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What changed in Norwegian Cruise Line Holdings's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Norwegian Cruise Line Holdings's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+370 added−398 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-28)

Top changes in Norwegian Cruise Line Holdings's 2024 10-K

370 paragraphs added · 398 removed · 271 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

120 edited+39 added−76 removed132 unchanged
Biggest changeNorwegian’s ships cater to a variety of travelers with up to 20 dining options; various attractions, including the world’s only racetracks at sea; a wide array of entertainment options; full-service spas at sea; and a diverse range of accommodations including luxury suites in The Haven, studio staterooms designed and priced for the solo traveler and everything in between.
Biggest changeWe are currently undergoing a broad and ongoing effort to improve operating efficiencies, including cost minimization initiatives, allowing us to progress towards achieving lower leverage. ​ Our Commitment to Sustainability ​ Our global sustainability program, Sail & Sustain, is centered around our commitment to drive a positive impact on society and the environment while delivering on our vision to be the vacation of choice for everyone around the world. ​ Competitive Strengths We believe that the following business strengths will enable us to execute our strategy: ​ Clearly Defined Brands ​ Our portfolio of three award-winning brands operates a combined 32 ships ranging in size from approximately 500 to over 4,000 Berths. ​ 10 Table of Contents Norwegian’s ships cater to a variety of travelers with up to 20 dining options; various attractions, including the world’s only racetracks at sea; a wide array of entertainment options; full-service spas at sea; and a diverse range of accommodations, including luxury suites in The Haven, studio staterooms designed and priced for the solo traveler and everything in between.
West Coast ​ Norwegian Bliss ​ 2018 ​ Alaska, Caribbean, Central America, Europe, Mexico-Pacific, U.S. West Coast ​ Norwegian Joy ​ 2017 ​ The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Mexico-Pacific, U.S.
West Coast ​ Norwegian Bliss ​ 2018 ​ Alaska, The Bahamas, Caribbean, Central America, Europe, Mexico-Pacific, U.S. West Coast ​ Norwegian Joy ​ 2017 ​ Alaska, The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Mexico-Pacific, U.S.
West Coast ​ Norwegian Pearl ​ 2006 ​ The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Europe ​ Norwegian Jewel ​ 2005 ​ Alaska, Asia, Caribbean, Central America, Mexico-Pacific, U.S.
West Coast ​ Norwegian Pearl ​ 2006 ​ The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Europe ​ Norwegian Jewel ​ 2005 ​ Alaska, Asia, Bermuda, Caribbean, Central America, Mexico-Pacific, U.S.
Compensation and Benefits Critical to our success is identifying, recruiting, retaining top talent and incentivizing existing and future team members. We attract and retain talented team members by offering competitive compensation and benefits. Our pay-for-performance compensation philosophy for our shoreside team is based on rewarding each team member’s individual contributions.
Compensation and Benefits Critical to our success is identifying, recruiting and retaining top talent and incentivizing existing and future team members. We attract and retain talented team members by offering competitive compensation and benefits. Our pay-for-performance compensation philosophy for our shoreside team is based on rewarding each team member’s individual contributions.
Thomas for a 10-year term through September 2026 with an option to extend the agreement for an additional five years. ● an agreement with the Port of Seattle for a 15-year lease through October 2030 with an option to extend the agreement for an additional five years. ● an agreement with the Huna Totem Corporation that includes preferential berthing rights, for which a second pier in Icy Strait Point, Alaska has been developed. ● a 30-year preferential berthing agreement with Ward Cove Dock Group, LLC, who has constructed a new double ship pier in Ward Cove, Ketchikan, Alaska.
Thomas for a 10-year term through September 2026. ● an agreement with the Port of Seattle for a 15-year lease through October 2030 with an option to extend the agreement for an additional five years. ● an agreement with the Huna Totem Corporation that includes preferential berthing rights, for which a second pier in Icy Strait Point, Alaska has been developed. ● a 30-year preferential berthing agreement with Ward Cove Dock Group, LLC, who has constructed a new double ship pier in Ward Cove, Ketchikan, Alaska.
Harry Sommer has served as President and Chief Executive Officer and a director of the Company since July 2023 and as President and Chief Executive Officer – Elect of the Company from April 2023 through June 2023.
Harry Sommer has served as President and Chief Executive Officer and a director of the Company since July 2023 and as President and Chief Executive Officer – Elect from April 2023 through June 2023.
Prior to that, he served as Senior Vice President, Consumer Research for Norwegian Cruise Line from May 2020 to October 2021, Senior Vice President, Brand Finance and Strategy for Norwegian Cruise Line from August 2018 to October 2021, Senior Vice President, Strategy and Corporate Development from February 2018 through July 2018, President of NCLH China, from November 2015 to February 2018 and Senior Vice President, Strategy and Business Development from May 2015 to November 2015.
Prior to that, he served as Senior Vice President, Consumer Research for Norwegian Cruise Line from May 2020 to October 2021, Senior Vice President, Brand Finance and Strategy from August 2018 to October 2021, Senior Vice President, Strategy and Corporate Development from February 2018 through July 2018, President of NCLH China, from November 2015 to February 2018 and Senior Vice President, Strategy and Business Development from May 2015 to November 2015.
We strive to be a great partner to each destination we visit, working together to find sustainable, long-term solutions for the communities, while at the same time allowing our guests to experience all that these incredible destinations have to offer. ​ We provide regular updates to our stakeholders on our sustainability efforts and promote awareness on important topics through our Sail & Sustain program, our annual ESG report and through various communications regarding important sustainability initiatives across distribution channels including but not limited to press releases, social media and our corporate website.
We strive to be a great partner to each destination we visit, working together to find sustainable, long-term solutions for the communities, while at the same time allowing our guests to experience all that these incredible destinations have to offer. ​ We provide regular updates to our stakeholders on our sustainability efforts and promote awareness on important topics through our Sail & Sustain program, our annual Sail & Sustain report and through various communications regarding important sustainability initiatives across distribution channels, including, but not limited to, press releases, social media and our corporate website.
IMO adopted an amendment to SOLAS which requires partial bulkheads on stateroom balconies to be of non-combustible construction. The SOLAS regulation implemented Long-Range Identification and Tracking. All our ships are in compliance with the requirements of SOLAS as amended and/or as applicable to the keel-laying date. In addition to the requirements of the ISPS Code, the U.S.
IMO also adopted an amendment to SOLAS which requires partial bulkheads on stateroom balconies to be of non-combustible construction. The SOLAS regulation implemented Long-Range Identification and Tracking. All our ships are in compliance with the requirements of SOLAS as amended and/or as applicable to the keel-laying date. In addition to the requirements of the ISPS Code, the U.S.
The Oil Pollution Act of 1990 (“OPA 90”) provides for strict liability for water pollution caused by the discharge of oil in the 200-nautical mile EEZ of the U.S., subject to defined monetary limits. OPA 90 requires that in order for us to operate in U.S. waters, we must have Certificates of Financial Responsibility (“COFR”) from the U.S.
The Oil Pollution Act of 1990 (“OPA 90”) provides for strict liability for water pollution caused by the discharge of oil in the 200-nautical mile EEZ of the U.S., subject to defined monetary limits. OPA 90 requires that in order for us to operate in U.S. waters, we must have Certificates of Financial Responsibility from the U.S.
In addition, due to the large quantities that we purchase, we can obtain favorable prices for many of our supplies. Our purchases for ship construction expenditures are generally denominated in euros and other purchases are denominated primarily in U.S. dollars. Payment terms granted by the suppliers are generally customary terms for the cruise industry.
In addition, due to the large quantities that we purchase, we typically can obtain favorable prices for many of our supplies. Our purchases for ship construction expenditures are generally denominated in euros and other purchases are denominated primarily in U.S. dollars. Payment terms granted by the suppliers are generally customary terms for the cruise industry.
As a result of these developments in global tax reform, during the fourth quarter of 2023, the Company realigned its organizational structure in Bermuda due to the inclusion of the international shipping income exclusion in the Bermuda Act, which we believe provides an ability for the Company to exempt a significant amount of its income.
As a result of these developments in global tax reform, during the fourth quarter of 2023, the Company realigned its organizational structure in Bermuda due to the inclusion of the international shipping income exclusion in the Bermuda Act, which we believe provides an ability for the Company to exempt a significant amount of its income from Bermuda income tax.
For additional information regarding our sustainability initiatives, please visit our website at www.nclhltd.com. ​ Highly Experienced Management Team ​ Our senior management team is comprised of executives with extensive experience in the cruise, travel, leisure and hospitality-related industries.
For additional information regarding our sustainability initiatives, please visit our website at https://www.nclhltd.com/sustainability. ​ Highly Experienced Management Team ​ Our senior management team is comprised of executives with extensive experience in the cruise, travel, leisure and hospitality-related industries.
For information regarding risks associated with our compliance with legal and regulatory requirements, see “Part I Item 1A-Risk Factors” in this Annual Report, including the risk factor titled “We are subject to complex laws and regulations, including environmental, health and safety, labor, data privacy and protection and maritime laws and regulations, which could adversely affect our operations and certain recently introduced laws and regulations and future changes in laws and regulations could lead to increased costs and/or decreased revenue.” 24 Table of Contents Taxation U.S.
For information regarding risks associated with our compliance with legal and regulatory requirements, see “Part I Item 1A-Risk Factors” in this Annual Report, including the risk factor titled “We are subject to complex laws and regulations, including environmental, health and safety, labor, data privacy and protection and maritime laws and regulations, which 21 Table of Contents could adversely affect our operations and certain recently introduced laws and regulations and future changes in laws and regulations could lead to increased costs and/or decreased revenue.” Taxation U.S.
Norwegian’s ticket prices typically include cruise accommodations, meals in certain dining facilities and many onboard activities such as entertainment, pool-side activities and various sports programs. To maximize onboard revenue, all three brands use various cross-marketing and promotional tools which are supported by point-of-sale systems permitting “cashless” transactions for the sale of these products and services.
Norwegian’s ticket prices typically include meals in certain dining facilities and many onboard activities such as entertainment, pool-side activities and various sports programs. To maximize onboard revenue, all three brands use various cross-marketing and promotional tools which are supported by point-of-sale systems permitting “cashless” transactions for the sale of these products and services.
West Coast ​ Oceania Insignia ​ 1998 ​ Africa, Alaska, Antarctica, Asia, Australia & New Zealand, Bermuda, Canada & New England, Caribbean, Central America, Europe, Hawaii, Mexico-Pacific, South America, South Pacific, U.S.
West Coast ​ Oceania Insignia ​ 1998 ​ Africa, Antarctica, Asia, Australia & New Zealand, Bermuda, Canada & New England, Caribbean, Central America, Europe, Hawaii, Mexico-Pacific, South America, South Pacific, U.S.
The coverage for each of the hull and machinery policies is maintained with syndicates of insurance underwriters from the European and U.S. insurance markets. 18 Table of Contents In addition to the insurance coverage on the hull and machinery of our ships, we seek to maintain comprehensive insurance coverage and believe that our current coverage is at appropriate levels to protect against most of the accident-related risks involved in the conduct of our business.
The coverage for each of the hull and machinery policies is maintained with syndicates of insurance underwriters from the European and U.S. insurance markets. 15 Table of Contents In addition to the insurance coverage on the hull and machinery of our ships, we seek to maintain comprehensive insurance coverage and believe that our current coverage is at appropriate levels to protect against most of the accident-related risks involved in the conduct of our business.
The third and fourth Prima Class Ships will be approximately 156,300 Gross Tons with 3,550 Berths and the fifth and sixth Prima Class Ships will be approximately 169,000 Gross Tons with 3,850 Berths.
The third and fourth Prima Class Ships will be approximately 156,000 Gross Tons with 3,550 Berths, and the fifth and sixth Prima Class Ships will be approximately 169,000 Gross Tons with 3,850 Berths.
West Coast ​ Norwegian Sky ​ 1999 ​ Asia, The Bahamas, Canada & New England, Caribbean, Central America, Europe ​ Norwegian Spirit ​ 1998 ​ Alaska, Asia, Australia & New Zealand, Hawaii, South Pacific ​ Oceania Cruises ​ ​ ​ ​ Oceania Allura (3) ​ 2025 ​ The Bahamas, Canada & New England, Caribbean, Europe ​ Oceania Vista ​ 2023 ​ Africa, Asia, The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Europe, Mexico-Pacific, South America, South Pacific ​ Oceania Riviera ​ 2012 ​ Africa, Alaska, Asia, Australia & New Zealand, The Bahamas, Bermuda, Caribbean, Europe, South Pacific ​ Oceania Marina ​ 2011 ​ Africa, Antarctica, Bermuda, Canada & New England, Caribbean, Central America, Europe, South America ​ Oceania Nautica ​ 2000 ​ Africa, Asia, Australia & New Zealand, Bermuda, Canada & New England, Caribbean, Central America, Europe, Hawaii, South America, South Pacific ​ Oceania Sirena ​ 1999 ​ Asia, Australia The Bahamas, Bermuda, Caribbean, Central America, Europe, Hawaii, South America, South Pacific ​ Oceania Regatta ​ 1998 ​ Alaska, Asia, Australia & New Zealand, Hawaii, Mexico-Pacific, South Pacific, U.S.
West Coast ​ Norwegian Sky ​ 1999 ​ Africa, Asia, The Bahamas, Canada & New England, Caribbean, Central America, Europe ​ Norwegian Spirit ​ 1998 ​ Alaska, Asia, Australia & New Zealand, Hawaii, South Pacific ​ Oceania Cruises ​ ​ ​ ​ Oceania Allura (4) ​ 2025 ​ The Bahamas, Canada & New England, Caribbean, Europe ​ Oceania Vista ​ 2023 ​ Africa, Asia, The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Europe, Mexico-Pacific, South America, South Pacific ​ Oceania Riviera ​ 2012 ​ Africa, Alaska, Asia, Australia & New Zealand, Europe, South Pacific ​ Oceania Marina ​ 2011 ​ Africa, Antarctica, Bermuda, Canada & New England, Caribbean, Central America, Europe, South America ​ Oceania Nautica ​ 2000 ​ Africa, Asia, Australia & New Zealand, Bermuda, Canada & New England, Caribbean, Central America, Europe, Hawaii, South Pacific ​ Oceania Sirena ​ 1999 ​ Asia, The Bahamas, Bermuda, Caribbean, Central America, Europe, South Pacific ​ Oceania Regatta ​ 1998 ​ Africa, Alaska, Asia, Australia & New Zealand, Hawaii, Mexico-Pacific, South Pacific, U.S.
Retention and Engagement We have a history of strong retention rates across our shoreside and shipboard teams which we attribute to our culture that allows our team members to thrive and achieve their career goals. For the full year of 2023, the Company experienced its highest shoreside voluntary retention rate as compared to the prior four years.
Retention and Engagement We have a history of strong retention rates across our shoreside and shipboard teams which we attribute to our culture that allows our team members to thrive and achieve their career goals. For the full year of 2024, the Company experienced its highest shoreside voluntary retention rate as compared to the prior four years.
Food and beverage, casino operations and shore excursions are generally managed directly by us while retail shops, spa services, art auctions and internet services may be managed through contracts with third-party concessionaires. These contracts generally entitle us to a percentage of the gross sales derived from these concessions.
Food and beverage, casino operations and shore excursions are generally managed directly by us while retail shops, spa services, art auctions and communication services may be managed through contracts with third-party concessionaires. These contracts generally entitle us to a percentage of the gross sales derived from these concessions.
The international, national, state and local laws, regulations, treaties and other 19 Table of Contents legal requirements applicable to our operations change regularly, depending on the itineraries of our ships and the ports and countries visited. Our ships are subject to inspection by the port regulatory authorities in the various countries that they visit.
The international, national, state and local laws, regulations, treaties and other legal requirements applicable to our operations change regularly, depending on the itineraries of our ships and the ports and countries visited. 16 Table of Contents Our ships are subject to inspection by the port regulatory authorities in the various countries that they visit.
Ashby 52 Senior Vice President and Chief Accounting Officer ​ All the executive officers listed above hold their offices at the pleasure of our Board of Directors, subject to rights under any applicable employment agreements. There are no family relationships between or among any directors and executive officers.
Ashby 53 Senior Vice President and Chief Accounting Officer ​ All the executive officers listed above hold their offices at the pleasure of our Board of Directors, subject to rights under any applicable employment agreements. There are no family relationships between or among any directors and executive officers.
She joined NCLH as Controller in November 2014 after the Acquisition of Prestige and served in that position until February 2016. From January 2012 to November 2014, Ms. Ashby served as Controller for Prestige, where she managed and developed the Accounting and External Financial Reporting teams. From March 2010 to December 2011, Ms.
She joined NCLH as Controller in November 2014 after the acquisition of PCI and served in that position until February 2016. From January 2012 to November 2014, Ms. Ashby served as Controller for PCI, where she managed and developed the Accounting and External Financial Reporting teams. From March 2010 to December 2011, Ms.
Ashby held the position of Senior Director of Financial Reporting with Prestige, where she started the Financial Reporting Department and was responsible for the preparation of annual financial statements, coordination of external audits and researching technical accounting issues. Before joining Prestige, Ms. Ashby was a Senior Manager at the international public accounting firm of Deloitte.
Ashby held the position of Senior Director of Financial Reporting with PCI, where she started the Financial Reporting Department and was responsible for the preparation of annual financial statements, coordination of external audits and researching technical accounting issues. Before joining PCI, Ms. Ashby was a Senior Manager at the international public accounting firm of Deloitte.
The requirements will be phased in from 2024 to 2026. Covered entities are required to procure and surrender allowances equivalent to 40% of their verified carbon emissions from 2024, with the amount increasing to 70% of carbon emissions from 2025 and 100% of GHG emissions from 2026, with allowances to be surrendered by September in the following year.
The requirements are being phased in from 2024 to 2026. Covered entities are required to procure and surrender allowances equivalent to 40% of their verified carbon emissions from 2024, with the amount increasing to 70% of carbon emissions from 2025 and 100% of GHG emissions from 2026, with allowances to be surrendered by September in the following year.
Farkas joined the Company in January 2004, he has held the positions of Secretary from 2010 to 2013, Senior Vice President and General Counsel from 2008 through 2018, Vice President and Assistant General Counsel from 2005 to 2008, and Assistant General Counsel from 2004 to 2005 and was instrumental in the Company’s IPO and the Acquisition of Prestige. Mr.
Farkas joined the Company in January 2004, he has held the positions of Secretary from 2010 to 2013, Senior Vice President and General Counsel from 2008 through 2018, Vice President and Assistant General Counsel from 2005 to 2008, and Assistant General Counsel from 2004 to 2005 and was instrumental in the Company’s IPO and the acquisition of PCI. Mr.
From September 2008 to November 2014, he served as Vice President, Corporate and Capital Planning, and was an instrumental figure in the completion of NCLH’s IPO in 2013 and the Acquisition of Prestige in 2014. From January 2007 to August 2008, he served as Director, Corporate and Capital Planning.
From September 2008 to November 2014, he served as Vice President, Corporate and Capital Planning, and was an instrumental figure in the completion of NCLH’s IPO in 2013 and the acquisition of PCI in 2014. From January 2007 to August 2008, he served as Director, Corporate and Capital Planning.
For example, the International Port and Ship Facility Code (“ISPS Code”) was adopted by the IMO in December 2002 with the goal of strengthening maritime security by placing new requirements on governments, port authorities and shipping companies. ​ 23 Table of Contents Amendments to SOLAS required that ships constructed in accordance with pre-1974 SOLAS requirements install automatic sprinkler systems.
For example, the International Port and Ship Facility Code (“ISPS Code”) was adopted by the IMO in December 2002 with the goal of strengthening maritime security by placing new requirements on governments, port authorities and shipping companies. ​ Amendments to SOLAS required that ships constructed in accordance with pre-1974 SOLAS requirements install automatic sprinkler systems.
Bernstein, where he advised high net worth families and endowments on financial matters, Vice President of Marketing, Finance and Reinsurance for Markel Corporation, and an investment banker at Goldman, Sachs 32 Table of Contents & Co. in the Financial Institutions Group. Mr. Herrera proudly served in the U.S. Army National Guard in Florida, Texas and New York. Mr.
Bernstein, where he advised high net worth families and endowments on financial matters, Vice President of Marketing, Finance and Reinsurance for Markel Corporation, and an investment banker at Goldman, Sachs & Co. in the Financial Institutions Group. Mr. Herrera proudly served in the U.S. Army National Guard in Florida, Texas and New York. Mr.
Our SMS is approved and audited regularly by our classification society, Lloyds Register, and it also undergoes regular internal audits as well as periodic inspections by the U.S. Coast Guard, flag state and other port and state authorities.
Our SMS is approved and audited regularly by our classification society, and it also undergoes regular internal audits as well as periodic inspections by the U.S. Coast Guard, flag state and other port and state authorities.
Sommer previously served as Senior Vice President and Chief Marketing Officer of Prestige from October 2013 until February 2015, Senior Vice President, Finance, and Chief Information Officer of Prestige from September 2011 until October 2013 and Senior Vice President, Accounting, Chief Accounting Officer and Controller of Prestige from August 2009 until August 2011. Prior to joining Prestige, Mr.
Sommer previously served as Senior Vice President and Chief Marketing Officer of PCI from October 2013 until February 2015, Senior Vice President, Finance, and Chief Information Officer of PCI from September 2011 until October 2013 and Senior Vice President, Accounting, Chief Accounting Officer and Controller of PCI from August 2009 until August 2011. Prior to joining PCI, Mr.
Our largest operating expenditures are for payroll and related (including our contract with a third party who provides certain crew services), fuel, airfare, food and 17 Table of Contents beverage, advertising and marketing and travel advisor services. Most of the supplies that we require are available from numerous sources at competitive prices.
Our largest operating expenditures are for payroll and related (including our contract with a third party who provides certain crew services), fuel, airfare, food and 14 Table of Contents beverage, advertising and marketing and travel advisor services. Most of the supplies that we require are typically available from numerous sources at competitive prices.
For 2023, 2022 and 2021, both Regent and Oceania Cruises relied on NCLH’s ability to meet the requirements necessary to qualify for the benefits of Section 883 as discussed above. 25 Table of Contents Taxation of International Shipping Income Where Section 883 of the Code is Inapplicable Unless exempt from U.S. federal income taxation, a foreign corporation is subject to U.S. federal income tax in respect of its “shipping income” that is derived from sources within the United States.
For 2024, 2023 and 2022, both Regent and Oceania Cruises relied on NCLH’s ability to meet the requirements necessary to qualify for the benefits of Section 883 as discussed above. 22 Table of Contents Taxation of International Shipping Income Where Section 883 of the Code is Inapplicable Unless exempt from U.S. federal income taxation, a foreign corporation is subject to U.S. federal income tax in respect of its “shipping income” that is derived from sources within the United States.
The IMO also decided to develop a basket of measures to support the revised ambitions consisting of two parts: a technical element which will be a goal-based marine fuel standard regulating the phased reduction of marine fuel GHG intensity, and an economic element which may be some form of a maritime GHG emissions pricing mechanism.
The IMO also decided to develop a basket of measures to support the revised ambitions consisting of two parts: a technical element which will be a goal-based marine fuel standard regulating the phased reduction of marine fuel GHG intensity, and an economic element which may be 19 Table of Contents some form of a maritime GHG emissions pricing mechanism.
Juneau Dock, Ogden Point Cruise Ship Terminal in Victoria, BC, Port of Southampton, ITM, and various Hawaiian ports pursuant to which we receive preferential berths to the exclusion of other vessels for certain specified days of the week at the terminals. ● a concession permit with the U.S.
Juneau Dock, Ogden Point Cruise Ship Terminal in Victoria, British Columbia, Port of Southampton, ITM, and various Hawaiian ports pursuant to which we receive preferential berths to the exclusion of other vessels for certain specified days of the week at the terminals. ● a concession permit with the U.S.
We will, as soon as reasonably practicable after we electronically file or furnish our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and amendments to those reports, if applicable, make available such reports free of charge on our website.
We will, as soon as reasonably practicable after we electronically file or furnish our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8- 27 Table of Contents K, proxy statements and amendments to those reports, if applicable, make available such reports free of charge on our website.
In January 2013, NCLH completed its IPO and the ordinary shares of NCLC were exchanged for the ordinary shares of NCLH, and NCLH became the owner of 100% of the ordinary shares and parent company of NCLC. In November 2014, we completed the Acquisition of Prestige.
In January 2013, NCLH completed its IPO and the ordinary shares of NCLC were exchanged for the ordinary shares of NCLH, and NCLH became the owner of 100% of the ordinary shares and parent company of NCLC. In November 2014, we completed the acquisition of PCI.
West Coast ​ Pride of America ​ 2005 ​ Hawaii ​ Norwegian Dawn ​ 2002 ​ Africa, Asia, Caribbean, Europe ​ Norwegian Star ​ 2001 ​ Antarctica, Europe, South America ​ Norwegian Sun ​ 2001 ​ Alaska, Asia, Central America, Mexico-Pacific, South America, South Pacific, U.S.
West Coast ​ Pride of America ​ 2005 ​ Hawaii ​ Norwegian Dawn ​ 2002 ​ Africa, Asia, The Bahamas, Caribbean, Europe ​ Norwegian Star ​ 2001 ​ Antarctica, Central America, Europe, Mexico-Pacific, South America ​ Norwegian Sun ​ 2001 ​ Alaska, Asia, The Bahamas, Central America, Hawaii, Mexico-Pacific, South America, South Pacific, U.S.
For example, the OECD and numerous jurisdictions have had an increased focus on issues concerning the taxation of multinational businesses and have adopted several related reforms including the implementation of a global minimum tax rate of at least 15% for large multinational businesses starting January 1, 2024 or later, which could have a negative effect on our business, financial condition and results of operations.
For example, the OECD and numerous jurisdictions have had an increased focus on issues concerning the taxation of multinational businesses and have adopted several related reforms including the implementation of a global minimum tax rate of at least 15% for large multinational businesses that was effective January 1, 2024 or later, which could have a negative effect on our business, financial condition and results of operations.
She has an M.B.A. and B.B.A. with concentrations in accounting from the University of Miami and is a Certified Public Accountant in Florida. 33 Table of Contents ​
She has an M.B.A. and B.B.A. with concentrations in accounting from the University of Miami and is a Certified Public Accountant in Florida. ​ 29 Table of Contents
Prices vary depending on the particular cruise itinerary, voyage length, stateroom category selected, added inclusions and the time of year that the sailing takes place. ​ 16 Table of Contents Onboard and Other Revenue All three brands generate onboard and other revenue for additional products and services which are not included in the cruise fare, including casino operations, certain food and beverage, shore excursions, gift shop purchases, spa services, Wi-Fi services and other similar items.
Prices vary depending on the particular cruise itinerary, voyage length, stateroom category selected, added inclusions and the time of year that the sailing takes place. ​ 13 Table of Contents Onboard and Other Revenue All three brands generate onboard and other revenue for additional products and services which are not included in the cruise fare, including casino operations, certain food and beverage, shore excursions, gift shop purchases, spa services, communication services and other similar items.
Exceptional team members continue to be recognized by a robust annual Award of Excellence recognition program which acknowledges and rewards individual team members and teams for their demonstration of Company values. In 2023, the Award of Excellence winners were celebrated by the NCLH President & CEO and senior leadership team onboard Regent Seven Seas Grandeur.
Exceptional team members continue to be recognized by a robust annual Award of Excellence recognition program which acknowledges and rewards individual team members and teams for their demonstration of Company values. In 2024, the Award of Excellence winners were celebrated by the NCLH President & CEO and senior leadership team onboard Regent Seven Seas Mariner.
West Coast ​ Norwegian Escape ​ 2015 ​ The Bahamas, Bermuda, Canada & New England, Caribbean, Europe ​ Norwegian Getaway ​ 2014 ​ The Bahamas, Bermuda, Canada & New England, Caribbean, Europe ​ Norwegian Breakaway ​ 2013 ​ Bermuda, Canada & New England, Caribbean, Europe ​ Norwegian Epic ​ 2010 ​ The Bahamas, Bermuda, Caribbean, Europe ​ Norwegian Gem ​ 2007 ​ The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Europe ​ Norwegian Jade ​ 2006 ​ Africa, Alaska, Asia, The Bahamas, Caribbean, Central America, Europe, U.S.
West Coast ​ Norwegian Escape ​ 2015 ​ The Bahamas, Bermuda, Canada & New England, Caribbean, Europe ​ Norwegian Getaway ​ 2014 ​ The Bahamas, Bermuda, Canada & New England, Caribbean, Europe ​ Norwegian Breakaway ​ 2013 ​ The Bahamas, Bermuda, Canada & New England, Caribbean, Europe ​ Norwegian Epic ​ 2010 ​ The Bahamas, Caribbean, Europe ​ Norwegian Gem ​ 2007 ​ The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Europe ​ Norwegian Jade ​ 2006 ​ Alaska, Asia, The Bahamas, Caribbean, Central America, Europe, Mexico-Pacific, U.S.
We evaluate, monitor, and implement energy-savings projects on our existing ships including but not limited to HVAC system upgrades, LED lighting, hydrodynamic upgrades, and Waste Heat Recovery projects. ​ The path towards net zero is complex, and this effort will require significant technology advancements including commercially viable and scalable low or zero GHG emission fuels, but we are committed to doing our part to facilitate this transition.
We evaluate, monitor, and implement energy-savings 12 Table of Contents projects on our existing ships including but not limited to HVAC system upgrades, LED lighting, hydrodynamic upgrades, and waste heat recovery projects. ​ The path towards net zero is complex, and this effort will require significant technological advancements including commercially viable and scalable low or zero GHG emission fuels, but we are committed to doing our part to facilitate this transition.
We are committed to providing crew members with guidelines, resources and activities for educational purposes and to guide them to achieve optimal wellness. Topics in this initiative address nutrition, physical activity, sleep and stress management and alcohol and tobacco awareness to name a few.
We are committed to providing crew members with guidelines, resources, and activities for educational purposes and to guide them to achieve optimal wellness. Topics in this initiative address, for example, nutrition, physical activity, sleep and stress management and alcohol and tobacco awareness.
Prior to the acquisition of Prestige, Mr. Herrera served as a Senior Advisor to the Chief Executive Officer of Prestige from 2012 through 2014. Prior to that, he was the founder and managing partner of Eastside Financial Group, a private investment firm, where he invested in and advised private companies, a Vice President at Sanford C.
Prior to the acquisition of PCI, Mr. Herrera served as a Senior Advisor to the Chief Executive Officer of PCI from 2012 through 2014. Prior to that, he was the founder and managing partner of Eastside Financial Group, a private investment 28 Table of Contents firm, where he invested in and advised private companies, a Vice President at Sanford C.
Our bridge teams conduct a voyage planning process prior to sailing, where the upcoming itinerary is reviewed and discussed by the captain and bridge team prior to departure and in preparation for arrival. In addition, all of our ships employ state-of-the-art navigational equipment and technology to ensure that our bridge teams have accurate data regarding the planned itinerary.
Our bridge teams conduct a voyage planning process prior to sailing, where the upcoming itinerary is reviewed and discussed by the captain and bridge team prior to departure and in preparation for arrival. In addition, all of our ships employ state-of-the-art navigational equipment and technology to provide our bridge teams with accurate data regarding the planned itinerary.
In order for a Bermuda entity’s international shipping income to qualify for the exclusion, the entity must demonstrate that the strategic or commercial management of all ships concerned is effectively carried on from or within Bermuda. NCLH expects it will meet the necessary requirements to qualify for the international shipping income exclusion during 2024.
In order for a Bermuda entity’s international shipping income to qualify for the exclusion, the entity must demonstrate that the strategic or commercial management of all ships concerned is effectively carried on from or within Bermuda. NCLH believes it met the necessary requirements to qualify for the international shipping income exclusion during 2024.
Trademarks and Trade Names Under the Norwegian brand, we own a number of registered trademarks relating to, among other things, the names “NORWEGIAN CRUISE LINE” and “FEEL FREE,” the names of our ships (except where trademark applications for these have been filed and are pending), incentive programs and specialty services rendered on our ships and specialty accommodations such as “THE HAVEN BY NORWEGIAN.” In addition, we own registered trademarks relating to the “FREESTYLE” family of names, including, “FREESTYLE CRUISING,” “FREESTYLE DINING” and “FREESTYLE VACATION.” We believe that these trademarks are widely recognized throughout North America, Europe and other areas of the world and have considerable value.
Trademarks and Trade Names Under the Norwegian brand, we own a number of registered trademarks relating to, among other things, the names “NORWEGIAN CRUISE LINE” and “FEEL FREE,” the names of our ships (except where trademark applications for these have been filed and are pending), incentive programs and specialty services rendered on our ships and specialty accommodations such as “THE HAVEN BY NORWEGIAN.” We believe that these trademarks are widely recognized throughout North America, Europe and other areas of the world and have considerable value.
The impacts of initiatives to improve environmental sustainability, modifications the Company has made to its newbuilds and/or other macroeconomic conditions and events have resulted in delays in expected ship deliveries in the past. These and other impacts could result in additional delays in ship deliveries in the future, which may be prolonged.
The impacts of initiatives to improve environmental sustainability and modifications the Company plans to make to its newbuilds and/or other macroeconomic conditions and events have resulted in delays in expected ship deliveries. These and other impacts could result in additional delays in ship deliveries in the future, which may be prolonged.
A total of 16 ships in our fleet, or 50%, are currently equipped with shore power technology, and we are targeting approximately 70% of our fleet to be equipped by year-end 2025.
A total of 19 ships in our fleet, or approximately 59%, are currently equipped with shore power technology, and we are targeting approximately 70% of our fleet to be equipped by year-end 2025.
We expect to make material investments in our business to comply with these laws and regulations; however, the total impact cannot be determined as we are evaluating our compliance plans. We refer you to “—Our Mission, Competitive Strengths & Business Strategies — Our Commitment to Sustainability” for information related to our Environmental, Social and Governance strategy.
We expect to make material investments in our business to comply with these laws and regulations; however, the total impact cannot be determined as we are evaluating our compliance plans. We refer you to “—Our Business Strategy and Competitive Strengths — Our Commitment to Sustainability” for information related to our sustainability strategy.
Each such certificate is granted for a five-year period and is subject to periodic verification. The SOLAS requirements are amended and extended by the IMO from time to time.
Each such certificate is granted for a five-year period and is subject to periodic verification. 20 Table of Contents The SOLAS requirements are amended and extended by the IMO from time to time.
The enforcement mechanism for CII has not yet been defined. The EEXI is a one-time design re-certification requirement that updates energy efficiency requirements for existing ships and regulates carbon dioxide emissions related to installed engine power, transport capacity and ship speed. Ongoing compliance with the EEXI is not expected to have a material impact on our operations.
The EEXI is a one-time design re-certification requirement that updates energy efficiency requirements for existing ships and regulates carbon dioxide emissions related to installed engine power, transport capacity and ship speed. Ongoing compliance with the EEXI is not expected to have a material impact on our operations.
As enacted, the Bermuda Act makes it clear that any corporate income tax liability is due regardless of the above assurances under the Exempted Undertakings Protection Act 1966. Therefore, NCLH, NCLC and their Bermuda subsidiaries will be subject to the Bermuda corporate income tax with effect from January 1, 2025. The Bermuda Act provides for an international shipping income exclusion.
As enacted, the Bermuda Act makes it clear that any corporate income tax liability is due regardless of the above assurances under the Exempted Undertakings Protection Act 1966. Therefore, NCLH, NCLC and their Bermuda subsidiaries became subject to the Bermuda corporate income tax effective as of January 1, 2025. The Bermuda Act provides for an international shipping income exclusion.
As of December 31, 2023, we have in place approximately £62.4 million of security guarantees for our brands as well as a consumer protection policy covering up to £107.9 million. The Company has provided approximately $1.5 million in cash to secure all the financial security guarantees required. Compliance with these regulations has had an impact on our financial condition.
As of December 31, 2024, we have in place approximately £65.1 million of security guarantees for our brands as well as a consumer protection policy covering up to £141.1 million. The Company has provided approximately $1.4 million in cash to secure all the financial security guarantees required. Compliance with these regulations has had an impact on our financial condition.
Although the Government of Bermuda has already released limited guidance with respect to specific provisions of the Bermuda Act, it is anticipated that further administrative guidance as well as regulatory guidance will be released over the course of the 2024 calendar year and beyond.
Although the Government of Bermuda has released limited guidance 23 Table of Contents with respect to specific provisions of the Bermuda Act, it is anticipated that further administrative guidance as well as regulatory guidance will be released over the course of the 2025 calendar year and beyond.
West Coast ​ 11 Table of Contents Regent Seven Seas Grandeur ​ 2023 ​ The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Europe, Mexico-Pacific ​ Seven Seas Splendor ​ 2020 ​ Africa, Antarctica, The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Europe, Mexico-Pacific, South America ​ Seven Seas Explorer ​ 2016 ​ Alaska, Asia, Australia & New Zealand ​ Seven Seas Voyager ​ 2003 ​ Africa, Asia, Antarctica, Australia & New Zealand, Bermuda, Europe, South America, South Pacific ​ Seven Seas Mariner ​ 2001 ​ Africa, Alaska, Asia, Australia & New Zealand, The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Europe, Hawaii, Mexico-Pacific, South America, South Pacific, U.S.
West Coast ​ Regent Seven Seas Prestige (5) ​ 2026 ​ The Bahamas, Caribbean, Central America, Europe ​ Seven Seas Grandeur ​ 2023 ​ The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Europe, Mexico-Pacific ​ Seven Seas Splendor ​ 2020 ​ Africa, Antarctica, The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Europe, Mexico-Pacific, South America ​ Seven Seas Explorer ​ 2016 ​ Alaska, Asia, Australia & New Zealand ​ Seven Seas Voyager ​ 2003 ​ Africa, Asia, Antarctica, Australia & New Zealand, Europe, South America, South Pacific ​ Seven Seas Mariner ​ 2001 ​ Africa, Alaska, Asia, Australia & New Zealand, The Bahamas, Bermuda, Canada & New England, Caribbean, Central America, Europe, Hawaii, Mexico-Pacific, South America, South Pacific, U.S.
The European Commission has also implemented regulations aimed at reducing GHG emissions from maritime shipping through a Monitoring, Reporting and Verification (“MRV”) regulation, which requires ships over 5,000 Gross Tons to 21 Table of Contents monitor and report carbon emissions on all voyages to, from and between E.U. ports as well as ports in the European Economic Area (“EEA”).
All non-ECA waters have a 0.5% fuel sulfur limit. 18 Table of Contents The European Commission has also implemented regulations aimed at reducing GHG emissions from maritime shipping through a Monitoring, Reporting and Verification (“MRV”) regulation, which requires ships over 5,000 Gross Tons to monitor and report carbon emissions on all voyages to, from and between E.U. ports as well as ports in the European Economic Area (“EEA”).
We are committed to providing crew members with guidelines, resources, and activities for educational purposes and to guide them to achieve optimal wellness. Topics in this initiative address nutrition, physical activity, sleep and stress management and alcohol and tobacco awareness to name a few. ​ Our captains and chief engineers are experienced seafarers.
We are committed to providing crew members with guidelines, resources, and activities for educational purposes and to help them achieve optimal wellness. Topics in this initiative address, among other things, nutrition, physical activity, sleep and stress management and alcohol and tobacco awareness. ​ Our captains and chief engineers are experienced seafarers.
Dahlgren has a B.S. in Nautical Science, Master Mariner from Linnaeus University. Daniel S. Farkas has served as Executive Vice President and General Counsel of NCLH since January 2019 and became Chief Development Officer of NCLH in April 2023. He has also served as Assistant Secretary of the Company since 2013. Since Mr.
Dahlgren has a B.S. in Nautical Science, Master Mariner from Linnaeus University. Daniel S. Farkas has served as Executive Vice President and General Counsel of NCLH since January 2019 and became Chief Development Officer of NCLH in April 2023.
YOUR WAY.” Under the Regent brand, we own registered trademarks relating to, among other things, the names “SEVEN SEAS CRUISES” and “AN UNRIVALED EXPERIENCE” as well as the names of our ships (except where trademark applications have been filed and are pending).
Under the Regent brand, we own registered trademarks relating to, among other things, the names “SEVEN SEAS CRUISES,” “AN UNRIVALED EXPERIENCE,” and “THE MOST INCLUSIVE LUXURY EXPERIENCE” as well as the names of our ships (except where trademark applications have been filed and are pending).
In general terms, adequate economic substance means: (i) the entity is actually directed and managed in the jurisdiction; (ii) core income-generating activities relating to the applicable relevant activity are performed in the jurisdiction; (iii) there are adequate employees in the jurisdiction; (iv) the entity maintains adequate physical presence in the jurisdiction; and (v) there is adequate operating expenditure in the jurisdiction.
In general terms, such economic substance requirements mean that: (i) the entity must be actually directed and managed in the jurisdiction; (ii) core income-generating activities relating to the applicable relevant activity must be performed in the jurisdiction; (iii) there are adequate suitably qualified employees in the jurisdiction; (iv) the entity maintains adequate physical presence in the jurisdiction; and (v) there is adequate operating expenditure incurred in the jurisdiction.
The Bermuda Act provides for opening tax loss carryforwards based on the Bermuda taxable income (loss) results of the individual Bermuda entities in the five fiscal years prior to the enactment date, which includes 2020 through 2024 calendar years for Norwegian, which can be carried forward indefinitely. Refer to Note 12 – “Income Taxes” for more information. U.K.
The Bermuda Act provides for opening tax loss carryforwards based on the Bermuda taxable income (loss) results of the individual Bermuda entities in the five fiscal years prior to the enactment date, which includes the 2020 through 2024 calendar years for Norwegian. These tax loss carryforwards can be carried forward indefinitely.
These tax regimes, however, are subject to change, possibly with retroactive effect. Legislation has been proposed in the past that would eliminate the benefits of the exemption from U.S. federal income tax under Section 883 and subject all or a portion of our shipping income to taxation in the U.S.
Legislation has been proposed in the past that would eliminate the benefits of the exemption from U.S. federal income tax under Section 883 and subject all or a portion of our shipping income to taxation in the U.S.
In 2018, the Vessel Incidental Discharge Act (“VIDA”), which will eventually replace the VGP, was signed into law, and the EPA published a notice of proposed rulemaking in 2020 and a supplemental notice of proposed rulemaking in 2023 to establish national standards of performance under VIDA that would apply to 20 different types of vessel equipment and systems, as well as general discharge standards that would apply to all types of vessel incidental discharges within 12 nautical miles of the United States.
In 2018, the Vessel Incidental Discharge Act (“VIDA”), which will eventually replace the VGP, was signed into law, and the EPA published a final rule in October 2024 establishing national standards of performance under the VIDA that apply to 20 different types of vessel equipment and systems, as well as general discharge standards that apply to all types of vessel incidental discharges within 12 nautical miles of the United States.
In addition, we have entered into various agreements relating to port or berthing rights for our ships, which include the following: ● an agreement with the Government of Bermuda whereby we are permitted weekly calls in Bermuda through 2028 from Boston and New York. ● contracts with the Port of New Orleans, Port Miami, Port Canaveral, New York City Economic Development Corporation (Manhattan Cruise Terminal), A.J.
In addition, we have entered into various agreements relating to port or berthing rights for our ships, which include the following: 26 Table of Contents ● an agreement with the Government of Bermuda whereby we are permitted weekly calls in Bermuda through 2037 from east coast ports in the United States of America. ● contracts with the Port of New Orleans, Port Canaveral, New York City Economic Development Corporation (Manhattan Cruise Terminal), A.J.
Public Health Service have agreed on regulations for food, water and hygiene, aimed at proactively protecting the health of travelers and preventing illness transmission to U.S. ports. We continue to work directly with the CDC Maritime Unit as well as other health regulatory authorities, such as E.U. Healthy Gateways, to adjust our infectious disease (COVID-19, influenza, noro virus) response protocols.
Public Health Service have agreed on regulations for food, water and hygiene, aimed at proactively protecting the health of travelers and preventing illness transmission to U.S. ports. We continue to work directly with the CDC Maritime Unit as well as other health regulatory authorities, such as E.U.
Pursuant to the legislation passed in each jurisdiction, entities subject to each jurisdiction’s laws that carry out relevant activities as specified in such laws, are required to demonstrate adequate economic substance in that jurisdiction.
Pursuant to the legislation passed in each jurisdiction, entities subject to each jurisdiction’s laws that carry out “relevant activities” as specified in such laws, are required to demonstrate adequate economic substance in that jurisdiction and meet the economic substance requirements under such laws.
As a travel company, our success is dependent on the wellbeing and vibrancy of the destinations we visit across the globe.
As a leading global cruise line, our success is dependent on the wellbeing and vibrancy of the destinations we visit across the globe.
Income items considered non-incidental to the international operation of ships include income from the sale of single-day cruises, shore excursions, air and other transportation, and pre- and post-cruise land packages.
Income items considered non-incidental to the international operation of ships include income from the sale of single-day cruises, shore excursions, air and other transportation, and pre- and post-cruise land packages. We believe that substantially all of our income currently derived from the international operation of ships is shipping income.
With regard to air emissions from seagoing ships, the E.U. requires the use of low sulfur (less than 0.1%) marine gas oil in E.U. ports. All non-ECA waters have a 0.5% fuel sulfur limit.
With regard to air emissions from seagoing ships, the E.U. requires the use of low sulfur (less than 0.1%) marine gas oil in E.U. ports.
Patrik Dahlgren has served as the Executive Vice President, Vessel Operations for NCLH since June 2023.
Patrik Dahlgren has served as the Executive Vice President, Chief Vessel Operations and Newbuild Officer for NCLH since August 2024 and as Executive Vice President, Vessel Operations since June 2023.
The Company’s Board of Directors is actively engaged in overseeing the Sail & Sustain program and Environmental, Social and Governance (“ESG”) strategy and implementation through its Technology, Environmental, Safety & Security Committee. ​ Reducing our environmental impact is a key component of the Sail & Sustain program.
The Company’s Board of Directors is actively engaged in overseeing the Sail & Sustain program, strategy and its implementation through its Technology, Environmental, Safety & Security Committee. ​ Reducing our environmental impact is a key component of the Sail & Sustain program. The backbone of our ships’ environmental programs is our ISO 14001 – certified Environmental Management System.
These policies and protocols were certified and audited to DNV’s Certification in Infection Prevention which further enhances our outbreak prevention and response to all types of infectious disease including, but not limited to COVID-19, norovirus, acute gastroenteritis, influenza and influenza-like illnesses. ​ Additional support to the above is provided to crew members with the NCLH Wellness at Sea initiative to create a wellness-conscious work environment on the vessels.
We developed Infectious Disease Management Protocols, which were certified and audited to DNV’s Certification in Infection Prevention, to further enhance our outbreak prevention and response to all types of infectious disease including, but not limited to COVID-19, norovirus, acute gastroenteritis, influenza and influenza-like illnesses. ​ Our NCLH Wellness at Sea initiative is designed to create a wellness-conscious work environment on our ships.
SOLAS requires that all cruise ships are certified as having safety procedures that comply with the requirements of the International Management Code for the Safe Operation of Ships and for Pollution Prevention (“ISM Code”). All of our ships are certified as to compliance with the ISM Code.
SOLAS requires that all cruise ships are certified as having safety procedures that comply with the requirements of the ISM Code. All of our ships are certified as to compliance with the ISM Code.
For the Norwegian brand, we have four Prima Class Ships on order, with currently scheduled delivery dates from 2025 through 2028. For Oceania Cruises, we have one Allura Class Ship on order for delivery in 2025. These additions to our fleet are expected to increase our total Berths to approximately 82,500.
For the Norwegian brand, we have four Prima Class Ships on order with currently scheduled delivery dates from 2025 through 2028. For Oceania Cruises, we have one Allura Class Ship on order for delivery in 2025.
This voluntary standard sets requirements for the establishment and implementation of a comprehensive environmental management system. ​ 15 Table of Contents As part of our environmental commitment, we are pursuing net zero greenhouse gas (“GHG”) emissions by 2050 across our operations (Scopes 1 and 2) and value chain (Scope 3).
This voluntary standard sets requirements for the establishment and implementation of a comprehensive environmental management system and helps us systematically identify, manage and control activities related to our environmental performance, manage progress toward our environmental goals and comply with applicable regulations. ​ As part of our environmental commitment, we are pursuing net zero greenhouse gas (“GHG”) emissions by 2050 across our operations (Scopes 1 and 2) and value chain (Scope 3).
We have set interim targets to guide us on our path to net zero and provide more details about them in our annual ESG Report. ​ The three components of our climate action strategy are Efficiency, Innovation and Collaboration.
We have set interim targets to guide us on our path to net zero and provide more details about them in our annual Sail & Sustain report (which does not constitute a part of, and shall not be deemed incorporated by reference into, this Annual Report). ​ The three components of our climate action strategy are Efficiency, Innovation and Collaboration.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe cannot predict the number or outcome of any such proceedings and the impact that they will have on our financial results, but any such impact may be material. ​ Epidemics, pandemics and viral outbreaks or other wide-ranging public health crises in the future would likely also adversely affect our business, financial condition and results of operations. ​ Adverse incidents involving cruise ships may adversely affect our business, financial condition and results of operations. ​ The operation of cruise ships carries an inherent risk of loss caused by adverse weather conditions and maritime disasters, including, but not limited to, oil spills and other environmental mishaps, extreme weather conditions such as 37 Table of Contents hurricanes, floods and typhoons, fire, mechanical failure, collisions, human error, war, terrorism, piracy, political action, civil unrest and insurrection in various countries and other circumstances or events.
Biggest changeWe were also negatively impacted by adverse impacts to our travel agencies and suppliers due to COVID-19, and we may experience similar impacts in the event of a future pandemic or other public health crises. ​ Adverse incidents involving cruise ships may adversely affect our business, financial condition and results of operations. ​ The operation of cruise ships carries an inherent risk of loss caused by adverse weather conditions and maritime disasters, including, but not limited to, oil spills and other environmental mishaps, extreme weather conditions such as hurricanes, floods and typhoons, fire, mechanical failure, collisions, human error, war, terrorism, piracy, political action, civil unrest and insurrection in various countries and other circumstances or events.
Financial covenants include free liquidity of no less than $250,000,000 at all times, a total net funded debt to total capitalization ratio and an EBITDA to consolidated debt service ratio of at least 1.25 to 1.00 at the end of each fiscal quarter unless free liquidity is greater than or equal to $300,000,000 at that time.
Financial covenants include free liquidity of no less than $250,000,000 at all times, an EBITDA to consolidated debt service ratio of at least 1.25 to 1.00 at the end of each fiscal quarter unless free liquidity is greater than or equal to $300,000,000 at that time and a total net funded debt to total capitalization ratio.
We may not be able to generate sufficient cash to service our indebtedness, and may be forced to take other actions to satisfy our obligations under our indebtedness, including refinancing our indebtedness, which may not be successful.
We may not be able to generate sufficient cash to service our indebtedness, and we may be forced to take other actions to satisfy our obligations under our indebtedness, including refinancing our indebtedness, which may not be successful.
COVID-19 related regulations also prevented us from using commercial airline services to transport our crew members to and from our ships, which resulted in increased costs to our Company. ​ Global events and conditions, including terrorist acts, armed conflicts, acts of piracy, and other international events impacting the security of travel or the global economy, or threats thereof, could adversely affect our business. 36 Table of Contents ​ Global events and conditions, including the threat or possibility of future terrorist acts, outbreaks of hostilities or armed conflict, political unrest and instability, the issuance of government travel advisories or elevated threat warnings, increases in the activity of pirates, and other geo-political uncertainties, or the possibility or fear of such events, have had in the past and may again in the future have an adverse impact on our business.
COVID-19-related regulations also prevented us from using commercial airline services to transport our crew members to and from our ships, which resulted in increased costs to our Company. ​ Global events and conditions, including terrorist acts, armed conflicts, acts of piracy, and other international events impacting the security of travel or the global economy, or threats thereof, could adversely affect our business. 32 Table of Contents Global events and conditions, including the threat or possibility of future terrorist acts, outbreaks of hostilities or armed conflict, political unrest and instability, the issuance of government travel advisories or elevated threat warnings, increases in the activity of pirates, and other geo-political uncertainties, or the possibility or fear of such events, have had in the past and may again in the future have an adverse impact on our business.
Operating internationally exposes us to a number of risks, including political risks, risks of increases in duties and taxes, risks relating to anti-bribery laws, as well as risks that laws and policies affecting cruising, vacation or maritime businesses, or governing the operations of foreign-based companies may change.
Operating internationally exposes us to a number of risks, including political risks, risks of increases in duties, taxes and tariffs, risks relating to anti-bribery laws, as well as risks that laws and policies affecting cruising, vacation or maritime businesses, or governing the operations of foreign-based companies may change.
The ability to raise additional financing depends on numerous factors that are outside of our control, including general economic and market conditions, the health of financial institutions, our credit ratings and investors’ and lenders’ assessments of our prospects and the prospects of the cruise industry in general. 34 Table of Contents If we raise additional funds by issuing debt, we may be subject to limitations on our operations due to restrictive covenants, which may be more restrictive than the covenants in our existing debt agreements, and we may be required to further encumber our assets.
The ability to raise additional financing depends on numerous factors that are outside of our control, including general economic and market conditions, the health of financial institutions, our credit ratings and investors’ and lenders’ assessments of our prospects and the prospects of the cruise industry in general. ​ 30 Table of Contents If we raise additional funds by issuing debt, we may be subject to limitations on our operations due to restrictive covenants, which may be more restrictive than the covenants in our existing debt agreements, and we may be required to further encumber our assets.
In addition, a data security breach or cybersecurity incident may cause business interruption, information system disruption, disruptions as a result of regulatory investigation or litigation, digital asset loss related to corrupted or destroyed data, loss of company assets, damage to our reputation, damages to intangible 39 Table of Contents property and other intangible damages, such as loss of consumer confidence, all of which could impair our operations and have an adverse impact on our financial results. ​ Changes in fuel prices and the type of fuel we are permitted to use and/or other cruise operating costs would impact the cost of our cruise ship operations and our hedging strategies may not protect us from increased costs related to fuel prices. ​ Fuel expense is a significant cost for our Company.
In addition, a data security breach or cybersecurity incident may cause business interruption, information system disruption, disruptions as a result of regulatory investigation or litigation, digital asset loss related to corrupted or destroyed data, loss of company assets, damage to our reputation, damages to intangible property and other intangible damages, such as loss of consumer confidence, all of which could impair our operations and have an adverse impact on our financial results. ​ Changes in fuel prices and the type of fuel we are permitted to use and/or other cruise operating costs would impact the cost of our cruise ship operations and our hedging strategies may not protect us from increased costs related to fuel prices. ​ Fuel expense is a significant cost for our Company.
Any failure to replace any counterparties under these circumstances may result in additional costs to us or an ineffective instrument. ​ Any further impairment of our trade names or goodwill could adversely affect our financial condition and operating results. ​ We evaluate trade names and goodwill for impairment on an annual basis, or more frequently when circumstances indicate that the carrying value of a reporting unit may not be recoverable.
Any failure to replace any counterparties under these circumstances may result in additional costs to us or an ineffective instrument. ​ Any potential impairment of our trade names or goodwill could adversely affect our financial condition and operating results. ​ We evaluate trade names and goodwill for impairment on an annual basis, or more frequently when circumstances indicate that the carrying value of a reporting unit may not be recoverable.
The regulatory framework for data privacy and protection is uncertain for the foreseeable future, and it is possible that legal and regulatory obligations may continue to increase and may be interpreted and applied in a manner that is inconsistent or possibly conflicting from one jurisdiction to another. ​ In the event of a data security breach of our systems and/or third-party systems or a cybersecurity incident, we may incur costs associated with the following: response, notification, forensics, regulatory investigations, public relations, consultants, credit identity monitoring, credit freezes, fraud alert, credit identity restoration, credit card cancellation, credit card reissuance or replacement, data restoration, regulatory fines and penalties, vendor fines and penalties, legal fees, damages and settlements.
The regulatory framework for data privacy and protection is uncertain for the foreseeable future, and it is possible that legal and regulatory obligations may continue to increase and may be interpreted and applied in a manner that is inconsistent or possibly conflicting from one jurisdiction to another. ​ In the event of a data security breach of our systems and/or third-party systems or a cybersecurity incident, we may incur costs associated with the following: response, notification, forensics, regulatory investigations, public relations, consultants, credit identity monitoring, credit freezes, fraud alert, credit identity restoration, credit card cancellation, 35 Table of Contents credit card reissuance or replacement, data restoration, regulatory fines and penalties, vendor fines and penalties, legal fees, damages and settlements.
The effect of these provisions may preclude third parties from seeking to acquire a controlling interest in NCLH in transactions that shareholders might consider to be in their best interests and may prevent them from receiving a premium above market price for their shares. ​ 47 Table of Contents Item 1B. Unresolved Staff Comments None. ​
The effect of these provisions may preclude third parties from seeking to acquire a controlling interest in NCLH in transactions that shareholders might consider to be in their best interests and may prevent them from receiving a premium above market price for their shares. ​ 43 Table of Contents Item 1B. Unresolved Staff Comments None. ​
In March 2020, we implemented a voluntary suspension of all cruise voyages across our three brands due to the COVID-19 pandemic. We began resuming cruise voyages in July 2021 in a phased manner and completed the phased relaunch of our entire fleet in early May 2022.
For example, In March 2020, we implemented a voluntary suspension of all cruise voyages across our three brands due to the COVID-19 pandemic. We began resuming cruise voyages in July 2021 in a phased manner and completed the phased relaunch of our entire fleet in early May 2022.
Beginning in 2024, covered entities are required to procure and surrender allowances equivalent to 40% of their carbon emissions, with the amount increasing to 70% of carbon emissions in 2025 and 100% of GHG emissions in 2026. ​ Compliance with such laws and regulations have resulted in increased costs to our Company and are expected to entail significant expenses for a combination of: ship modifications, purchases of emissions allowances, alternative fuels and 44 Table of Contents higher-cost compliant newbuilds.
Beginning in 2024, covered entities are required to procure and surrender allowances equivalent to 40% of their carbon emissions, with the amount increasing to 70% of carbon emissions in 2025 and 100% of GHG emissions in 2026. ​ Compliance with such laws and regulations have resulted in increased costs to our Company and are expected to entail significant expenses for a combination of: ship modifications, purchases of emissions allowances, alternative fuels and higher-cost compliant newbuilds.
Many aspects of the cruise industry are subject to international treaties such as SOLAS, an international safety regulation, MARPOL, IMO’s requirements governing environmental protection, and STCW, an IMO regulation governing ship manning. In the United States, the Environmental Protection Agency and the U.S.
Many aspects of the cruise industry are subject to international treaties such as SOLAS, an international safety regulation, MARPOL, IMO’s requirements governing environmental protection, and STCW, an IMO regulation governing ship manning. In the United States, the EPA and the U.S.
Although the Government of Bermuda has already released limited guidance with respect to specific provisions of the Bermuda Act, it is anticipated that further administrative guidance as well as regulatory guidance will be released over the course of the 2024 calendar year and beyond. ​ As enacted, the Bermuda Act makes it clear that any corporate income tax liability is due regardless of the above assurances under the Exempted Undertakings Protection Act 1966.
Although the Government of Bermuda has released limited guidance with respect to specific provisions of the Bermuda Act, it is anticipated that further administrative guidance as well as regulatory guidance will be released over the course of the 2025 calendar year and beyond. ​ As enacted, the Bermuda Act makes it clear that any corporate income tax liability is due regardless of the above assurances under the Exempted Undertakings Protection Act 1966.
For example, the OECD and numerous jurisdictions have had an increased focus on issues concerning the taxation of multinational businesses and have adopted several related reforms, including the implementation of a global minimum tax rate of at least 15% for large multinational businesses starting January 1, 2024 or later, which could have a material adverse effect on our aggregate tax liability and effective tax rate.
For example, the OECD and numerous jurisdictions have had an increased focus on issues concerning the taxation of multinational businesses and have adopted several related reforms, including the implementation of a global minimum tax rate of at least 15% for large multinational businesses that was effective January 1, 2024 or later, which could have a material adverse effect on our aggregate tax liability and effective tax rate.
During the fourth quarter of 2023, in response to the OECD’s BEPS 45 Table of Contents 2.0 Pillar 2 global tax reform, the Company restructured its organizational structure by realigning many of its operations across its three different brands into a single jurisdiction, Bermuda. In connection with the reorganization, among other steps, certain NCLH subsidiaries were redomiciled to Bermuda.
During the fourth quarter of 2023, in response to the OECD’s BEPS 2.0 Pillar 2 global tax reform, the Company restructured its organizational structure by realigning many of its operations across its three different brands into a single jurisdiction, Bermuda. In connection with the reorganization, among other steps, certain NCLH subsidiaries were redomiciled to Bermuda.
The impacts of global events including armed or geopolitical conflicts and pandemics, a lack of viable drydock facilities, modifications the Company plans to make to its newbuilds, including initiatives to improve environmental sustainability, and other macroeconomic events have resulted in some delays in expected ship deliveries, and may result in additional delays in ship deliveries in the future, which may be prolonged.
The impacts of global events including armed or geopolitical conflicts and pandemics, a lack of viable Dry-dock facilities, modifications the Company plans to make to its newbuilds, including initiatives to improve environmental sustainability, and other macroeconomic events have resulted in some delays in expected ship deliveries, and may result in additional delays in ship deliveries in the future, which may be prolonged.
The operation of cruise ships also involves the risk of other incidents at sea or while in port, including missing guests, inappropriate crew or passenger behavior and onboard crimes, which may bring into question passenger safety, may adversely affect future industry performance and may lead to litigation against us.
The operation of cruise ships also involves the risk of other incidents at sea or while in port, including 33 Table of Contents missing guests, inappropriate crew or passenger behavior and onboard crimes, which may bring into question passenger safety, may adversely affect future industry performance and may lead to litigation against us.
We have also made, and plan to continue to make, investments in land-based projects including port facilities and destination projects that are susceptible to impacts from, among other things, weather events, regulatory restrictions, labor risks, 43 Table of Contents shortages of goods and materials and resistance from local populations.
We have also made, and plan to continue to make, investments in land-based projects including port facilities and destination projects that are susceptible to impacts from, among other things, weather events, regulatory restrictions, labor risks, shortages of goods and materials and resistance from local populations.
Also, we may be limited in obtaining funds to pay amounts due to our counterparties 35 Table of Contents under our derivative contracts and to pay amounts that may become due under other agreements.
Also, we may be limited in obtaining funds to pay amounts due to our counterparties 31 Table of Contents under our derivative contracts and to pay amounts that may become due under other agreements.
These issues are, and we believe will continue to be, areas of focus by the relevant authorities throughout the world. This could result in the enactment of more stringent regulation of cruise ships that would subject us to increasing compliance costs in the future.
These issues are, and we believe will continue to be, 40 Table of Contents areas of focus by the relevant authorities throughout the world. This could result in the enactment of more stringent regulation of cruise ships that would subject us to increasing compliance costs in the future.
In addition, we could experience increases in other cruise operating costs due to market forces and economic or political instability resulting from increases or volatility in fuel expense.
We could also experience increases in other cruise operating costs due to market forces and economic or political instability resulting from increases or volatility in fuel expense.
Consequently, this may negatively affect demand for cruise vacations in these countries, which are a discretionary purchase. Decreases in demand for cruise vacations could result in price discounting or lower Occupancy Percentages, which, in turn, could reduce the profitability of our 38 Table of Contents business.
Consequently, this may negatively affect demand for cruise vacations in these countries, which are a discretionary purchase. Decreases in demand for cruise vacations could result in price discounting or lower Occupancy Percentages, which, in turn, could reduce the profitability of our business.
For example, under the Sixth ARCA, we are required to maintain a loan to value ratio of less than 0.70 to 1.00.
For example, under the Seventh ARCA, we are required to maintain a loan to value ratio of less than 0.70 to 1.00.
If our assumptions and interpretations regarding the global minimum tax rules or our efforts to reorganize prove to be incorrect for any reason, our business, financial condition and results of operations could be materially adversely affected.
If our assumptions and interpretations regarding the global minimum tax rules or our efforts to reorganize prove to be incorrect for any reason, 41 Table of Contents our business, financial condition and results of operations could be materially adversely affected.
Such events or conditions may also have downstream effects on the global economic environment, including increased fuel and commodity pricing, supply chain shortages, labor shortages, volatility in the global capital markets, contraction of the global economy leading to decreased consumer discretionary spending, and other effects impossible to predict at this time. ​ Armed conflicts, including Russia’s ongoing invasion of Ukraine and the Israel-Hamas war, have also impacted, and could in the future impact, our profitability and product offering by limiting the destinations to which we can travel and our operations by making it more difficult to source crew members and third-party vendors from affected regions and making it more difficult or costly to source goods we need to run our operations or to build or maintain our ships.
Such events or conditions may also have downstream effects on the global economic environment, including increased fuel and commodity pricing, supply chain shortages, labor shortages, volatility in the global capital markets, contraction of the global economy leading to decreased consumer discretionary spending, and other effects impossible to predict at this time. ​ Armed conflicts have also impacted, and could in the future impact, our profitability and product offering by limiting the destinations to which we can travel and our operations by making it more difficult to source crew members, guests and third-party vendors from affected regions and making it more difficult or costly to source goods we need to run our operations or to build or maintain our ships.
Our business, financial condition and results of operations may be materially and adversely affected by any negative impact on the global economy, capital markets or commodity fuel prices resulting from armed conflicts and other geopolitical tensions. ​ Public health crises have had, and may in the future have, a significant impact on our financial condition, results, operations, outlook, plans, goals, growth, reputation, cash flows, liquidity, demand for voyages and share price. ​ Public health crises, such as the COVID-19 pandemic, could have significant negative impacts on all aspects of our business.
Our business, financial condition and results of operations may be materially and adversely affected by any negative impact on the global economy, capital markets or commodity fuel prices resulting from armed conflicts and other geopolitical tensions. ​ Public health crises have had, and may in the future have, a significant impact on our financial condition, results, operations, outlook, plans, goals, growth, reputation, cash flows, liquidity, demand for voyages and share price. ​ Public health crises have, in the past, and could in the future, have significant negative impacts on all aspects of our business.
Limited capacity and availability of shipyards and related subcontractors, including a lack of viable drydock facilities in the Western Hemisphere, could impact our ability to construct or repair ships as needed.
Limited capacity and availability of shipyards and related subcontractors, including a lack of viable Dry-dock facilities in the Western Hemisphere, could impact our ability to construct or repair ships as needed.
We have in the past and may in the future be subject to increased costs and our management team may be required to devote 46 Table of Contents significant time to satisfying economic substance requirements in certain of these jurisdictions.
We have in the past and may in the future be subject to increased costs and our management team may be required to devote significant time to satisfying economic substance requirements in certain of these jurisdictions.
Delays or mechanical faults may result in cancellation of cruises and/or necessitate unscheduled drydocks and repairs of ships. ​ In addition, availability, work stoppages, insolvency or financial problems in the shipyards’ construction, refurbishment or repair of our ships, other “force majeure” events that are beyond our control and the control of shipyards or subcontractors, or changes to technical specifications due to regulatory changes, sustainability initiatives or other strategic initiatives could also delay or prevent the newbuild delivery, refurbishment and repair and maintenance of our ships.
Delays or mechanical faults may result in cancellation of cruises and/or necessitate unscheduled Dry-docks and repairs of ships. ​ In addition, availability, work stoppages, insolvency or financial problems in the shipyards’ construction, refurbishment or repair of our ships, other “force majeure” events that are beyond our control and the control of shipyards or subcontractors, or changes to technical specifications due to regulatory changes, sustainability initiatives or other 36 Table of Contents strategic initiatives could also delay or prevent the newbuild delivery, refurbishment and repair and maintenance of our ships.
A significant delay in the delivery of a 40 Table of Contents new ship, or a significant performance deficiency or mechanical failure of a new ship could also have an adverse effect on our business.
A significant delay in the delivery of a new ship, or a significant performance deficiency or mechanical failure of a new ship could also have an adverse effect on our business.
Our credit ratings, which have been downgraded in the past, could be further downgraded, which could have an impact on the availability and/or cost of financing.
Our credit ratings, which have been downgraded in the past, could be downgraded again in the future, which could have an impact on the availability and/or cost of financing.
In order for a Bermuda entity’s international shipping income to qualify for the exclusion, the entity must demonstrate that the strategic or commercial management of all ships concerned is effectively carried on from or within Bermuda. We expect we will meet the necessary requirements to qualify for the international shipping income exclusion during 2024, but we cannot provide any assurances.
In order for a Bermuda entity’s international shipping income to qualify for the exclusion, the entity must demonstrate that the strategic or commercial management of all ships concerned is effectively carried on from or within Bermuda. We believe we have met the necessary requirements to qualify for the international shipping income exclusion during 2024, but we cannot provide any assurances.
The actions we take to meet our emissions reduction goals and requirements are expected to result in delays to our shipbuilding program. Our ability to achieve our sustainability commitments and goals will depend on a number of variable factors, some of which are outside of our control.
The actions we take to meet our emissions reduction goals and requirements have in the past and may again result in delays to our shipbuilding program. Our ability to achieve our sustainability commitments and goals will depend on a number of variable factors, some of which are outside of our control.
Adverse changes in the perceived or actual economic climate in North America or globally, such as the volatility of fuel prices, higher interest rates, stock and real estate market declines and/or volatility, more restrictive credit markets, higher unemployment or underemployment rates, inflation, higher taxes, changes in governmental policies and political developments impacting international trade, trade disputes and increased tariffs, could reduce the level of discretionary income or consumer confidence in the countries from which we source our guests.
Adverse changes in the perceived or actual economic climate in North America or globally, such as the volatility of fuel prices, higher interest rates, stock and real estate market declines and/or volatility, more restrictive credit markets, higher 34 Table of Contents unemployment or underemployment rates, inflation, higher taxes, changes in governmental policies and political developments impacting international trade, trade disputes, increased tariffs or customers’ willingness to travel with us, could reduce the level of discretionary income or consumer confidence in the countries from which we source our guests.
The demand for cruises is affected by international, national and local economic conditions. ​ The demand for cruises is affected by international, national and local economic conditions.
The demand for cruises is affected by international, national and local economic conditions. ​ The demand for cruises is affected by international, national, local and other macroeconomic conditions.
Pursuant to the legislation passed in each jurisdiction, entities subject to each jurisdiction’s laws that carry out relevant activities as specified in such laws, are required to demonstrate adequate economic substance in that jurisdiction.
Pursuant to the legislation passed in each jurisdiction, entities subject to each jurisdiction’s laws that carry out relevant activities as specified in such laws, are required to demonstrate adequate economic substance in that jurisdiction and meet the economic substance requirements under such laws.
If such entities cannot establish compliance with these requirements, we may be liable to pay additional penalties and fines in the applicable jurisdictions and/or required to re-domicile such entities to different jurisdictions that may have tax regimes and other regulatory regimes which may be less favorable. ​ Risks Related to NCLH’s Ordinary Shares ​ Shareholders of NCLH may have greater difficulties in protecting their interests than shareholders of a U.S. corporation. ​ We are a Bermuda exempted company.
If such entities cannot demonstrate compliance with these requirements, we may be liable to pay penalties and fines in the 42 Table of Contents applicable jurisdictions and/or may take the decision to re-domicile such entities to different jurisdictions that may have tax regimes and other regulatory regimes which may be less favorable. ​ Risks Related to NCLH’s Ordinary Shares ​ Shareholders of NCLH may have greater difficulties in protecting their interests than shareholders of a U.S. corporation. ​ We are a Bermuda exempted company.
The loss of services of one or more of these individuals could materially adversely affect us. ​ Negative perceptions about the cruise industry, carbon intensity, sustainability or otherwise may make it increasingly difficult to retain and hire additional crew members to staff our fleet and to recruit new employees generally. 41 Table of Contents ​ Impacts related to climate change may adversely affect our business, financial condition and results of operations. ​ There has been an increased focus on GHG and other emissions from global regulators, consumers and other stakeholders.
Negative perceptions about the cruise industry, carbon intensity, sustainability or otherwise may make it increasingly difficult to retain and hire additional crew members to staff our fleet and to recruit new employees generally. 37 Table of Contents ​ Impacts related to climate change may adversely affect our business, financial condition and results of operations. ​ There has been an increased focus on GHG and other emissions from global regulators, consumers and other stakeholders.
The requirements are to be phased in from 2024 to 2026.
The requirements are being phased in from 2024 to 2026.
In general terms, adequate economic substance means: (i) the entity is actually directed and managed in the jurisdiction; (ii) core income-generating activities relating to the applicable relevant activity are performed in the jurisdiction; (iii) there are adequate employees in the jurisdiction; (iv) the entity maintains adequate physical presence in the jurisdiction; and (v) there is adequate operating expenditure in the jurisdiction.
In general terms, such economic substance requirements mean that: (i) the entity must be actually directed and managed in the jurisdiction; (ii) core income-generating activities relating to the applicable relevant activity must be performed in the jurisdiction; (iii) there are adequate suitably qualified employees in the jurisdiction; (iv) the entity maintains adequate physical presence in the jurisdiction; and (v) there is adequate operating expenditure incurred in the jurisdiction.
Additionally, older ships in our fleet may not be as competitive as new ships enter the market and we may not be able to sell such older ships at optimal prices. ​ Risks Related to the Regulatory Environment in Which We Operate ​ We are subject to complex laws and regulations, including environmental, health and safety, labor, data privacy and protection and maritime laws and regulations, which could adversely affect our operations and certain recently introduced laws and regulations and future changes in laws and regulations could lead to increased costs and/or decreased revenue. ​ Increasingly stringent and complex international, federal, state, and local laws and regulations addressing environmental protection and health and safety of workers could affect our operations.
Risks Related to the Regulatory Environment in Which We Operate ​ We are subject to complex laws and regulations, including environmental, health and safety, labor, data privacy and protection and maritime laws and regulations, which could adversely affect our operations and certain recently introduced laws and regulations and future changes in laws and regulations could lead to increased costs and/or decreased revenue. ​ Increasingly stringent and complex international, federal, state, and local laws and regulations addressing environmental protection and health and safety of workers could affect our operations.
Additionally, we are reliant on a third party to oversee certain newbuild and Dry-dock projects. Any occurrence that prevented such third party from continuing to oversee such projects or substantially increased the costs related to such oversight could have an adverse effect on our operations.
Any occurrence that prevented such third party from continuing to oversee such projects or substantially increased the costs related to such oversight could have an adverse effect on our operations.
We have had instances of disease outbreaks, such as COVID-19, on our ships and there is no guarantee that the health and safety protocols we implement will be successful in preventing the spread of infectious disease onboard our ships and among our passengers and crew. ​ We have been and may in the future be the subject of lawsuits and investigations stemming from outbreaks of infectious disease.
We have had instances of disease outbreaks on our ships and there is no guarantee that the health and safety protocols we implement will be successful in preventing the spread of infectious disease onboard our ships and among our passengers and crew.
In addition, although our collective bargaining agreements have a no-strike provision, they may not prevent a disruption in work on our ships in the future.
In addition, although our collective bargaining agreements have a no-strike provision, they may not prevent a disruption in work on our ships in the future. Any such disruptions in work could have a material adverse effect on our financial results.
For example, currently and in the past, regulatory changes, disease outbreaks resulting in a global pandemic, armed conflicts and damages to ports from hurricanes have prohibited our cruise voyages from visiting certain regions, including Cuba, Russia, Japan and some ports in the Caribbean.
For example, currently and in the past, regulatory changes, disease outbreaks resulting in a global pandemic, armed conflicts and damages to ports from hurricanes have prohibited our cruise voyages from visiting certain regions. Certain ports have also significantly increased fees related to cruise visits, affecting the profitability of visiting those destinations.
Subject to applicable insurance 42 Table of Contents coverage, we may also incur costs both in defending against any claims, actions and investigations and for any judgments, fines, civil or criminal penalties if such claims, actions or investigations are adversely determined. ​ The U.S.
Subject to applicable insurance 38 Table of Contents coverage, we may also incur costs both in defending against any claims, actions and investigations and for any judgments, fines, civil or criminal penalties if such claims, actions or investigations are adversely determined. ​ We rely on third parties to provide hotel management services for certain ships and certain other services, and we are exposed to risks facing such providers.
We were also negatively impacted by adverse impacts to our travel agencies and suppliers due to COVID-19, and we may experience similar impacts in the event of a future pandemic or other public health crises. ​ We have been, and may in the future be, subject to heightened governmental regulations, travel advisories, travel bans and restrictions that have and could significantly impact our global guest sourcing and our access to various ports of call around the globe.
We have been, and may in the future be, subject to heightened governmental regulations, travel advisories, travel bans and restrictions that have and could significantly impact our global guest sourcing and our access to various ports of call around the globe.
We will also be required to use alternate fuel sources in the future as regulations aimed at reducing carbon intensity have been introduced and we may choose to use alternative fuels in order to achieve any emissions reduction targets we have and may in the future adopt.
We are actively exploring alternative fuel solutions as regulatory requirements develop to facilitate compliance while working on fuel cost increase protection tools for additional spend mitigation, but we may not be successful in these efforts. ​ We are also required to use alternate fuel sources as regulations aimed at reducing carbon intensity have been introduced and we may choose to use alternative fuels in order to achieve any emissions reduction targets we have and may in the future adopt.
If we are unable to attract new customers, or fail to do so in a cost-effective manner, our growth could be slower than we expect and our business could be harmed. ​ The adverse impact of general economic and related factors, such as fluctuating or increasing levels of interest rates, unemployment, underemployment and the volatility of fuel prices, declines in the securities and real estate markets and perceptions of these conditions can decrease the level of disposable income of consumers or consumer confidence.
We also may not achieve the benefits that we anticipate from any new system or technology, such as fuel abatement technologies, and a failure to do so could result in higher than anticipated costs or could impair our operating results. ​ The adverse impact of general economic and related factors, such as fluctuating or increasing levels of interest rates, inflation, unemployment, underemployment and the volatility of fuel prices, declines in the securities and real estate markets and perceptions of these conditions can decrease the level of disposable income of consumers or consumer confidence.
Ships are given an annual rating from A to E with a C or better required for compliance. For ships that receive a D rating for three consecutive years, or an E rating for one year, a corrective action plan will need to be developed and approved.
For ships that receive a D rating for three consecutive years, or an E rating for one year, a corrective action plan will need to be developed and approved. Beginning in 2023, ships are now required to reduce carbon intensity by 5% from a 2019 baseline, with 2% incremental improvements each year thereafter until 2030.
In 2021, the IMO adopted two requirements that went into effect in 2023, the Carbon Intensity Indicator (the “CII”) and Energy Efficiency Ship Index (the “EEXI”), which each regulate carbon emissions for ships. The CII is an operational metric designed to measure how efficiently a ship transports goods or passengers by looking at carbon dioxide emissions per nautical mile.
For example, in 2021, the IMO adopted two requirements that went into effect in 2023, the Carbon Intensity Indicator (the “CII”) and Energy Efficiency Ship Index (the “EEXI”), which each regulate carbon emissions for ships.
For example, the IMO adopted two requirements that went into effect in 2023, the Carbon Intensity Indicator and Energy Efficiency Ship Index, which each regulate carbon emissions for ships, and the E.U. has begun to regulate carbon dioxide emissions from passenger and cargo ships over 5,000 Gross Tons under its Emissions Trading System beginning in 2024.
For example, the IMO adopted two requirements that went into effect in 2023, the Carbon Intensity Indicator and Energy Efficiency Ship Index, which each regulate carbon emissions for ships. The E.U. has included the maritime shipping sector in the scope of its Emissions Trading System, which regulates GHG emissions through a “cap and trade” principle, since January 2024.
Any such disruptions in work could have a material adverse effect on our financial results. ​ Our executive officers and other members of senior management have substantial experience and expertise in our business and have made significant contributions to our growth and success.
Our executive officers and other members of senior management have substantial experience and expertise in our business and have made significant contributions to our growth and success. The loss of services of one or more of these individuals could materially adversely affect us.
We may not be able to comply with future and existing regulations and may be subject to fines, penalties and limitations on our ability to operate.
We may not be able to comply with future and existing regulations and may be subject to fines, penalties and limitations on our ability to operate. Some environmental groups continue to lobby for more extensive oversight of cruise ships and have generated negative publicity about the cruise industry and its environmental impact.
Beginning in 2023, ships are now required to reduce carbon intensity by 5% from a 2019 baseline, with 2% incremental improvements each year thereafter until 2030. The EEXI is a design re-certification requirement that updates energy efficiency requirements for existing ships and regulates carbon dioxide emissions related to installed engine power, transport capacity and ship speed.
The EEXI is a design re-certification requirement that updates energy efficiency requirements for existing ships and regulates carbon dioxide emissions related to installed engine power, transport capacity and ship speed. The maritime shipping sector has been included in the E.U.’s Emissions Trading System since the beginning of 2024.
We cannot predict the number or outcome of any such proceedings and the impact that they will have on our financial results, but any such impact may be material. ​ We rely on third parties to provide hotel management services for certain ships and certain other services, and we are exposed to risks facing such providers.
We cannot predict the number or outcome of any such proceedings and the impact that they will have on our financial results, but any such impact may be material. ​ Epidemics, pandemics and viral outbreaks or other wide-ranging public health crises in the future would likely also adversely affect our business, financial condition and results of operations.
Some environmental groups continue to lobby for more extensive oversight of cruise ships and have generated negative publicity about the cruise industry and its environmental impact. ​ Additionally, in the past, states have implemented taxes that impact the cruise industry.
Additionally, in the past, states have implemented taxes that impact the cruise industry.
Removed
For example, Dubrovnik, Venice and Barcelona have either implemented or considered implementing such limitations on cruise ships and passengers.
Added
We have been and may in the future be the subject of lawsuits and investigations stemming from outbreaks of infectious disease.
Removed
Future increases in the cost of fuel globally or regulatory requirements which require us to use more expensive types of fuel, including more costly alternate fuel sources, would increase the cost of our cruise ship operations.
Added
If we are unable to attract new customers, or fail to do so in a cost-effective manner, our growth could be slower than we expect and our business could be harmed. ​ A failure to keep pace with developments in technology could impair our operations or competitive position. ​ Our business continues to demand the use of sophisticated systems and technology.
Removed
For example, as of January 2020, the IMO’s convention entitled Prevention of Pollution from Ships (MARPOL) set a global limit on fuel sulfur content of 0.5% (reduced from the previous 3.5% global limit). Various compliance methods, such as the use of low-sulfur fuels or exhaust gas cleaning systems that reduce an equivalent amount of sulfur emissions, may be utilized.
Added
These systems and technologies must be refined, updated and replaced with more advanced systems on a regular basis in order for us to meet our customers’ demands and expectations.
Removed
We have elected to install exhaust gas cleaning systems on some ships in our fleet, which will allow us to continue to use high-sulfur fuel on those ships in certain areas.
Added
If we are unable to do so on a timely basis or within reasonable cost parameters, or if we are unable to appropriately and timely train our employees to operate any of these new systems, our business could suffer.
Removed
However, the significant drop in demand for high-sulfur fuel due to the previous pandemic-related pause in operations has made it more difficult to source high-sulfur fuel going forward, which may increase our fuel costs.
Added
We have implemented a strategy to contract with fuel providers at most ports, with a market-driven pricing structure to support our itineraries. Increases in fuel costs are predicted for the upcoming years as new regulatory requirements become effective, causing demand for alternative fuels to grow at a faster pace than the supply infrastructure development.
Removed
Ships in our fleet that do not have exhaust gas cleaning systems, and in specified areas even ships with exhaust gas cleaning systems, will be required to use low-sulfur fuels. Low-sulfur fuels may be costly due to increased demand and scarcity if suppliers are not able to produce sufficient quantities.
Added
In addition, as of January 1, 2025, the FuelEU Maritime regulation is designed to promote the use of renewable, low-carbon fuels and clean energy technologies for ships, and mandates ships calling at E.U. ports gradually reduce the GHG intensity of their fuel usage.
Removed
Government announced that, effective May 2, 2019, it would no longer suspend the right of private parties to bring litigation under Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, popularly known as the Helms-Burton Act, allowing certain individuals whose property was confiscated by the Cuban government beginning in 1959 to sue anyone who "traffics" in the property in question in U.S. courts.
Added
Under the FuelEU Maritime regulation, ships that have a higher GHG intensity than the requirement must pay a penalty. The penalty is progressively increased if the ship has a compliance deficit for two or more consecutive reporting periods.
Removed
One such certified claim against us is pending and additional claims may be brought against us in the future. If this suit is successful after we have exhausted our ability to appeal, we may be required to pay substantial monetary damages.
Added
Additionally, older ships in our fleet may not be as competitive as new ships enter the market and we may not be able to sell such older ships at optimal prices. 39 Table of Contents Our use of artificial intelligence (“AI”) technologies may present business, compliance, and reputational risks.
Removed
For example, MARPOL regulations have established special Emission Control Areas (“ECAs”) with stringent limitations on sulfur and nitrogen oxide emissions from fuel burning aboard ships. Ships operating in designated ECAs are generally expected to meet the new sulfur oxide emissions limits through the use of low-sulfur fuels or installation of exhaust gas cleaning systems.
Added
We use AI technologies in some of our business processes, including some consumer-facing features. Developing our own AI technologies requires resources to develop, test, and maintain such technologies, which could be costly.
Removed
In addition, in December 2022, the European Parliament, the Council of the European Union, and the European Commission reached an agreement on including the maritime transport sector in the E.U.’s carbon dioxide Emissions Trading System.
Added
Adding AI technologies, especially generative AI, in both new and existing business processes may introduce additional risks, including increased governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, as well as other factors that could adversely affect our business, reputation, and financial results.
Added
Specifically, using AI technologies may lead to accuracy issues, security vulnerabilities, or biases, among other things, which may compromise data security, intellectual property, or client information, and adversely impact our reputation, business, financial condition and results of operations. We may also fail to adopt AI technologies at an appropriate pace, which could put us at a competitive disadvantage.
Added
The CII is an operational metric designed to measure how efficiently a ship transports goods or passengers by looking at carbon dioxide emissions per nautical mile. Ships are given an annual rating from A to E with a C or better required for compliance.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe also compare our processes to standards set by the National Institute of Standards and Technology (“NIST”) and/or International Organization for Standardization (“ISO”), as appropriate. ​ Governance ​ The Technology, Environmental, Safety and Security (“TESS”) Committee of our Board of Directors oversees our programs and policies related to data protection and cybersecurity and receives updates on related risks from our Chief Information Security Officer on at least an annual basis, and more often as the circumstances require.
Biggest changeWe also compare our processes to standards set by the National Institute of Standards and Technology and/or International Organization for Standardization, as appropriate. ​ Governance ​ The Technology, Environmental, Safety and Security Committee of our Board of Directors oversees our programs and policies related to data protection and cybersecurity and receives updates on related risks from our Chief Information Security Officer on at least an annual basis, and more often as the circumstances require.
We generally require that third-party service providers that access, host our data, or could otherwise introduce cybersecurity risk to us, enter into contracts that obligate them to manage their cybersecurity risks in certain ways and report any cybersecurity incidents to us. ​ We engage third-party advisory firms to conduct assessments of the maturity of our security program and, among other measures, work to be Payment Card Industry (“PCI”) compliant where required.
We generally require that third-party service providers that access, host our data, or could otherwise introduce cybersecurity risk to us, enter into contracts that obligate them to manage their cybersecurity risks in certain ways and report any cybersecurity incidents to us. ​ We engage third-party advisory firms to conduct assessments of the maturity of our security program and, among other measures, work to be Payment Card Industry compliant where required.
Our Chief Information Security Officer holds master’s and bachelor’s degrees in both Computer Information Systems and Business Administration and the following certifications: Certified Internal Controls Auditor (CICA), Payment Card Industry Professional (PCIP), Certified 48 Table of Contents Information Systems Security Professional (CISSP), Certified Information Systems Auditor (CISA) and Certified in Risk and Information Systems Control (CRISC). ​ We discuss risks related to cybersecurity threats under the heading “Breaches in data security or other disturbances to our information systems and other networks or our actual or perceived failure to comply with requirements regarding data privacy and protection could impair our operations, subject us to significant fines, penalties and damages, and have a material adverse impact on our business, financial condition and results of operations” included as part of our risk factor disclosures in Item 1A of this Annual Report, which disclosures are incorporated by reference herein.
Our Chief Information Security Officer holds master’s and bachelor’s degrees in both Computer Information Systems and Business Administration and the following certifications: Certified Internal Controls Auditor (CICA), Payment Card Industry Professional (PCIP), Certified 44 Table of Contents Information Systems Security Professional (CISSP), Certified Information Systems Auditor (CISA) and Certified in Risk and Information Systems Control (CRISC). ​ We discuss risks related to cybersecurity threats under the heading “Breaches in data security or other disturbances to our information systems and other networks or our actual or perceived failure to comply with requirements regarding data privacy and protection could impair our operations, subject us to significant fines, penalties and damages, and have a material adverse impact on our business, financial condition and results of operations” included as part of our risk factor disclosures in Item 1A of this Annual Report, which disclosures are incorporated by reference herein.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMine Safety Disclosures None. ​ 49 Table of Contents PART II ​
Biggest changeMine Safety Disclosures None. ​ 45 Table of Contents PART II ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information NCLH’s ordinary shares are listed on the NYSE under the symbol “NCLH.” Holders As of February 16, 2024, there were 278 record holders of NCLH’s ordinary shares.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information NCLH’s ordinary shares are listed on the NYSE under the symbol “NCLH.” Holders As of February 17, 2025, there were 282 record holders of NCLH’s ordinary shares.
Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, financial condition, restrictions imposed by applicable law and our financing agreements and other factors that our Board of Directors deems relevant. ​ 50 Table of Contents Stock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of NCLH under the Securities Act of 1933, as amended, or the Exchange Act .
Any determination to pay dividends in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, financial condition, restrictions imposed by applicable law and our financing agreements and other factors that our Board of Directors deems relevant. ​ 46 Table of Contents Stock Performance Graph This performance graph shall not be deemed “soliciting material” or to be “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of NCLH under the Securities Act of 1933, as amended, or the Exchange Act .
The Stock Performance Graph assumes that $100 was invested at the closing price of our ordinary shares on the NYSE and in each index on the last trading day of fiscal 2018. Past performance is not necessarily an indicator of future results. The stock prices used were as of the close of business on the respective dates.
The Stock Performance Graph assumes that $100 was invested at the closing price of our ordinary shares on the NYSE and in each index on the last trading day of fiscal 2019. Past performance is not necessarily an indicator of future results. The stock prices used were as of the close of business on the respective dates.
Item 6. [Reserved] ​ 51 Table of Contents
Item 6. [Reserved] ​ 47 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeSecurities and Exchange Commission on February 28, 2023. ​ We reported total revenue, total cruise operating expense, operating income (loss) and net income (loss) as follows (in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Total revenue ​ $ 8,549,924 ​ $ 4,843,760 Total cruise operating expense ​ $ 5,468,587 ​ $ 4,267,086 Operating income (loss) ​ $ 930,911 ​ $ (1,551,757) Net income (loss) ​ $ 166,178 ​ $ (2,269,909) EPS: ​ ​ Basic ​ $ 0.39 ​ $ (5.41) Diluted ​ $ 0.39 ​ $ (5.41) ​ The following table sets forth operating data as a percentage of total revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Revenue ​ ​ ​ ​ ​ Passenger ticket 67.3 % 67.2 % Onboard and other 32.7 % 32.8 % Total revenue 100.0 % 100.0 % Cruise operating expense Commissions, transportation and other 22.0 % 21.4 % Onboard and other 7.0 % 7.4 % Payroll and related 14.8 % 22.5 % Fuel 8.4 % 14.2 % Food 4.2 % 5.4 % Other 7.6 % 17.2 % Total cruise operating expense 64.0 % 88.1 % Other operating expense Marketing, general and administrative 15.7 % 28.5 % Depreciation and amortization 9.4 % 15.5 % Total other operating expense 25.1 % 44.0 % Operating income (loss) 10.9 % (32.1) % Non-operating income (expense) Interest expense, net (8.5) % (16.5) % Other income (expense), net (0.5) % 1.6 % Total non-operating income (expense) (9.0) % (14.9) % Net income (loss) before income taxes 1.9 % (47.0) % Income tax benefit (expense) — % 0.1 % Net income (loss) 1.9 % (46.9) % ​ 58 Table of Contents The following table sets forth selected statistical information: ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Passengers carried 2,716,546 1,663,275 Passenger Cruise Days 23,311,672 12,791,773 Capacity Days (1) 22,652,588 17,566,069 Occupancy Percentage 102.9 % 72.8 % (1) Excludes certain capacity on Pride of America, which was temporarily unavailable in 2022. ​ Adjusted Gross Margin and Net Yield were calculated as follows (in thousands except Capacity Days and per Capacity Day data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2023 ​ 2022 Total revenue ​ $ 8,549,924 ​ $ 4,843,760 Less: ​ ​ Total cruise operating expense ​ ​ 5,468,587 ​ ​ 4,267,086 Ship depreciation ​ ​ 753,629 ​ ​ 700,988 Gross Margin ​ ​ 2,327,708 ​ ​ (124,314) Ship depreciation ​ ​ 753,629 ​ ​ 700,988 Payroll and related ​ ​ 1,262,119 ​ ​ 1,088,639 Fuel ​ ​ 716,833 ​ ​ 686,825 Food ​ 358,310 ​ 263,807 Other ​ 648,142 ​ 835,254 Adjusted Gross Margin ​ $ 6,066,741 ​ $ 3,451,199 Capacity Days ​ 22,652,588 ​ ​ ​ Gross Margin per Capacity Day ​ $ 102.76 ​ ​ ​ Net Yield ​ $ 267.82 ​ ​ ​ 59 Table of Contents Gross Cruise Cost, Net Cruise Cost, Net Cruise Cost Excluding Fuel and Adjusted Net Cruise Cost Excluding Fuel were calculated as follows (in thousands except Capacity Days and per Capacity Day data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 2022 Total cruise operating expense ​ $ 5,468,587 ​ $ 4,267,086 Marketing, general and administrative expense ​ 1,341,858 ​ 1,379,105 Gross Cruise Cost ​ 6,810,445 ​ 5,646,191 Less: ​ ​ Commissions, transportation and other expense ​ 1,883,279 ​ 1,034,629 Onboard and other expense ​ 599,904 ​ 357,932 Net Cruise Cost ​ 4,327,262 ​ 4,253,630 Less: Fuel expense ​ 716,833 ​ 686,825 Net Cruise Cost Excluding Fuel ​ 3,610,429 ​ 3,566,805 Less Other Non-GAAP Adjustments: ​ ​ Non-cash deferred compensation (1) ​ 2,312 ​ 2,797 Non-cash share-based compensation (2) ​ 118,940 ​ 113,563 Restructuring costs (3) ​ ​ — ​ ​ 12,140 Adjusted Net Cruise Cost Excluding Fuel ​ $ 3,489,177 ​ $ 3,438,305 Capacity Days ​ 22,652,588 ​ ​ ​ Gross Cruise Cost per Capacity Day ​ $ 300.65 ​ ​ ​ Net Cruise Cost per Capacity Day ​ $ 191.03 ​ ​ ​ Net Cruise Cost Excluding Fuel per Capacity Day ​ $ 159.38 ​ ​ ​ Adjusted Net Cruise Cost Excluding Fuel per Capacity Day ​ $ 154.03 ​ ​ ​ (1) Non-cash deferred compensation expenses related to the crew pension plan and other crew expenses, which are included in payroll and related expense.
Biggest changeSecurities and Exchange Commission on February 28, 2024. ​ ​ 53 Table of Contents We reported total revenue, total cruise operating expense, operating income and net income as follows (in thousands, except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Total revenue ​ $ 9,479,651 ​ $ 8,549,924 Total cruise operating expense ​ $ 5,688,696 ​ $ 5,468,587 Operating income ​ $ 1,465,906 ​ $ 930,911 Net income ​ $ 910,257 ​ $ 166,178 EPS: ​ ​ Basic ​ $ 2.09 ​ $ 0.39 Diluted ​ $ 1.89 ​ $ 0.39 ​ The following table sets forth operating data as a percentage of total revenue: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Revenue ​ ​ ​ ​ ​ Passenger ticket 67.7 % 67.3 % Onboard and other 32.3 % 32.7 % Total revenue 100.0 % 100.0 % Cruise operating expense Commissions, transportation and other 20.2 % 22.0 % Onboard and other 7.0 % 7.0 % Payroll and related 14.2 % 14.8 % Fuel 7.4 % 8.4 % Food 3.3 % 4.2 % Other 7.9 % 7.6 % Total cruise operating expense 60.0 % 64.0 % Other operating expense Marketing, general and administrative 15.1 % 15.7 % Depreciation and amortization 9.4 % 9.4 % Total other operating expense 24.5 % 25.1 % Operating income 15.5 % 10.9 % Non-operating income (expense) Interest expense, net (7.9) % (8.5) % Other income (expense), net 0.6 % (0.5) % Total non-operating income (expense) (7.3) % (9.0) % Net income before income taxes 8.2 % 1.9 % Income tax benefit 1.4 % — % Net income 9.6 % 1.9 % ​ The following table sets forth selected statistical information: ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Passengers carried 2,926,794 2,716,546 Passenger Cruise Days 24,593,331 23,311,672 Capacity Days 23,445,397 22,652,588 Occupancy Percentage 104.9 % 102.9 % ​ ​ 54 Table of Contents Adjusted Gross Margin and Net Yield were calculated as follows (in thousands except Capacity Days and per Capacity Day data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2024 ​ 2023 Total revenue ​ $ 9,479,651 ​ $ 8,549,924 Less: ​ ​ Total cruise operating expense ​ ​ 5,688,696 ​ ​ 5,468,587 Ship depreciation ​ ​ 825,493 ​ ​ 753,629 Gross Margin ​ ​ 2,965,462 ​ ​ 2,327,708 Ship depreciation ​ ​ 825,493 ​ ​ 753,629 Payroll and related ​ ​ 1,344,718 ​ ​ 1,262,119 Fuel ​ ​ 698,050 ​ ​ 716,833 Food ​ 312,992 ​ 358,310 Other ​ 753,940 ​ 648,142 Adjusted Gross Margin ​ $ 6,900,655 ​ $ 6,066,741 Capacity Days ​ 23,445,397 ​ ​ 22,652,588 Gross Margin per Capacity Day ​ $ 126.48 ​ $ 102.76 Net Yield ​ $ 294.33 ​ $ 267.82 ​ Gross Cruise Cost, Net Cruise Cost, Net Cruise Cost Excluding Fuel and Adjusted Net Cruise Cost Excluding Fuel were calculated as follows (in thousands except Capacity Days and per Capacity Day data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2024 2023 Total cruise operating expense ​ $ 5,688,696 ​ $ 5,468,587 Marketing, general and administrative expense ​ 1,434,807 ​ 1,341,858 Gross Cruise Cost ​ 7,123,503 ​ 6,810,445 Less: ​ ​ Commissions, transportation and other expense ​ 1,917,443 ​ 1,883,279 Onboard and other expense ​ 661,553 ​ 599,904 Net Cruise Cost ​ 4,544,507 ​ 4,327,262 Less: Fuel expense ​ 698,050 ​ 716,833 Net Cruise Cost Excluding Fuel ​ 3,846,457 ​ 3,610,429 Less Other Non-GAAP Adjustments: ​ ​ Non-cash deferred compensation (1) ​ 2,875 ​ 2,312 Non-cash share-based compensation (2) ​ 91,781 ​ 118,940 Adjusted Net Cruise Cost Excluding Fuel ​ $ 3,751,801 ​ $ 3,489,177 Capacity Days ​ 23,445,397 ​ 22,652,588 Gross Cruise Cost per Capacity Day ​ $ 303.83 ​ $ 300.65 Net Cruise Cost per Capacity Day ​ $ 193.83 ​ $ 191.03 Net Cruise Cost Excluding Fuel per Capacity Day ​ $ 164.06 ​ $ 159.38 Adjusted Net Cruise Cost Excluding Fuel per Capacity Day ​ $ 160.02 ​ $ 154.03 (1) Non-cash deferred compensation expenses related to the crew pension plan, which are included in payroll and related expense.
Adjusted EBITDA is not a defined term under GAAP nor is it intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income (loss), as it does not take into account certain requirements such as capital expenditures and related depreciation, principal and interest payments and tax payments and it includes other supplemental adjustments.
Adjusted EBITDA is not a defined term under GAAP nor is it intended to be a measure of liquidity or cash flows from operations or a measure comparable to net income, as it does not take into account certain requirements such as capital expenditures and related depreciation, principal and interest payments and tax payments and it includes other supplemental adjustments.
In addition, Adjusted Net Income (Loss) and Adjusted EPS are non-GAAP financial measures that exclude certain amounts and are used to supplement GAAP net income (loss) and EPS. We use Adjusted Net Income (Loss) and Adjusted EPS as key performance measures of our earnings performance.
In addition, Adjusted Net Income and Adjusted EPS are non-GAAP financial measures that exclude certain amounts and are used to supplement GAAP net income and EPS. We use Adjusted Net Income and Adjusted EPS as key performance measures of our earnings performance.
For the Company’s cash flow activities for the fiscal year ended December 31, 2021, see “Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s annual report on Form 10-K for the year ended December 31, 2022, which was filed with the U.S. Securities and Exchange Commission on February 28, 2023.
For the Company’s cash flow activities for the fiscal year ended December 31, 2022, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s annual report on Form 10-K for the year ended December 31, 2023, which was filed with the U.S. Securities and Exchange Commission on February 28, 2024.
We believe we were in compliance with our covenants as of December 31, 2023. In addition, our existing debt agreements restrict, and any of our future debt arrangements may restrict, among other things, the ability of our subsidiaries, including NCLC, to make distributions and/or pay dividends to NCLH and NCLH’s ability to pay cash dividends to its shareholders.
We believe we were in compliance with our covenants as of December 31, 2024. In addition, our existing debt agreements restrict, and any of our future debt arrangements may restrict, among other things, the ability of our subsidiaries, including NCLC, to make distributions and/or pay dividends to NCLH and NCLH’s ability to pay cash dividends to its shareholders.
Our estimate of fair value is generally measured by discounting expected future cash flows at discount rates commensurate with the associated risk. 53 Table of Contents We evaluate goodwill and trade names for impairment annually or more frequently when an event occurs or circumstances change that indicates the carrying value of a reporting unit may not be recoverable.
Our estimate of fair value is generally measured by discounting expected future cash flows at discount rates commensurate with the associated risk. We evaluate goodwill and trade names for impairment annually or more frequently when an event occurs or circumstances change that indicates the carrying value of a reporting unit may not be recoverable.
Results of Operations The discussion below compares the results of operations for the year ended December 31, 2023 to the year ended December 31, 2022. You should read this discussion in conjunction with the consolidated financial statements and the notes thereto included elsewhere in this Annual Report.
Results of Operations The discussion below compares the results of operations for the year ended December 31, 2024 to the year ended December 31, 2023. You should read this discussion in conjunction with the consolidated financial statements and the notes thereto included elsewhere in this Annual Report.
We rely on historical experience and on various other assumptions that we believe to be reasonable under the circumstances to make these estimates and judgments. Actual results could differ materially from these estimates. We believe that the following critical accounting policies reflect the significant estimates and assumptions used in the preparation of our consolidated 52 Table of Contents financial statements.
We rely on historical experience and on various other assumptions that we believe to be reasonable under the circumstances to make these estimates and judgments. Actual results could differ materially from these estimates. We believe that the following critical accounting policies reflect the significant estimates and assumptions used in the preparation of our consolidated financial statements.
Generally, if an event of default under any debt agreement occurs, then pursuant to cross default and/or cross acceleration clauses, substantially all of our outstanding debt and derivative contract payables could become due, and all debt and derivative contracts could be terminated, which would have a material adverse impact to our operations and liquidity. ​ Our Moody’s long-term issuer rating is B2, our senior secured rating is B1 and our senior unsecured rating is Caa1.
Generally, if an event of default under any debt agreement occurs, then pursuant to cross default and/or cross acceleration clauses, substantially all of our outstanding debt and derivative contract payables could become due, and all debt and derivative contracts could be terminated, which would have a material adverse impact to our operations and liquidity. ​ Our Moody’s long-term issuer rating is B1, our senior secured rating is Ba3 and our senior unsecured rating is B3.
For our evaluation of goodwill, we use a qualitative assessment which allows us to first assess qualitative factors to determine whether it is more likely than not (i.e., more than 50%) that the estimated fair value of a reporting unit is less than its carrying value.
For our evaluation of goodwill, we use a qualitative assessment which allows us to first assess qualitative factors to determine whether it is 49 Table of Contents more likely than not (i.e., more than 50%) that the estimated fair value of a reporting unit is less than its carrying value.
These critical accounting policies, which are presented in detail in our notes to our audited consolidated financial statements, relate to ship accounting and asset impairment. Ship Accounting Ships represent our most significant assets, and we record them at cost less accumulated depreciation.
These critical accounting policies, which are presented in detail in our notes to our audited consolidated financial statements, relate to ship accounting and asset impairment. 48 Table of Contents Ship Accounting Ships represent our most significant assets, and we record them at cost less accumulated depreciation.
In measuring our ability to control costs in a manner that positively impacts our net income (loss), we believe changes in Adjusted Gross Margin, Net Yield, Net Cruise Cost and Adjusted Net Cruise Cost Excluding Fuel to be the most relevant indicators of our performance.
In measuring our ability to control costs in a manner that 50 Table of Contents positively impacts our net income, we believe changes in Adjusted Gross Margin, Net Yield, Net Cruise Cost and Adjusted Net Cruise Cost Excluding Fuel to be the most relevant indicators of our performance.
As a routine part of our business, depending on market conditions, exchange rates, pricing and our strategy for growth, we regularly consider opportunities to enter into contracts for the building of additional ships. We may also consider the sale of ships, potential acquisitions and strategic alliances.
As a routine part of our business, depending on market conditions, exchange rates, pricing and our strategy for growth, we regularly consider opportunities to enter into contracts for the building of additional ships, acquisitions and strategic alliances.
We also have agreements with our credit card processors that, as of December 31, 2023, governed approximately $2.9 billion in advance ticket sales that had been received by the Company relating to future voyages.
We also have agreements with our credit card processors that, as of December 31, 2024, governed approximately $2.8 billion in advance ticket sales that had been received by the Company relating to future voyages.
For a comparison of the Company’s results of operations for the fiscal years ended December 31, 2022 to the year ended December 31, 2021, see “Item 7, Management’s Discussion and 57 Table of Contents Analysis of Financial Condition and Results of Operations” in the Company’s annual report on Form 10-K for the year ended December 31, 2022, which was filed with the U.S.
For a comparison of the Company’s results of operations for the fiscal years ended December 31, 2023 to the year ended December 31, 2022, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s annual report on Form 10-K for the year ended December 31, 2023, which was filed with the U.S.
Furthermore, we are exposed to fluctuations in the euro exchange rate for certain portions of ship construction contracts that have not been hedged. See “Item 1A. Risk Factors” in our Annual Report for additional information.
Furthermore, we are exposed to fluctuations in the euro exchange rate for certain portions of ship construction contracts and various exchange rates for customer deposits that have not been hedged. See “Item 1A—Risk Factors” in our Annual Report for additional information.
We included this as an adjustment in the reconciliation of Adjusted Net Income (Loss) since the expenses are not representative of our day-to-day operations; however, this adjustment did not occur and is not included in the comparative period presented within this Annual Report.
We included this as an adjustment in the reconciliation of Adjusted Net Income since the benefit is not representative of our day-to-day operations, and this adjustment did not occur and is not included in the comparative period presented within this Annual Report.
However, we do not believe that these restrictions have had or are expected to have an impact on our ability to meet any cash obligations. ​ We believe our cash on hand, the impact of the undrawn commitment less related fees, borrowings available under our $1.2 billion fully undrawn Revolving Loan Facility, expected future operating cash inflows and our ability to issue debt securities or additional equity securities, will be sufficient to fund operations, debt payment requirements, capital expenditures and maintain compliance with covenants under our debt agreements over the next 12-month period.
However, we do not believe that these restrictions have had or are expected to have an impact on our ability to meet any cash obligations. ​ We believe our cash on hand, borrowings available under our Revolving Loan Facility, expected future operating cash inflows and our ability to issue debt securities or additional equity securities, will be sufficient to fund operations, debt payment requirements, capital expenditures and maintain compliance with covenants under our debt agreements over the next 12-month period.
Each brand, Oceania Cruises, Regent Seven Seas and Norwegian, constitutes a business for which discrete financial information is available and management regularly reviews the operating results and, therefore, each brand is considered an operating segment. For our annual impairment evaluation, we performed a quantitative assessment for the Regent Seven Seas reporting unit and of each brand’s trade names.
Each brand, Oceania Cruises, Regent and Norwegian, constitutes a business for which discrete financial information is available and management regularly reviews the operating results and, therefore, each brand is considered an operating segment. For our annual impairment evaluation, we performed a qualitative assessment for the Norwegian and Regent reporting units and for each brand’s trade names.
If our credit ratings were to be further downgraded, or general market conditions were to ascribe higher risk to our rating levels, our industry, or us, our access to capital and the cost of any debt or equity financing will be further negatively impacted.
If our credit ratings were to be downgraded as has occurred in the past, or general market conditions were to ascribe higher risk to our rating levels, our industry, or us, our access to capital and the cost of any debt or equity financing will be negatively impacted.
Sources and Uses of Cash In this section, references to 2023 refer to the year ended December 31, 2023, references to 2022 refer to the year ended December 31, 2022. Net cash provided by operating activities was $2.0 billion in 2023 compared to net cash provided by operating activities of $210.0 million in 2022.
Sources and Uses of Cash In this section, references to 2024 refer to the year ended December 31, 2024, references to 2023 refer to the year ended December 31, 2023. Net cash provided by operating activities was $2.0 billion in 2024 and 2023.
Refer to Item 1A, “Risk Factors” for further details regarding risks and uncertainties that may cause our results to differ from our expectations. At December 31, 2023, we were in compliance with all of our debt covenants.
Refer to “Item 1A—Risk Factors” for further details regarding risks and uncertainties that may cause our results to differ from our expectations. At December 31, 2024, we were in compliance with all of our debt covenants.
Future Capital Commitments Future capital commitments consist of contracted commitments, including ship construction contracts. Anticipated expenditures related to ship construction contracts are $0.4 billion, $2.1 billion and $1.4 billion for the years ending December 31, 2024, 2025 and 2026, respectively.
Future Capital Commitments Future capital commitments consist of contracted commitments, including ship construction contracts. Anticipated expenditures related to ship construction contracts and growth are $2.5 billion, $2.4 billion and $2.4 billion for the years ending December 31, 2025, 2026 and 2027, respectively.
We have export-credit backed financing in place for the anticipated expenditures related to ship construction contracts of $0.2 billion, $1.5 billion and $0.8 billion for the years ending December 31, 2024, 2025 and 2026, respectively. Anticipated non-newbuild capital expenditures are $475 million for the year ended December 31, 2024.
We have export-credit backed financing in place for the anticipated expenditures related to ship construction contracts of $1.5 billion, $1.5 billion and $1.8 billion for the years ending December 31, 2025, 2026 and 2027, respectively. Anticipated other non-newbuild capital expenditures are $0.6 billion for the year ending December 31, 2025.
Adjusted EBITDA increased to $1.9 billion for the year ended December 31, 2023 from $(673.9) for the year ended December 31, 2022. We refer you to our “Results of Operations” below for a calculation of Adjusted Net Income (Loss), Adjusted EPS and Adjusted EBITDA.
Adjusted EBITDA increased 31.7% to $2.5 billion for the year ended December 31, 2024 from $1.9 billion for the year ended December 31, 2023. We refer you to our “Results of Operations” below for a calculation of Adjusted Net Income, Adjusted EPS and Adjusted EBITDA.
Funding Sources Certain of our debt agreements contain covenants that, among other things, require us to maintain a minimum level of liquidity, as well as limit our net funded debt-to-capital ratio and maintain certain other ratios. Approximately $16.2 billion of our assets are pledged as collateral for certain of our debt.
Funding Sources Certain of our debt agreements contain covenants that, among other things, require us to maintain a minimum level of liquidity, as well as limit our net funded debt-to-capital ratio and maintain certain other ratios. Approximately $15.6 billion of our assets were pledged as collateral for certain of our debt as of December 31, 2024.
If we reduced our estimated weighted average ship service life by one year, depreciation expense for the year ended December 31, 2023 would have increased by $19.4 million. In addition, if our ships were estimated to have no residual value, depreciation expense for the same period would have increased by $84.4 million.
If we reduced our estimated weighted average ship service life by one year, depreciation expense for the year ended December 31, 2024 would have increased by $20.5 million. In addition, if our ships were estimated to have no residual value, depreciation expense for the same period would have increased by $89.7 million.
Net cash used in investing activities was $1.8 billion in 2022, primarily related to the delivery of Norwegian Prima. Net cash provided by financing activities was $346.9 million in 2023, primarily due to newbuild loans and $1.6 billion from our various note offerings, partially offset by debt repayments and a net decrease in our Revolving Loan Facility balance.
Net cash provided by financing activities was $346.9 million in 2023, primarily due to newbuild loans and $1.6 billion from our various note offerings, partially offset by debt repayments and a net decrease in our Revolving Loan Facility balance.
As of December 31, 2023, we had a working capital deficit of $4.7 billion. This deficit included $3.1 billion of advance ticket sales, which represents the total revenue we collected in advance of sailing dates and accordingly are substantially more like deferred revenue balances rather than actual current cash liabilities.
This deficit included $3.1 billion of advance ticket sales, which represents the total revenue we collected in advance of sailing dates and accordingly are substantially more like deferred revenue balances rather than actual current cash liabilities.
However, there is no guarantee that debt or equity financings will be available in the future to fund our obligations, or that they will be available on terms consistent with our expectations. ​ 63 Table of Contents As of December 31, 2023, we had advance ticket sales of $3.2 billion, including the long-term portion, which included approximately $78.0 million of future cruise credits.
However, there is no guarantee that debt or equity financings will be available in the future to fund our obligations, or that they will be available on terms consistent with our expectations. ​ As of December 31, 2024, we had advance ticket sales of $3.2 billion, including the long-term portion.
Capacity Days increased by 29.0%. For the year ended December 31, 2023, we had net income and diluted EPS of $166.2 million and $0.39, respectively. For the year ended December 31, 2022, we had net loss and diluted EPS of $(2.3) billion and $(5.41), respectively.
Capacity Days increased by 3.5%. For the year ended December 31, 2024, we had net income and diluted EPS of $910.3 million and $1.89, respectively. For the year ended December 31, 2023, we had net income and diluted EPS of $166.2 million and $0.39, respectively.
Net cash provided by operating activities included net income (loss) and the timing differences in cash receipts and payments relating to operating assets and liabilities. The net cash provided by operating activities in 2023 included net income of $166.2 million and an increase in advance ticket sales of $503.7 million.
Net cash provided by operating activities included net income and the timing differences in cash receipts and payments relating to operating assets and liabilities. The net cash provided by operating activities in 2024 included net income of $910.3 million and an increase in advance ticket sales of $35.7 million.
Refer 65 Table of Contents to “—Liquidity and Capital Resources—General” for further information regarding the debt covenant waivers and liquidity requirements. ​ Other Certain service providers may require collateral in the normal course of our business. The amount of collateral may change based on certain terms and conditions.
Refer to “—Liquidity and Capital Resources—General” for further information regarding liquidity. ​ 61 Table of Contents Other Certain service providers may require collateral in the normal course of our business. The amount of collateral may change based on certain terms and conditions. We refer you to “—Liquidity and Capital Resources—General” for information regarding collateral provided to our credit card processors.
Additionally, our ships, port facilities, corporate offices and island destinations have in the past and may again be adversely affected by an increase in the frequency and intensity of adverse weather conditions caused by climate change.
ETS, a portion of which was collected directly from passengers through revenue. Additionally, our ships, port facilities, corporate offices and island destinations have in the past and may again be adversely affected by an increase in the frequency and intensity of adverse weather conditions caused by climate change.
Our S&P Global issuer credit rating is B, our issue-level rating on our $1.2 billion Revolving Loan Facility, 2028 Senior Secured Notes and 2029 Senior Secured Notes is BB-, our issue-level rating on our other senior secured notes is B+ and our senior unsecured rating is CCC+.
Our S&P Global issuer credit rating is B+, our issue-level rating on our $1.7 billion Revolving Loan Facility and $790 million 8.125% senior secured notes due 2029 is BB, our issue-level rating on our other senior secured notes is BB- and our senior unsecured rating is B+.
Operating income increased to $930.9 million for the year ended December 31, 2023 from an operating loss of $(1.6) billion for the year ended December 31, 2022.
Operating income increased to $1.5 billion for the year ended December 31, 2024 from $930.9 million for the year ended December 31, 2023.
We are evaluating the effects of global climate change related requirements, which are still evolving, including our ability to mitigate certain future expenses through initiatives to reduce greenhouse gas emissions; consequently, the full impact to the Company is not yet known.
We are also evaluating the effects of global climate change related requirements, which are still evolving, including our ability to mitigate certain future expenses through initiatives to reduce GHG emissions; consequently, the full impact to the Company is not yet known. During 2024, we recognized $19.3 million of expense related to compliance with the E.U.
We will continue to evaluate all relevant positive and negative evidence in monitoring the realizability of our deferred tax assets and determining the appropriate timing for the recognition of any valuation allowance reversal. In the future, the Company may recognize a material reversal of its valuation allowance on both its U.S. and Bermuda deferred tax assets.
The Company will continue to evaluate all relevant positive and negative evidence in monitoring the realizability of its deferred tax assets and determining the appropriate timing for the recognition of any additional valuation allowance reversal.
Pursuant to the third amended commitment letter, and subject to effectiveness thereof, the Commitment Parties have agreed to purchase from NCLC an aggregate principal amount of $650 million of senior unsecured notes due five years after the issue date (the “Commitment Notes”) at NCLC’s option.
Pursuant to the third amended commitment letter, the Commitment Parties have agreed to purchase from NCLC an aggregate principal amount of $650 million of senior unsecured notes due five years after the issue date at NCLC’s option, which option is available through March 2025 and we do not expect to extend.
(2) Non-cash deferred compensation expenses related to the crew pension plan and other crew expenses are included in payroll and related expense. (3) Non-cash share-based compensation expenses related to equity awards are included in marketing, general and administrative expense and payroll and related expense.
(2) Non-cash deferred compensation expenses related to the crew pension plan are included in payroll and related expense.
During the year ended December 31, 2023, the Company received a return of cash collateral from one credit card processor of $500 million, which was previously classified as other long-term assets. We may be required to pledge additional collateral and/or post additional cash reserves or take other actions in the future that may adversely affect our liquidity.
The $31.5 million previously recognized in other long-term assets was returned to the Company during the year ended December 31, 2024. 58 Table of Contents We may be required to pledge additional collateral and/or post additional cash reserves or take other actions in the future that may adversely affect our liquidity.
We expect to incur significant expenses related to these regulatory requirements and commitments, which may include expenses related to greenhouse gas emissions reduction initiatives and the purchase of emissions 56 Table of Contents allowances, among other things.
We expect to incur significant expenses related to these regulatory requirements and commitments, which have and will include expenses related to GHG emissions reduction initiatives, including modifications to our ships, and have and will include the purchase of emissions allowances, among other things.
The amounts excluded in the presentation of these non-GAAP financial measures may vary from period to period; accordingly, our presentation of Adjusted Net Income (Loss) and Adjusted EPS may not be indicative of future adjustments or results. For example, for the year ended December 31, 2022, we incurred $12.1 million related to restructuring costs or charges.
The amounts excluded in the presentation of these non-GAAP financial measures may vary from period to period; accordingly, our presentation of Adjusted Net Income and Adjusted EPS may not be indicative of future adjustments or results.
Our non-GAAP financial measures may not be comparable to other companies. Please see a historical reconciliation of these measures to the most comparable GAAP measure presented in our consolidated financial statements below in the “Results of Operations” section. Financing Transactions In February 2023, NCLC issued $600 million aggregate principal amount of 8.375% senior secured notes due 2028.
Our non-GAAP financial measures may not be comparable to other companies. Please see a historical reconciliation of these measures to the most comparable GAAP measure presented in our consolidated financial statements below in the “Results of Operations” section.
However, if any such events were to occur, it could result in, among other things, the forfeiture of prior deposits or payments made by us and potential claims and impairment losses which may materially impact our business, financial condition and results of operations.
However, if any such events were to occur, it could result in, among other things, the forfeiture of prior deposits or payments made by us and potential claims and impairment losses which may materially impact our business, financial condition and results of operations. 60 Table of Contents Capitalized interest for the year ended December 31, 2024 and 2023 was $59.9 million and $56.4 million, respectively, primarily associated with the construction of our newbuild ships.
We had Adjusted Net Income and Adjusted EPS of $298.0 million and $0.70, respectively, for the year ended December 31, 2023, including $131.8 million of adjustments primarily consisting of share-based compensation, compared to Adjusted Net Loss and Adjusted EPS of $(1.9) billion and $(4.64), respectively, for the year ended December 31, 2022.
We had Adjusted Net Income and Adjusted EPS of $937.5 million and $1.82, respectively, for the year ended December 31, 2024, including $(36.0) million of adjustments primarily consisting of the reversal of a valuation allowance partially offset by share-based compensation, compared to Adjusted Net Income and Adjusted EPS of $298.0 million and $0.70, respectively, for the year ended December 31, 2023.
Climate Change We believe the increasing focus on climate change, including the Company’s recently established targets for greenhouse gas reductions, and evolving regulatory requirements will materially impact our future capital expenditures and results of operations. We have set interim targets to guide us on our path to net zero and provide more details about them in our annual ESG Report.
Climate Change We believe the increasing focus on climate change, including the Company’s targets for greenhouse gas reductions, and evolving regulatory requirements will materially impact our future capital expenditures and results of operations.
Passenger ticket revenue and onboard and other revenue vary according to product offering, the size of the ship in operation, the length of cruises operated and the markets in which the ship operates.
Passenger ticket revenue and onboard and other revenue vary according to product offering, the size of the ship in operation, the length of cruises operated and the markets in which the ship operates. Our revenue is seasonal based on demand for cruises, which has historically been strongest during the Northern Hemisphere’s summer months.
See Note 2 – “Summary of Significant Accounting Policies” for more information. 54 Table of Contents Non-GAAP Financial Measures We use certain non-GAAP financial measures, such as Adjusted Gross Margin, Net Yield, Net Cruise Cost, Adjusted Net Cruise Cost Excluding Fuel, Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted EPS, to enable us to analyze our performance.
Non-GAAP Financial Measures We use certain non-GAAP financial measures, such as Adjusted Gross Margin, Net Yield, Net Cruise Cost, Adjusted Net Cruise Cost Excluding Fuel, Adjusted EBITDA, Adjusted Net Income and Adjusted EPS, to enable us to analyze our performance. See “Terms Used in this Annual Report” for the definitions of these and other non-GAAP financial measures.
We have and may continue to be required to change certain operating procedures, for example slowing the speed of our ships, to meet regulatory requirements, which could adversely impact our operations.
During 2024, we spent $47.7 million on capital expenditures for projects that are intended to reduce carbon emissions from our existing fleet. We have changed and may continue to be required to change certain operating procedures, for example slowing the speed of our ships, to meet regulatory requirements, which could adversely impact our operations.
We also utilize Net Cruise Cost and Adjusted Net Cruise Cost Excluding Fuel to manage our business on a day-to-day basis.
We utilize Adjusted Gross Margin and Net Yield to manage our business on a day-to-day basis because it reflects revenue earned net of certain direct variable costs. We also utilize Net Cruise Cost and Adjusted Net Cruise Cost Excluding Fuel to manage our business on a day-to-day basis.
No term loans remain outstanding. Refer to Note 8 – “Long-Term Debt” for further details about the above financing transactions. Based on our liquidity estimates and our current resources, we have concluded we have sufficient liquidity to satisfy our obligations for at least the next 12 months.
Based on our liquidity estimates and our current resources, we have concluded we have sufficient liquidity to satisfy our obligations for at least the next 12 months.
Net cash provided by financing activities was $1.0 billion in 2022, primarily due to newbuild loans and the proceeds of $2.1 billion from our various note offerings partially offset by debt repayments and related redemption premiums associated with extinguishment of certain senior secured notes.
Net cash used in financing activities was $1.0 billion in 2024, primarily due to repayments of newbuild loans, our 2028 Secured Notes and the 3.625% senior notes due 2024 partially offset by the proceeds from newbuild loan facilities and the 2030 Notes.
For example, certain ports have become temporarily unavailable to us due to hurricane damage and other destinations have either considered or implemented restrictions on cruise operations due to environmental concerns. Refer to “Impacts related to climate change may adversely affect our business, financial condition and results of operations” in “Item 1A. Risk Factors” for further information.
For example, certain ports have become temporarily unavailable to us due to hurricane damage and other destinations have either considered or implemented restrictions on cruise operations due to environmental concerns.
If any of these transactions were to occur, they may be financed through the incurrence of additional permitted indebtedness, through cash flows from operations, or through the issuance of debt, equity or equity-related securities. We refer you to “—Liquidity and Capital Resources—General” for information regarding collateral provided to our credit card processors.
If any of these transactions were to occur, they may be financed through the incurrence of additional permitted indebtedness, through cash flows from operations, or through the issuance of debt, equity or equity-related securities. Additionally, we similarly consider opportunities for the sale of ships and long-term charters with purchase options.
(3) Restructuring costs related to the workforce reduction are included in marketing, general and administrative expense. ​ ​ 60 Table of Contents Adjusted Net Income (Loss) and Adjusted EPS were calculated as follows (in thousands, except share and per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Net income (loss) ​ $ 166,178 ​ $ (2,269,909) Non-GAAP Adjustments: ​ ​ Non-cash deferred compensation (1) ​ 4,039 ​ 4,048 Non-cash share-based compensation (2) ​ 118,940 ​ 113,563 Restructuring costs (3) ​ — ​ 12,140 Extinguishment and modification of debt (4) ​ 8,822 ​ 193,374 Adjusted Net Income (Loss) ​ $ 297,979 ​ $ (1,946,784) Diluted weighted-average shares outstanding - Net income (loss) and Adjusted Net Income (Loss) ​ 427,400,849 ​ 419,773,195 Diluted EPS ​ $ 0.39 ​ $ (5.41) Adjusted EPS ​ $ 0.70 ​ $ (4.64) (1) Non-cash deferred compensation expenses related to the crew pension plan and other crew expenses are included in payroll and related expense and other income (expense), net.
(2) Non-cash share-based compensation expenses related to equity awards, which are included in marketing, general and administrative expense and payroll and related expense. 55 Table of Contents Adjusted Net Income and Adjusted EPS were calculated as follows (in thousands, except share and per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Net income ​ $ 910,257 ​ $ 166,178 Effect of dilutive securities - exchangeable notes ​ ​ 63,308 ​ ​ — Net income and assumed conversion of exchangeable notes ​ ​ 973,565 ​ ​ 166,178 Non-GAAP Adjustments: ​ ​ Non-cash deferred compensation (1) ​ 4,930 ​ 4,039 Non-cash share-based compensation (2) ​ 91,781 ​ 118,940 Extinguishment and modification of debt (3) ​ 29,175 ​ 8,822 Reversal of U.S. deferred tax asset valuation allowance (4) ​ (161,926) ​ — Adjusted Net Income ​ $ 937,525 ​ $ 297,979 Diluted weighted-average shares outstanding - Net income and Adjusted Net Income ​ 515,030,548 ​ 427,400,849 Diluted EPS ​ $ 1.89 ​ $ 0.39 Adjusted EPS ​ $ 1.82 ​ $ 0.70 (1) Non-cash deferred compensation expenses related to the crew pension plan are included in payroll and related expense and other income (expense), net.
In connection with the execution of the third amended commitment letter, and subject to effectiveness thereof, NCLC has agreed to repurchase all of the outstanding Class A Notes (as defined in Note 8 – “Long-Term Debt”) at a purchase price of 107% of the principal amount thereof plus accrued and unpaid interest thereon.
In connection with the execution of the third amended commitment letter, NCLC agreed to repurchase all of the outstanding $250 million aggregate principal amount of 9.75% senior secured notes due 2028 at a negotiated premium plus accrued and unpaid interest thereon.
Our business model, along with our liquidity and undrawn export-credit backed facilities , allows us to operate with a working capital deficit and still meet our operating, investing and financing needs. In February 2023, NCLC issued $600 million aggregate principal amount of 8.375% senior secured notes due 2028.
Our business model, along with our liquidity and undrawn export-credit backed facilities , allows us to operate with a working capital deficit and still meet our operating, investing and financing needs. In February 2024, NCLC and the Commitment Parties entered into the third amended commitment letter, which became effective in March 2024.
The net cash provided by operating activities in 2022 included net losses of $(2.3) billion, an increase in advance ticket sales of $928.9 million and loss on extinguishment of debt of $188.8 million. Net cash used in investing activities was $2.9 billion in 2023, primarily related to three new ship deliveries and newbuild payments.
The net cash provided by operating activities in 2023 included net income of $166.2 million, the return of $500 million cash collateral from one credit card processor and an increase in advance ticket sales of $503.7 million. Net cash used in investing activities was $1.2 billion in 2024, primarily related to newbuild payments and ship improvements.
Includes exchangeable notes which can be settled in shares. Excludes the impact of any future possible refinancings and undrawn export-credit backed facilities. (2) Ship construction contracts are for our newbuild ships based on the euro/U.S. dollar exchange rate as of December 31, 2023.
Includes exchangeable notes which can be settled in NCLH ordinary shares. Excludes the impact of any future possible refinancings and undrawn export-credit backed facilities.
(4) Losses on extinguishments and modifications of debt are primarily included in interest expense, net. ​ EBITDA and Adjusted EBITDA were calculated as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Net income (loss) ​ $ 166,178 ​ $ (2,269,909) Interest expense, net ​ 727,531 ​ 801,512 Income tax (benefit) expense ​ (3,002) ​ (6,794) Depreciation and amortization expense ​ 808,568 ​ 749,326 EBITDA ​ 1,699,275 ​ (725,865) Other (income) expense, net (1) ​ 40,204 ​ (76,566) Other Non-GAAP Adjustments: ​ ​ Non-cash deferred compensation (2) ​ 2,312 ​ 2,797 Non-cash share-based compensation (3) ​ 118,940 ​ 113,563 Restructuring costs (4) ​ ​ — ​ ​ 12,140 Adjusted EBITDA ​ $ 1,860,731 ​ $ (673,931) (1) Primarily consists of gains and losses, net of foreign currency remeasurements, and in 2022, derivatives not designated as hedges.
Future income tax expense is not expected to change materially as a result of the reversal. ​ EBITDA and Adjusted EBITDA were calculated as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Net income ​ $ 910,257 ​ $ 166,178 Interest expense, net ​ 747,223 ​ 727,531 Income tax benefit ​ (137,350) ​ (3,002) Depreciation and amortization expense ​ 890,242 ​ 808,568 EBITDA ​ 2,410,372 ​ 1,699,275 Other (income) expense, net (1) ​ (54,224) ​ 40,204 Other Non-GAAP Adjustments: ​ ​ Non-cash deferred compensation (2) ​ 2,875 ​ 2,312 Non-cash share-based compensation (3) ​ 91,781 ​ 118,940 Adjusted EBITDA ​ $ 2,450,804 ​ $ 1,860,731 (1) Primarily consists of gains and losses, net of foreign currency remeasurements.
In October 2023, NCLC issued $790 million aggregate principal amount of 8.125% senior secured notes due 2029. The net proceeds from the notes, together with cash on hand, were used to repay the Term Loan A Facility, including to pay any accrued and unpaid interest thereon, as well as related premiums, fees and expenses. No term loans remain outstanding.
The net proceeds, together with cash on hand, were used to redeem $600.0 million aggregate principal amount of 8.375% senior secured notes due 2028 and $1.2 billion aggregate principal amount of 5.875% senior unsecured notes due 2026, together with any accrued and unpaid interest thereon, and to pay any related transaction premiums, fees and expenses.
Liquidity and Capital Resources General As of December 31, 2023, our liquidity of $2.3 billion consisted of cash and cash equivalents of $402.4 million, borrowings available under our $1.2 billion fully undrawn Revolving Loan Facility and a $650 million undrawn commitment less related fees. Our primary ongoing liquidity requirements are to finance working capital, capital expenditures and debt service.
Liquidity and Capital Resources General As of December 31, 2024, our liquidity of approximately $2.0 billion consisted of cash and cash equivalents of $190.8 million, borrowings available of $955.0 million under our Revolving Loan Facility, a €200 million commitment that can be used for future newbuild payments and a $650 million undrawn commitment less related fees.
Excludes the impact of expected future ship construction contracts that are not effective noted above. ​ For other operational commitments for lease and port obligations we refer you to Note 5 – “Leases” and Note 13 – “Commitments and Contingencies,” respectively, for further information.
The above presentation reflects the current delivery dates; however, certain delivery dates may be delayed at the option of the builder. ​ For other operational commitments for lease and port obligations we refer you to Note 6 – “Leases” and Note 13 – “Commitments and Contingencies,” respectively, for further information.
As of December 31, 2023, the combined contract prices, including amendments and change orders, of the five ships on order for delivery was approximately €5.8 billion, or $6.4 billion based on the euro/U.S. dollar exchange rate as of December 31, 2023.
(6) Delivery dates may be delayed at the option of the builder, which would result in additional fees. ​ As of December 31, 2024, the combined contract prices, including amendments and change orders, of the 13 ships on order for delivery (which excludes the two ships on order for Oceania Cruises, which are currently scheduled for delivery in 2030 and 2031, that we have the option to cancel) was approximately €17.5 billion, or $18.1 billion based on the euro/U.S. dollar exchange rate as of December 31, 2024.
These strategies may not fully offset the impact of current macroeconomic conditions; however, during 2023, we continued to see progress from our ongoing margin enhancement initiative. The Company continues to prioritize identifying and evaluating a variety of initiatives to improve its cost structure and margin profile, while preserving its brand equity and optimal guest satisfaction levels.
The Company continues to prioritize identifying and evaluating a variety of initiatives to improve its cost structure and margin profile, while preserving its brand equity and optimal guest satisfaction levels. However, global macroeconomic events have created volatility and disruptions in the past that have adversely impacted our costs and they may do so again in the future.
(2) Non-cash share-based compensation expenses related to equity awards are included in marketing, general and administrative expense and payroll and related expense. (3) Restructuring costs related to the workforce reduction are included in marketing, general and administrative expense.
(2) Non-cash share-based compensation expenses related to equity awards are included in marketing, general and administrative expense and payroll and related expense. (3) Losses on extinguishments and modifications of debt are primarily included in interest expense, net. (4) Non-cash income tax benefit related to the reversal of a valuation allowance on our U.S. deferred tax assets.
Excluding these losses, interest expense increased primarily as a result of higher rates. Other income (expense), net was expense of $40.2 million in 2023 compared to income of $76.6 million in 2022. In 2023, the expense primarily related to net losses on foreign currency remeasurements.
The increase in 2024 primarily reflects higher losses from extinguishment of debt and debt modification costs, which were $29.2 million in 2024 and $8.8 million in 2023. Other income (expense), net was income of $54.2 million in 2024 compared to expense of $40.2 million in 2023 primarily related to net gains and losses on foreign currency remeasurements.
As of December 31, 2023, we had cash collateral reserves of approximately $51.6 million, which includes $20.1 million recognized in accounts receivable, net and $31.5 million recognized in other long-term assets.
As of December 31, 2024, we had cash collateral reserves of approximately $0.8 million with credit card processors recognized in accounts receivable, net.
The net proceeds from the notes, together with cash on hand, were used to repay the Term Loan A Facility, including to pay any accrued and unpaid interest thereon, as well as related premiums, fees and expenses. 62 Table of Contents Also in October 2023, NCLC entered into the Sixth ARCA, an amendment and restatement of the Senior Secured Credit Facility, which among other things, increased the aggregate amount of the Revolving Loan Facility from $875 million to $1.2 billion.
The net proceeds, together with cash on hand, were used to redeem $600.0 million aggregate principal amount of 8.375% senior secured notes due 2028 and $1.2 billion aggregate principal amount of 5.875% senior unsecured notes due 2026, together with any accrued and unpaid interest thereon, and to pay any related transaction premiums, fees and expenses.
(4) Restructuring costs related to the workforce reduction are included in marketing, general and administrative expense. ​ 61 Table of Contents Year Ended December 31, 2023 (“2023”) Compared to Year Ended December 31, 2022 (“2022”) Revenue Total revenue increased 76.5% to $8.5 billion in 2023 compared to $4.8 billion in 2022.
(3) Non-cash share-based compensation expenses related to equity awards are included in marketing, general and administrative expense and payroll and related expense. ​ 56 Table of Contents Year Ended December 31, 2024 (“2024”) Compared to Year Ended December 31, 2023 (“2023”) Revenue Total revenue increased 10.9% to $9.5 billion in 2024 compared to $8.5 billion in 2023 primarily due to an increase in Capacity Days and an increase in passenger ticket pricing and onboard spending.
Per Capacity Day data is not presented for the year ended December 31, 2022 as we do not consider it meaningful for comparison purposes due to our phased restart of cruise operations, which was completed in May 2022. We believe that Adjusted EBITDA is appropriate as a supplemental financial measure as it is used by management to assess operating performance.
We believe that Adjusted EBITDA is appropriate as a supplemental financial measure as it is used by management to assess operating performance.
As of December 31, 2023, we have committed undrawn export-credit backed facilities of $5.4 billion which funds approximately 80% of our ship construction contracts.
As of December 31, 2024, we have committed undrawn export-credit backed facilities of $8.6 billion which funds approximately 80% of our ship construction contracts, with the exception of the two ships on order for Oceania Cruises that we have the option to cancel and the four additional ships on order for Norwegian Cruise Line with currently scheduled delivery from 2030 to 2036.
We also intend to refinance the $565.0 million 3.625% senior unsecured notes due in December 2024 prior to September 2024. Within the next twelve months, we may pursue other refinancings in order to reduce interest expense and/or extend debt maturities.
Within the next twelve months, we may pursue additional refinancings in order to reduce interest expense and/or extend debt maturities. We expect the holders of the 2025 Exchangeable Notes maturing in August 2025 will exchange their 2025 Exchangeable Notes for NCLH ordinary shares if not refinanced prior to maturity.
Simultaneously, the amount of the commitment was reduced to $650 million, which may be drawn in up to two draws, and in connection with the execution of the current commitment letter, NCLC issued $250 million aggregate principal amount of 9.75% senior secured notes due 2028. NCLC used the net proceeds for general corporate purposes.
In connection with the execution of the third amended commitment letter, NCLC agreed to repurchase all of the outstanding $250 million aggregate principal amount of 9.75% senior secured notes due 2028 at a negotiated premium plus accrued and unpaid interest thereon. Additionally, in April 2024, a €200 million commitment became available that can be used for future newbuild payments.
We have obtained fixed-rate export-credit backed financing which is expected to fund approximately 80% of the contract price of each ship on order, subject to certain conditions. We do not anticipate any contractual breaches or cancellations to occur.
(3) Delivery for the second Oceania Cruises ship is contractually scheduled for the fourth quarter of 2028, but may be delayed to 2029, which would result in additional fees. (4) We have obtained export-credit backed financing which is expected to fund approximately 80% of the contract price of each ship as well as related financing premiums, subject to certain conditions.
Removed
Our revenue is seasonal based on demand for cruises, which has historically been strongest during the Northern Hemisphere’s summer months; however, our cruise voyages were completely suspended from March 2020 until July 2021 due to the COVID-19 pandemic and our resumption of cruise voyages was phased in gradually, with full operation of our fleet resumed in May 2022.
Added
As of December 31, 2024, there was $135.8 million of goodwill for the Regent and Norwegian reporting units. Trade names were $500.5 million as of December 31, 2024. As of October 1, 2024, our annual impairment reviews support the carrying values of these assets. See Note 2 – “Summary of Significant Accounting Policies” for more information.
Removed
In 2023, we changed our annual evaluation date for impairment from December 31 to October 1. We believe this measurement date, which represents a change in the method of applying an accounting principle, is preferable because it better aligns with the timing of the Company’s financial planning process, which is a key component of the annual impairment tests.
Added
For example, for the year ended December 31, 2024, we had a benefit of $161.9 million related to the reversal of the majority of our U.S. deferred tax asset valuation allowance.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+2 added−1 removed4 unchanged
Biggest changeThe change from December 31, 2022 to December 31, 2023 was due to an increase in contract price for our newbuild agreements. We estimate that a 10% change in the euro as of December 31, 2023 would result in a $0.6 billion change in the U.S. dollar value of the foreign currency denominated remaining payments.
Biggest changeWe estimate that a 10% change in the euro as of December 31, 2024 would result in a $1.7 billion change in the U.S. dollar value of the foreign currency denominated remaining payments. Fuel Price Risk Our exposure to market risk for changes in fuel prices relates to the forecasted purchases of fuel on our ships.
This increase would be partially offset by an increase in the fair value of our fuel swap agreements of $34.1 million. Fair value of our derivative contracts is derived using valuation models that utilize the income valuation approach.
This increase would be partially offset by an increase in the fair value of our fuel swap agreements of $34.7 million. Fair value of our derivative contracts is derived using valuation models that utilize the income valuation approach.
Derivative positions are monitored using techniques including market valuations and sensitivity analyses. Interest Rate Risk As of December 31, 2023, 95% of our debt was fixed and 5% was variable.
Derivative positions are monitored using techniques including market valuations and sensitivity analyses. Interest Rate Risk As of December 31, 2024, 94% of our debt was fixed and 6% was variable. As of December 31, 2023, 95% of our debt was fixed and 5% was variable.
Based on our December 31, 2023 outstanding variable rate debt balance, a one percentage point increase in annual Term SOFR interest rates would increase our annual interest expense by approximately $6.8 million excluding the effects of capitalization of interest.
Based on our December 31, 2024 outstanding variable rate debt balance, a one percentage point increase in annual Term SOFR interest rates would increase our annual interest expense by approximately $7.8 million excluding the effects of capitalization of interest.
We use fuel derivative agreements to mitigate the financial impact of fluctuations in fuel prices and as of December 31, 2023, we had hedged approximately 53% and 21% of our 2024 and 66 Table of Contents 2025 projected metric tons of fuel purchases, respectively.
We use fuel derivative agreements to mitigate the financial impact of fluctuations in fuel prices and as of December 31, 2024, we had hedged approximately 56% and 21% of our 2025 and 2026 projected metric tons of fuel purchases, respectively. As of December 31, 2023, we had hedged approximately 21% of our 2025 projected metric tons of fuel purchases.
The change in our fixed rate percentage from December 31, 2022 to December 31, 2023 was primarily due to the addition of fixed rate debt and refinancing variable rate debt with fixed rate debt.
The change in our fixed rate percentage from December 31, 2023 to December 31, 2024 was primarily due to the addition of variable rate debt and the extinguishment of certain fixed rate debt with variable rate debt.
As of December 31, 2022, we had hedged none of our 2024 or 2025 projected metric tons of fuel purchases. Additional fuel swaps were executed between December 31, 2022 to December 31, 2023 to lower our fuel price risk. We estimate that a 10% increase in our weighted-average fuel price would increase our anticipated 2024 fuel expense by $63.7 million.
Additional fuel swaps were executed between December 31, 2023 to December 31, 2024 to lower our fuel price risk. We estimate that a 10% increase in our weighted-average fuel price would increase our anticipated 2025 fuel expense by $65.1 million.
Foreign Currency Exchange Rate Risk As of December 31, 2023, future ship construction obligations aggregate €5.4 billion, or $6.0 billion based on the euro/U.S. dollar exchange rate as of December 31, 2023. As of December 31, 2022, the ship construction obligations aggregated €4.5 billion, or $4.8 billion, based on the euro/U.S. dollar exchange rate as of December 31, 2022.
As of December 31, 2024, the payments not hedged aggregated €16.0 billion, or $16.6 billion based on the euro/U.S. dollar exchange rate as of December 31, 2024. As of December 31, 2023, the payments not hedged aggregated €5.4 billion, or $6.0 billion, based on the euro/U.S. dollar exchange rate as of December 31, 2023.
Fuel Price Risk Our exposure to market risk for changes in fuel prices relates to the forecasted purchases of fuel on our ships. Fuel expense, as a percentage of our total cruise operating expense, was 13.1% for the year ended December 31, 2023 and 16.1% for the year ended December 31, 2022.
Fuel expense, as a percentage of our total cruise operating expense, was 12.3% for the year ended December 31, 2024 and 62 Table of Contents 13.1% for the year ended December 31, 2023.
Removed
As of December 31, 2022, 75% of our debt was fixed and 25% was variable, which includes the effects of an interest rate swap that matured during the year ended December 31, 2022.
Added
Foreign Currency Exchange Rate Risk As of December 31, 2024, we had foreign currency derivatives to hedge the exposure to volatility in foreign currency exchange rates related to our ship construction contracts denominated in euros. These derivatives hedge the foreign currency exchange rate risk on a portion of the payments on our ship construction contracts.
Added
The change from December 31, 2023 to December 31, 2024 was primarily due to the eight new effective newbuild agreements, which excludes the two ships on order for Oceania Cruises, which are currently scheduled for delivery in 2030 and 2031, that we have the option to cancel.

Other NCLH 10-K year-over-year comparisons