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Norwegian Cruise results sail past estimates on travel boom

Randy Mancini 3 November 8, 2022

(Reuters) -Norwegian Cruise Line Holdings Ltd beat Wall Street revenue estimates on Tuesday, as travel demand bounced back following easing of COVID-related protocols.

The Miami, Florida-based cruise operator also reported a smaller-than-expected loss, sending its shares up about 3% in premarket trading.

While inflation has eaten into savings of lower-income households, more affluent consumers are rushing back to travel, fueling demand at cruise operators such as Norwegian which have now relaxed pandemic-related restrictions onboard.

Passengers have also been splurging on food, spas and upscale experiences onboard, helping cruise lines cushion some of the hit from higher fuel and labor costs and pushing them toward normalcy after a near 18-month pandemic-induced lull.

Norwegian, which reaffirmed next year’s bookings at record 2019 levels, said occupancy in the third quarter rose to about 82% from 65% in the previous quarter.

The company’s upbeat report echoes comments from larger rival Royal Caribbean Group, which last week forecast strong bookings for next year and said it would reach historical occupancy levels by late spring of 2023.

For the third quarter ended Sept. 30, Norwegian’s revenue rose to $1.62 billion from $153.1 million a year earlier when cruise operations were just resuming after the pandemic hit, beating estimates of $1.58 billion, according to Refinitiv IBES data.

The company, which owns the Oceania Cruises and Regent Seven Seas Cruises brands, also forecast total revenue between $1.4 billion and $1.5 billion for the fourth quarter. Analysts were expecting it to be at $1.46 billion.

Norwegian, which typically caters to wealthier guests who remain unaffected by inflation, has also been raising prices, helping it post an adjusted loss of 64 cents per share, smaller than analysts’ estimates for a 70-cent loss.

The company also said its adjusted quarterly earnings before interest, taxes, depreciation and amortization turned positive for the first time since the start of the pandemic.

(Reporting by Deborah Sophia in Bengaluru; Editing by Vinay Dwivedi)