Windstar Cruises Parent Company Declares Bankruptcy

It was no April Fool’s Day joke when Ambassadors International filed for Chapter 11 bankruptcy protection in a Delaware court on April 1, 2011.  While the Ambassadors name may not be that familiar to the general public, they are the parent company of the three-ship Windstar Cruises and also control the remaining assets of Majestic America Line which discontinued operations in 2008.  The five major vessels affected by the filing include the 14,745 gross ton WIND SURF (ex CLUB MED 1), the sister vessels WIND STAR and WIND SPIRIT, both approximately 5,700 gross tons, and the riverboats DELTA QUEEN and COLUMBIA QUEEN.

DELTA QUEEN October 9, 2007. Photo © Shawn Dake

Ambassadors International had once been one of the most respected names in the travel industry.   They described themselves as a cruise, marine, travel and event company.  For years Ambassadors was based in Newport Beach, California before moving to Seattle, Washington to concentrate their efforts solely on Windstar Cruises.  After a very rapid expansion into the cruise business beginning in 2006, the financial outlook for this company has been going downhill for the past several years.  As a publicly held company, stock trading was suspended after “unusual activity” was seen following a surge in their share trading and prices.  The Chapter 11 filing came as part of an agreement with private investment firm, Whippoorwill Associates, to whom Ambassadors has agreed to sell substantially all of their assets including Windstar Cruises.  During the week preceding the bankruptcy Ambassadors stock was trading at .93 cents a share, representing a loss of 75.3% of its value from one year before.  On April 13, NASDAQ delisted Ambassadors stock at the opening of business.  The final price on the last day of trading was only .31 cents a share.

WIND SONG meets STAR OF INDIA at San Diego, June 27, 1987. Photo © Shawn Dake

Windstar Sail Cruises Limited was formed in 1984 by Karl Gosta Andren who had the vision to believe that the traveling public would enjoy returning to passenger cruising under sail.  The first of his computer-assisted sailing ships emerged in 1986 as the  439.7 foot long, 51 foot in beam WIND STAR.  The 148 passenger ship measured a respectable 5,350 gross tons when built, with a winged-funnel and four masts reaching 204 feet into the air.  The first ship was followed by two sisters the WIND SONG in 1987 and WIND SPIRIT in 1988.  Each featured clean, yacht-like decor.  In the cabins the atmosphere was akin to that of a luxurious sailing yacht from the two brass portholes down to the teak decking on the floors of the bathrooms.   In 1997, the much larger WIND SURF built in 1989 as the CLUB MED 1 for Club Med joined the company.  Sadly, the lovely WIND SONG was severely damaged by fire in her engine spaces on December 1, 2002.  Beyond economic repair, the ship was scuttled in the waters off Tahiti on January 22, 2003.  The remaining three ships continued an annual pattern of tropical cruising in areas like the Caribbean in winter, moving to the Mediterranean in the summer.

WIND SPIRIT Owner's Suite #107, photo © Shawn J. Dake

In 1987 Holland America Line acquired a 50% share in Windstar Sail Cruises.  The next year the rest of the company was purchased.  By the end of 1988, Holland America were themselves the target of an acquisition by the Carnival Holdings group and Windstar came along with that deal.  The offices of Windstar were moved to Seattle in 1994 where Holland America Line handled the marketing and operations of Windstar Cruises for several years.  In 2007, Carnival Corporation sold the company to Ambassadors for $100 million.

WIND SURF, Windstar Cruises photo

Ambassadors had been on a buying spree the year before, attempting to gain a near monopoly on the U.S. river cruise business by purchasing the Delta Queen Steamboat Company, American West Steamboat Company and Great American Journeys.  Suddenly, they had seven vessels which together created Majestic America Line.   On the Mississippi River the DELTA QUEEN, MISSISSIPPI QUEEN and AMERICAN QUEEN were to form the core of the business.  On the West Coast and the Columbia River the QUEEN OF THE WEST, EMPRESS OF THE NORTH, COLUMBIA QUEEN and the 42-passenger catamaran vessel EXECUTIVE EXPLORER, renamed CONTESSA, rounded out the fleet.  It all went terribly wrong very quickly.  As then CEO of Ambassadors International, Joe Ueberroth candidly stated “I acknowledge that no matter how well structured or how little capital was required, our investment in the domestic river cruise business was a very bad investment.  We flat got it wrong.”  Not surprisingly, no buyers came forward to purchase Majestic America Line as a whole company.  By October 31, 2008 the line had shut down with the last sailing of the DELTA QUEEN.  MARAD, the U.S. Maritime Administration, seized the AMERICAN QUEEN and QUEEN OF THE NORTH.  The MISSISSIPPI QUEEN, which had been gutted but never refurbished, was eventually sold for scrap.   The QUEEN OF THE WEST was sold to American Cruise Lines and is back in service on the Columbia River.  The CONTESSA was sold in 2010 to the newly formed Alaskan Dream Cruises renamed the ALASKAN DREAM.  The DELTA QUEEN which presently operates as a stationary hotel in Chattanooga, Tennessee is still an asset of the company and is for sale, reportedly for $4.75 million.  The COLUMBIA QUEEN, also is still a company asset and remains laid up in the Portland area for sale.

A statement on their website  reads “Ambassadors and Windstar will continue normal business operations throughout this process.  Delivering extraordinary luxury travel experiences and the highest quality service to Windstar guests remains our top priority.  We want you to know that: All Windstar cruises are sailing as scheduled…”  On April 5th the court allowed Windstar to continue normal operations and granted interim approval of the company’s debtor-in-possession financing allowing it access to $5 million in new working capital.  A further hearing is scheduled for April 26th to determine if approval will be granted for the additional $5 million to provide liquidity during the remaining sales process.  Ambassadors had already borrowed $20 million in two transactions from Whippoorwill during 2010.  If the full purchase of Windstar Cruises goes through as planned, the company may yet be saved.  Travel agents and consumers seem to be taking a wait and see approach before committing their money and vacations into this once great but troubled company.  It is now in the hands of a financial investment firm rather than shipping people, as has become so common in the cruise business these days.

Shawn Dake

Shawn Dake

Shawn J. Dake, freelance travel writer and regular contributor to MaritimeMatters, worked in tourism and cruise industry for over 35 years.  A native of Southern California, his first job was as a tour guide aboard the Queen Mary.  A frequent lecturer on ship-related topics he has appeared on TV programs.  Owner of Oceans Away Cruises & Travel agency, he served as President of the local Chapter of Steamship Historical Society of America.  With a love of the sea, he is a veteran of 115 cruises.
Shawn Dake

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