Regency Cruises has posted a loss from operations of $3.4 million in the first quarter which ended March 31, 1990, compared to a loss of $236,000 in the same period last year. Net loss, after interest and other income, was $2,046,000 compared to net profit of $398,000 for the first quarter last year.

The consolidated statement of operations for the first quarter showed a decrease in revenues from $22.8 million in the first quarter of last year to $22 million this year.

A sharp increase was posted for ship operation expenses up to $13.8 million compared to $11.7 million last year. Other costs were basically constant including marketing, commission and air transportation which were posted as $8.9 million this year compared to $8.6 million for the same period last year.

Overall, costs and expenses increased a percentage of gross revenue, to 62 percent in the first quarter of 1990 compared to 51 percent in the same period last year.

Regency Cruises attributed its loss to a decrease in demand for its cruises during the first quarter of 1990 and to the fact that the Regent Star was out of service for 21 days for repairs.

Repairs to the ship's generators had been scheduled to take seven days, but due to propeller damage and additional repair time needed for the generators, the ship was out of service for 21 days, during which Regency did not make charter payments.

Last year, the Regent Star was out of service for 40 days because of repairs.

Occupancy Down

Passenger occupancy factors were reported to be 77 percent for the Regent Sun and the Regent Sea for the period compared to 84 percent and 92 percent for the same period last year. The Regent Star achieved an occupancy factor of 55 percent for the quarter compared to 71 percent last year.

According to Regency, the events of the fourth quarter of 1989 which reduced revenues and earnings for that period, continued into the first quarter of 1990. The company attributed the decrease in demand for its cruises to negative publicity from Hurricane Hugo, the military action in Panama, and the U.S. travel advisory on Colombia, which all occured during the peak booking period for first quarter Caribbean cruises.

Analysis

According to statements provided by Regency Cruises, the cruise line carried approximately 20,890 passengers in the first quarter of 1990. Based on reported cruise revenues of $22,055,000, each passenger generated $1,055 in gross revenues from the cruise fare and onboard spending.

Based on posted marketing costs of $8,888,000, each passenger cost the cruise line an average of $425 in marketing expenditures, which include travel agent commission and air transportation, leaving $630 per passenger to cover operating administrative overhead and vessel depreciation. This translates into a net per diem of $90.

Estimated maximum occupancy capacity for the quarter was 32,695 passengers which, at the same rate levels, would have generated $34,493,225 in revenues.

However, with demand strong enough to fill the ships, it is assumed that discounting would be reduced, thus raising gross per diems perhaps by as much as 25 percent. This would generate some $43 million in revenues less an estimated 10 percent in travel agent commissions; less an estimated $200 per passenger in air travel expenditures; less the $2.7 million spent on marketing in the last quarter. Revenues before ship operations, general and administrative costs and vessel depreciation, which were posted at $17 million in the first quarter, would be $30 million.

Based on the above assumptions, with full ships Regency would need gross per diems of $130 to break even or, net per diems, less marketing costs, of $75. But at loadfactor levels in the high seventies, Regency needs to earn net per diems of about $110 to break even.

At the end of the first quarter, the company's assets and shareholders equity was valued at about $64 million by unaudited statements filed by the company. Total current liabilities and long term debt was posted at less than $30 million, including the remaining long-term debt on the Regent Sun was about $11 million.

There are 23,403,000 shares outstanding with 1,826 shareholders of record. At press time, Regency's shares closed at $2.

1989

Regency, which reported revenues of $21.8 million for the fourth quarter ending December 31, 1989, compared to $18.5 million for the same period last year, also posted a loss for that quarter of $1.2 million compared to a loss of $1.7 million in the previous year's fourth quarter.

Loss from operations was $2.3 million in last year's fourth quarter compared to a loss of $3.1 million in the same period in 1987.

For the year, revenues were up at $120 million from $87 million in 1988. Income from operations increased to $3.6 million from $3.3 million in the previous year. Net income, boosted by interest and other income, was $4.2 million or $.18 per share versus net income of $3.9 million or $.17 a share for the year ended December 31, 1988.

Steady Expansion

Regency Cruises has seen a steady increase in revenues since start-up in 1985, from $4.7 million that year, to $40.8 million in 1986, $65 million in 1987, $87.7 million in 1988, to $120 million in 1989. But as the company has grown from a one-ship to a three-ship operation, income from operations as a percentage of revenues has fluctuated from a high of 13.4 percent in 1987 to 3.7 percent in 1988 and 2.9 percent in 1989.

While revenues jumped $32 million from 1988 to 1989 this was due to the increase in capacity with the introduction of the Regent Sun and deployment of two ships in Alaska.

But while a 50 percent increase in passenger capacity brought revenues up by more than 36 percent, operating expenses went up right along with a 35 percent increase, and marketing costs, including travel agent commissions and air transportation, also increased 35 percent.

New Itineraries

This spring and summer, Regency will be out of the Caribbean entirely, with two of its ships in Alaska which historically has been the most profitable itinerary for the company, and one New England/Canada. In the fall, Regency will limit its Caribbean program to two ships with the Regent Sea sailing a 47-day cruise around South America.