Cunard contributed about $60 million to Trafalgar House's earnings for its 1987/88 fiscal year, which ended September 30. The earnings from the shipping and hotels division were mainly attributed to the profitable operation of the OE2 which saw a full year of service following its refit in 1986/87.

Poised for Expansion

According to a statement by Trafalgar House Chairman Sir Nigel Broackes, the "company is now well placed for further expansion."

Cunard, which used to be one of the major cruise operators, has suddenly found itself left behind in the recent rash of newbuildings and acquisitions that have taken place in the North American cruise market.

According to cruise shipping analyst Mark McVicar at County Nat West, Cunard is expected to make its move, but not quite yet. "There has been a series of top level changes within Cunard," McVicar said, "and in the United States, Dermott McDermott, who succeeded Ralph Bahna as CEO, has only been on the job a few weeks. It is expected that it will take him a little longer to play with the cruise business." McVicar expects that Cunard will make its move sometime in the first half of next year.

Scenarios

The cruise grapevine is as usual full of rumors, including one that has Cunard acquiring Kloster Cruise, which analysts agree is the only reasonable target left in today's market. However, analysts see such a move as highly unlikely. While there is a good product fit between the two companies, the Kloster management has worked too hard to turn the company around, McVicar said, and "next year Kloster is poised to begin earning a lot of money."

Cunard, which has a history of buying ships especially from cruise lines in financial straits, is also seen as a possible buyer of Windstar Sail Cruises, which Carnival Cruise Lines reportedly is taking a somewhat lukewarm position on.

Other ships reported to be for sale include the two Navtol/Windsor yachtlike ships being built by Flender Werft.

But Cunard is also said to be talking to yards, especially yards in Japan, where the QE2 will be spending the better part of next summer on a charter engagement. While the Japanese are building cruise ships for Japanese operators, they have so far failed to gain a building contract from a western operator.

Cunard is rumored to be negotiating a heavily subsidized contract, which would give it the fleet expansion it needs, and would give the Japanese builders their entry into the western building market.

What is left for speculation is what kind of ship and how many Cunard will acquire or build. If it comes to building, insiders speculate that Cunard will build a large ship aimed at the upscale market.