Port Security Conference

May 20, 2003

Tough quarter for Star Cruises
Hit by factors such as SARS and steep fuel increases Malyasia's Star Cruises has had a tough first quarter. However, the SARS issue has led the company to probe the Australian market with promising results and, meantime, its NCL brand is pressing ahead with its U.S.-flag operation, announcing the names of its first two U.S.-flag ships today,

Compared with the quarter ended March 31, 2002, Star's group capacity increased by 9.5% from 2,088,942 to 2,286,507 capacity days and revenue increased by 11.9% from US$ 368.0 million to US$ 412.0 million. But EBITDA decreased by 6.2% from US$ 74.0 million to US$ 69.5 million and operating Income fell by 27.7% from US$ 35.8 million to US$ 25.9 million.

The quarter's net loss of $ 2.2 million compared with a net income of US$ 6.3 million for the same quarter last year, when net income had included a charge of US$5.9 million in connection with the refinancing of a 5-year syndicated debt.

Net yield, defined as net revenue per capacity day after deducting such costs as commissions, air tickets and other direct costs was 2.3% higher.

During the first quarter of 2003, excluding fuel costs, the combined ship operating expenses and SG&A expenses per capacity day was 3.6% up as compared with the same period in 2002.

This increase was primarily due to increased environmental and security expenses.

In addition, shore costs per capacity day for this quarter were also slightly higher as compared with the same quarter in 2002 due mainly to expansion in the new China market from the second half of 2002.

Fuel costs were up by approximately 60% on a per capacity day basis and this sizeable increase over the first quarter of 2002 was responsible for approximately $11.1 million in negative variance to last year's first quarter result.

Star Cruises (excluding NCL)

Star Cruises (excluding its NCL unit) operated with 4.9% higher capacity as compared with the same quarter in 2002. Net yield was essentially the same as first quarter2002. Total ship operating expenses and SG&A expenses excluding fuel costs increased 8.5% as compared with the same period in 2002. Fuel costs were up by approximately 50% on a per capacity day basis accounting for approximately US$2.7 million in negative variance from last year's first quarter.

The results in Asia Pacific were affected by passenger cancellations and greatly reduced forward bookings as a consequence of the outbreak of Severe Acute Respiratory Syndrome ("SARS") especially in the core markets of Hong Kong and Singapore where SuperStar Leo and SuperStar Virgo were hubbed respectively.

These two ships were temporarily redeployed to Australia in April for one to three months. The strong bookings to-date in Australia have been "encouraging," says Star. Meanwhile, its "continuing focus on cost reduction will be further heightened."

Star says the SARS crisis continues to impact negatively the profitability of the Group in the second quarter.

However, with the disease slowly coming under control in Hong Kong and Singapore, it is expected that the two core markets will slowly return after the second quarter. "Our experience in Australia with the SuperStar Leo and SuperStar Virgo opens another market for the Group for a possible seasonal deployment there in the future," notes Star, which says he situation it is facing in the Asia Pacific region is "unprecedented but manageable."

NCL Group

For the first quarter ended March 31, 2003, NCL Group recorded an increase of 11.3% in capacity days compared to the first quarter ended March 31, 2002. This increase was due primarily to the introduction of the purpose built "Freestyle Cruising" ship Norwegian Dawn. There was also a negative impact on available capacity days of two major scheduled dry docks on Norwegian Sea and Crown Odyssey. 2003-first quarter net yield was higher by 3.6% from the first quarter in 2002. The NCL brand net yield was actually up slightly higher than this and the Orient Lines net revenue yield was unchanged from a year ago.

During first quarter of 2003, excluding fuel costs, total ship operating expenses and SG&A expenses were up slightly by 1.7% on a per capacity day basis as compared with the same period in 2002.

In large part this was due to the timing of advertising and promotion activities for Norwegian Dawn, with the NCL brand returning to television advertising (in the New York metropolitan market) for the first time in several years.

Fuel costs were up by over 60% on a per capacity day basis and this sizeable increase over first quarter of 2002 was responsible for approximately US$8.4 million in negative variance to last year's first quarter result. Accordingly, and in spite of a healthy increase in net yield in difficult circumstances, the NCL Group's EBITDA remained unchanged over last year on an absolute basis and just over 10% down on a per capacity day basis.

The number of bookings taken during the first quarter exceeded the number taken during Q1 last year, but not by as much as capacity is increasing for the year. Consequently the booked load factor at the end of the first quarter for Q2 onwards was significantly down on the position at the end of Q1 last year. Average booked per diems also declined significantly throughout the first quarter, with the forward impact being most pronounced in Q2.

"Since the end of hostilities in Iraq." says Star," there appears to have been a rebound in consumer willingness to book a cruise and the booking volumes during the latter part of April and the first two weeks of May have been well ahead of the same time last year. Pricing remains a challenge though there are some signs of stability returning."

Regarding SARS, extensive preventative measures have been put in place by NCL, in common with the rest of the North American cruise industry. The US Center for Disease Control (CDC) has been highly pro-active in seeking to contain any incidence of possible SARS and to prevent the spread of the virus into the US. The impact of the SARS crisis has been minimal on NCL's North American business as compared to Star's Asian business. The media focus on SARS generally has certainly had a depressing effect on the public's tendency to feel positive about the future and to make forward-looking vacation plans. However, no redeployment has been necessary and NCL's concentration on its Homeland Cruising program has been timely in this respect. So too has the Homeland deployment been helpful in a geopolitical climate in which North Americans are more reluctant to travel overseas for vacations.

Star notes that during the first quarter, Congress enacted legislation permitting NCL to embark upon a course of action that will lead to the company operating three modern cruise ships under US flag in coastwise trades (i.e. no requirement for foreign port calls) in Hawaii.

In a related development, and with a view to expanding our eventual US flag operations beyond Hawaii and beyond the three ships provided for by Congress, the Group recently purchased two documented US passenger ships, the s/s United States and the s/s Independence. The intention with these two old passenger liners is to convert them to modern cruise ships in a combination of US and European shipyards in a way that is more feasible, technically and economically, than building new cruise ships in their entirety in US shipyards.

The timing of such a major conversion project is under study but the Group remains focused in the immediate term on completing the first Project America ship now under construction in Germany and successfully introducing it and the re-flagged Norwegian Sky to Hawaii next year.

NCL today announced that Project America 1 will be named "Pride of America", reflecting the "Best of America" theme on board. The line's second Project America ship, currently sailing as Norwegian Sky, will be reflagged into the U.S. registry, and will be renamed, "Pride of Aloha" reflecting the strong Hawaii theme to be incorporated during a complete refurbishment in September 2004. The ships will sail under the company's new U.S. Flag brand--NCL America--with 100 percent U.S. officers and crew.

Pride of America will be the first new ocean-going passenger ship in nearly 50 years to sail under the American flag. She will begin service in Hawaii in July 2004, offering seven-night inter-island cruises round trip from Honolulu.

The ship will feature the innovative attributes of NCL's newest Freestyle Cruising fleet. She features eight restaurants offering traditional dining experiences in two main restaurants plus multiple alternative dining venues, from formal to casual and 24-hour room service.

Pride of America has over 660 balcony staterooms, the broadest range of family-friendly interconnecting cabins available at sea, state-of-the-art entertainment venues, three pools, extensive children's facilities, an abundance of spacious public rooms, and the largest dedicated meeting facilities at sea. The ship will also include several firsts for NCL including a Conservatory, a new category of Family Suites, a Tennis Court and an Art Gallery.

"As the first new ocean-going ship to hoist the Stars and Stripes in nearly 50 years, Pride of America has been designed to reflect many diverse parts of the country," said Colin Veitch, president and CEO of NCL. "From an Alaskan Gold Rush Pub to a New Orleans' Mardi Gras Cabaret Lounge to a Hawaii-themed Aloha Café and Waikiki Bar, passengers will be able to experience the flavor of the U.S. while enjoying the Aloha Spirit of the Hawaii crew on board."

The Largest Dedicated Meeting Facilities at Sea

NCL says the Pride of America and Pride of Aloha will provide the best meetings and conference facilities at sea. The ships are a unique opportunity for meeting planners with three, four and seven day cruises available every week of the year. Planners can book a full week's cruise or alternatively book a three or four day cruise with the option to combine the cruise with a hotel stay to accommodate a variety of meeting lengths.

As the only U.S. flagged ships sailing the Hawaii islands and visiting only U.S. ports, conferences and meetings on board NCL America ships qualify for both corporate and individual tax deductibility for meetings expenses.

Pride of America's meeting facilities will feature six dedicated meeting rooms ranging in size from boardrooms for 10 people to an auditorium that can accommodate over 250 guests.

Five of the meeting rooms -- the Hawaii Room, the Oahu Room, the Kauai Room, Molokai room and the Maui Room - can be used individually or combined with others. The Diamond Head Auditorium is a multi-level, circular room that boasts a state-of-the-art audiovisual system that lowers from the ceiling and can be viewed by all participants with it multiple screens. The auditorium also splits into two amphitheatre-like presentation rooms.

The conference area features a business center, a separate large gathering and break area and the Lanai Bar and Lounge, perfect as another break area, for private one-on-one meetings or for group cocktail parties.

Pride of America will also feature Wi Fi capability, which is also available on each of NCL's existing ships fleet wide. Guests can visit the Internet Center on Deck 6 to obtain an Internet access card if they have brought their own laptops with them, or rent a laptop with wireless Internet capabilities.

Pride of Aloha to Begin Sailing in October 2004

Pride of Aloha, currently Norwegian Sky, is a modern 2,002-passenger ship that was the first NCL ship to offer Freestyle Cruising when the program was introduced in 2000. Reflagged into the U.S. register, she will be 100 percent U.S. crewed and will begin her Hawaii service in October 2004, offering three- and four-night inter-island cruises round trip from Honolulu. The company will announce detailed plans of the redesign for the ship in the next few months.

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