Carnival Likely to Spend at Least $700 Mln on `Queen Mary' Ship

New York, June 8 (Bloomberg) -- Carnival Corp., the world's largest cruise operator, is likely to spend at least $700 million on its "Project Queen Mary"' to build the largest luxury oceanliner ever, its chief financial officer said.

Miami-based Carnival expects to launch the trans-Atlantic liner in 2002, CFO Gerald Cahill said at the PaineWebber Growth & Technology Conference in New York.

Carnival began designing the Queen Mary last year to capitalize on the famous name of the oceanliner Queen Elizabeth II. Carnival acquired the QE2 and its owner, Cunard Line, last year. The 160-year-old Cunard Line is associated with the luxury trans-Atlantic travel of the 1920s and 1930s.

Carnival is finding the Queen Mary project to be more difficult and expensive than it first anticipated because there have been no
trans-Atlantic passenger liners built for 35 years, said Cahill.  "It's a little difficult to find the talent and the knowledge,'' to build such a ship, he said.   Still, Carnival expects a return on investment of at least 25 percent, Cahill said.

Carnival is also considering building a second smoke-free cruise ship, after seeing strong demand for cruises on the Paradise, a non-smoking cruise ship that Carnival launched in November Cahill said.