I had an opportunity to chat informally with Dan Hanrahan, President of Celebrity Cruises, while attending the parent company's stockholders' meeting last week. A few items might be of general interest.
>> 1. I specifically asked him when Celebrity Cruises would return to the Hawai'i and Australia/New Zealand markets. He replied that it probably would happen in the 2012-2013 season.
>> 2. I did ask about plans for MV Celebrity Mercury
, to which he replied that he could not comment about unannounced plans in public. He also declined to comment on any possible announcement of additional orders for new vessels, but see below.
>> 3. On the subject of MV Celebrity Century
offering four-night and five-night cruises in the Caribbean attracting a different spectrum of passengers than other Celebrity itineraries, Mr. Hanrahan remarked that his staff had gone back and forth about that for some time and that, while some of the passengers on those cruises had moved up to longer itineraries, there was no doubt that those cruises were drawing more than a few "undesirables" (his term).
>> 4. The company does not plan to offer "Mexican Riviera" cruises for the foreseeable future, as these cruises are yielding far lower fares than any other cruise destination. Note that sister line Royal Caribbean has also withdrawn these itineraries.
>> 5. I asked about plans to move a couple ships of the Celebrity Solstice
class to the Pacific to operate cruises to Alaska. He raised the issue of winter itineraries, to which I mentioned Hawai'i, Australia/New Zealand, and South America as possibilities. That comment seemed to catch his attention.
>> 6. There was also some discussion of the glacier viewing areas in Alaska. I asked specifically about Glacier Bay, to which Mr. Hanrahan mentioned taking a fly-over and did not see anything additional to recommend it. Thinking quickly, I pointed out that the real attraction of the area is its wildlife, which probably would not be visible from an airplane, and that the National Park Service rangers offered outstanding programs, both for adults and for youngsters, aboard the ships that visited there. I also mentioned College Fjord in Prince William Sound as a very worthwhile destination for glacier viewing on the "Gulf of Alaska" itineraries.
Finally, with regard to possible orders for new vessels, Mr. Fain, the Chairman of parent company Royal Caribbean Cruises Ltd. (NYSE: RCL), told the stockholders during the meeting that the company's immediate financial priority is to continue paying down debt with the goal of restoring an "investment grade" rating on its bonds. He went on to explain that the bond ratings depend upon various financial ratios such as debt to profit, and that the drop in profits due to the tough market of last year had caused these ratios to drop precipitously, promting a lowering of the bond rating. He went on to say that the lower bond rating had not impaired the company's ability to obtain financing for new vessels on favorable terms yet, but that the potential for it to do so in the future demands immediate priority to get the numbers back in check. Obviously, this situation also means that resumption of a dividend probably is at least a year or two away.