— 1st ship in 2008 for east Med, Greece
Louis pcl continues to trade briskly after the sharp rise on Monday following the summer break and news that the company had struck a major franchise deal with entrepreneur Stelios Haji-Ioannou’s easyCruise to launch budget cruises in Greece by 2008 or 2009.
After trading in the 20-23c range for three months, the stock started galloping towards the previous year-high of 29c recorded in March and jumped to just over 26c on Monday on a heavy volume of 1,5 mln shares, but retreated Tuesday to 25.6c on half that volume and stood at 25.5c on Wednesday on smaller volume of trades.
Analysts said that positive announcements about the company’s results and the impending launch of the common CSE/ASE trading platform have revived interest in the stock.
The franchise agreement with easyCruise calls for CSE-quoted Louis to operate at least one ship in the eastern Mediterranean by 2008 or early 2009, targeting young passengers aged 20 to 40 wishing to travel primarily in the Aegean.
Louis is expected to calm the concerns of shareholders by converting one of its existing ships to easyCruise standards and colours, instead of a great cash outlay or debt to purchase any new ship that could to cost some EUR 35 mln for a 500-passenger vessel.
“We do not have any commitment to buy a newbuild and will probably convert one of our existing ships that will have very little cost,” a senior company official told the Financial Mirror.
“This is a new strategic alliance that has been in the pipeline for a year-and-a-half with very good mid- to long-term prospects,” the official said.
No financial details of the franchise deal were announced, but another company official at Louis said Monday that the agreement is based on royalties from a percentage of the turnover of the ship.
“We were their advisors when Stelios (Haji-Ioannou) first conceived the idea for easyCruises because of our extensive experience in ship owning, ship management and cruise chartering,” he explained.
Louis has agreed to allocate one or even two cruise ships, either new or refurbished, and operate them as easyCruise vessels, in addition to the two easyCruise ships presently in operation and more on order from the Greek shipyard Neorion Holdings.
Once the Louis-owned ship starts cruises in 2008 or the latest by 2009, Louis plc will have the exclusive franchise and operation rights in the eastern Mediterranean, and primarily in Greece, even though Stelios may sail any one of his cruise ships into the area before then.
Following on the success of the easyJet low-cost airline launched by Stelios Haji-Ioannou in 1995, these cruise ships, with a capacity of 500 passengers each, will expand the easyCruise concept to serve the Greek islands as well as other parts of Mediterranean, the Caribbean, Florida and the Bahamas and Dubai and the nearby areas with a fleet of eight vessels by the end of the decade.
As regards pricing policy on board the Louis-operated easyCruise ships, one industry expert said that Louis “must follow similar norms and the universal pricing policy adopted by Stelios on board all easyCruise vessels, whether this relates to yield management, varying cabin prices or even meals.”
“The difference will be that on board any Louis cruise ship you get a cabin and a three-course meal at a fixed price, often with heavy discounts for additional members in the party. In this case, you will get separate berth or cabin prices, and other prices for on-board meals and other facilities which you must book in advance to secure the low advertised price.”
Already into its second year, easyCruiseOne will continue to operate off the French and Italian Rivieras until October and will start low-cost cruises in the Caribbean in December using the port of St. Maarten as its base, with ticket prices starting from GBP 9 per person per night for at least two nights.
The company embarked on its first franchise agreement in early August with Boonstra River Line operating a river cruise ship, the 52-cabin easyCruiseTwo, that has shed the all-orange paint of the flagship for the new red-and-grey livery and will sail from Amsterdam with stopovers in Rotterdam, Antwerp and Brussels. Tickets on board Two are selling from GBP 7 per person.
It already has a third ship on order from Neorion that will have nine decks and a capacity for 504 passengers in 224 cabins and 85 crew, on board a floating hotel where passengers can join and depart at any stage of the itinerary.
The new franchise deal with easyCruise is expected to boost the financial results of Louis, that already owns a fleet of 12 ships, three of which are chartered to Britain’s Thomson Cruises, part of the TUI Group, and another to the German Transocean.
Louis operates in the eastern Mediterranean out of its home port of Limassol, from Genoa and Marseilles to the western Mediterranean, in the Aegean and to Turkey from the Greek port of Pireas as Louis Hellenic Cruises, and from the London port of Tilbury cruising around Britain and the Baltic Sea, North Cape and the Iberian peninsula.
Louis has pioneered short cruises for the past 20 years becoming the biggest travel company in Cyprus that owns or operates 27 hotels on the island and in Greece, as well as airport concessions in eastern Europe and the Middle East.
It bought the recently refurbished Birka Princess from Finland earlier this year for 35 million dollars and renamed it Sea Diamond that is already operating as part of the Louis Hellenic fleet with 3- and 4-day cruises in the Aegean.
