Norway's Departure from NCL Imminent

Norway most likely will be leaving the NCL fleet within a month. The most recent blow to its continued existence came last Tuesday (February 22, 05), when one of two potential buyers of the classic ship decided it wasn't for them. In any case, Colin Veitch, NCL's CEO, told CND yesterday that the company wants to bring Norway’s time with NCL to a conclusion of some sort by the end of this quarter.

If the ship ultimately goes to the breakers, it won't be because NCL hasn’t put forth its best efforts, first to keep it in their fleet, and then to find it a good home - and keeping it in good repair all the while.

The problem is, Norway is an aging - and damaged - piece of equipment. It is expensive to repair, operate or even maintain. Any business that would want the ship has to be able to make money with it in excess of what it will cost to put it into a condition that would be useful to them, and then, of course, an additional excess to what it would cost to operate it for profit. Even if a museum were to buy it simply to let it sit and be viewed from outside, it would still cost money - and lots of it - just to let it sit.

The most recent company that has walked away from a deal with NCL is Pierre & Vacances, a French vacation company which considered purchasing the ship to "repatriate" it to France and use it as a floating hotel and museum. (The ship had a celebrated first life as S/S France, and the French have maintained a tremendous interest in it even through its long and equally famous life as S/S Norway.)

Pierre & Vacances said Tuesday that after an extensive feasibility study, they don't see Norway as a truly viable business venture. The firm estimated a cost of at least 200 million euros to relocate the ship to France, convert the ship and remove the asbestos.

Veitch told CND that there is one more qualified buyer, a Dutch group, with what he thinks is a realistic business plan.

Because we know there is a tremendous interest in Norway, and it has a lot of fans, CND has kept in touch with Veitch about the ship's fate since the 2003 boiler explosion in Miami which took Norway out of service.

From the start, NCL was planning to return Norway to service as soon as possible. Shortly after the National Transportation Safety Board released the ship back to NCL, they had it towed to Europe where they knew the repair would take place, even though a specific yard hadn't been chosen. The idea was to have the ship in place so they could get the repairs started as soon as the insurance claim was settled.

Even as NCL was still doing their own surveys of the ship to plan what repairs they deemed necessary, rumors were circulating among the ship's fans that it would never return. The cynics said NCL would take the insurance claim and scrap the ship because it would be easier.

We never saw any evidence of that, either in what NCL was actually doing or what Colin Veitch was telling us. From a business perspective, Norway was profitable for NCL. It was owned outright by the line, and that made it easy to sell at the low leader type of prices that were often/usually seen on the ship and easy to keep it full.

Part of the market was also true fans of the ship. Veitch told CND that they knew that fan base existed, but they never realized the true extent of it until NCL started hearing from them when the rumors began circulating about scrapping the ship. The even-larger market than NCL had previously realized made it even more important to NCL to return Norway to service.

Several times during the summer and fall of 2003, when things didn't seem to be moving forward, CND talked with Veitch about the delay and the persistent feeling among fans of the ship that it wasn't coming back, especially when it didn't go back into the schedule for late-2003 when NCL had estimated it would return to service.

Veitch said they had run into several problems. One was that there were few manufacturers who could still build a boiler for the vintage ship, and their delivery time would be much longer than originally anticipated. The other problem was that it was taking much longer to settle the insurance claim than planned.

That was when Veitch first raised the possibility with us that Norway may not return to service. It's probably when NCL started getting an inkling that it they may not get all the money they wanted from their claim. In the fall of 2003, Veitch told CND that as much as they wanted return Norway to service, it all came down to how much they would receive from the insurance company, and how much more NCL would have to invest in the ship to make it operable. He said that they had to be able to operate it profitably and make their money back.

In the mean time, NCL did put Norway to use when it was used at the Lloyd yard, where Pride of America was being built in Germany. NCL was using Norway to house crew members in training for Pride of America. The fact that Norway was available for that duty was fortuitous because hotel rooms are usually limited in the areas around shipyards. (Ultimately, those crew members went to Pride of Aloha instead of Pride of America when the new ship sank at the yard as the result of a shipyard accident.)

While they were still aboard Norway last March, however, Veitch announced that NCL had determined Norway would not sail again for NCL, but at that time wasn't willing to elaborate.

When Pride of Aloha went into service in July, we had an opportunity to talk with Veitch at length about that decision, although we didn't publish it at the time. The decision, he told CND, did indeed come down to safety and money.

NCL, he said, wanted to replace the existing boilers in addition to the one destroyed in the explosion. Since no cause could be determined for the failure of the one boiler, which resulted in the fatal blast, NCL would not operate the ship with two other boilers of the same vintage. All of the boilers had passed a routine inspection shortly before the explosion. The others may have the same undetectable weakness, and NCL did not want to risk the safety of their passengers or employees with an unknown like that.

The insurance company was willing to pay only for the replacement of the destroyed boiler and repair of the ship. Replacing the other boilers would be at NCL's expense. In the end, the decision, therefore, came down to money. There is no way that NCL could reasonably expect to make back a financial investment of that size on the 30-year-old ship, plus a reasonable profit.

Then it became a search for a buyer who would preserve the ship. There have been several groups who have stepped forward over the last few months and expressed interest. The problem with those ventures, from the public's point of view, is that often they have announced their plans for the vessel as if they were firm and everything is in place. In reality they were still only in the planning stages, before they have really considered all the aspects of the venture, and usually before they had actually even negotiated an agreement with NCL for the purchase.

As we mentioned at the beginning of this article, there is one more group interested in purchasing Norway, and may possibly save Norway from the breakers, but NCL wants to get on with their life and resolve Norway’s future by the end of next month.

For those who are rooting for Norway to begin a new life as some sort of permanently-moored hotel or entertainment facility, we recall some wise words from a well-known personage in the cruise industry. Last summer we talked with Mike Moulin, the former commodore of the Princess fleet and now a noted cruise industry historian, about the end of ship’s sailing life and what should be done with them. He said it is a sad situation to see a beloved ship go off to the breakers, but he thinks there is something even sadder to see. That is seeing the vintage ships that groups buy to preserve as hotels or conference centers fall into disrepair.

He said that the economics make it unrealistic to preserve ships that way. He said, "it’s great to try to save it, but with what? Who’s going to pay for the upkeep?"

Moulin said that he has never seen one kept properly like it was when it was sailing and they way the group envisioned doing when they bought it. He said the costs of keeping a ship in top form are tremendous, much more than these organizations realize they are getting into. "If you buy it, and don’t keep it up, within weeks, she’ll look tatty. Within months, she’ll look shabby. Within a year, [from the looks of the ship the group] regrets ever getting into it."

Words for all of us to remember as Norway officially ends its life at sea.

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