American Classic Voyages, which runs Hawaii’s only interisland cruise line as well as luxury riverboats and cruise ships serving the East Coast, filed for bankruptcy protection Friday, citing losses following the Sept. 11 terrorist attacks. The company will pare its
American Classic Voyages, which runs Hawaii’s only interisland cruise line as well as luxury riverboats and cruise ships serving the East Coast, filed for bankruptcy protection Friday, citing losses following the Sept. 11 terrorist attacks.
The company will pare its fleet of seven ships down to one, the Delta Queen, a paddlewheel steamboat declared a National Historic Landmark, said spokeswoman Fran Sevcik in Miami.
The two Hawai’i cruise ships, the Independence (scheduled to call on Nawiliwili Harbor on Kaua’i Friday morning) and the Patriot, were kept at sea to avoid the press before returning last night to their home ports of Kahului on Maui and Honolulu Harbor, respectively, said Dan Bayne, a spokesman in Hawai’i for American Classic Voyages.
Bayne said he spent much of yesterday on the telephone, offering the ships’ food supplies to needy groups on Maui and O’ahu.
The ships’ 750 crew members were paid through and including today, with checks issued yesterday or today, he said.
In onboard meetings, employees were told that after Friday they no longer have jobs.
Kaua’i retail businesses, restaurants, tour companies and activities suddenly saw the steady flow of up to 2,000 passengers a week dry up in one day.
Nalani Brun, tourism specialist with the Kaua’i County Office of Economic Development, likened the end of American Classic Voyages’ weekly calls to Kaua’i to losing part of a family.
Musicians who make money performing at greetings for the cruise ships will lose that income, said Brun, who organizes musical greetings for visitors at Lihu’e Airport and Nawiliwili Harbor and has been known to sing and dance hula herself.
Several shuttle vans activated on boat days will now sit idle on Kaua’i, as well.
Ironically, American Classic Voyages said it would continue construction on two, 1,900-passenger cruise ships scheduled to enter the Hawai’i market by 2004 and eventually replace the Patriot and Independence.
Bayne, though, figures someone else will finish the $1 billion Project America build.
If a court finds the company not financially fit to run its existing operations, why would it feel the company could carry out the expansive, new-ships project, he wondered.
Bayne also confirmed Friday that Carnival Cruise Line holds a mortgage on the Patriot and has been in negotiations to acquire that ship. Carnival representatives met with American Classic Voyages officials in Honolulu yesterday, and Bayne said that with the financial condition of American Classic Voyages, the Patriot might soon become a Carnival ship.
It’s not known whether Carnival would continue interisland sailings.
Three of American Classic Voyages’s ship brands – Delta Queen Coastal Voyages, which ran cruises along the East Coast, and the American Hawai’i Cruises and United States Lines, which provided cruises off Hawai’i – are shut down.
The company is cutting 2,150 jobs – 450 office personnel and 1,700 ship-based workers. It is also closing offices in Hawai’i and a recently opened reservations call center and headquarters in Florida. The company will keep 30 employees in its New Orleans office and 80 aboard the Delta Queen, which operates out of New Orleans under the Delta Queen Steamboat Company brand.
“The tragic events of Sept. 11 dealt a devastating blow to our business that has made it impossible to continue our full operations,” said chief executive officer Phil Calian.
The company filed its petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in Wilmington, Del., on Friday.
“Our 2002 was looking very good, especially in Hawai’i,” Calian said. But in the weeks since the attacks, bookings declined 50 percent while cancellations spiked 30 percent, he said.
“Vendors and creditors who had extended us credit were all of a sudden demanding cash payments,” he said. “The Chapter 11 filing became the only alternative to us to preserve our present cash supply, improve our balance sheet and minimize the impact on affected passenger and other stakeholders.”
Sevcik said all cruises already underway this week will continue as planned.
Several of the company’s riverboats and the Cape May Light, which sails off the East Coast, were also at sea on cruises concluding within three days.
Calian said the company will make sure passengers and crews get back home.
The company moved to reassure customers that their deposits toward future bookings on the Delta Queen would be protected in an escrow account, but was not issuing refunds to customers who bought tickets to sail on the rest of the company’s ships. Company officials suggested they file a claim in court.
Customers who bought tickets with credit cards or through travel agents, or who had travel insurance, were being told to pursue refunds through those companies.
Calian said his company would add a second riverboat next spring and planned to re-enter the Hawaiian market with two planned 1,900-passenger cruise ships. He said the company would work with the Northrop Grumman Corp. and the U.S. Maritime Administration to complete the $1 billion project begun last July in Pascagoula, Miss.
“We believe strongly in Hawai’i as a cruise market,” Calian said. “We believe that in the future, as these ships sail in Hawai’i, they will be a very good investment.”
Northrop Grumman officials said Friday that work was proceeding on the new ships.
TGI staff writer Paul C. Curtis and Associated Press writer Alex Veiga contributed to this report.
