Welcome to Cruise News, your daily
update on everything happening at
sea. Visit cruisenews .io to see
today's stories and sign up for
email alerts. Glad to be here. So,
um... If you are a cruiser listening
to this right now and you're thinking
you can just wait until late 2025
to, you know, casually book your
2026 summer vacation, you might
be in for a massive wake up call.
Yeah, a really big one. Right. Because
today we are doing a complete 2026
reality check. We're looking at
the the unforgiving physical realities
of weather driven port changes.
We're looking at the brutal financial
pressures of corporate execution,
which are intense. right now. Exactly.
And we'll get into why certain cruise
lines are already selling out of
next year's inventory. And I think
if there is one single word that
ties all of this together, it's
control. Control. Yeah, that is
the perfect lens for this. Right.
Like which lines have it, which
lines have completely lost it, and
how that directly impacts the vacation
you are trying to take. Because,
I mean, 2026 is no longer some distant
concept on a whiteboard somewhere.
It is a present day reality. It's
dictating billion dollar decisions
right now. The companies that are
actively seizing control of their
physical and commercial operations,
they're thriving. And the ones reacting
after the fact, well, they are getting
heavily penalized by the market.
So let's start with the ultimate
test of control, which is the physical
environment. Before we even get
to the boardroom battles and the
financial reports, we really have
to talk about the sheer physical
execution of operating a modern
mega ship. Oh, for sure. Because
look, the weather frankly does not
care. about a perfectly marketed
itinerary. No, it really doesn't.
And the proactive shift we're seeing
in the industry's execution baseline
is just fascinating. Cruise lines
are simply no longer willing to
roll the dice on weather. Right.
Let's look at a very specific present
day example of this. So, Coaster
Cruise has recently announced they
are completely dropping La Goulette,
which, for the listener, is the
port for Tunis in Tunisia. Right.
They're dropping it from the coast
of Smaralda's March 4, 2026 itinerary.
And they are swapping it out for
a full day in Naples, Italy. Massive
change. Huge. And the stated reason
isn't geopolitical. It isn't demand
driven. It is entirely about the
wind. They are forecasting strong
winds and gusts exceeding 40 miles
per hour, which actually crosses
the port established wind limits
for a safe access channel transit.
And Costa is not an isolated case
here at all. MSC Cruises is facing
the exact same structural geographical
issue at that very same port. Really?
At La Goulette? Yes. The MSC Splendida
actually canceled its loglet calls
for January and February of 2026.
Same reason. Predicted winds up
to 50 knots, which if you do the
math, translates to about 57 miles
per hour. Wow. 57 miles per hour.
That is serious wind. It's incredible.
So for their February 12 sailing,
instead of risking it, they just
opted to turn it into a sea day.
They expanded the onboard programming,
fired the Formula One simulators,
ran the 4D cinema. I kept everybody
entertained on board. Exactly. And
then they substituted a call in
Palma de Mallorca, Spain for the
following day. I always try to visualize
the physics of this for you guys
listening. Because 34 miles per
hour is generally considered the
absolute upper limit for safely
docking a cruise ship. That's the
baseline. Now think about the Custis
Merelda. That ship is 185 ,000 gross
tons. It carries over 5 ,000 passengers.
It sits incredibly high out of the
water. So high. Trying to maneuver
a vessel of that sheer volume through
a narrow channel in 40 to 50 mile
per hour winds, it's like trying
to parallel park a skyscraper in
a hurricane, right? Yeah, the physics
of it make it nearly impossible.
Yeah. I mean, the surface area of
the side of these modern mega ships
acts exactly like a giant sail.
A giant sail. Right. In the maritime
industry, they actually refer to
this as windage. When you have a
massive block of balconies and superstructures
catching a 50 mile per hour gust,
the lateral force pushing that ship
sideways is just immense. I can't
even imagine the pressure on the
thrusters. It's too much. If you
are trying to transit a narrow port
access channel, like the one in
La Gulette, which is in a very exposed
coastal setting during the winter
and early spring, the thrusters
on the ship simply cannot overpower
the wind pushing it toward the rocks.
It becomes a severe safety hazard.
But what really stands out to me
here is the sheer geographical and
the logistical scale of these changes.
Swapping a North African port like
Tunis for Naples, Italy, or Palma
de Mallorca in Spain. That is not
taking a minor detour down a side
street. You are completely redrawing
the map for thousands of people.
Walk me through the mechanics of
that. How difficult is it to just,
you know, swap a port? Oh, it is
a massive logistical undertake.
You don't just point the steering
wheel toward Naples and say, hey,
we're here. Right. Right. When a
line changes a port call, they have
to secure an open berth at the new
port, which is highly competitive
right now. They have to arrange
for local harbor pilots, tugboats,
and longshoremen to handle the mooring
lines. You have to coordinate all
those ground teams. Exactly. Then
there is the provisioning. If they
were planning to load fresh produce
or offload waste in Tunis, they
now have to coordinate all those
vendor contracts in Spain or Italy.
Furthermore, the ship's entire fuel
consumption route has to be recalculated
based on the new speed and distance
required to hit those revised arrival
times. Doing this a year in advance
takes an incredible amount of operational
coordination. Which brings us back
to that central theme of control.
Both Costa and MSC are making these
decisive itinerary changes weeks,
or in this case actually months
in advance. Very early. Yeah. Costa
is automatically processing refunds
for canceled shore excursions right
back to the original form of payment
or the onboard accounts. They are
not waiting until the morning of
the arrival to see if the wind magically
dies down. Which is the critical
difference. Historically, a captain
might sail toward the port, wait
offshore, and just hope for a break
in the weather. Cross their fingers.
Pretty much. And if it didn't happen,
the call was scrubbed at the last
minute. The passenger wakes up,
looks out the balcony, and is told,
uh, sorry, too windy. We're spending
the day at sea. Which ruins the
day for the passenger. It totally
does. By making the call early,
the cruise line takes control of
the narrative. Yes, they take a
short -term hit by automatically
refunding those excursions early,
but they preserve... the brand relationship.
That makes perfect sense. They prioritize
safety, but they also provide the
passenger with a guaranteed predictable
alternative. It's a prime example
of rigorous operational execution.
OK, so making early calls on weather
is an example of strong operational
control. But what happens when a
company loses control on a commercial
level? That's where things get ugly.
Yeah. Because I want to pivot to
the corporate execution pressures
currently facing Norwegian cruise
line holdings. They are having a
remarkably tough moment in the market
right now. The market response to
their recent updates has been incredibly
severe. Yeah, their shares recently
sank 11 % in early trading. And
while Carnival and Royal Caribbean
took minor sympathetic hits, Norwegian's
drop was heavily tied to their specific
2026 projections. Very specific.
They projected a 2026 adjusted earnings
per share of $2 .38. Now, Wall Street
analysts were expecting $2 .55.
On top of that, they announced they
expect flat net yields in 2026,
with the first quarter of 2026 actually
seeing a net yield drop of 1 .6
percent. Let's break down why those
specific numbers caused such a dramatic
sell off. Earnings per share or
EPS is essentially the company's
total profit divided by the number
of outstanding shares. It's the
bottom line for investors. Right.
It is the ultimate scorecard for
Wall Street. When a company misses
that expectation by 17 cents, it
signals to investors that management's
internal forecasting is flawed.
And the phrase from their update
that really alarmed the market was
the admission of self -inflicted
execution gaps. Yes, their new CEO.
John W. Chidsey literally used that
phrase, self -inflicted. They had
this massive 40 % year -over -year
capacity increase in the Caribbean.
But it was poorly aligned with their
marketing, and crucially, it was
completely out of sync with the
operational readiness of their private
island destination, Great Stirrup
Cay. A huge mistake. They didn't
have the full slate of amenities
ready for the passengers they were
bringing in. Wait, help me understand
this disconnect. Consumers are spending
record amounts on vacations right
now. How does a massive, sophisticated
corporation like Norwegian drop
the ball this hard on their own
private island? That's a great question.
I mean, to me, it sounds like throwing
a highly advertised grand opening
for a brand new luxury restaurant,
inviting the entire town, and then
realizing on opening night you forgot
to install the ovens in the kitchen.
The restaurant analogy is spot on.
And if we extend it, here is what
actually happens behind the scenes.
In a corporation that size, forgetting
the Evans means your marketing and
commercial team sold thousands of
premium tickets based on the promise
of a fully upgraded island experience.
Right. They sold the dream. They
sold the dream. But the operations
team, the people actually pouring
the concrete and building the cabanas,
were on a completely different timeline.
They were working in silos. Exactly.
When those two silos don't communicate,
You have a disaster on your hands.
The commercial team fills the ships.
A 40 % capacity increase in the
Caribbean is a massive influx of
people. Oh, yeah. Thousands of extra
people a week. But when those passengers
arrive at Great Sturb K and the
amenities aren't finished, the cruise
line can't charge premium prices.
They have to issue massive refunds,
offer discounts, or give away onboard
credit just to apologize for the
construction. That directly destroys
your pricing power. Which explains
that flat net yield metric we mentioned
earlier. For the listener, what
exactly is net yield and why is
it so dangerous for it to be flat?
Net yield is essentially the true
profit a cruise line makes per passenger
per day after you strip out all
the unavoidable costs of getting
them on board. So if you pay fifteen
hundred dollars for a cruise, the
line immediately has to subtract
travel agent commissions, port taxes
and the cost of the flights if they
were included in the package. OK,
so whatever is left is the net yield.
Exactly. What is left over is the
net yield. If your net yield is
flat or dropping 1 .6 percent like
Norwegian's first quarter projection,
it means you are losing your ability
to squeeze profit out of each ticket.
And that is incredibly dangerous
because their costs are not flat.
No, they're reclimbing. Their chief
financial officer, Mark Kempe, noted
that their fuel costs are projected
to rise from $662 per metric ton
in 2025, up to $670 per ton in 2026.
So if your costs are going up, but
the profit you make per passenger
is flat because you have to discount
for a half -finished private island,
your margins just collapse. There's
Iceland. And the pressure isn't
just in the Caribbean. Campa also
pointed out pricing softness in
Alaska. Yeah, I saw that. He specifically
tied that to mid single digit industry
capacity growth. When every major
cruise line decides to send an extra
ship or two to Alaska to chase the
money, the market gets flooded with
cabins and prices soften across
the board. Supply and demand. Exactly.
Furthermore, Norwegian didn't see
the expected momentum in Europe
and they are facing pricing pressures
while trying to roll out their new
Philadelphia home port. So you have
a perfect storm of lost operational
control. siloed departments, unfinished
projects, rising fuel costs, and
increased competition in key markets.
When you have execution lapses like
this, the wolves start circling
the boardroom, don't they? They
do. And in this case, the wolf is
Elliott Investment Management. They
are an aggressive, activist investor
firm, and they recently disclosed
an ownership stake of more than
10 percent in Norwegian Cruise Line
holdings. That's a huge stake. It
is. When an activist investor buys
up that much stock, they aren't
just looking to hold it quietly.
They want to force changes to maximize
their return. And they are aggressively
escalating their demands ahead of
the annual shareholder meeting.
Yeah, I saw their statement. They
publicly called out a troubling
pattern of execution lapses and
strategic missteps. They are demanding
a comprehensive board refresh. They
want stricter cost controls. And
they are pushing heavily for a former
royal Caribbean executive, Adam
Goldstein, to join the board. Which
is a very specific demand. Right.
And Elliott claims that if Norwegian
can just To fix these execution
gaps, the stock could lift to as
high as $56 a share. That would
be a 159 % increase over recent
levels. The data underneath the
surface points to something really
critical here, though. The problem
Norwegian is facing isn't a lack
of consumer demand. The consumer
is still extremely healthy. And
Norwegian's own portfolio proves
this. Right, because they own more
than just the main contemporary
Norwegian brand. Correct. Their
luxury brands, Regent Seven Seas
Cruises and Oceania Cruises, are
seeing incredible numbers. Oh, yeah.
Regent just recorded its strongest
booking month in history this past
January. Oceania is seeing record
booking activity for their newest
ship, the Oceana Sonata. And that
ship doesn't even debut until August
of 2027. Wow. So passengers are
perfectly happy opening their wallets
for the ultra premium experience.
They are. The luxury brands tend
to benefit from longer booking curves,
meaning passengers book further
in advance. But more importantly,
those brands are executing well.
Right. The operational and commercial
pressure is almost entirely concentrated
on the contemporary Norwegian Cruise
Line brand, which is the largest
piece of the company's portfolio.
So it drags everything else down.
Exactly. That's why the issues there
are dragging down the consolidated
numbers so heavily. It is a pure
internal execution issue on the
contemporary side. Activist investors
like Elliott look at that and see
massive unlocked value. They believe
the underlying asset is strong,
but the management's grip on the
steering wheel is just loose. That
distinction between the contemporary
struggle and the luxury success
perfectly bridges us to our final
segment. Because while Norwegian's
contemporary brand is struggling
to align their capacity with demand
and getting hammered by Wall Street
analysts, Viking Holdings is facing
the exact opposite reality. They
are quite literally running out
of inventory for 2026. The contrast
in operational control is staggering.
Let's look at the numbers because
they are jaw dropping. As of February
15th, 2026, Viking has already sold
an astounding 86 % of its 2026 capacity
for its core products. That is just
unheard of. Just process that for
a second. 86 % of their cabins for
the entire year are already gone.
By February. Unbelievable. They
are sitting on $5 .96 billion in
advance bookings. That is 13 percent
higher than this exact time last
year. And keep in mind, their operating
capacity for 2026 is actually 7
percent higher. They have more ships
and more cabins to sell, yet they
are selling out faster than ever.
And that level of advanced booking
translates directly to the strength
of their balance sheet. Their 2025
financial results were entirely
record breaking. Tell me about it.
They posted $6 .5 billion in total
revenue. They achieved a 95 % occupancy
rate in the fourth quarter. And
crucially, their net leverage dropped
all the way down to 1 .1x from 2
.4x the year prior. OK, for those
of you listening who are not living
in financial spreadsheets, explain
net leverage. Why is that drop from
2 .4 to 1 .1 such a big deal? So
net leverage is a ratio that measures
a company's total debt against its
actual cash earnings. The cruise
industry is incredibly capital intensive,
right? Building ships requires taking
on billions in debt. Billions. When
a company's net leverage drops to
1 .1x, it means their earnings are
so strong that they could almost
pay off all their corporate debt
with just a little over a year's
worth of profit. It is an indicator
of massive financial health instability.
And they are certainly using that
stability to expand. They are taking
delivery of two new ocean ships
and 10 new rivers. ships in 2026
alone. Plus they have options for
more ocean ships in 2034 and expedition
ships coming in 2030 and 2031. They're
not slowing down. Not at all. But
I want to play devil's advocate
here for a second. Is this massive
advanced booking rate purely just
the luxury of serving the premium
older demographic? Because we just
established that Regent and Oceania
are also doing well in that luxury
space. Or is Viking actually doing
something fundamentally different
with their physical ship design
and operations to secure these insane
margins? It is absolutely the latter.
Viking success is a master class
in operational control and it is
entirely tied to how they design
and build their physical hardware.
Their CEO, Thorsten Hagen, points
specifically to their strategy of
building interchangeable, purpose
-built ships. Meaning all the ocean
ships are virtually identical clones
of each other? Yes. And the river
ships have a strictly standardized
design as well, right? Exactly.
When your ships are completely interchangeable,
you unlock massive economies of
scale. First, building them is cheaper
because the shipyard doesn't have
to re -engineer the blueprints every
single time. Oh, that makes sense.
But the real magic happens in the
daily operations. When every ship
has the exact same layout, the same
engines, and the same galleys, your
crews become incredibly efficient.
A chef or an engineer can transfer
from one Viking ship to another
and instantly know where everything
is. They don't have to relearn the
ship. Right. You only have to warehouse
one type of spare part for the entire
fleet. This lean, standardized operation
drastically reduces wasted space
and weight, allowing for a remarkably
fast payback period. They pay off
their ocean ships in five to six
years and their river vessels in
just four to five years. Which gives
them an incredible buffer against
the chaos we saw with Norwegian.
It gives them total armor. Because
their core demographic locks in
their travel so early, and their
operations are so standardized,
Viking has built a massive financial
cushion against the very variables
currently plaking the rest of the
industry. Like the fuel costs. Take
fuel volatility, exactly. We just
discussed how a few dollars per
ton in fuel costs is hurting Norwegian.
Viking controls this in two ways.
On the ocean side, their ships use
closed -loop scrubbers. Which are
essentially giant exhaust filters.
Yeah, exactly. A closed -loop scrubber
washes the sulfur out of the engine
exhaust. This means Viking can purchase
cheaper, unrefined, heavy fuel oil,
clean the emissions themselves on
board, and still strictly meet all
environmental regulations. Wow.
So they save on the raw fuel costs.
It is a massive structural cost
advantage. And on the river side,
they secure fixed price fuel contracts
for a significant portion of the
season. They are actively hedging
their bets to lock in their expenses.
Wow. So they are locking in their
revenue billions of dollars in advance
and they are locking in their operational
costs at the exact same time. That
is the ultimate definition of control.
It seems like even global geopolitics
doesn't shake their model. I know
they did have to temporarily pause.
their operations in Egypt due to
the ongoing tensions in the Middle
East, but they noted that Egypt
only accounts for about 3 % of their
total capacity. It's a tiny fraction.
Yeah. Analysts from Jeffries and
BMP Paribas both pointed out that
this localized pause hasn't slowed
Vikings' overall booking momentum
at all, and their pricing trends
are actually accelerating. Which
really brings us full circle to
the reality of 2026. You have contemporary
lines that are locked in fierce
capacity battles, fighting over
pricing in the Caribbean and Alaska,
dealing with siloed marketing teams
and activist investors. It's a mess.
Meanwhile, Viking is sitting above
the fray, utilizing identical ship
designs and fuel hedges. And they
are essentially finished selling
2026. They are operating on a completely
different timeline than the rest
of the industry. which leaves you
with a really provocative thought
about where this entire industry
is heading and how you have to plan
your own life. If 86 % of Viking's
2026 core capacity is already gone
by February, and the contemporary
lines are brutally fighting for
whatever market share and pricing
power is left over, what does this
actually mean for 2027? That's a
great question. Are we entering
an era where passengers must plan
their vacations two to three entire
years in advance just to secure
the itinerary, the cabin, and the
price they actually want? Because
looking at these numbers, it seems
the days of casually booking a premium
cruise just a few months out might
be a of the past. It certainly looks
that way. Thanks for listening to
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