Norwegian Cruise orders eight new ships, biggest order in its history

By Doyinsola Oladipo

NEW YORK (Reuters) -Norwegian Cruise Line Holdings has placed the largest ship order in its history to meet the growing demand for cruise travel, the cruise operator said on Monday.

The company will order eight new ships across the company's three brands, scheduled for delivery between 2026 and 2036, executives told Reuters, without giving a price for the ships.

Norwegian Cruise Line made its announcement after stock trading closed. Its shares closed at $19.39, up 2.65%.

The cruise industry represents 1.5% to 2% of the overall vacation market so there is room for growth, Norwegian CEO Harry Sommer told Reuters.

"This is the most comprehensive look to the future that the company has ever done," Sommer said. "It demonstrates our optimism about the future of this industry."

Sommer said the new ship orders will not materially increase capital expenditure requirements or the company's net leverage.

The cruise operator said the new vessels are slightly more expensive than previous ones given inflation. The company took approximately $1.5 billion in euro-denominated term loans to partially finance its purchase of four of the new vessels, according to an SEC filing.

Norwegian said the new ships will enable the company to grow passenger capacity by 6% a year through 2028 and 4% annually through 2036.

"We can grow and deliver these outsized returns on dividend free cash flow while at the same time not impacting at all our leverage for the foreseeable future," Sommer said.

The company had total net debt of $13.7 billion at the end of 2023.

Italian ship-maker Fincantieri said it will build four of the ships and has signed a letter of intent to build the remaining four.

Norwegian also plans to develop a new pier on its private island in the Bahamas, set to be completed by late 2025, with an investment of $150 million.

The company said the pier will allow it to carry 50% more guests to the region annually.

(Reporting by Doyinsola Oladipo in New York and additional reporting by Granth Vanaik in Bengaluru; Editing by David Gregorio and Deepa Babington)