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Two of Germany's largest shipbuilders declare bankruptcy


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This is the result of the Genting Hong Kong mess over the last several weeks.  The ship yard component occurred a couple weeks ago.  These yards were only really producing ships for Genting (Crystal and Dream) and one, Lloyd Werft had been doing some conversion/dry dock type work. 

Unfortunate for all of the employees of the various arms of the company.  Genting has always seem to run these on a shaky financial footing and it is nearly impossible to manage the last couple years in this business if you weren't solid from the beginning.  

Even in the beginning of the pandemic Carnival Corp was borrowing money in double digits (like over 11%) which is insane in modern business, but it had to be done.  I imagine Genting's borrowing prospects were worse.  

 

 

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On a separate thought, I do think that the ship pricing is going to have to change.  All of the major groups (Chantiers, Fincantieri, and Meyer) have to compete hard for these major projects and margins are not great based upon reported financial results.  There is a ton of risk for the ship builders, costs, complexities, etc without a significant gain on the pricing end. 

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You don't have to look very far in this pandemic to find business casualties.  Thousands of businesses have failed domestically alone.  Around the world the impact is mind boggling.  

Collectively the number of businesses lost to the pandemic when aggregated make a few shipyard bankruptcies look like a drop in the ocean.  

Sad for the communities involved without a doubt but they are far from alone.  

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I doubt Corona is the only problem here... there was a deal for a 600,000,000 € loan from the German state n the table. But Genting was neither willing to also give some money (60,000,000 € for their OWN company...) nor willing to commit to paying back the loan. It's very sad for the employees but as a tax payer i'm glad the government didn't just gift 600,000,000 € to the owner (who's worth 2,500,000,000 € btw) - honestly I wouldn't have put it past them...

On another note, I guess Royal will be quite happy about this - when Global Dream can't be finished their own prognosis for the Asian market should improve.

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12 minutes ago, Neaxan said:

I doubt Corona is the only problem here... there was a deal for a 600,000,000 € loan from the German state n the table. But Genting was neither willing to also give some money (60,000,000 € for their OWN company...) nor willing to commit to paying back the loan. It's very sad for the employees but as a tax payer i'm glad the government didn't just gift 600,000,000 € to the owner (who's worth 2,500,000,000 € btw) - honestly I wouldn't have put it past them...

On another note, I guess Royal will be quite happy about this - when Global Dream can't be finished their own prognosis for the Asian market should improve.

Interesting to hear a German taxpayer view on this.  I agree, Genting was unwilling to participate in additional risks, and so the German/Local governments shouldn't have either.  Especially as, according to media reports, Genting was asking for the loan payout several years before originally contemplated.  

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Traditionally this is right in NCL's wheelhouse.  They have a history of acquiring partially completed ships impacted by bankruptcy. 

This isn't the first such occurrence.  The Pride of America in Hawaii is USA's shining example of how far the government was willing to go to avoid losing hundreds of millions when the same thing occurred two decades ago.  Congress went so far as to modify the PVSA as a result, allowing foreign steel to be used in the ship and allowing the ship to be completed overseas bypassing our law.  Decades later and the PVSA remains a thorn for many Hawaii cruisers from this event.

NCL has acquired other ships in the same manner.  It explains why there are some massive discrepancies in the designs for some of their fleet.   When a ship is partially completed you can't gut it and redesign the ship, you are limited to small adaptations.  

If NCL wasn't on such shaky ground right now they would gobble up these ships in a heartbeat.  I'm sure they are actively working on it.     

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54 minutes ago, twangster said:

Traditionally this is right in NCL's wheelhouse.  They have a history of acquiring partially completed ships impacted by bankruptcy. 

This isn't the first such occurrence.  The Pride of America in Hawaii is USA's shining example of how far the government was willing to go to avoid losing hundreds of millions when the same thing occurred two decades ago.  Congress went so far as to modify the PVSA as a result, allowing foreign steel to be used in the ship and allowing the ship to be completed overseas bypassing our law.  Decades later and the PVSA remains a thorn for many Hawaii cruisers from this event.

NCL has acquired other ships in the same manner.  It explains why there are some massive discrepancies in the designs for some of their fleet.   When a ship is partially completed you can't gut it and redesign the ship, you are limited to small adaptations.  

If NCL wasn't on such shaky ground right now they would gobble up these ships in a heartbeat.  I'm sure they are actively working on it.     

 

Im not sure they would want something as big as the Global Dream under construction.  Its over 200,000 tons and seems rather densely designed.  They also have a bunch of capacity coming with 6 Prima class ships in 7 years.  Now the current dream fleet is not too dissimilar from their existing breakaway class. 

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1 hour ago, twangster said:

Traditionally this is right in NCL's wheelhouse.  They have a history of acquiring partially completed ships impacted by bankruptcy. 

 

Such a big ship though (capacity-wise) with max occupancy nearly 10k. But they could probably get it for cheap

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1 hour ago, Plumlee2028 said:

 

Im not sure they would want something as big as the Global Dream under construction.  Its over 200,000 tons and seems rather densely designed.  They also have a bunch of capacity coming with 6 Prima class ships in 7 years.  Now the current dream fleet is not too dissimilar from their existing breakaway class. 

Frank loves to troll Richard.  🤣 

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3 hours ago, twangster said:

Traditionally this is right in NCL's wheelhouse.  They have a history of acquiring partially completed ships impacted by bankruptcy. 

This isn't the first such occurrence.  The Pride of America in Hawaii is USA's shining example of how far the government was willing to go to avoid losing hundreds of millions when the same thing occurred two decades ago.  Congress went so far as to modify the PVSA as a result, allowing foreign steel to be used in the ship and allowing the ship to be completed overseas bypassing our law.  Decades later and the PVSA remains a thorn for many Hawaii cruisers from this event.

NCL has acquired other ships in the same manner.  It explains why there are some massive discrepancies in the designs for some of their fleet.   When a ship is partially completed you can't gut it and redesign the ship, you are limited to small adaptations.  

If NCL wasn't on such shaky ground right now they would gobble up these ships in a heartbeat.  I'm sure they are actively working on it.     

Interestingly I find the ships from Genting Dream to be very similar to NCL’s ships. 

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23 minutes ago, Vancity Cruiser said:

Interestingly I find the ships from Genting Dream to be very similar to NCL’s ships. 

Theres some historical ownership overlap in there. And the existing Dream cruises ships were built by Meyer Werft, same as the Breakaway and Breakaway Plus class at Norwegian. 

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  • 4 months later...
27 minutes ago, smokeybandit said:

I think this really shows just how much COVID has change the cruise industry's outlook in China.  Genting Cruise Lines had some very ambitious plans prior to COVID.  If I remember correctly they were looking at expanding the company's Dream Cruise Line brand throughout all of Asia then eventually expanding into Europe and perhaps even offering cruises in the US under the Dream brand, and now they are scrapping a 200 gross ton new build. 

I hope these ship yards in Germany find a way through these difficult times.

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1 hour ago, JasonOasis said:

I think this really shows just how much COVID has change the cruise industry's outlook in China.  Genting Cruise Lines had some very ambitious plans prior to COVID.  If I remember correctly they were looking at expanding the company's Dream Cruise Line brand throughout all of Asia then eventually expanding into Europe and perhaps even offering cruises in the US under the Dream brand, and now they are scrapping a 200 gross ton new build. 

I hope these ship yards in Germany find a way through these difficult times.

I don’t read this as a commentary on the China cruise market. I read this as a sign of how little demand there is for anyone to buy a cruise ship

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