Future of NCL America Decision to be made by end of 2008

[DAGVBSB]

Ok, maybe I missed this back in August, but over on the PSA thread on "cruise questions" someone brought up this article in Cruise Business Review Online.

 

Here is the link:

 

http://www.cruisebusiness.com/news.php?u=20070820162344

 

 

Basically the article, written in August 2007, says that NCL, Star and Apollo are going to study the NCLA operation and make a decision in 16 months (which would be roughly the end of 2008) as to whether to continue NCL-A operation or "liquidate it within 16 months"

 

It sounds like there may be a chance that NCL-A will not be around in 2009.

 

No wonder they are pushing for the PSA changes to go into effect quickly.

[smeyer418]

this is way before Apollo bought into NCL. NCLAmerica was NOT part of the Apollo deal. That remains wholly owned by Star. No one can expect any government agency to issue rules under such a time table. It never works like that.

 

DO I expect that a decision will be made before the end of 2008? Yes I do but I have no idea what that decision will be. With a Billion dollars of new capital NCL and Star can do whatever they want and another year wouldn't surprise me either.

[DAGVBSB]

this is way before Apollo bought into NCL. NCLAmerica was NOT part of the Apollo deal. That remains wholly owned by Star. No one can expect any government agency to issue rules under such a time table. It never works like that.

 

Actually it is a little confusing in the article. One place says: "Apollo Management’s $1Bn equity offer for 50% of NCL Corporation includes a specific plan to either revive the US-flag NCL America operation or liquidate it within 16 months." But elsewhere it says: "Consideration for the intra-Hawaii, US-flag assets is not included in Apollo's initial $1Bn equity infusion, but is being deferred until the decision is made on whether we stay in the [uS flag] business,”

 

To me that sounds like Apollo has some say in the matter and if they decide not to pick up NCLA, it will cease to exist.

 

I think that is why NCLA is pushing so hard for the changes in the PSA rules to go into effect immediately. If the government delays the implementation of these rules, NCLA may cease to exist.

 

My opinion is, if you want to sail on an American flagged vessel, you better do it this summer. I also would be very leary of booking any NCL America voyage for this fall or in 2009.

[smeyer418]

Actually it is a little confusing in the article. One place says: "Apollo Management’s $1Bn equity offer for 50% of NCL Corporation includes a specific plan to either revive the US-flag NCL America operation or liquidate it within 16 months." But elsewhere it says: "Consideration for the intra-Hawaii, US-flag assets is not included in Apollo's initial $1Bn equity infusion, but is being deferred until the decision is made on whether we stay in the [uS flag] business,”

 

To me that sounds like Apollo has some say in the matter and if they decide not to pick up NCLA, it will cease to exist.

 

I think that is why NCLA is pushing so hard for the changes in the PSA rules to go into effect immediately. If the government delays the implementation of these rules, NCLA may cease to exist.

 

My opinion is, if you want to sail on an American flagged vessel, you better do it this summer. I also would be very leary of booking any NCL America voyage for this fall or in 2009.

 

I have spoken with people at NCL. It isn't included but has certain milestones(which I don't know). Star fully controls it. Apollo has no responsibility for it but I am sure there is some agreement on what happens if it is rolled in. The Star people still will make the decision but exactly who those people are I don't know. The government will not issue the rules on the time line you suggest and if they do there may be legally challenges to them especially if they are as harsh as proposed. But your suggestion to book now is a good one as it will help insure the ships continued flagging...

[SeattleCruiselover]

Unfortunately, it's a paid link (costs $2.95 for one time access to the archives to read the article), but the Miami Herald of 26 Nov 07 excerpts as follows:

 

Despite it's problems, NCL's potential hasn't been lost on Apollo management. In August, the New York based private equity giant agreed to invest $1BB in new capital in NCL for a 50 percent stake and control of the board.

 

Under the deal, Star Cruises agreed to fund losses in Hawaii and defer receiving a big payment from NCL. Star and Apollo will decide by the end of 2008 whether to continue the Hawaii venture or shut it down.

 

Author of the article is Martha Brannigan, and it can be found on pg 20G of Business Monday in the final edition for 26 Nov 2007.

 

The article is quite extensive on the history of NCL/NCLA, and is titled "NCL's Hawaiian Odyssey." Makes for some pretty interesting reading if you are at all interested in paying for it at this point.

[Deck10 007]

The actual agreement calls for Star Cruises to defer payment of US$500 of Star Cruises loan for the 2 ships in Hawaii for up to 18 months until a decision on the two ships is made. Doesn't sound like they cannot extend the dateline to me.

No need to buy the book . We here in Asia has followed the birth of Star Cruises, purchase of NCL and the formation of NCLA as every day affair.

[ohioNCLcruiser]

I think with the Aloha and America selling out and the prices going up I think they wont make a choice till the start of 2009 after figures start rolling in. I think they will make it.

[Don Haynes]

With the two ships selling out months in advance with prices more than twice last year's prices, it appears NCLA's cutting the supply of cabins have worked. I expect NCLA to continue sailing in Hawaiian waters.

[DAGVBSB]

I have spoken with people at NCL. It isn't included but has certain milestones(which I don't know). Star fully controls it. Apollo has no responsibility for it but I am sure there is some agreement on what happens if it is rolled in. The Star people still will make the decision but exactly who those people are I don't know. The government will not issue the rules on the time line you suggest and if they do there may be legally challenges to them especially if they are as harsh as proposed. But your suggestion to book now is a good one as it will help insure the ships continued flagging...

 

Thank You for explaining the situation. So, if it appears NCLA will stay in business, will Apollo take that over too?

 

It seems strange for Star to operate NCLA and Apollo to operate NCL but yet they share advertising, web site and booking.

[Ms belp]

Thank You for explaining the situation. So, if it appears NCLA will stay in business, will Apollo take that over too?

 

It seems strange for Star to operate NCLA and Apollo to operate NCL but yet they share advertising, web site and booking.

 

Gosh, this is fun Friday night fodder...

[smeyer418]

Thank You for explaining the situation. So, if it appears NCLA will stay in business, will Apollo take that over too?

 

It seems strange for Star to operate NCLA and Apollo to operate NCL but yet they share advertising, web site and booking.

 

I am not quite positive but I expect there is an operating agreement wherein the entity(NCL) operates NCLA with NCLA being responsible for 100% of the expenses and also it (Star) would get a 100% of the profits until the final decision is made. There may be a side agreement that covers when and if, but I don't know what it says. Star is still on the hook for 500,000,000 in bonds that is attributable to NCLA but I assume the two NCLA ships cover that as they are worth at least that much.

[flashdog_1]

I know that mid season no cruise line is going to change its itinerary to include extra hours in a foreign port, since people are already booked etc. But has anyone heard if any line has fit the extended stays in the foreign ports on next season's schedule?

[Globaliser]

It seems strange for Star to operate NCLA and Apollo to operate NCL but yet they share advertising, web site and booking.

It is an unusual arrangement, but this is effectively a part of the agreement with Apollo that ringfences the risks in Hawaii from Apollo - those risks are borne entirely by Star, who will either make it work, so that NCLA can be brought within the Apollo umbrella; or NCLA will be shut down.

I know that mid season no cruise line is going to change its itinerary to include extra hours in a foreign port, since people are already booked etc. But has anyone heard if any line has fit the extended stays in the foreign ports on next season's schedule?

I'm not sure that any cruise lines are yet planning anything on the basis of a rule that has not yet been made. Nobody knows what the final form of the rule will be, although there seems to be a certain amount of confidence that it won't be exactly that which has been proposed.

[DAGVBSB]

It has been posted several times that whoever is making the new rules regarding port visits (I can't keep all the letters straight...), plans to do so quickly. (I believe the quote was "it won't be a year"). I think this is being pushed by the Hawaii Congressional Delegation since NCLA is sort of under the gun with the time limit imposed by Star and Apollo. The sooner that they can get the rules in place, the sooner NCLA can monoploize the Hawaii market and perhaps stay afloat.

[DAGVBSB]

Interesting article in our local paper on Sunday...talking about the new passport rules and a mention of the "Struggling Cruise Line" in Hawaii.

[DAGVBSB]

Another new article on the PSA rule changes... $95 million impact on LA if it goes through.

 

http://www.dailybreeze.com/ci_8072210

[electricron]

Another new article on the PSA rule changes... $95 million impact on LA if it goes through.

 

http://www.dailybreeze.com/ci_8072210

 

The impact would be much less, because the cruise lines will change their itineraries to meet any new rules.

 

The $19 million impact on Catalina could be replaced by a simple, cheaper fast ferry servicing Catalina, like the new Hawaii Superferry. And at the same time provide American sailors a job.

[SeattleCruiselover]

The Catalina Island Express has served Avalon for years, as has the Island Express helicopter service. I doubt that there will ever be an oceangoing car ferry from SoCal to Catalina, because it would likely not be profitable. The cruise ships take pax to Avalon who likely would never go otherwise, so it will be a loss for them.

[DAGVBSB]

The impact would be much less, because the cruise lines will change their itineraries to meet any new rules.

 

The $19 million impact on Catalina could be replaced by a simple, cheaper fast ferry servicing Catalina, like the new Hawaii Superferry. And at the same time provide American sailors a job.

 

Oh, yes, let's start a new ferry to save a few more jobs. But let's cost LA, San Diego, Seattle, Miami, New York, Boston, Newport, San Francisco, Portland, Bar Harbor and possibly New Orleans jobs in the tourism industry, transportation industries and port workers.

 

Makes sense to me.... deystroy those jobs and the US economy for the sake of a few jobs on the POA and POAm. Sorry.... I'm of the belief that the needs of the many, outweigh the needs of NCL.....

[Cruisin' Chick]

The impact would be much less, because the cruise lines will change their itineraries to meet any new rules.

 

The $19 million impact on Catalina could be replaced by a simple, cheaper fast ferry servicing Catalina, like the new Hawaii Superferry. And at the same time provide American sailors a job.

 

The impact will be horrendous. And it's not just the port workers. Tourism dollars are very important to Los Angeles, San Diego, San Francisco and Seattle. Hotels, restaurants, taxi and shuttle services, stores benefit from people coming to these cities to take a cruise and drop some money. Even the locals contribute. Everytime my family takes a cruise out of San Pedro and parks our car there, a percentage of the money goes to the City of L.A.

 

The proposed changes are ridiculous and intenable. The true purpose is to cause Princess, HAL, Celebrity, etc. to change their Hawaiian round-trips into an Ensenada-based trip (or Vancouver). Less people will be willing to book those cruises. If the intent of NCLA is to get many of us to book one of the Pride cruises instead, they are sadly mistaken.

[DAGVBSB]

The proposed changes are ridiculous and intenable. The true purpose is to cause Princess' date=' HAL, Celebrity, etc. to change their Hawaiian round-trips into an Ensenada-based trip (or Vancouver). Less people will be willing to book those cruises. If the intent of NCLA is to get many of us to book one of the Pride cruises instead, they are sadly mistaken.[/quote']

 

I believe that they really want the International cruises to Hawaii to completely stop and are doing this to make them so unappealing (very long cruise, limited stops in Hawaii, leaving from a foreign port) that people won't cruise them and look to NCL.

 

I think NCL GREATLY underestimated the consequences of this action of trying to put teeth in the PVSA. Because of the broad scope of the issue that has to enforced, it is going to do serious harm to the entire cruising industry and especially NCL image. (yes, I know NCLA and NCL are too different companies...but the VAST majority of people do not and consider the "Pride" ships simply a part of NCL.)

 

You know, its too bad that John Houseman is no longer alive... remember the commercials he used to do for some brokerage firm... "We get your business the Old Fashioned way...we eaaaaaarrrrnnnn it." NCL should take a lesson for that instead of the sneaky way of attempting to create a monopoly.

[electricron]

I'm going to disagree.

 

The PVSA needs to be enforced, no matter how many feathers it ruffles.

 

It wasn't passed by Congress in the 1880s to distress passengers, nor to prop up a failing company. It was passed to encourage growth of the American shipping industry.

 

One could argue it isn't working as intended. I will argue it isn't working as intended because it's been weaken over the years.

 

The last change to the regulations by Customs was made in 1985 when Alaskan cruises were starting to take off in popularity. That change allowed foreign ships to embark and disembark passengers in the same American port to visit other American ports if they only stopped in a near foreign port. Without the 1985 changes, Alaskan cruises from Seattle would be illegal, cruises that stopped in Port Canaveral, Key West, and Maine would be too. Imagine how many cruise ships that might have been built in America if the rules hadn't been changed in 1985? I propose that many would have been built to meet passenger demands to visit these popular American ports.

 

NY to Florida cruises are popular. Seattle, even San Francisco to Alaska cruises are popular. Miami to the US Virgin Island cruises are popular.

Make it illegal for foreign ships to do them, and I bet you RCI, Carnival, and NCL would start building some cruise ships in America, and man them with Americans as well. The pot of gold at the end of the rainbow would make them do so.

 

The foreign flag ships can do the other itineraries, that don't visit Hawaii, US Virgin Islands, Alaska, or New England. Or they can start their cruises from Vancouver, Ensenada, or Halifax, or Nassau to visit more than one American port.

 

Congress allowed NCLA to be created, they can do the same for the other major lines, if they are willing to fly under the American flag, live under American health and safety laws, and pay union wages. But limit them to just a few ships and limit where they can sail like they did to NCLA, until they have time to build ships in America.

 

The idea they will leave the cash cow, America, for long is ridiculous. It's time to stop pampering and pandering to foreign corporations.

[electricron]

The Catalina Island Express has served Avalon for years, as has the Island Express helicopter service. I doubt that there will ever be an oceangoing car ferry from SoCal to Catalina, because it would likely not be profitable. The cruise ships take pax to Avalon who likely would never go otherwise, so it will be a loss for them.

 

I propose that if foreign cruise ships can't go to Catalina Island after embarking passengers in Los Angeles, more would take the ferries to Catalina Island. More American built ferries would be built to meet the same demand with less supply of berths, and more American jobs would be created.

 

It's apparently clear that many booking the short cruises from Los Angeles aren't sailing them to visit Ensenada, the jewel of these short itineraries is Catalina Island.

[SeattleCruiselover]

I seriously doubt that anyone is going to fly or drive a long distance to Southern California just to go to Catalina, by whatever means. There is basically nothing there, other than maybe the Avalon Ballroom. For most who go there on a four day cruise out of Los Angeles, it is not the ports that make the trip appealing, it is the being aboard ship and just "crusing". Sure, they get off in Avalon and walk around town; other than that there really isn't much to do unless you are a scuba diver or a kayaker.

 

I lilved in SoCal for 35 years, and I set foot on Catalina Island precisely once. I have no particular desire to return to either Catalina or Ensenada, so I wouldn't be doing a four day cruise anyway. But there are those who don't have as much time to cruise as I do and/or they have more and will go just to be going.

 

And I have to disagree that you will find the cruise lines that foreign flag their ships building any in the US anytime soon, if ever. About the only shipyards large enough to build ships of the size that they commission are under military control, and not likely to retool/change over to civilian applications just to build a random ship here or there. Government contracts are far more profitable and ongoing.

[smeyer418]

actually US Shipyards have a real problem currently filing orders they have for commericial vessels not because there aren't enough shipyards but the skill set needed to work on ships has been lost. Its been two working generations since any large cruise ship was built in the US. The Shipyards building warships aren't particularly busy in fact there is make work at many of them i.e. they are building one ship Slowly so that there will be a skilled worker pool in case there is ever a need(the submarine building yards almost mothball some of the ships that come off the ways). I don't think that getting the skill set back will be that hard. With the Euro being so strong and the dollar so weak, it will be cheaper to build in the US. Its not like the countries where cruise ships are built have a third world economy.