2016 Annual Report for Norwegian Cruiseline Holdings - 25

In addition, availability, work stoppages, insolvency or financial problems in the shipyards' construction, refurbishment or repair of our ships, or other
"force majeure" events that are beyond our control and the control of shipyards or subcontractors, could also delay or prevent the newbuild delivery,
refurbishment and repair and maintenance of our ships. Any termination or breach of contract following such an event may result in, among other things,
the forfeiture of prior deposits or payments made by us, potential claims and impairment of losses. 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. The consolidation of the
control of certain European cruise shipyards could result in higher prices for refurbishment and repairs due to reduced competition. Also, the lack of
qualified shipyard repair facilities could result in the inability to repair and maintain our ships on a timely basis. These potential events and the
associated losses, to the extent that they are not adequately covered by contractual remedies or insurance, could adversely affect our results of operations
and financial condition.
We rely on scheduled commercial airline services for passenger and crew connections. Increases in the price of, or major changes or reduction in,
commercial airline services could undermine our customer base or disrupt our operations.
A number of our passengers and crew depend on scheduled commercial airline services to transport them to ports of embarkation for our cruises.
Increases in the price of airfare due to increases in fuel prices, fuel surcharges, changes in commercial airline services as a result of strikes, weather or
other events, or the lack of availability due to schedule changes or a high level of airline bookings could adversely affect our ability to deliver guests and
crew to or from our cruise ships and thereby increase our cruise operating expenses which would, in turn, have an adverse effect on our financial
condition and results of operations.
Our revenue is seasonal, owing to variations in passenger fare rates and occupancy levels at different times of the year. We may not be able to
generate revenue that is sufficient to cover our expenses during certain periods of the year.
The demand for our cruises is seasonal, with the greatest demand for cruises generally occurring during the Northern Hemisphere's summer months.
This seasonality in demand has resulted in fluctuations in our revenue and results of operations. The seasonality of our results is increased due to ships
being taken out of service for Dry-docks, which we typically schedule during off-peak demand periods for such ships. Accordingly, seasonality in
demand and Dry-dock periods could adversely affect our ability to generate sufficient revenue to cover the expenses we incur during certain periods of
the year.
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. 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. 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. 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.
Amendments to the collective bargaining agreements for crew members of our fleet and other employee relation issues may materially adversely
affect our financial results.
Currently, we are a party to eight collective bargaining agreements. Three of these agreements are in effect through 2017 and four through 2018. The
remaining one is set to expire in 2020. Any future amendments to such collective bargaining agreements or inability to satisfactorily renegotiate such
agreements may increase our labor costs and have a negative impact on our financial condition. 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.
Unavailability of ports of call may materially adversely affect our business, financial condition and results of operations.
We believe that attractive port destinations are a major reason why guests choose to go on a particular cruise or on a cruise vacation. The availability of
ports, including the specific port facility at which our guests will embark and disembark, is affected by a number of factors, including, but not limited to,
existing capacity constraints, security, safety and environmental concerns, adverse weather conditions and natural disasters, financial limitations on port
development, political instability, exclusivity arrangements that ports may have with our competitors, local governmental regulations and fees, local
community concerns about port development and other adverse impacts on their communities from additional tourists and sanctions programs
implemented by the Office of Foreign Assets Control of the United States Treasury Department or other regulatory bodies. Any limitations on the
availability of ports of call or on the availability of shore excursions and other service providers at such ports could adversely affect our business,
financial condition and results of operations.
Litigation, enforcement actions, fines or penalties could adversely impact our financial condition or results of operations and damage our
reputation.
Our business is subject to various U.S. and international laws and regulations that could lead to enforcement actions, fines, civil or criminal penalties or
the assertion of litigation claims and damages. In addition, improper conduct by our employees or agents could damage our reputation and/or lead to
litigation or legal proceedings that could result in civil or criminal penalties, including substantial monetary fines. In certain circumstances, it may not be
economical to defend against such matters, and a legal strategy may not ultimately result in us prevailing in a matter. Such events could lead to an
adverse impact on our financial condition or results of operations.
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Table of Contents for the Digital Edition of 2016 Annual Report for Norwegian Cruiseline Holdings