Miami Herald (MCT)
October 26, 2012
The world's largest cruise ships should expect some company.
Royal Caribbean Cruises announced Thursday that negotiations are underway to order a sister ship to Oasis of the Seas and Allure of the Seas, which each carry 5,400 passengers.
"A year or two ago, I think I thought two ships in this category would probably be the right number," said Royal Caribbean Cruises chairman and CEO Richard Fain in a conference call with analysts. "But I think they have simply continued to perform so well...that I think that overcame our reservations."
The company said that a new order would cost less per berth than the first two ships, which rang in at about $1.4 billion each. The newest Oasis-class addition would be delivered in 2016, but few other details are known about the company's plans.
A spokeswoman for the Miami-based cruise operator, which is already expecting new 4,100-passenger ships in 2014 and 2015, would not say where a new Oasis-size ship might be based. Oasis and Allure both sail the Caribbean from Port Everglades in Fort Lauderdale.
Miami cruise expert Stewart Chiron, CEO of CruiseGuy.com, said few ports can handle such a massive ship.
"I would have to think that the ship would have to come into Miami," he said.
A spokeswoman for PortMiami said Thursday that it was too premature to comment.
Chiron said Oasis and Allure remain popular, drawing passengers who are more interested in the ship experience than itinerary.
"I'm confident that a third ship would be easily added in," he said.
Although the new Oasis order had been rumored for weeks, the world's second-largest cruise ship company refused to comment on reports about any potential order until Thursday. The official announcement came in a third-quarter earnings release.
While better than expected, results from the third quarter still show that net income dropped to about $368 million from $399 million during the same time last year. Revenues fell from $2.3 billion in 2011 to $2.2 billion this year, while net cruise costs excluding fuel increased 2 percent.
But executives said they were encouraged by strong close-in bookings and the outlook for 2013 and raised projections for the full year. For next year, executives said, bookings and pricing are a little higher than a year ago. That's despite the waning impact of the deadly January shipwreck of the Costa Concordia, owned by rival Carnival Corp., and the struggling economy in Europe.
Royal Caribbean stock closed at $33.74, up more than 8 percent from the previous day's close.
"If this is how we're doing facing such headwinds, imagine how we'll do in a normal year," Fain said.