S&P Upgrades Norwegian Cruise Line Credit Rating

Norwegian Bliss in Ponta Delgarda, Azores photo credit Spacejunkie2 Flickr Account

Norwegian Cruise Line Holdings today announced that S&P Global Ratings (S&P) has recently upgraded NCLC’s (NCL Corporation, a subsidiary of Norwegian Cruise Line Holdings) issuer credit rating and issue-level ratings.

NCLC’s issuer credit rating has been upgraded to B+, marking a notable improvement in the company’s creditworthiness, according to a press release.

In addition, S&P has raised the issue-level ratings on NCLC’s existing secured and unsecured debt. The company’s senior secured debt ratings were raised to BB/BB- and its unsecured debt rating was upgraded two notches to B.

S&P highlighted several factors for the upgrade, including NCLC’s current forward-booked position, increased capacity, occupancy recovery, and higher pricing providing good revenue and cash flow visibility for 2024. In addition, S&P noted that the Company’s leverage will benefit from higher revenue, EBITDA, and cash as it generates a full year of operations from its 2023 ship deliveries, without incurring incremental ship delivery debt in 2024.

Further enhancing its financial position, on March 7, 2024, the company successfully completed the refinancing of its $650 million backstop commitment. This commitment has been refinanced from a secured to an unsecured commitment, and as part of this refinancing, the company has repaid its $250 million 9.75% senior secured notes due 2028, eliminating its highest interest rate debt.

“The upgraded ratings are an important recognition of the strength of our business and our ability to reduce leverage,” commented Mark A. Kempa, executive vice president and chief financial officer of Norwegian Cruise Line Holdings Ltd. He continued, “Our recent refinancing, which reduces interest costs while releasing the related collateral, is a clear demonstration of our commitment to de-levering and improving our balance sheet.”

Del Rio: Full NCLH Fleet to Operate by Late Spring; Adapt to Situation

Frank Del Rio, president and CEO of Norwegian Cruise Line Holdings, spoke on Thursday morning along with Dr Scott Gottlieb, former Commissioner of the U.S. Food and Drug Administration and Chairman of the Norwegian Cruise Line Holdings SailSAFE Global Health and Wellness Council.

Del Rio said the company, which operates the Norwegian, Regent and Oceania brands, had spared no expense to operate safely and he still plans to have the company’s full fleet operating by late spring.

“We have made every effort (and) spared no expense to have the most stringent protocols in the hospitality and leisure space,” he said, on a webinar for media and travel partners. “We will simply not take risks with the well-being of our crew and our guests for the sake of profit.”

Commenting on close-in voyage cancellations, Del Rio said that the virus was spreading quickly, but also disappearing quickly.

“With the rapid spread of Omicron across the globe our industry has gotten a lot of press. Most of it negative press,” he continued. “And all of it has been biased to some degree … taking advantage of the fact that our industry offers robust testing, that we track cases and that we diligently report them to the CDC and other public health administrations.”

Del Rio said the different rules for the cruise industry for public safety had hurt the business. 

“The media and even some politicians turn to this hard data that we provide and they take this news and sensationalize it for a cheap headline. We are the only industry they can pick on because of our honesty,” he continued, adding that the industry had survived two years of “this monster” and told travel advisors it was not time to quit.

Dr Gottlieb stressed that he thought the Omicron wave was peaking in parts of the U.S. and some areas of the country would see the same in a few weeks before cases start going down. That, combined with new treatments, should paint a positive picture of the future.

Onboard, Dr Gottlieb said the cruise industry had the ability to tightly control the environment and noted that Norwegian had invested heavily in onboard therapeutics and testing.

“The cruising environment lends itself to being able to introduce those measures.”

Del Rio admitted that the Omicron timing had a dampening effect on wave season.

Dr Gottlieb mentioned that he felt confident there would be a low prevalence of COVID this summer, people would be back to travelling and consumer confidence would be up.

In light of the past two years, Del Rio said: "Continue to expect the unexpected and adapt."

Norwegian Builds Global Sourcing Strategy

Norwegian Builds Global Sourcing Strategy

Norwegian Cruise Line Holdings (NCLH) is pursuing a global passenger sourcing strategy for its European cruises.

Said Frank Del Rio, President and CEO, on NCLH’s Q3 earnings call: “Our sailings in Europe has benefited from our global sourcing model and the go-to-market strategy that allows us to source the best or highest yielding guests regardless of where they come from.

“North American guests comprise the majority of the guests for our European sailings, and the second-largest contingent of passengers on these cruises come from Asia, Australia and South America.

“We know that guests that fly a long way to cruise are higher-yielding guests than those that drive their car or take a bus or a train to the port.”

“But not withstanding issues in Europe, booked ticket revenue for passengers sourced there were up 43 per cent year-over-year,” Del Rio added, who cited the company’s Free at Sea promotion introduced seven months ago. Guests can choose up to five “free” offers, including beverage packages and speciality dining.

For Q3 2019, NCLH’s European capacity was up 13 per cent over the same period last year.