American Classic Voyages may shelve the Independence
By Michele Kayal
Advertiser Staff Writer
Amid tough first-quarter financial results, American Classic Voyages made clear this week that the Independence, Hawai'i's vintage cruise ship, will come out of service if it fails to pull its weight financially, but cautioned that there is no schedule for taking such action.
Advertiser library photo • Nov. 4, 2000
The Independence was responsible for the biggest decline in yields in the Hawai'i market during a quarter in which the company's losses widened to $13 million.
Owners of Hawai'i's vintage cruise ship, the Independence, say losses may force the ship out of service.
Yields on the Independence, which sails under the brand American Hawaii Cruises, came in at $130 per passenger a night, a 39 percent decrease from the same period a year ago.
For the full year 2001, the company estimates a yield of $105 a night on the 860-passenger classic cruise vessel, 25 to 30 percent lower than on the 1,212-passenger Patriot, which sails Hawai'i under the brand United States Lines.
The company attributed the weak performance to overcapacity in the market and increasingly competitive pricing.
"You don't make a decision based on one quarter alone," said Philip Calian, American Classic's chief executive officer. "But if we do not perceive the Independence as contributing, which we think it will and should, then we make that decision."
Calian said a decision would be balanced by other factors, such as the need to retain already-trained employees for other ships that will come on line in the future.
Analysts said they do not believe the Independence will come out any time soon, but could not estimate when a decision might be made.
"Our analysis would suggest that it's already cash-flow negative," said Joe Hovorka with Raymond James in St. Petersburg, Fla. "But they're looking at the current situation as partly impacted by the soft economy. So they're assuming their pricing is going to come back. But how long would they feel comfortable waiting, I don't' know."
Calian and other American Classic executives also expressed concern over the ability of Ingalls Shipbuilding to meet certain deadlines. Ingalls is building two 1,900-passenger ships for American Classic service in Hawai'i. The first ship is due in 2003, and Calian declined to say when the company might offer a clearer picture of whether the ships might be delivered late.
"I'm not going to speculate at this time. It's very premature," he said. "Contractually, the delivery date remains January 2003 for the first ship."
