Star Cruises Reports Lower First Half Loss

Star Cruises, which owns 50 percent of NCL Corp., reported that net revenue increased by 5.2 percent, but net revenue yield decreased by 18.6 percent in the first six months of 2008. Overall, the company said it reduced its losses in the first half of the year to $1.3 million, compared to a $2.6 million loss in the first half of 2007.

NCL ceased to be a subsidiary of Star Cruises and became a 50 percent jointly controlled entity on Jan. 7, 2008 following the completion of agreement where Apollo Management L.P. assumed control of the other 50 percent.

Star said capacity increased by 29.2 percent, from one million to 1.3 million capacity days. Ship operating expenses per capacity day increased by 7.4 percent. Ship operating expenses excluding fuel costs per capacity day were essentially flat.

Star Cruises reported net revenue for the first half of increased 5.2 percent from primarily due to a 29.2 percent capacity increase which was partially offset by the lower net revenue yield and occupancy level of 18.6 percent and 5.7 percentage points, respectively.

The increase in capacity in the first half was primarily due to the addition of SuperStar Aquarius, which commenced operations in June 2007. The decrease in net revenue yield was due to a lower gaming hold percentage onboard the ships. Occupancy was at 78.8 percent in the first half of the year compared with 84.5 percent in the same period last year.

Ship operating expenses per capacity day for 1H 2008 increased 7.4 percent compared with the first half of 2007. This increase was mainly due to higher fuel costs and partially offset by the lower ships’ charter hire fees.

In the first half, fuel costs increased approximately $13.9 million compared with the same period last year with the average fuel price increasing approximately 51 percent. Fuel costs accounted for approximately 24.7 percent of ship operating expenses in the first half compared with 19.6 percent last year.

During the first half of 2008, Star said it recognized a gain of $71.8 million on the disposal of 50 percent of NCL and accounted for its share of loss from NCL of approximately $85.5 million, reflecting the group’s 50 percent share of NCL’s results.

Star said NCL’s net revenue for the first quarter increased 4.7 percent from last year primarily due to an 8 percent increase in net revenue yield partially offset by a 3.1 percent decrease in capacity. The increase in net revenue yield in the first half was primarily the result of an increase in passenger ticket prices, onboard and other revenues and occupancy.

The decrease in capacity was the result of the departure of Norwegian Wind (renamed to SuperStar Aquarius), Norwegian Crown and Marco Polo, which left the fleet upon expiration of the relevant charter agreements in April 2007, November 2007 and March 2008, respectively, as well as the re-flag of Pride of Aloha, which was withdrawn from the fleet on May 11, 2008 and launched as Norwegian Sky in July 2008.