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Old January 11th, 2010, 10:41 PM
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Default Royal caribbean and rolls-royce announce pod settlement


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ROYAL CARIBBEAN CRUISES LTD. AND ROLLS-ROYCE
ANNOUNCE POD SETTLEMENT

MIAMI – January 11, 2010 – Royal Caribbean Cruises Ltd. (NYSE, OSE: RCL) and Rolls-Royce announced today that they have reached a suitable and amicable resolution to the lawsuit regarding the Mermaid pod-propulsion system on Celebrity Cruises’ Millennium-class ships.

When they were first designed and implemented, podded propulsion was a significant technological advance over traditional shaft propulsion, but it experienced a number of technical issues in the early years of use. However, working together, Royal Caribbean and Rolls-Royce have been successful in improving the reliability of the design. Mermaid pods are installed on four Celebrity ships – Millennium, Summit, Infinity and Constellation.

"We look forward to continuing our alliance with Rolls-Royce for many years to come,” said Daniel J. Hanrahan, president and chief executive officer, Celebrity Cruises. “Rolls-Royce has one of the best reputations for reliability, and guests and travel agents should feel confident in Rolls-Royce’s assurances of the reliability of the Mermaid pods.”

“We are not only satisfied to have reached a solution with Celebrity Cruises, but that we have been able to improve and enhance the Mermaid pod’s reliability,” said John Paterson, President-Marine, Rolls-Royce. “We look forward to the opportunity to continue contributing toCelebrity’s high operating standards now, and in the future.”

The settlement will generate a net increase of approximately $65 million in Other Income/(expense) in Royal Caribbean’s 2010 first quarter results.

Royal Caribbean Cruises Ltd. is a global cruise vacation company that operates Royal Caribbean International, Celebrity Cruises, Pullmantur, Azamara Cruises and CDF Croisieres de France. The company has a combined total of 39 ships in service and four under construction. It also offers unique land-tour vacations in Alaska, Asia, Australia/New Zealand, Canada, Dubai, Europe and South America. Additional information can be found on Royal Caribbean International, www.celebritycruises.com, PULLMANTUR, www.azamaracruises.com, www.cdfcroisieresdefrance.com or www.rclinvestor.com.

Rolls-Royce, a world-leading provider of power systems and services for use on land, at sea and in the air, has established a strong position in global markets - civil aerospace, defence aerospace, marine and energy. As a result of this strategy, Rolls-Royce today has a broad customer base comprising more than 600 airlines, 4,000 corporate and utility aircraft and helicopter operators, 160 armed forces, more than 2,000 marine customers, including 70 navies, and energy customers in nearly 120 countries, with an installed base of 54,000 gas turbines. Rolls-Royce employs over 38,000 skilled people in offices, manufacturing and service facilities in 50 countries. The Group has a strong commitment to apprentice and graduate recruitment, and to further developing employee skills. In 2008, Rolls-Royce and its partners invested £885 million on research and development, two thirds of which had the objective of further improving the environmental aspects of its products, in particular the reduction of emissions. Annual underlying revenues were £9.1 billion in 2008, of which 52 per cent came from services revenues. The firm and announced order book stood at £57.5 billion at 30 June 2009, providing visibility of future levels of activity.
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So - RCL get $65 million, but are they going to fix the pods? They allude they have been mostly fixed over the years, but something tells me we are going to get a visit from our friend "Nurse Debra" soon.

People who had unsatisfactory cruises on these ships due to pod failure should get a piece of that money by all rights, right?

It is an interesting press release "we're getting money, but no announcement about using it to fix the problem?"

Does anyone know if Celebrity ever did truly fixed any of those pods? They allude that they have, but I don't know if it is true.

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Old January 12th, 2010, 04:55 PM
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As I recall, the people who were affected by the pod problems were generously compensated for their affected sailings. Besides the company's reputation, the stockholders probaly took the biggest hit, no?
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Old January 12th, 2010, 05:11 PM
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Well, if the stockholders took the hit they should be getting compensated this quarter with 65 million going to the bottom line. However, you wouldn't know it by today's performance.
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Old January 12th, 2010, 07:27 PM
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If you read the press release they say nothing about the pods being fixed only saying they improved the reliability of them. Also, note that the money is going to the Royal Caribbean Corportation and not to Celebrity itself. I also agree with the comments that the passengers were amply compensated as they should have been.

Don
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Old January 12th, 2010, 08:23 PM
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Originally Posted by Paul Motter View Post

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So - RCL get $65 million, but are they going to fix the pods? They allude they have been mostly fixed over the years, but something tells me we are going to get a visit from our friend "Nurse Debra" soon.

People who had unsatisfactory cruises on these ships due to pod failure should get a piece of that money by all rights, right?

It is an interesting press release "we're getting money, but no announcement about using it to fix the problem?"

Does anyone know if Celebrity ever did truly fixed any of those pods? They allude that they have, but I don't know if it is true.
Hi Paul,

It is refreshing, once in a while, to see my name referenced in a post, in an intelligent logical and respectful way. Many kudos for that!!!! Debra

"So - RCL get $65 million, but are they going to fix the pods? They allude they have been mostly fixed over the years, but something tells me we are going to get a visit from our friend "Nurse Debra" soon".

The original of the lawsuit against Rolls Royce was for over $300 million and the reported settlement was about 80% less, so I don't know if this is a good thing or a disappointment for RCCL stockholders and Celebrity top brass. It is true that many Celebrity champions have alluded that this problem has been fixed for many years now, but they continued to happen.

"People who had unsatisfactory cruises on these ships due to pod failure should get a piece of that money by all rights, right?"

Ahhh - RIGHT, but my experience with Celebrity has been that that will happen the day after I win the mega lottery!

"It is an interesting press release "we're getting money, but no announcement about using it to fix the problem?".

Yes, I also was struck by that very strange omission.

“Does anyone know if Celebrity ever did truly fixed any of those pods? They allude that they have, but I don't know if it is true”.

While some have touted the end of these problems several times for the past four or five years, the problems continued to happen. My opinion is that if Celebrity really had a permanent fix they would be shouting it from the roof tops. Unfortunately only the future will tell any of us if this problem will continue to happen or not.



My hope is that for all future cruisers on the Millennium, Infinity or Summit that these problems will be permanently fixed by Celebrity.

Debra
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Old January 19th, 2010, 08:05 PM
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Paul,

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Originally Posted by You View Post
Does anyone know if Celebrity ever did truly fixed any of those pods? They allude that they have, but I don't know if it is true.
Most settlement agreements formally state that (1) there's no admission of fault and (2) the parties agree not to discuss the details publicly, beyond what's stated in the joint press release announcing the settlement. Thus, we probably will never know the full extent of what has or has not been resolved.

That said, it's also very unlikely that Celebrity's management would have agreed to the settlement without either reasonable certainty that the problem is solved or continuing contingent liability if it isn't.

Norm.
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