Norwegian Cruise Line Holdings has reported third-quarter earnings that surpassed its own guidance, signaling that its turnaround plan is beginning to take hold following a significant leadership shakeup. The cruise line attributed the positive results to stronger-than-expected close-in demand and increased onboard spending. Additionally, continued cost discipline and the shifting of certain expenses into the fourth quarter contributed to lower-than-anticipated unit costs.
The company's adjusted earnings per share reached $1.12, beating the guided estimate of 90 cents. Occupancy rates climbed to 106.5%, exceeding expectations of 104%, while onboard revenue rose 12.7% to $1 billion. Despite these gains, passenger ticket revenue fell 5.1% and net yield dropped 6.7% in constant currency for the quarter. In response to the performance, Norwegian raised its full-year adjusted EBITDA guidance to approximately $2.55 billion and projected net yield growth of 1% to 2% for the coming year.
These financial improvements follow a major restructuring initiated after activist investor Elliott Investment Management disclosed a stake exceeding 10% in February. Elliott had criticized the company for falling behind competitors due to a decade of strategic misjudgments, prompting a board overhaul that added five new members. CEO John Chidsey, who replaced Harry Sommer in February, has identified "self-inflicted" wounds as the primary cause of the company's previous underperformance.
Despite the positive momentum, analysts caution that significant work remains. Norwegian currently trails its major rivals; while the company expects its net yield to fall 4.4% this year, Royal Caribbean and Carnival anticipate increases of 2.1% and 2.3%, respectively. Furthermore, bookings for the next 12 months remain below the optimal range, and gross margin per capacity day has declined by approximately 17%. The company carries a debt load of $15.1 billion, with interest expenses projected to rise about 25% next year.
Chidsey's recovery strategy relies on several key pillars, including a new creative platform launching in January targeting premium families and seasoned travelers. The plan also involves pricing adjustments designed to encourage earlier bookings and the realization of more than $600 million in run-rate savings since 2023. Following the announcement, shares of Norwegian Cruise Line Holdings rose more than 13%.
Sources: Skift.