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Continued Profitability Could Bring 2nd Ship Back

NCL's Pride of America extends Hawaii stay for 3 more years  Apr 13, 2009

The Pride of America will continue cruising the Hawaiian Islands for at least three more years, and continued profitability on the route could bring a second ship back for regular port calls, according to the new chief executive officer of NCL Corp.

That's the word from Kevin Sheehan, president and CEO of the Miami-based NCL Corp. Sheehan, 55, joined the cruise ship company in November 2007 as chief financial officer of the company and rose to CEO in August.

NCL has been through a lot of changes here — a rapid expansion from one ship, to three, and then last year back to one: the Pride of America. More foreign-flagged ships began cruising Hawaiian waters in recent years, creating more competition for NCL and putting downward pressure on prices. The Pride of Hawaii departed in February 2008, and the Pride of Aloha left last May.

Sheehan said the Pride of America's deployment to Hawaii has been extended through January 2012.

"It's doing well. I see us being here forever, personally," Sheehan said in an interview last week during his first trip to Hawaii since joining NCL. Looking ahead, "way out in the future," he could see the company committing to a second ship deployed here. But not yet, not in this economy.

He said spring-break traffic helped boost occupancy on the Pride of America recently, but overall the ship has felt the pinch of the tourism slowdown. "We've had a couple of months of the ship going out not full," Sheehan said.

Still, cutting back to one ship in Hawaii has proven to be a good model, he said. "We were losing an awful lot of money a year ago," he said. "Now, we have the one ship here that is actually profitable."

The Pride of Hawaii became the Norwegian Jade, and now sails in Europe; the Pride of Aloha shifted to Norwegian Sky and handles short trips to the Bahamas out of Miami.

He said while the company previously had experienced a high turnover of employees on the ships here, staffing is now more stable. And that has helped improve service for customers.

While he was here, Sheehan met with Governor Linda Lingle and expressed concern that a state plan to assess tariffs for state harbor modernization would shift too much of the burden on NCL.

Sheehan said improvements that help cargo operations and others should share more of that burden. He said NCL's share would increase more than 100 percent over three years. "That's not something that we could swallow from a profitability standpoint," he said.

Sheehan has visited Hawaii before, when he ran Cendant Corp.'s vehicle services division, which included Avis and Budget rent-a-cars.

Being hired to handle finances and then running the business has been something of a career pattern for the New York City native, who has a 30-year background in senior executive and financial positions. Before Cendant, he was with STT Video Partners LL and senior vice president and controller of Telemundo Group. He also spent 2 1/2 years consulting while teaching full time at Adelphi University.

NCL improved its bottom line after Sheehan joined the company. Its net loss narrowed to US$211.8 million last year after cost-saving initiatives, including redeployment of two of three Hawaii cruise ships. That compared with a net loss of US$227 million a year earlier.

Sheehan said bookings are up 15 percent for the first part of this year over the same period last year. And the cost of building one new ship and canceling another ship-building contract weighed on earnings.

Sheehan said he's having fun switching from cars to ships. He said he's tried to bring a management style that includes more people who work for the company. "I think we have a great opportunity," Sheehan said. "We felt we had to do a lot to improve the customer experience."

Some of the changes included new bedding, new restaurants and food choices. The company expanded on the practice of allowing travelers to pick the time and place they eat, part of the concept they call "freestyle cruising" that is different from the traditional model where travelers dined at the same time, place, and table every night of their voyage.

He sums it up as: "It's your vacation, you can do what you want."

NCL's Pride of America extends Hawaii stay for 3 more years
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