Q3 profit up 17 percent for Norwegian Cruise Line

Norwegian Cruise Line Holdings said net income improved 17.5% in the key third quarter, helped by delivery of Norwegian Getaway and extremely healthy load factors.

The Miami-based operator of 13 ships said it earned $201.1 million in the July-to-September quarter, up from $170.9 million a year earlier. Revenue climbed 12%, to $907 million.

Norwegian said revenues rose through a combination of a 13% increase in capacity days, driven mostly by the 4,000-passenger Getaway and a 3% increase in net yields.

Norwegian ships traveled on average of 114.8% of their double-occupancy capacity, suggesting many third and fourth berths per cabin were filled over the summer months. In last year’s third quarter, Norwegian’s average capacity was 114%.

Analysts said Norwegian’s future pricing has strengthened in recent weeks, with the exception of New York-based Norwegian Breakaway, which faces competitive pressure from Royal Caribbean International’s newest ship, Quantum of the Seas, arriving at Cape Liberty in Bayonne, N.J., on Nov. 10.

Patrick Scholes, analyst with SunTrust Robinson Humphrey in Atlanta, said that ticket yields in the quarter were down only 1% compared to his negative 3% expectations.

“While we would not classify ticket prices down 1% as a ‘strong result’ it was certainly ‘less bad’ than we anticipated, especially given the glut of Caribbean supply,” Scholes said in a note to clients.

Falling oil prices continue to provide a tailwind for cruise line earnings. The company’s fuel price per metric ton in the third quarter, net of hedges, was $641 compared to $695 in 2013.

Overall fuel expense was $79.9 million in the quarter, up from $77 million a year earlier.

Interest expense rose to $32.3 million, up from $26.6 million, “as a result of higher incremental borrowings and interest rates.”

Norwegian said construction of its next ship, Norwegian Escape, is on track for its scheduled October 2015 delivery. The company recently disclosed the ship will include a version of Tobacco Road, Miami’s oldest bar, which recently closed after 112 years.

A replica of the bar’s iconic sign, along with vintage photos and specialty drinks served at the bar will features of the bar on Norwegian Escape.

Last month, Norwegian announced it had agreed to acquire Prestige Cruise Holdings, the operator of the Regent Seven Seas and Oceania luxury brands. It said the $3.03 billion deal is expected to close in the fourth quarter.