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The Honolulu Advertiser
Posted on: Friday, April 26, 2002

Partially built cruise ship for sale

By John Porretto
Associated Press

PASCAGOULA, Miss. — The federal government is trying to sell a partially built cruise ship once destined for Hawai'i to recoup some of the $185 million in taxpayer money that was sunk in the failed public-private venture.

Scaffolding surrounds a cruise ship at the Northrop Grumman Ship Systems' Ingalls shipyard in Pascagoula, Miss., during construction that has since been halted. The federal government is trying to sell the partially built ship.

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The U.S. Maritime Administration is accepting bids on the ship's hull, which is 55 percent complete, and related materials and equipment.

The structure is at defense contractor Northrop Grumman's Ingalls shipyard in south Mississippi, where it was being built for American Classic Voyages, now in bankruptcy.

The new ships were to be based in Hawai'i, where American Classic Voyages had operated the SS Independence and the Patriot.

The Maritime Administration has placed advertisements in trade publications and will accept bids until sometime in May, said agency spokeswoman Robyn Boerstling.

The Maritime Administration is working with Ingalls on a plan to close the hull, which is 650 feet long and 124 feet high.

"The idea is to make it floatable and towable so you can take it wherever," Boerstling said.

Los Angeles-based Northrop Grumman suspended work in October on the 1,900-passenger vessel after the Maritime Administration decided to end its guarantee of $1.1 billion in loans for the project, which had encountered financial and design problems.

The venture, known as Project America, was to include two ships.

Greg Trauthwein, associate publisher of Maritime Reporter and Engineering News in New York, said selling the hull will be a challenge.

The biggest factor is that the cruise ship market is considerably overbuilt at present, he said.

"The cruise industry was already maturing before Sept. 11, and then it got its legs cut out," Trauthwein said. "The last thing you'd want right now is another ship you can't fill."

He also said converting the ship to something other than a cruise liner would be difficult because such vessels are designed and built to very strict specifications.

Ingalls began work in June 2000 on the first vessel — which was to be the largest cruise ship ever built in the United States. The shipyard and the Miami-based cruise line kicked off construction with a glitzy ceremony that featured fireworks, red, white and blue confetti, and hula dancers.

Ingalls, primarily known for building Navy destroyers, eventually encountered problems involving designs and materials and fell months behind schedule. The company had ordered 90 percent of the equipment for the second vessel.

After American Classic Voyages filed for bankruptcy in October, Northrop Grumman was unable to reach an agreement with the Maritime Administration to finish building the ships and canceled the program. It ended the first effort to build a cruise ship in America in more than 40 years.

Senate Minority Leader Trent Lott, R-Miss., who lives in Pascagoula, suggested in an interview with The Associated Press earlier this year that the Navy buy the ship and convert it into a Navy command and control vessel. The Navy determined that such a deal wasn't feasible.

Northrop Grumman has said it took a $60 million pretax charge in last year's third quarter related to Project America.