Fast Ferry Catalina Was Repossessed

Passenger Ferry Proposed for New Service From New Bedford Was Centerpiece Of Financial Trouble in California

By JULIA WELLS

The high-speed passenger ferry that the Steamship Authority is negotiating to lease and possibly buy was returned to the Washington state shipyard where it was built because it had mechanical problems - and because it was a financial disaster for the California company that bought it, the Gazette has learned.

In fact, the Catalina Jet was such a financial disaster that it nearly sank the 42-year-old ferry company that had launched the service.

"The real problem is the ridership," said Catalina Cruises chief executive officer Bruce Voss in a story in the Knight Ridder/Tribune Business News that reported on the failure of the high-speed ferry. "Essentially, the boat was too big for the number of people we were carrying," said Catalina Cruises chief financial officer Sam Luxenberg in the same story.

The story was published in September of 2000. It was one of a series of stories that chronicled the rise and fall of the Catalina Jet.

In May of 1999 it was billed as one of the most modern high-speed passenger ferries to hit the American market. "It's bigger, it's faster, it's smoother," declared a story in the Seattle Times announcing the launch of the ferry that spring. Built by the Nichols Brothers Boat Builders on Whidbey Island in the state of Washington, the 144-foot, 499-passenger ferry was put into service on the run to Catalina Island off the coast of southern California. The ferry ran at 36 knots, cutting travel time to Catalina from two and a half hours to 45 minutes.

One year later, newspaper accounts about the Catalina Jet suddenly lost their glow.

"Catalina Cruises said ongoing mechanical problems forced it to mothball the $8 million, 450-passenger craft and cease service. . . . The foundering company also announced that it was laying off employees," reported the Los Angeles Times in September of 2000.

"It's a very difficult situation for all of us. Our goal is to resume service by . . . next summer," said Mr. Voss, the Catalina Cruises CEO, in the story.

The Catalina Island Visitors Bureau scrambled to put out the word that Catalina Island was still open for business. The island is serviced by three other ferry companies.

About a million people a year visit Catalina.

Catalina Cruises announced that it would refund ticket money to people who had unused tickets for the high-speed ferry. The company stopped high-speed ferry service to Avalon but continued regular service to other points on Catalina.

"We're sorry it came to this," said Mr. Luxenberg, the Catalina Cruises CFO, in the Knight-Ridder story published in September of 2000.

The Catalina Jet has been back at the Nichols Brothers shipyard since then. The boat is now on the market for $8.275 million.

Last month, the SSA board of governors voted to reject a lease-buy proposal for the Catalina Jet after two of the three board members concluded that the financial projections for using the ferry in a pilot program were too risky.

The pilot program has been proposed to replace the passenger ferry Schamonchi on the run between New Bedford and Martha's Vineyard. City officials in New Bedford are pushing a plan to open a full Steamship Authority ferry port in the Whaling City.

A pilot program for freight was converted this year to an SSA-run program for the coming year.

Two years ago, New Bedford city officials said they were only interested in freight service, but now all that has changed.

Immediately after the vote by the boat line board to reject the high-speed pilot project last month, New Bedford city solicitor George Leontire took matters into his own hands, launching a fresh set of negotiations with the Nichols shipyard. Mr. Leontire presented the boat line with a new lease-buy offer for the ferry. He also launched a personal attack on Falmouth boat line governor Galen Robbins, who had voted to reject the pilot project.

Since then SSA acting general manager Wayne Lamson has been involved in active talks with the ship builder and also with New Bedford city officials.

James Swindler, the director of operations for the SSA, said this week that he knew little about the Catalina Jet.

"For whatever reason the vessel was repossessed. That's all I really know," he said. Mr. Swindler has been actively involved in the lease-buy negotiations for the ferry.

Mr. Lamson said yesterday that the two-week negotiation with the shipyard had concluded and he was preparing a management summary on the new proposal. The summary was expected to be sent to SSA board members today. The November boat line meeting will be held next Thursday morning in Woods Hole; the reshaped proposal is expected to come up again for consideration.

The city of New Bedford is also suing the Steamship Authority in an aggressive - and expensive - lawsuit in federal court.

The lawsuit is now in the discovery phase and throughout the week SSA staff were busy collecting documents for city attorneys. Last Friday, city attorneys deposed Mr. Robbins for some eight hours in what many observers say is pure legal harassment.

So far boat line general counsel Steven Sayers has raised little or no objection to the aggressive legal action.

Mr. Lamson acknowledged yesterday that the situation is awkward.

"We are looking into the appropriateness of all of this," he said.