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Norwegian Cruise Line CFO: ‘We have the ability’ to pay off debt

Norwegian Cruise Line (NCLH) CFO Mark Kempa doesn't see the cruise operator taking any drastic action to pay down the debt accrued during the COVID-19 pandemic.

"As we look forward over the course of the next two to three years, we have about a billion dollars a year [of debt] plus or minus that's coming due," Kempa said on Yahoo Finance Live (video above). "And we firmly believe, given our trajectory today, that with our existing cash on hand and our expected organic cash flow, we are going to be able to pay off our debt in the normal course of business by just good old-fashioned earnings and cash generation."

According to SEC filings, the company ended the second quarter with about $12.2 billion in long-term debt.

"Our board has no appetite to issue any sort of equity to pay down debt or to delever," Kempa added. "This company is a cash engine machine."

Norwegian Cruise Line stock fluctuated in early trading on Thursday before moving more than 2% higher as of 2:00 p.m. ET.

Kempa's confidence in paying down debt comes at a precarious time for the cruise line industry.

Ticket discounting has picked up recently as the U.S. economy slows and concerns around COVID-19 linger. Despite this, Norwegian Cruise Line ended all COVID-19 masking, testing, and vaccination requirements on Tuesday.

"We immediately saw a significant boost in our bookings as a result of that," Kempa told Yahoo Finance from Norwegian's newest ship, the Prima.

PORTLAND, ENGLAND - AUGUST 31: Cruise ship Norwegian Prima arrives at Portland Port, on August 31, 2022 in Portland, England. The Norwegian Prima is the first ship in Norwegian Cruise Line's
Norwegian Cruise Line's ship 'Prima' arrives at Portland Port, on August 31, 2022, in Portland, England. (Photo by Finnbarr Webster/Getty Images)

Meanwhile, Norwegian rival Carnival Cruise Line (CCL) badly missed analyst quarterly sales and profit expectations last week. The company also warned that bookings would be weaker than anticipated, which hammered the stock price.

Still, Kempa maintained that Norwegian continues to see strong demand.

"Our demand continues to be very, very strong, even against the backdrop of a lot of different world events, economic events," Kempa said. "Our customer tends to be a higher-level customer than that of our peers. So while not insulated from any sort of recessionary issues or economic malaise, our customers tend to be more insulated and more resilient from that."

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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