Fuel Price Surge & Global Events: How They're Shaping Norwegian Cruise Line's Strategy

Norwegian Cruise Line Holdings Ltd NCLH said that in the third quarter and into the fourth quarter of FY23, it experienced operational impacts from higher fuel prices as well as global events, including the wildfires in Maui and the escalating conflict in Israel. 

The company noted that Pride of America, which offers year-round inter-island Hawaii itineraries, modified certain itineraries in August to avoid stressing local resources in Maui.

The wildfires also led to a slowdown in close-in bookings for sailings in Hawaii, primarily concentrated in the fourth quarter of 2023. 

Pride of America accounts for approximately 3% of the cruiseliner’s capacity in the fourth quarter of 2023. 

In addition, after the escalation of the conflict in Israel, Norwegian Cruise Line is canceling and redirecting all calls to Israel for the remainder of 2023.

Prior to the conflict, approximately 6% of the company’s capacity in the fourth quarter of 2023 had visits to Israel. 

As of October 5, 2023, Norwegian had hedged approximately 45%, 35% and 5% of its total projected metric tons of fuel consumption for the remainder of 2023, 2024 and 2025, respectively in order to mitigate the impact of fuel price volatility.

NCLH also said it continues to experience strong consumer demand and remains at its optimal booked position on a 12-month forward basis.

NCL Corporation Ltd, a subsidiary of Norwegian Cruise Line, has offered to sell $790 million of its senior secured notes due 2029 in a private offering.

Price Action: NCLH shares are trading lower by 0.89% at $16.46 on the last check Wednesday.