Ward working to revive Cunard New chief executive showed his abilities mending Rolls-Royce; Cruise lines


LONDON -- When Peter Ward, the former chief executive of Rolls-Royce Motor Cars Ltd., took over last June at Cunard Line Ltd., a passenger cruise line company, he may have felt a sense of deja vu.

He again found himself at the helm of an unprofitable company with a brand name and flagship product that were far from the assets they once were.

At Rolls in the early 1990s, Ward is credited with having fashioned a profitable car company from a tarnished world-class brand that was losing money and its reputation, and had failed to move with the times.

He reformed Rolls by cutting the work force by more than half, slashing production to bring supply into balance with demand and revamping its marketing and sales division.

At Cunard now, he runs a company where the flagship Queen Elizabeth 2 is perhaps best known for its calamitous voyage to the United States 18 months ago, during which alarmed passengers reported "exploding toilets" and other inconveniences after the ship set sail from Southampton, England, before a refit was completed.

That incident was almost matched in embarrassment in April, when the Royal Viking Sun, Cunard's newest and most luxurious ship, pierced its hull on a Red Sea coral reef and was impounded by Egyptian authorities, barely a month after Cunard's parent company was bought by Kvaerner ASA, a Norwegian shipbuilder.

Cunard in 1995 lost 134.3 million pounds ($203.6 million), as it wrote down the value of its assets by 79 million pounds and took a 30.5 million-pound reorganization charge.

Ward, 50, has set a target of making a profit by 1998 and has drafted a five-year business plan -- a first, he says at the company, where such plans "had never seen the light of day."

"Whether he can do to boats what he has done to cars remains to be seen," said Brian Newman, an analyst at Henderson Crosthwaite. "But Rolls-Royce has got to have given him a lot of confidence."

Ward joined Triumph Motors' marketing department in 1967, becoming a sales director before moving to Peugeot in 1979. He was recruited by Rolls-Royce to become sales and marketing director in 1982. His success at Britain's legendary luxury-car maker gave him the formula he is using at Cunard: reduce costs, increase margins and motivate managers.

"Already in the first half of this year vs. last year, we're ahead in terms of sales performance and profit performance -- we're a much leaner business," he said.

The company previously "lacked direction and focus," said Peter Wild, a passenger shipping consultant at G. P. Wild., who says the jury is still out on Ward's tenure.

Ward said he has cut 18 percent of the land-based work force and expects to reduce it by a similar amount again. He has hired an outside company to run Cunard's information technology and management information systems, moved the headquarters to New York and closed offices.

He has introduced a new management team, and turned each ship into a separate business to make managers more accountable.

He is introducing an airline-style yield-management system that estimates the optimum mix of passenger fares for each ship on each trip. Such automated fare-shuffling, which seeks to fill as many staterooms as possible at the highest price possible, is standard among Cunard's competitors.

Ward said he will focus on the top end of the cruise-line business, for now.

Cunard cannot compete lower down the scale with the three major competitors in the cruise line industry -- Carnival Cruise Lines and Royal Caribbean Cruises of Miami and the Peninsular & Oriental Steam Navigation Co. of Britain -- without significant capital investment, which the company is unable to make, he said.

This approach has its critics. Wild, for one, said he thinks the largest profits are made in the middle market, now dominated by P&O; and Carnival.

"To have a real future, they must look to grow," he said of Cunard.

Pub Date: 5/28/96

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