More trouble hits cruise line
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 yesterday, citing issues related to the construction of two passenger ships.
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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.
Two cruise ships being built for American Classic Voyages in Mississippi are reportedly behind schedule and over budget, prompting the company to withhold its earnings announcement until Tuesday.
The Miami-based operator of the Independence and Patriot cruise ships put off announcing its earnings yesterday, rescheduling the release for Tuesday.
The delay was because of "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.
American Classic was planning to put the two ships into service in 2003 and 2004.
Sen. John McCain, R-Ariz., who opposes federal subsidies for the shipbuilding industry, 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.
Ingalls and American Classic are at odds over who is to blame for the delays and cost overruns. American Classic has said Ingall's request for a delay in delivery of the ships is unwarranted, according to the South Florida Sun-Sentinel.
This is just the latest in a sting of problems for American Classic. 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, which have dropped nearly 90 percent this year, fell 6 cents yesterday to close at $1.96.
