Phoenix World City: Another Hurdle

World City Corporation has appealed the Maritime Administration's termination of its loan guarantee application to build the 5,600-passenger Phoenix to Federico Pena, Secretary of Transportation.

Marad claims to have terminated the Phoenix application because of insufficient information: that World City failed to meet the Title XI program's economic, financial and technical requirements.

However, John Rogers, Chainnan of World City, said that Marad was in violation of applicable statutory regulations and Marad practices.

Rogers said that World City's application was in all respects complete and sufficient under applicable criteria, including the economic, financial and technical requirements. He underscored that Marad's termination had nothing to do with the merits of the application.

Rogers also said that World City met Marad's requirements during the review process and demonstrated the economic soundness of the project and its ability to raise the equity on the assumption that a loan guarantee would be forthcoming.

According to Rogers, it was not until after the six month review period had lapsed, and after Marad officials had lobbied Capitol Hill in an effort to undermine the project, that Marad "suddenly changed horses and wrongfully demanded that World City actually raise the equity before Marad would complete the review process."

Rogers also said that the technical package for the ship has been reviewed and accepted by the U.S. Coast Guard and the American Bureau of Shipping.


While Marad has not approved any loan guarantees for ocean-going cruise ship newbuildings in recent times, a $65 million guarantee was granted to American Classic Voyages (AMCV) in conjunction with the building of the 420-passenger paddlewheeler American Queen for its subsidiary Delta Queen Steamboat Company. AMCV also received a $30 million loan guarantee for the refurbishment of the Constitution.

In addition, AMCV is also involved in a feasibility study project, funded by Marad, to see if an ocean-going cruise ship can be built in this country. There are also repons that the United States group is considering Title XL assistance.

Hence, Marad has granted guarantees for passenger vessel building and refurbishment and appears to look favorably upon such projects.

But the building project in question may be overwhelming, as it is seeking a loan guarantee in excess of $1 billion.

Secondly, Marad is probably a bureaucracy like most big organizations. Why should its present leadership risk their careers on such a visible project that many experts speak against?

Thirdly, some of the companies and individuals who are speaking against the Phoenix obviously have their own motives. The shipyards and brokers would rather see Marad funds spread around on more ships, generating more work for more yards and more commissions for more brokers.

So what are the benefits?

For starters, in the big scheme of things, a $1 billion loan guarantee is not a lot of money. It does not build too many stealth bombers, for instance.

Secondly, the ship will be a boost to American yards and shipbuilding technology and will open the way for new projects. Thirdly, the ship will create American jobs both ashore and at sea. Fourthly, a new American-flag ship may also help open up new market segments for the cruise industry at large with coast­ wise trade and business meetings.

But, of course, until she sails, benefits and costs are all hypothetical. The Phoenix will ultimately sail or sink on her own.

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