Princess/RCI Merger -- Q&A
November 27, 2001
Today marks a week since P&O Princess and Royal Caribbean made the most surprising announcement of the year. Their decision to merge has propelled the newly-joined partners into the world’s biggest cruise line. Beyond the financial statements there still isn’t much detail about what this will mean for travelers. “We learn more every day,” says Royal Caribbean’s Lynn Martenstein, “but we don’t have a lot of answers. Once we get past shareholder and regulatory clearance we can sit down and work out the details.” The basics have, however, been decided. In our question-and-answer piece we asked executives at P&O Princess and Royal Caribbean to shed light on areas important to cruise aficionados. Q: What does the merger mean? A: At this point, the merger is about combining separate and disparate cruise line brands under one umbrella holding company. Think – Carnival Corp., for instance, which owns everything from Carnival to Holland America to Windstar to Costa (among others) and yet operates them separately and distinctly. “This is a merger of holding companies so none of the brands should be significantly impacted,” says P&O Princess’ Sophie Fitton. “They will continue to compete with each other. Q: What are these brands? P&O Princess has Princess, of course, and the British-run P&O. It’s also got Swan Hellenic, a small ship line geared to learning-oriented cruises, the German-oriented Aida Cruises and the recently launched A’Rosa, and P&O Princess in Australia. Royal Caribbean has Celebrity. Q: What’s the company’s name? A: It hasn’t received an official moniker yet but the working title is RCP Cruise Line. Pretty easy to figure out what the initials stand for. Q: Is this a done deal? A: Nope, not yet. Executives at the two companies still have to convince shareholders and regulatory officials that it’s a good move for the cruise lines and the industry respectively. Regulatory approval must be gained from three countries -- the U.S., Great Britain and Germany. While they say they are confident the deal will be approved it’s not a certainty until the appropriate officials have signed on the dotted line (think the failed United Airlines and US Airways merger -- which dissolved because it failed to gain regulatory approval). If for any reason either of the two lines pulls out it will have to pay $62.5 million to the one left behind. Q: How long will it take? A: Company officials say they expect it will be four to six months before the official merger will occur. So if all goes well think “spring.” Q: Who will run the cruise lines? A: Actually, not much will change in this area. Richard Fain, Royal Caribbean’s chairman and CEO and Peter Ratcliffe, P&O Princess’ CEO, will head up the holding company but the individual presidents at each of the cruise lines will continue to serve as the hands-on leaders. Q: Where will the company be based? A: Plans call for corporate headquarters of the holding company to be located in Miami. Royal Caribbean will continue to operate out of its existing office there while Princess will maintain its headquarters in Southern California (as well as its Seattle office). Q: I’m a shareholder. What does this mean for my stock? A: Not much, actually. P&O Princess and Royal Caribbean will continue to trade separately. Q: As a Princess past passenger, does this mean I can use my credit on Royal Caribbean or Celebrity? Or vice versa? A: No one knows yet. These kind of operational details, including itinerary changes, have not yet been decided on. “They are separate companies with separate operations,” stresses Royal Caribbean’s Lynn Martenstein. “They’re like two companies under a single management. Both are very successful at what they do so there would not be a lot of incentive to change that. Stay tuned and Cruise Critic will keep you posted as events unfold.