Royal Caribbean Looks to Order New Ultra-Voyager Ships

Monday, June 16, 2003
Royal Caribbean Cruises Ltd., along with Finnish shipbuilder Kvaerner Masa-Yards, has developed a design for a new and even more spectacular ship, the "Ultra-Voyager," and that both parties have signed an agreement that could lead to a firm order. The conditional agreement anticipates one newbuilding, deliverable in 2006, and one option, for delivery in 2007 or 2008. The agreement anticipates that the cruise line and the yard could enter into construction contracts for Ultra-Voyager, provided that certain conditions, such as the euro-dollar exchange rate, move to a more favorable position. Royal Caribbean may activate the agreement up to August 31, 2003 or under certain terms up to December 31, 2003. The new Ultra-Voyager would be roughly 15 percent larger in space and in passenger capacity that the earlier Voyager-class vessels. It would carry more than 3,600 guests (double-occupancy), 500 more than its predecessors. At just under 160,000 gross tons the Ultra-Voyager would provide even more room for passenger facilities and amenities and would provide even greater economies of scale than her predecessors. Royal Caribbean has four Voyager-class ships in its fleet today. The fifth sistership, Mariner of the Seas, is due for delivery at Kvaerner Masa-Yards Turku yard in October this year. One key factor affecting whether this agreement leads to a firm contract is how much the current euro-dollar exchange rate improves. Royal Caribbean hopes that circumstances will allow it to finalize the order later this year and that these new berths will enjoy a lower capital and operating cost than earlier Voyager-class ships. "We are pleased that Royal Caribbean continues to place its faith in Kvaerner Masa-Yards and hope that conditions will allow us to proceed with our mutual plans. We will work hard to improve our cost efficiency even further, without compromising our high quality standards," said Jorma Eloranta, president and chief executive officer of Kvaerner Masa-Yards Inc. "We are nearing the completion of an aggressive shipbuilding program unprecedented in our history," said Richard D. Fain, chairman and CEO of Royal Caribbean. "That program has allowed us to develop some of the most innovative ships in the world and has greatly improved our economies of scale. We are operating in a different environment today, and we anticipate that the company's future fleet expansion will proceed at a more measured pace in terms of capacity, but not in terms of innovation." Royal Caribbean has three ships under construction in Finland and in Germany. In addition, it has options for two Radiance-class ships in Germany. Fleet capacity has grown 77 percent in the last four years, the height of the company's growth spurt, or more than 15 percent annually. Adding an Ultra-Voyager in 2006 would increase capacity by 3.0 percent in 2006 and 2.9 percent in 2007. If the decision is made to build an Ultra-Voyager, there would be a two-year gap between the last of the current newbuildings and the first of the Ultra-Voyagers.

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