NCL Corporation Ltd. (“NCL” or the “Company”) announced today that Kevin Sheehan, currently President and Chief Financial Officer, has been appointed Chief Executive Officer, as well. Colin Veitch, current CEO, will be transitioning his existing responsibilities and assume a new advisory role to the Board of Directors. In addition, Andy Stuart has been appointed Executive Vice President, Global Sales and Passenger Services. These senior organizational announcements are being made as the Company is also reporting record third quarter results.
In this expanded leadership role, Sheehan is now responsible for both the day-to-day operations of the business, and a broader focus on long term corporate strategy. Sheehan joined NCL in November 2007 as Chief Financial Officer and was named President in August 2008. He has an extensive 30-year business career that has included, most recently, being Chairman and CEO of Cendant Corporation’s Vehicle Services Division, which consisted of a group of companies, including the Avis and Budget rental car companies, PHH Corporation and Wright Express. He also served as CFO of Cendant Corporation, and prior thereto as President and CFO of Avis Group Inc.
In his new role, 20-year NCL veteran Andy Stuart is responsible for global sales, revenue management, passenger services and public relations. Specifically, Stuart will direct the Company’s global distribution strategy, ensuring NCL continues to enhance and strengthen its relationships with travel partners as its primary distribution system. He will lead the further development of Partnership 2.0, a core strategy to position NCL as the first choice of travel partners when selecting and booking a cruise for their clients. He will also ensure revenue optimization and oversee the Company’s public relations efforts.
“Andy will ensure we forge even closer relationships with the travel agency distribution system,” said Kevin Sheehan, NCL’s President and Chief Executive Officer. “I’m extremely confident in Andy’s strong ability to lead these efforts and build a global sales presence unlike any other in the cruise industry.”
For the third quarter ended September 30, 2008, NCL reported net income of $171.2 million on total revenues of $639.0 million compared to a net loss of $8.6 million on total revenues of $632.5 million for the third quarter ended September 30, 2007. Revenues for the third quarter of 2008 increased 1.0% due to a slight increase in Capacity Days coupled with a 7.0% increase in Net Yields. The increase in Net Yields was the result of higher passenger ticket pricing and onboard revenues. These increases were partially offset by lower air add-on participation primarily due to changes in our Hawaii deployment. Occupancy remained steady for the third quarter of 2008 at 111.3% compared to 111.2% in the same quarter of 2007.
Net Cruise Costs per Capacity Day for the third quarter of 2008 increased 1.0% compared to the same period in the prior year. A year-over-year increase in fuel costs was principally offset by reduced payroll and related expenses. The reduction in payroll and related expenses was primarily due to the re-flagging and redeployment of Pride of Hawai`i and Pride of Aloha from the Company’s U.S.-flagged fleet to its international fleet as Norwegian Jade and Norwegian Sky, respectively. During the third quarter of 2008, average fuel prices, including the impact of fuel swaps, increased approximately 75% to $706 per metric ton from $405 per metric ton in the third quarter of 2007. Excluding fuel expenses, Net Cruise Costs per Capacity Day decreased 10.3% when compared to the same period in the prior year.
During the third quarter of 2008, the Company benefited from lower interest rates and favorable exchange rates. Interest expense (net of capitalized interest and interest income) decreased 20.1% to $34.0 million in the third quarter of 2008 compared to $42.6 million in the third quarter of 2007. Other income (expenses), net improved from a loss of $42.9 million in 2007 to a gain of $104.6 million in 2008. Due to the strengthening of the Dollar/Euro exchange rate in the quarter, the Company reported a non-cash foreign exchange translation gain of $133.7 million primarily related to marking-to-market the Company’s Euro-denominated debt partially offset by $28.8 million of losses due to the change in fair value of our derivative contracts. During the third quarter of 2007, the Company reported a non-cash foreign exchange loss of $44.4 million.
“We are extremely pleased with the revenue performance achieved in the quarter and the significant improvement in our profitability,” said Sheehan. “Our Hawai`i operation is now profitable, the growth of our international fleet has had a very positive impact, Partnership 2.0 and Freestyle 2.0 are already having a strong impact on both travel partners and consumers, and we ended the quarter with over $525 million in liquidity, positioning us very strongly for the future.”