Another View: Year 2000

“By the year 2000, seven to 10 major brands, with at least a dozen other smaller cruise lines, will emerge,” said Adam Aron, President and CEO of Norwegian Cruise Line, in contrast to the five to six operators predicted by Holland America Line President & CEO Kirk Lanterman.

With his own line in jeopardy as large debt repayments loom on the horizon, Aron forecasted that at least seven cruise operators – Carnival Cruise Lines, Royal Caribbean Cruise Lines, Holland America Line, Princess Cruises, Star Cruise, Disney Cruise Line, and Costa Cruise Lines – “won’t disappear by 2000.” (Aron left Celebrity Cruises out of his list.)

Aron based his predictions on the fact that the airline industry watchers also expected only a few remaining airline giants, but, Aron explained, smaller carriers were able to change and survive.

Seven Factors

Aron delivered his short list of seven attributes “for the major lines to continue as such.” These include: a strong balance sheet and access to capital; a strong brand, strong name and strong loyalty to brand; a modem fleet; management depth; an efficient cost structure; a strong service product at sea; and critical mass, with at least five ships with 7,500 beds.

As for Norwegian Cruise Line, Aron revealed that, “My company is just a few weeks away from a successful refinancing deal.”

Norwegian Cruise Line must come up with more than $100 million before May 31, 1996, to meet interest payments and exercise purchase options. Overall, the company is faced with $700 million of outstanding debt which cost the line more than $90 million in interest payments in 1995.

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