NCLH looks at alternatives to St. Petersburg for Baltic cruises

So said Norwegian Cruise Line Holdings management during Thursday's earnings call during which the geopolitical situation took a back seat to COVID-19 recovery matters.

Cruise shares fall, oil prices jump

All cruise shares fell and oil prices jumped as high as $105 per barrel the day after Russia's attack.

'We are following the situation carefully,' NCLH President and CEO Frank Del Rio said. 'We have no vessels in the region until late May and will be updating guests about plans for affected itineraries as needed.'

Baltic itineraries are the highest or among the highest earning itineraries in cruising.

St. Petersburg figures in 50 cruises

EVP/CFO Mark Kempa said about 50 NCLH sailings, mainly by the Norwegian Cruise Line brand, feature St. Petersburg. This is roughly 5% of NCLH's total capacity.

'We are looking at alternative ports as we speak. This is something we have been thinking about,' Kempa told analysts. 'Worst case scenario, if we are not able to call on St. Petersburg or the surrounding areas, there's plenty of other ports in that Scandinavian region that we have the ability to call on.' He predicted: 'Not a huge impact.'

'It is disappointing because St. Petersburg is one of the crown jewels of the Baltic itinerary, but certainly there are alternatives,' Del Rio added.

No 'red flags' this morning

As for whether the Russia-Ukraine conflict will impact cruise bookings, 'It's way too early,' Kempa said. 'We definitely did not see anything as of close of business yesterday. This morning we haven't received any red flags.' Kempa said it's possible there may be some slowdown on the margin but it's too early to tell if there will be any major impact longer term.

'Europe's a big continent. This is impacting a very small portion of Europe,' he said. 'There's lots of other areas where we can operate, including the Med.'

Baltic ships will stay in the Baltic

Del Rio clarified: 'The Baltic ships will stay in the Baltic, the Med ships in the Med. If we cannot go to St. Petersburg, there are many alternative ports to visit in the surrounding countries. We also have the opportunity to overnight in another port so would not affect the length of the itinerary, nor the embark/disembark [city].'

Hedging partly offsets fuel spike

Kempa said the Russia-Ukraine conflict is pushing fuel curves higher.

NCLH has hedged 42% of its total fuel consumption for 2022 and 24% for 2023 so that 'affords us partial protection from the recent spike in prices,' he noted.

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