Norwegian Cruise Line faces turnaround effort as activist investor

Norwegian Cruise Line faces turnaround effort as activist investor

Activist investor Elliott Investment Management on Tuesday revealed it has constructed up a more than 10% stake in Norwegian Cruise Line and plans to launch a turnaround effort at the struggling ship operator.

Norwegian – the world’s fourth-largest cruise operator by variety of passengers value roughly $10 billion – has lagged behind fellow mass-market rivals like Royal Caribbean and Carnival, even as client demand has rebounded in the years following the pandemic.

Elliott, which has led bold activist campaigns at Southwest Airlines and Phillips 66, is now one among Norwegian’s top traders – and said in a letter to the company’s board that it believes it could actually execute a profitable turnaround.

An activist investor is planning a turnaround strategy at Norwegian Cruise Line.

“Over the past decade, the company has fallen from a best-in-class cruise operator at the time of its initial public offering to a clear industry laggard, suffering from inconsistent strategy, weak execution, inaccurate guidance and poor cost discipline,” Elliott said in the Tuesday letter.

“With the right strategy and strong execution, we see a clear path for the stock to reach $56 per share, or 159% higher than current levels.”

Share in Norwegian jumped 8.3% Tuesday. Prior to those good points, the inventory was down about 20% over the past 12 months and among the worst-performing in the S&P 500 over the past 5 years.

“Our board of directors and management team regularly engage with our shareholders to hear their views on our strategy and progress, and we appreciate their perspectives,” a spokesperson at Norwegian Cruise Line Holdings told The Post.

“Of note, this is the first we are hearing from Elliott Investment Management.”

Last week, the Miami-based cruise operator – the manufacturers of which embody Oceania Cruises and Regent Seven Seas – announced that its CEO Harry Sommer was stepping down.

The company appointed John Chidsey, the former CEO of Subway eating places and a earlier Norwegian board member, to take the reins – a shakeup that despatched shares in Norwegian down more than 7%.

“What might confuse investors is Norwegian is being run by someone with zero ties to the cruise industry,” analysts at Stifel wrote in a observe to shoppers. 

Norwegian has lagged behind fellow mass-market rivals like Royal Caribbean and Carnival. Debbie Ann Powell – inventory.adobe.com

In its letter, Elliott accused Norwegian’s board of failing “to fulfill any of its fundamental responsibilities, including its most important obligation – to select the right leadership.”

The activist investor has been on the lookout for new unbiased administrators to appoint to the board, including Adam Goldstein, the former president and chief working officer of Royal Caribbean, The Wall Street Journal reported Tuesday. 

The deadline for shareholders to appoint board candidates ends next month, ahead of Norwegian’s annual assembly.

Along with modifications to the board, Elliott – which boasts more than $79 billion in belongings under administration – also proposed a review of current government management and a new marketing strategy.

Norwegian’s rivals have discovered notable success in attracting new clients with their non-public island choices. 

The company already owns Great Stirrup Cay in the Bahamas – one among the largest non-public islands owned by the cruising trade – however development plans have been slow-moving.

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