Why Royal Caribbean's Fourth Quantum Ship Order Could Mean More Capacity for North America

Royal Caribbean's Quantum-class Anthem of the Seas

Royal Caribbean Cruises Ltd. has announced a new agreement with Meyer Werft in Germany to deliver a fourth Quantum-class ship in 2019, a move that cruise industry analyst at UBS Investment Research Robin Farley has described as "not surprising."

"Two of Royal Caribbean's four Quantum-class orders are already announced to be home-ported in China, so for the North American market, this order is the second Quantum-class ship," Farley said. "Plus, Royal Caribbean also has five other ships on order." 

The fourth Quantum-class ship is so far Royal Caribbean's only newbuild order for 2019, bringing the cruise line's projected capacity growth that year to 6.5 percent, versus 3.9 percent previously, Farley said. 

In a statement announcing the new ship order, Royal Caribbean said that capacity increases for 2015, 2016, 2017, 2018 and 2019 are now expected to be 5.5 percent, 6.3 percent, 3.1 percent, 3.9 percent and 6.5 percent, respectively. These figures do not include potential ship sales or additions that the company may elect to make in the future.

Farley said that this new ship order is the sixth overall for fiscal year 2019, after MSC Cruises' Vista-class order, Norwegian Cruise Line's Breakaway-plus-class order, Carnival Corp.'s assumed two newbuild orders (specific dates of delivery not confirmed as of yet) and an order from TUI Cruises. Overall, the new Quantum-class order brings Farley's North American supply growth estimate to about 6.3 percent, while 2020 capacity growth goes up to 4.4 percent, from growth of 4.2 percent previously. The average net capacity growth for the North American market from 2015-2019 currently stands at 3 to 4 percent, below the 2005-2014 CAGR of above 4 percent growth.

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