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When it comes to soft demand for Europe, Del Rio thinks 'the worst is behind us'

Frank Del Rio also told analysts 2017 is looking 'very, very good' for bookings and pricing in general
Softer North American demand for cruises in Europe is impacting US-based operators this year, but Frank Del Rio thinks 'the worst is behind us.'

The ceo of Norwegian Cruise Line Holdings on Tuesday cited positive booking trends for Europe over the last four weeks and said it's possible a late European bookings cycle could 'bridge the gap.'

NCLH shares fell more than 4% in early Tuesday trading after the company issued second quarter earnings per share guidance in the range of 80 cents to 85 cents, under the Wall Street consensus forecast of 97 cents per share, and said softer demand for European cruises was to blame. 

But NCLH held its earlier full-year EPS guidance of $3.65 to $3.85, which encompassed the $3.77 consensus expectation.

Del Rio said the company has been making up for the lower North American bookings in Europe by courting more European customers. However, Europeans pay less for cruises and spend less on board.

Overall, one-third of the company's business in Europe is European-sourced, and Europe comprises 26% of NCLH capacity in Q2. That's mostly Mediterranean sailings while Q3 has the bulk of the high-yielding Baltic itineraries, and that region is less impacted.

Terrorist incidents in Istanbul, Paris and, particularly, Brussels in recent months have hurt North American demand for Europe. But Del Rio told analysts the memories of those incidents are starting to fade.

Airfares are down because of softer travel demand following these incidents, while the US dollar remains strong. Both factors help American travelers.

'Yes, the worst of the downtown in the North American market is behind us ... Bookings are starting to come back,' Del Rio reiterated, adding that NCLH doesn't need a major rebound in European business to hit its targets.

Also, Del Rio told analysts the company hasn't changed its outlook with regard to achieving $5 EPS in 2017. Previously he had seemed to imply NCLH would exceed $5 per share.

'2017 is looing very, very good and we're comfortable with where we are,' Del Rio said.

Bookings and pricing are strong for the first half of the year and that's not counting an expected boost from Norwegian Joy's introduction in China, which happens in the third quarter.