MIAMI (CBSMiami) — Miami-based Norwegian Cruise Line is taking on Carnival big time, and it’s not playing games.
CBS4 news partner The Miami Herald reports the cruise operator reached an agreement with the Meyer Werft shipyard in Papenburg, Germany to build a 4,200-passenger vessel for delivery in October 2015 for 700 million euros, or about $918 million at current exchange rates. The agreement includes an option for a second ship, which would be delivered in spring 2017.
Already in the works: two 4,000-passenger ships for Norwegian, which will be delivered in April 2013 and January 2014. The first, Norwegian Breakaway, will sail from New York City and the later ship, Norwegian Getaway, will be based year-round in Miami.
Kevin Sheehan, the cruise line’s CEO, said he’s been encouraged by robust advance bookings for Breakaway. The company believes Getaway, which will be available to the public for booking on Monday, will be just as successful. After spending the last several years improving the company and onboard experience, he said additional growth made sense. The name of the new ship will be announced later.
The line’s last new ship was the 4,100-passenger Norwegian Epic, which debuted in 2010.
With room for 100 more passengers at double occupancy and higher gross tonnage than Epic — 163,000 compared to Epic’s 153,000 — the just-announced project known for now as “Breakaway Plus” will be the company’s biggest ship.
“We thought that to continue to be at the cutting edge of innovation, we needed to continue to challenge ourselves, and we’ve got some really fun, neat things that these ships will have,” Sheehan said, adding that it was necessary to add “a little more space to make sure you can do it and not hurt the guest experience.”
Norwegian isn’t saying yet where the new ship will sail.
The pace of new ship orders across the industry has slowed considerably in the last few years as cruise lines seek to maximize demand and prices.
Still, last August, Carnival Corp. said it was buying three ships for its European brands to arrive between October 2014 and March 2016.
Royal Caribbean has two 4,100-passenger ships on order, also from Meyer Werft, expected to launchin fall of 2014 and spring 2015. Reports have been circulating about a possible Royal Caribbean order of a third ship in the 5,400-passenger Oasis class from a ship builder in Finland, but the cruise operator has called them “rumors” and declined to comment further.
UBS Investment Research leisure analyst Robin Farley referenced the report, which originated in Finnish media, in a note to investors Monday.
“Because shipyards globally remain starved for business, it would not be surprising if the yard, perhaps with help from the Finnish government, worked to come up with an attractive package for the order,” she wrote.
The cruise industry faced significant challenges earlier this year after the fatal shipwreck of the Carnival Corp.-owned Costa Concordia in Italy. Demand for future cruises fell, and cruise lines were forced to lower prices to fill ships. Europe’s rocky economy also caused headaches in the summer months, when many cruise lines have extra capacity stationed there.
But Sheehan said he’s confident that there will be market demand for another Norwegian ship when the newest one debuts in 2015 — and he said even this year is shaping up well.
“Of course, the industry had a tough year,” he said. “Nevertheless, we’re having a solid year with solid growth.”
The company is expected to release third-quarter earnings later this month.
Norwegian, which is privately held, has export credit financing in place for the new order. Genting Hong Kong — a subsidiary of Genting Group, a gambling and resort conglomerate that purchased the land currently occupied by the Miami Herald in 2010 for $236 million — owns 50 percent of the cruise line in a partnership with private equity firms Apollo Management and TPG.