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The Honolulu Advertiser

Posted at 11 a.m., Thursday, August 9, 2001

American Classic ship problems delay earnings

Advertiser Staff

Troubles are mounting at American Classic Voyages, the parent company of Hawai'i's two locally based cruise ships. The company postponed release of its second-quarter earnings report, citing issues related to the construction of two new passenger ships.

The cruise ships, the first to be built in the United States since the 1950s, are behind schedule and over budget, according to recent reports.

The Miami-based operator of the Independence and Patriot cruise ships put off announcing its earnings from today to Tuesday.

The delay was due to "the ongoing discussions with Northrop Grumman/Ingalls Shipbuilding regarding issues affecting construction of two 1,900-passenger cruise ships," the company said in a statement.

American Classic ordered the two cruise ships in March 1999. Ingalls, a subsidiary of Los Angeles-based defense contractor Northrop Grumman, began work on the ships at its Pascagoula, Miss., shipyard in June 2000.

Sen. John McCain, R-Ariz., said in a July 11 letter to President Bush that Ingalls is as much as 18 months behind schedule, and "the shipyard and American Classic Voyages are crying foul."

Northrop chief executive Kent Kresa said last month his company was holding talks about cost overruns on the billion-dollar contract.

American Classic was planning to put the two ships into service in 2003 and 2004.

Last month the company said it would suspend its dividend because of a slowdown in the economy and stiff competition.

In June it announced it was cutting prices and would lay off about 15 percent of its land-based staff.

American Classic's shares fell 6 cents to close at $1.96 today.