Carnival and Iberojet to form joint venture
8/2/2007
Carnival Corp and Orizonia Corporación, Spain's largest travel company which operates its own cruise fleet under the Iberojet division, have signed of a letter of intent to form a joint venture to operate and expand the existing Iberojet Cruceros brand in Spain.
Iberojet Cruceros operates two ships, the 834-passenger Grand Voyager, built in 2000, and the 1,196-passenger Grand Mistral, constructed in 1999. The intention is to grow the fleet over the next several years through the acquisition of existing tonnage from Carnival’s current fleet.

‘With their extensive experience marketing in Spain, combined with a keen understanding of Spanish vacation trends, Iberojet provides a solid partnership for expanding in one of the fastest-growing segments of the European vacation industry,’ said Micky Arison, Carnival chairman and CEO.

Pedro de Esteban, Orizonia´s chairman and managing director of The Carlyle Group, Orizonia´s principal shareholder, said, ‘With Carnival's support and expertise, we intend to continue expanding our operations, adding high quality vessels and providing specialized top services to our Spanish customers.’

Under the proposed transaction, the Iberojet cruise business being contributed to the jv company will be valued at €320m, with €180m in debt, representing a net capital value of €140m. Carnival will own 75% of the jv with Iberojet owning 25%.

Iberojet Cruceros would use the Iberojet cruise management team with its president, Alfredo Serrano, reporting to the joint venture's board of directors. It is expected that Pier Luigi Foschi, chairman and ceo of Costa Cruises, will serve as chairman of the board of the joint venture.

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Originally posted by Joe1690:
Likely candidates are the Sun, Sea, and Dawn Princess as well as any of the Fantasy class ships from Carnival....Also, the fantasy class ships are larger then any vessel currently offered within the Iberojet fleet.

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Originally posted by mike sa:
There are no "old" Aida ships [..]

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I am also not yet used to it - but there are some people who call anything older than five years an old ship.

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Originally posted by Atlcruiser:
Holiday and Celebration is my guess for the first two ships to go. I hate to see Mickey Arison get anything else.

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The Holiday and Celebration will likely end up on the Greek Isle itinerary with a port a day and one sea day in 11. Even if redecorated with Hidef TV's in all of the cabins, a large spa, etc are still old ships with no balconies.

Is there a milk run from Lisbon to the Canary Islands, Funchal, or the Azores?

The Holiday class ships can only provision for 7 days.

I find this rather childish of Carnival to be honest. It is easy to dump any of their 'unwanted' ships, there's a ready market in Aus where all these ships would be welcomed with open arms. Why have they not set up a new company down there. P&O Aus could have the more upmarket vessels and the older ones go to a new Carnival subsidiary. Why dump them in the Med which is more or less a saturated market as is, with more competition, there is none is Australia.

Pam

[ 02-10-2007: Message edited by: PamM ]

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Originally posted by PamM:
So is "joint venture" a sneaky way of not involving the monopolies commission?

[ 02-10-2007: Message edited by: PamM ]

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Originally posted by PamM:
So is "joint venture" a sneaky way of not involving the monopolies commission? But reading the EU guidelines I think perhaps they are not able to by-pass this as it investigates all "restrictive business practices" & "abuses of monopoly power". If the CEO of Costa is to head the new company, it appears an outright takeover and not a so-called joint venture. I feel for the Spanish market who have not only lost Pullmantur but also now Iberojet as Carnival cannot let anyone be one step up. There is way too much of a Carnival monopoly imo.

I find this rather childish of Carnival to be honest. It is easy to dump any of their 'unwanted' ships, there's a ready market in Aus where all these ships would be welcomed with open arms. Why have they not set up a new company down there. P&O Aus could have the more upmarket vessels and the older ones go to a new Carnival subsidiary. Why dump them in the Med which is more or less a saturated market as is, with more competition, there is none is Australia.

Pam

[ 02-10-2007: Message edited by: PamM ]

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Pam,

how is this "childish" or "abusive"? By stating this is childish, you're implying that Carnival execs are ruled by their egos. While they most certainly have egos, all businessmen do, they certainly don't let egos rule decide or rule when deals worth hundreds of millions of dollars are at stake. Carnival has done many JVs in the past such as Seabourn and Epirotiki. They obviously see Iberojet as a good, solid investment.

As far as abusive or restrictive goes, this JV would in no way restrict competition to drive prices up. In fact, as they will introduce more tonnage and berths in the Spanish market, as will the RCCL/Pullmantur deal, it increases competition.

Additionally, as neither Pullmantur or Iberojet had the financial resources to expand their fleet or operations as independent companies, and given the high barriers to entry in the cruise industry as a whole, there was no hope for any organic growth.

Let us also not forget that both of these companies were put up for sale by their respective owners and solicited CC and RCCL as buyers.

Obviously, the Carlyle Group, the private equity firm that acquired Iberjoet last year, was not comfortable with expending the necessary capital to expand the operations and views CC as having the necessary expertise and more importantly, the tonnage, to assist in the expansion.

Both Pullmantur and Iberojet would have stagnated without their new cruise-industry-giant parents.

If anything is dominated by emotion, it is the incessant whining on message boards about how RCCL and CC are single-handedly ruining the cruise industry.

That's my 99 cents worth of contrarian, dry-as-a-bone business-like view of this.

I don't necessarily agree that is is a sound business venture as is for Carnival. I fail to see quite how the value of the cruise division has been reached either. Quite a sum for a line which doesn't own either of the 2 vessels they operate. 2 vessels which I do not believe Carnival are even interested in.

The Carnival bonus is a foothold in the Spanish growing market. Yet they state they already have a strong presence in the Spanish market with Costa.. so why need another? If not just as a dumping ground for their no longer up to date vessels. Other threads have commented on Carnival Cruise Lines falling behind in the new vessel league with outdated designs and a number of 'out dated' vessels to dispose of.

As to whether a growth of Iberojet was looked for by Orizonia I don't know. Maybe they just wanted rid of the cruise sector altogether but couldn't find a buyer; this was the only option. Growth is not always the answer, neither is anything as dry-as-a-bone, influencing factors are always there somwhere.

I don't see any incessant whining on message boards over it. People are free to state their opinons and a good job too that there are differences to discuss. My main concern is the homogenisation of the mass market cruise industry as a whole, which appears to be heading fast in that direction.

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The Holiday class ships can only provision for 7 days.

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