CALL TO ACTION
This week, we met with RCL, CCL, and NCLH managements in Miami. The tone was quite varied among the 3 companies with CCL the most cautious and NCLH the most optimistic. All operators were quite bullish on the long-term outlook for the industry. Falling fuel costs are a major tailwind in 2015 for CCL, RCL, and NCLH in that order. However, the operators, particularly CCL, corroborated our assertion that Europe pricing is under pressure in the face of a weakening economic backdrop and accelerating supply growth (+5%) in 2015.
CCL is the most exposed to European sourced customers and indeed we are most concerned with that stock as it sits at a 52 week high. Management didn’t exactly bolster the long thesis that yields should outperform the industry (furthest from peak theory) as brand building costs abate (they probably won’t). On the other hand, NCLH seems the best positioned for 2015.
Please see our detailed note: