The Star Cruises Group has reported a net loss of $29 million, or $0.59 per share, on revenues of $368. 7 million for the second quarter ended June 30, 2003, compared to net income of $29.5 million, or $0.71 per share, on revenues of $389.8 million for the same quarter last year.
Star said that its performance in the second quarter was severely affected by weak passenger demand and booking cancellations resulting from the Iraq conflict and the outbreak of SARS.
Also included in the Q2 results were $3.9 million of expenses in connection with the boiler accident on the Norway.
Additional costs were also incurred associated with the redeployment of Star Cruises ships because of SARS, including heavy advertising and promotional expenses.
The Star Group posted a loss of $31.2 million, or $0.63 per share, on revenues of $780.7 million for the first six months of 2003, compared to net income of $36.9 million, or $0.83 per share, on revenues of $757.8 million for the first six months of 2002.
Higher fuel prices and weak passenger demand affected the first six months, according to Star.
Norwegian Cruise Line (NCL) suffered because of the poor booking environment in the first quarter when most people plan their summer vacation, according to Star. Both occupancy and pricing were down in Q2 year-over-year.
In May, the Norway also suffered a boiler explosion that resulted in the loss of eight crew members' lives and injury to several others. The ship has been out of service since, pending repairs.
The outlook for the remainder of the year is more optimistic as bookings and pricing seem to be picking up for all the cruise lines, although NCL will face additional cost items related to the start-up of its new Hawaiian operation in the second half of the year.
The effect of the Norway's withdrawal is expected to be about $7.0 million in reduced net income.
Meanwhile, Star stated that the summer season (Q3) was going well, with good ticket prices and onboard revenues.
Q4 was also booking well, but a large portion was sold at discounted prices earlier in the year in an effort to catch up with the shortfall in boolcings resulting from the poor demand in the so-called Wave Period.
Star also said that a bright spot in Q2 and the first half is that NCL's new ships continue to perform extremely well and compared favorably in both revenues and operating costs with the industry generally.
The forward picture for those ships in particular continues to be encouraging, according to Star.
NCL has not provided an update on its plans for a second Project America ship nor has it provided a date when the Norway is expected to re-enter service.
Star Cruises operated with 10.1 percent lower capacity in Q2 primarily because of the reduced sailing days due to the relocation to non-SARS-affected areas. Occupancy and net yield in Q2 were 15 percent and 32 percent lower respectively compared to Q2 last year.
Operating costs were up due to ship relocation costs, shore streamlining costs and higher advertising and promotional expenses in Australia.
The Superstar Leo and Superstar Virgo returned to Hong Kong and Singapore, respectively, in July. Star said that the response in both markets had been very encouragmg. Neither ship has had any incidents of SARS.