EMEA News
"Teething Problems" with LNG Vessels Sees Fjord Line Suffer Heaving Income Losses
Norway's Fjord Line A/S has announced that it suffered heavy losses in the last quarter of 2014 due to problems with its new liquefied natural gas (LNG) cruise ferries, the MS Stavengerfjord and the MS Bergensfjord.
The "teething problems" reportedly included issues with the original delivery, LNG supply, and a legal dispute with a competitor.
Though the Group's operating revenues for the quarter rose to NOK 766.3 million ($102.6 million) compared to NOK 405.5 million ($54.3 million) the year before, losses after tax increased to NOK 163.8 million ($22 million) compared to NOK 133.3 million ($17.9 million) in 2013.
Earnings before interest, taxes, depreciation, and amortization (EBITDA) also increased to a loss of NOK 243.4 million ($32.6 million) from NOK 149 million ($20 million).
According to the company, deficiencies with the original delivery of the ships led them to be brought into three guarantee docks in 2014.
Delays with the company's gas supplier also purportedly meant that there was a lack of appropriate infrastructure available for bunkering, which led to longer-than-expected bunkering times and higher LNG consumption.
The company said that it has also had to involve itself in costly litigation against Norway-based Color Line A/S, who runs a competing ferry service on the route from Sandefjord to Strömstad.
"Fjord Line has suffered heavy losses as a consequence of the obstruction actions that the company has been subject to on this route," Fjord Line said.
Color Line A/S was accused of breaching competition regulations and attempting to block Fjord Line from accessing "commercially acceptable" departure times, with the case expected to be settled in fall of 2015.
"The group expects a result for 2015 that is considerably better than in 2014," said the company.
"This is a consequence of the fact that all starting-up of new ships and routes have been accomplished, and we now shall have year-round sailings on all routes."
Last year, the MS Bergensfjord leaked 100 kilograms of LNG from a hose connection in the bunkering room into the water.
In 2013, the MS Stavengerfjord was also reported as having to turn around during a voyage due to engine troubles.
