MSC Cruises Plans $4.6 Billion Order of Up to Four More Ships

LONDON—MSC Cruises said on Wednesday it plans to order up to four new ships worth almost €4 billion ($4.6 billion) in a further bet on rising demand for ocean cruises.

Geneva-based MSC Cruises signed the letter of intent with shipyard STX France SA for a firm order of two cruise liners, while securing options to acquire two more vessels. The four ships would hit the water between 2022 and 2026, stretching the cruise operator's €9 billion fleet-renewal program to more than a decade.

MSC Cruises in February confirmed an order for two more Meraviglia Plus cruisers, which will be 331 meters (1,086 feet) long and can each accommodate up to 6,300 passengers. They also will be built by STX France, one of France's biggest shipyards.

Closely held MSC Cruises primarily operates in the Mediterranean and the Caribbean, pooling passengers mainly from Italy, Germany, Spain and France. It is part of Mediterranean Shipping Co.—the world's second-largest shipping operator by capacity, after A.P. Mø ller-Maersk A/S—which is mostly involved in container shipping.

The rising demand for luxury sea travel contrasts starkly with the woes of the container and dry-bulk shipping sectors, where a glut of tonnage and rock-bottom freight rates are forcing owners to cancel orders or lay up ships for long periods.

"This industry presents significant opportunities for additional growth," MSC Cruises Executive Chairman Pierfrancesco Vago said.

The company now has plans to float up to 11 new cruise ships, built by STX France and rival Italian shipyard Fincantieri SpA, between 2017 and 2026. The latest ships will feature more than 2,700 cabins, carrying about 5,400 passengers. The ships, weighing more than 220,000 tons, will be MSC Cruises's largest vessels and its first powered by liquid natural gas.

The cruise industry is dominated by Miami-based giants Carnival Corp. and Royal Caribbean Cruises Ltd.

The big players, including MSC Cruises, are investing heavily in new markets like China, where growth is expected to be around double the rate in other markets over the next few years.

Cruise Lines International Association, the industry trade group, estimates 24 million passengers will take ocean cruises this year, or almost 35% more than in 2009. The boom in business has also fueled demand for new ships, with more than 50 new cruise liners on order for delivery between 2016 and 2022, the organization said.

Even before making the latest fleet commitment, MSC Cruises, which currently operates a fleet of 12 ships, was on a path to more than double passenger carrying capacity to 3.6 million passengers by 2021 from 1.7 million last year. The new ships are being ordered entirely for growth, with no plans to phase out any of the existing vessels, a company spokesman said.

Laurent Castaing, chief executive of STX France, said the agreement provides the shipyard with certainty over its industrial capacity for the next decade.

Write to Robert Wall at [e-mail] and Costas Paris at [e-mail]

(END) Dow Jones Newswires

April 06, 2016 11:55 ET (15:55 GMT)

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