Coastal shipping industry buffeted by sea of red ink

The Greek coastal shipping industry continues to be buffeted by strong storms, evident in the performances of listed companies in the first four months of the year, which can be characterized as disappointing. The crisis gripping the industry can be seen in their sliding share prices as well as the companies’ market capitalization. Rising oil prices due to the Middle East crisis, lagging passenger traffic, and strong competition in the Adriatic Sea are the principal causes for the coastal passenger shipping industry’s current doldrums. On top of this, the sector also bears a heavy debt burden. Seeking to impress strategic investors as well as the general investment public during the «golden era» of the Athens Stock Exchange three years ago, passenger shipping companies launched a series of mergers and acquisitions with the aim of creating strong groups. Judging from the course of events since then, the three new groups resulting from this trend, Attica Enterprises and Strintzis Lines, Minoan Lines and the partnership of Anek and NEL, have failed to sustain their fortunes due to the heavy debts taken on in order to help the companies deal with the expected competition following the end of cabotage late this year. In the current climate, one condition for mergers is cutting costs. With the stock market in a prolonged downturn, mergers could produce a more positive financial size, on condition, of course, that all the necessary preconditions are in place. Crete-based Anek and Strintzis Lines have already started discussions on a possible merger. Special committees have been set up to look into the details and the consequences of the merger of two companies that control a significant share of the market in the Aegean and Adriatic seas. To date, nothing substantial has been announced, leading some banking figures to speculate about problems and stumbling blocks such as the companies’ low share prices and their bank debts. The other possible merger, that between NEL and Hellas Flying Dolphins, appears to be fading away. Guided by Piraeus Bank, the two companies had reviewed the probability of integrating their operations. Banking sources, however, told Kathimerini that «the attempt is improbable, as the two companies have a liquidity problem and a merger would only compound their problems instead of solving them.» In the period 1999-2001, coastal shipping companies embarked on a buying spree, acquiring dozens of modern vessels. Their investment programs were funded by hefty euro loans, with the result that many companies are now burdened with heavy debt. Recent statistics showed that the five listed companies, with the exception of Dane (not currently traded), have debts exceeding 1.85 billion euros.