Norwegian Dream in the third quarter which is expected to show a strong gain year ­ over-year.

In addition, the acquisition of Orient Lines guarantees a contribution of at least $17 million in net earnings over the next 12 months.

Still, for investors the basic question surrounding the company's future is when will it start to turn a steady profit quarter over quarter?

All the changes - acquisitions, joint ventures, fleet adjustments, and new ships - make predictions difficult. But management has expressed confidence in 1998 and previously suggested net income of $120 million in 1999 pending successful implementation of its plans.

At press time, NCL shares traded at NOK 34 (about $4.50) on the Oslo stock exchange.

At $4.50 NCL would be the lowest priced cruise stock traded in the U.S. and, if profitable, the combination should make the stock attractive to investors.

1999 Program

NCL has announced its 1999 sailing program. New for 1999 will be the Norwegian Sky launching service with one 10-day cruise in Europe in August, before sailing to Boston for a series of New England/Canada cruises. During the winter, she will sail alternating Eastern and Western Caribbean cruises from Miami.

In other news, the Norway will return to Europe with a series of seven-day cruises which will be sold in both the U.S. and Europe. The Norwegian Dream also returns to Europe with a series of 12-day sailings.

The Norwegian Dream will sail summers in the Southern Caribbean taking over the program of the Norwegian Sea which moves to Houston replacing the Norwegian Star, which, in turn, redeploys to Australia.

For the second year, the only seven-day NCL ship in the Caribbean in the summer will be sailing out of Houston.

The Norwegian Majesty will be pulled from her short-cruise program and instead will sail 10and I !­ day Panama Canal cruises following her summer sailings from Boston to Bermuda, and only the Leeward will sail threeand four-day cruises.

The Norwegian Wind will double NCL's capacity in Hawaii on five cruises in the fall.

Other deployments continue from this year.

NCL is also taking bookings on its New Year's cruises for 1999. "We haven't opened our books on all the ships yet," said a spokesperson. "We have a wait­ list and deposits, however, and will soon advise passengers where we will be sailing and what the rates will be." NCL will have seven ships offering special millennium cruises.