Norwegian Cruise Line Holdings plans to expand its Oceania Cruises fleet by two ships to meet heightened demand for upscale cruising.
The New York-listed company today announced an order for two 67,000-gt Allura-Class vessels from Fincantieri as part of its OceaniaNext initiative.
The ships, set for delivery in 2022 and 2025, will be built at a cost of €575m ($730m) each.
“We are excited to expand the Oceania Cruises fleet with our new Allura-Class ships to meet the strong demand for upscale culinary- and destination-focused cruise vacations around the globe,” chief executive Frank Del Rio said.
“This new class of ships will further elevate the already best-in-class guest experience at Oceania Cruises and meaningfully strengthen demand from both new and loyal returning guests, which will ultimately drive further returns for shareholders.”
The company's shares went up 2.4% to $44.76 by noon today.
Norwegian is not concerned about talks of a possible recession after investing the almost $1.5bn because the new ships will not hit the water until 2022 and 2025, spokeswoman Andrea Demarco said.
"We have repeat customer loyalty of 50% to 60%, so the demand is very strong," she tells TradeWinds.
The new ships help expand the company’s position in the luxury market, Sanford C Bernstein Research analyst David Beckel tells TradeWinds.
"All new ships are accretive to EPS, as capacity growth is a primary driver of earnings," he said.
Norwegian has obtained export credit financing with favourable terms to fund 80% of the newbuilds, subject to Italian government approvals.
Norwegian's order was probably partially motivated by shipyard slot availability, which has lessened from consolidation, Morningstar analyst Jamie Katz said.
"The inclination is that there's demand in that market that has been untapped," she said.
The company has 10 ships on order for delivery through 2027, including seven ships for Norwegian Cruise Line, two for Oceania Cruises and one for Regent Seven Seas Cruises.
"This [Oceania Cruises order] rounds out the orderbook for all of our brands, and we see higher demand across all of our brands," Demarco said.
Norwegian will take delivery of its newest ship, Norwegian Encore, in fall 2019.
