Star Cruises net loss for quarter doubles on increasing costs
Star Cruises, Asia's largest cruise line, said its net loss more than doubled in the first quarter to US$79.4 million, from US$35 million a year earlier, on rising costs.
Despite a 10 per cent rise in turnover to US$564.9 million, operating profit during the first three months swung to a loss of US$10.1 million, from a gain of US$15.1 million a year earlier.
Net revenue yield, an industry measure that factors in costs, cruise occupancies and fleet utilisation, fell 6.5 per cent. Management blamed the decline on price cutting along a Hawaiian route, as well as an unlucky streak in the casinos on the company's gaming ships in Asia.
Star Cruises' US and European subsidiary, NCL Group, said net revenue yield fell 5.3 per cent due to 'a significant decrease in cruise ticket prices for NCL Group's inter-island cruises in Hawaii'.
As a result, the company plans to remove one major ship from service in Hawaii and redeploy it for service on European routes beginning next summer.
Six of the company's 21 ships are based in Hong Kong, Singapore, Malaysia and India.
Excluding NCL's contribution, Star Cruises revenue declined 15.7 per cent while net revenue yield fell 13 per cent, despite steady occupancy of 76 per cent.
The decrease was the result of a lower gaming 'hold' percentage at casinos aboard the ships, meaning customers won a higher-than-expected percentage of wagers.
Asia accounted for 15 per cent of the group's turnover and 18 per cent of the operating loss. The US accounted for 79 per cent of turnover and 77 per cent of the loss, with Europe accounting for the remainder of both turnover and operating loss.
Ship operating expenses rose 1.1 per cent per capacity day, mainly due to fees paid for the use of a ship that was sold to, then leased back from, a third party.
Star Cruises felt some relief on fuel costs after average prices, including hedging measures, decreased 4.1 per cent during the period. Fuel costs accounted for 18.3 per cent of ship operating expenses in the first three months, compared with 19.4 per cent a year earlier.
Chips are down
Run of bad luck in ship casinos adds to worsening results
Occupancy rate aboard the line's vessels, excluding its US and European subsidiary 76%