Seaspan has another five containerships eligible for scrapping as the Vancouver-based company braces for another tough year.
Addressing analysts after reporting fourth quarter earnings, chief financial officer David Spivak said it has five vessels that are 15 years or older that would likely make good scrapping candidates as they are coming up for dry dock.
Spivak did not say if there were specific plans to scrap those ships as yet. But he did say the company could face a non-cash loss of $100m this year should the ships be scrapped.
Chief executive Gerry Wang said the rates on panamax vessels are "just not sustainable" in the current market. He suggested the company will continue to winnow its fleet to handle the current environment.
"We'd continue to push more panamax vessels to the scrap yard, which is a healthy thing for the industry," Wang said.
During the fourth quarter, Seaspan scrapped one 13-year old panamax, the 4,590-teu Seaspan Efficiency (built 2003), booking a $15.4m non-cash loss in the transaction.
Seaspan also outlined an anticipated cut in its dividend, with its annual payout lowered 67% to $0.50 per share. Credit Suisse analyst Greg Lewis said the move saves the company some $106m annually.
The Gerry Wang-led company will need to save cash as it is on the hook for the delivery of five 11,000-teu containerships and one 14,000-teu containership this year. Seaspan was able to defer delivery of two unchartered 10,000-teu vessels until 2018.
