NCLH investor calls for 'board change and new business plan' in scathing letter

One of Norwegian Cruise Line Holdings’ largest investors has criticised the direction of the company in a scathing letter to the board of directors, in which it calls for a new business plan and change of leadership.

Elliott Investment Management manages funds which together hold shares greater than 10% in the parent company of Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises.

In its letter, penned after the appointment of new chief executive John Chidsey to succeed Harry Sommer, the investment management firm said it believes NCLH’s financial position has “atrophied” in the last decade, which has made the case for change “as compelling as any we have ever seen”.

It claimed the cruise brand had “failed to translate advantages into superior performance”, saying the company had not capitalised on “secular tailwinds” in the industry, possessing a large and loyal customer base and a fleet of “well-maintained ships with first-class amenities”, or operating one of the largest private island destinations in the sector.

More: Norwegian Cruise Line Holdings confirms order for three more ships

Elliott said NCLH’s shares have “underperformed those of Royal Caribbean and Carnival” in the letter due to “critical revenue opportunities” being “missed or poorly executed”, in addition to “a lack of cost discipline”.

However, the letter maintained that with “the right strategy and strong execution” there was “a clear path” for stock to rise by 159%, or by $56 on current levels.

To achieve this, the fund manager is pushing for a comprehensive board change, a review of the executive leadership team and a new business plan in what it is labelling a ‘Norwegian Now’ strategy.

“With the right leadership, strategy and board oversight, we believe Norwegian’s challenges are readily addressable,” stated the letter.

It added that a board of “new, truly independent directors with relevant industry and operational expertise”, a new leadership team to “restore credibility” and a business plan which “delivers on available revenue opportunities” and “restores cost discipline” could drive a turnaround.

In response to the letter, a spokesperson for NCLH said: “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.

"Of note, this is the first we are hearing from Elliott Investment Management. We are committed to delivering durable, long-term value creation, which will be led by our recently appointed chief executive officer, John Chidsey.

"We look forward to sharing additional information on our earnings call on March 2.”

NCLH appointed Chidsey on February 13 to take over from Harry Sommer, who had been in the role for less than three years. 

The group subsequently confirmed an order for three more ships for each of the company’s brands with Italian shipbuilder Fincantieri, with the first delivery due in 2030.