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Disney to expand its cruise line

February 23, 2007|From Bloomberg News

Walt Disney Co. said Thursday that it planned to purchase two ocean liners to more than double its cruise line business.

The 122,000-ton ships are scheduled to launch in 2011 and 2012, Burbank-based Disney said. Each will have 1,250 staterooms.

Chief Executive Robert Iger is expanding the Port Canaveral, Fla.-based Disney Cruise Line to bolster growth in the company's resort unit. The move follows a pledge by Iger to boost capital spending at U.S. theme parks by as much as 38% this year. The ships will be two decks taller than the current 83,000-ton Disney Magic and Disney Wonder.

"It's a very good move," said David Miller, a Los Angeles-based analyst with Sanders Morris Harris Inc. "People really want to experience this and it behooves them to purchase more ships."

"We have a great opportunity to expand this business," Iger said. He said he was "confident that we will be able to do so in a way that continues the great success we have had."

Iger wouldn't say how much Disney is spending. Miller estimates that each new ship will cost $860 million to $890 million, accounting for the ships' larger size and inflation. The original vessels cost $500 million each, he said.

The vessels are being built by Papenburg, Germany-based Meyer Werft shipyard. Design plans and itineraries for the yet- unnamed ships are still in development, Disney said.

Disney has been expanding its resorts business to capture more of the family leisure market. Walt Disney Parks and Resorts Chairman Jay Rasulo wants to expand in areas where Disney already has a presence, such as cruise lines.

Shares of Disney rose 2 cents to $35.16.

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