Posted on: Friday, November 2, 2001

Shipbuilder ends Hawai'i cruise project

Advertiser News Services

JACKSON, Miss. — Northrop Grumman Corp., the company that stopped work last week on two 1,900-passenger cruise ships scheduled for use in Hawai'i, said yesterday it has failed in attempts to arrange financing to restart construction and will take a $60 million charge to shut down the project.

Northrop halted work on the ships after American Classic Voyages, which was to buy them and use them for interisland cruises in Hawai'i starting in 2004, filed for bankruptcy Oct. 19.

Northrop revised its third-quarter earnings to add the cost of the stoppage. That caused its earnings to fall to $79 million, or 84 cents a share, from the previously reported $117 million, or $1.28.

The first vessel at the company's Ingalls shipyard in Pascagoula is about 40 percent complete. "We're going to move the ship out of our production area because it's tying up space," said Northrop Grumman spokesman Randy Belote.

Northrop said it canceled the Project America construction program, which would have produced the first U.S.-built cruise ships in more than 40 years, after the U.S. Maritime Administration decided to end its guarantee of $1.1 billion in loans.

But the Maritime Administration, which is stuck with $185 million in guaranteed debt on the vessel, suggested in a statement yesterday that the saga may not be over.

"We regretted the bankruptcy of American Classic Voyages," the statement read. "We are in contact with Northrup Grumman and their Ingalls shipbuilding division. Our door is open to any meaningful proposal Northrup may make."

The Maritime Administration said it made a proposal to Northrop Grumman that would have allowed continued financing, but Northrop rejected the offer.

Belote said he wasn't certain what would become of the first ship.