Cruise line sails into red over fuel prices

**Ally** · 08-15-2006, 02:50 PM

Star Cruises Ltd, Asia's largest cruise operator, posted a third straight quarter of losses because of higher fuel costs and a writedown of an airline investment.

Net loss was US$33.9 million, or 0.64 cents a share, in the three months ended in June, compared with a profit of US$6.2 million, or 0.12 cents, a year earlier, the Hong Kong-based company said in an e-mailed statement yesterday. Sales rose 30 percent to US$590.1 million, Bloomberg News said.

Rising fuel prices are offsetting gains from increasing passenger numbers at Star Cruises and other cruise ship operators. Larger rivals Carnival Corp and Royal Caribbean Cruises Ltd, both Miami-based, have cut their 2006 profit forecasts because of rising costs.

Star Cruises' second-quarter loss included a US$10.3 million writedown in its investment in a discount carrier, it said. The company holds 10 percent of Orangestar Investment Holdings Pte, the holding company for Singapore-based discount carriers Jetstar Asia and Valuair Ltd.

The cruise line also made a US$20.2 million translation loss related to its non-cash foreign currency debts, compared with a gain of US$16.2 million a year earlier, it said without explanation. Gerard Lim, Star Cruises' chief financial officer, could not be reached for comment.

Star Cruises' operating profit, or sales minus the cost of goods sold and administrative expenses, rose 68.4 percent from a year earlier to US$39.5 million.

The company's operating expenses per capacity day rose 6.4 percent, with fuel costs accounting for 5 percentage points of the increase.