Carnival Orders $500M Vessel for Princess

Princess Cruises will construct a new 116,000-ton cruise ship, a sister to the Caribbean Princess, which will be built at Fincantieri's Monfalcone yard. Built at an approximate all-in cost of $500 million, the new vessel is expected to be delivered in May 2006. By utilizing an existing hedge against the euro, the new Princess vessel will be built at approximately 92 cents to the euro versus the current exchange, which is approximately $1.10 today. In addition, the company has reduced the number of Holland America's "Vista-class" vessels from five to four. Holland America's Vista-class includes the Zuiderdam, introduced last year, along with three other newbuilds scheduled to enter service through early 2006. "The addition of four Holland America 'Vista-class' vessels will result in a 59 percent capacity increase over a three-and-a-half-year period, which is a more rational growth rate for an up-market premium brand," said Micky Arison, chairman and CEO of Carnival Corporation & plc. The company has also stretched out the delivery of three cruise ships being constructed at Italy's Fincantieri shipyard. The vessels with adjusted deliveries include: Carnival Cruise Lines' Carnival Valor - delivery adjusted from Sept. 2004 to Dec. 2004; Cunard Line's Queen Victoria - delivery adjusted from Jan. 2005 to March 2005; and Holland America Line's fourth "Vista-class" vessel - delivery adjusted from Oct. 2005 to Jan. 2006. This realigned newbuilding schedule further demonstrates Carnival's flexibility, allowing it to maximize its newbuilding program especially when it encompasses multiple companies building ships at the same yard. "We're less than two weeks into the new Carnival/P&O Princess combination and we are already working on optimizing asset utilization to benefit the brands and maximize returns for the group," said Arison. "The reality is that we would have scheduled our deliveries differently had we been making decisions for this portfolio of brands two years ago. Slowing down the delivery schedule gives us a more rational and efficient timetable to absorb additional capacity. It is also a testament to our excellent relationship with Fincantieri, which has shown incredible flexibility in working with us in accommodating this new schedule. Eleven of our 17 newbuilds are under contract with Fincantieri and the level of cooperation they have demonstrated only serves to further strengthen our business partnership," Arison stated.