Shares of Norwegian Cruise Line fall after Q4 earnings report

Shares of Norwegian Cruise Line fell more than 10% on Tuesday after the company posted larger-than-expected losses and offered a soft outlook for the year despite continued travel demand.

The cruise line reported a loss of $1.04 per share in the fourth quarter, surpassing analyst estimates of 85 cents.

Norwegian also expects annual earnings per share of 70 cents in 2023, well below expectations of $1.04. The guidance comes as the company struggles to reduce costs and debt that weigh heavily on the company. Norwegian was $13.6 billion in debt as of December 31.

As Norwegian tries to climb back to profitability, it didn’t offer much confidence for the first half of 2023.

CEO Frank Del Rio said the company’s first quarter of 2023 “will be the highest cost quarter,” but added that the second half will be better. Norwegian expects a loss of 45 cents per share in the first quarter, 10 cents higher than Wall Street had expected.

Norwegian said costs continue to rise, exacerbated by inflation, even as more ships enter service. Del Rio wouldn’t rule out an increase in equity to manage debt, but he said it wouldn’t be “prudent to spend more equity to relieve the company” even though there is “a lot of work to do “.

The strong demand gives the company hope that it can overcome the difficulties.

“We’ve seen a very, very strong record — near record booking levels dating back to November,” Del Rio said. “So we just don’t see a weakening consumer.”

Norwegian has lagged its peers, though others are still posting losses as the industry struggles with higher fuel prices and interest rates.

Royal Caribbean saw its inventory rise after posting smaller-than-expected fourth-quarter losses and bookings earlier in February. Morgan Stanley had upgraded the rival company in January, calling it the “superior cruise operator” to emerge from the pandemic.

–Seema Mody of CNBC contributed to this report.