Wärtsilä and Carnival Ink 12-Year, $1 Billion Partnership Agreement

Carnival Corporation, the world’s largest cruise company, has signed a 12-year agreement with Finnish engine manufacturer Wärtsilä valued at nearly $1 billion and covering all engine maintenance and monitoring work for 79 of Carnival Corp.’s vessels.

The two companies said the agreement builds on their existing partnership and is aimed at maintaining the highest possible levels for cruise ship safety and reliability. The agreement is performance-based and provides for shared financial incentives and exposure based on outcomes for both companies.

“Our agreement with Wärtsilä extends our cooperation to a strategic partnership,” said Bill Burke, Chief Maritime Officer for Carnival Corporation. “With Wärtsilä maintaining vessels under our agreement and ensuring a high level of safety and reliability, we can concentrate on our core priority – providing great cruise vacations for our more than 11 million annual guests. In addition to reducing our costs, the long-term agreement increases safety and operational efficiency – two critical advantages in the fast-growing cruise market.”

The long-term value of the agreement is said to be approximately EUR 900 million.

Wärtsilä says the expected revenues for 24 months, approximately EUR 150 million, will be included in its order book for the first quarter of 2017, with expected revenues of EUR 56 million in 2017. The contract will become effective as of April 1.

According to the agreement, all engine maintenance and monitoring work for 79 of Carnival Corporation’s vessels will be handled by Wärtsilä, and ongoing planning will be a collaboration between both companies.

“The agreement includes Wärtsilä’s Dynamic Maintenance Planning (DMP) and Condition Based Maintenance (CBM),” Wärtsilä said in a press release. “These services are based on capturing digitalised data streams from every engine, after which this data is analysed by specialists. This allows real-time optimisation of the equipment whilst predicting operational and maintenance demands. With the DMP and CBM in place, vessel and fleet operations are optimized and engine overhaul intervals potentially extended. With approximately 400 Wärtsilä engines covered under the agreement, even the smallest improvements in vessel fuel consumption add up to significant annual savings in fleet operational costs.”

For Wärtsilä, the strategic partnership is expected to encourage increased focus on research and development, manufacturing and other functions to make its products even better and more efficient.

“We are very excited to develop our long-term partnership into a more strategic direction. Both Wärtsilä and Carnival Corporation are committed to investing significantly in this partnership as well as to develop our cooperation in the long run. We are confident that working closely together, we can improve performance in both organisations,” says Pierpaolo Barbone, President, Services & Executive Vice President, Wärtsilä Corporation.