[Operator Instructions] Our first question is from Lizzie Dove with Goldman Sachs.

So Mark or John, I appreciate all the color here and the comments that you gave on 2027. I know it's still early, but could you maybe elaborate on how you're thinking about the setup for 2027 on the net yield side, I guess, particularly in terms of maybe how booked you are for next year, at what price? And with that in mind, when do you think that we can start seeing some of these green shoots on the net yield side of things?

Lizzie, thanks for joining us this morning. So to reiterate what you just said, of course, it is early to be talking about 2027. But as we think about it, when we look at our current company-specific execution issues, we do expect that to weigh more on the first half than the second half of 2027, and really primarily in the first quarter. We do expect that our first half yields will be negative, again, primarily as a result of the first quarter. But as we think of it going forward, we expect yields to accelerate in the back half of 2027, primarily as a result as we see the benefits from the changes we're making in the business today.

And Lizzie, I would just throw in one other thing, just sequentially -- I mean I know the back half of '27 is not as booked, so it's a little hard to tell. But you can sequentially see improvement. Just where we sit today, you can see second quarter better than the first quarter. So it's building in the right direction. So I mean, early days, but it's encouraging.

Our next question is from Steve Wieczynski with Stifel.

So I know I'm supposed to ask one question. I'm going to do that, but it's going to have 2 parts to it. So okay, first of all, if we look at the change in your second half guidance, basically, you've lowered your occupancy levels by just about 200 basis points. So I guess my first question is, is that the decision to essentially start to hold price now moving forward and willing to let that occupancy kind of drift a little bit? You kind of outlined that a little bit on Slide 8. Or is there something else in the fourth quarter that's limiting those load factors? And then second question, John, it seems like you essentially have your whole team in place or mostly in place at this point. This turnaround is not going to happen overnight. So as Mark kind of just talked about, I'm guessing 2027 is still going to be somewhat of a transitory type year. Is it fair to think as we kind of move more into '28, that should be the first so-called what we would call kind of a normalized year? And based on the recent cost cuts that you guys have identified, at that point, could you see your margin profile start to get back into that low 30s type range?

Yes. Let me take a stab at the first, and Mark can give you -- and I'll certainly answer your second. But yes, in terms of what you're seeing in the fourth quarter, a conscious decision on pricing, we try to balance everything here between load factor, pricing, whatever, just to optimize overall net yield and revenue. So it's not a conscious factor one way or the other. I think it's just more a function, as we said in our remarks, that really our demand generation is where we really have to work hard, and that's sort of where our marketing -- that's why we made all the changes in the marketing group at the NCL brand. So we've really got to drive the top of the funnel. And I think all the stuff we're doing around revenue management and a new person running casino, new itinerary team, all that will pay dividends, but you got to start writing more names down through the top of the funnel. So that would be my answer to that. Anything you want to add to that piece, Mark?

Yes. No, I think that John is right. And I think, Steve, as you think about the margin profile and the margin expansion, you're certainly going to start to see that accelerate towards the back half of '27, especially into 2028, not only from the continued cost efficiencies that we're proving to effectuate. But again, as our demand and marketing engine starts to get rightsized and we start to create that flywheel. Going back to, I think, your first part of your question on the load factor for the back half of the year, yes, load factors are down 200 to 300 basis points. And I think as John said, we're not just looking at price and load in isolation. We're really trying to balance the entire equation for the best overall net revenue and yield. And again, it's primarily a result of we've got to correct our demand-generating engine. We've got to get more names in the top of the funnel. As we think ahead, as we said in our prepared remarks, we do have new marketing, new branding campaigns that are about to launch. That and combined with the opening of our island, actually previewing next week, officially opening in early September, again, we're hopeful that, that's going to start to create more awareness and names at the top of the funnel.

And then to your sneaky way, Steve, to get a second question in, I'm joking with you. The answer, yes. I mean, so we do have the whole team in place, although I would point out that the Head of Marketing and the Head of Digital, they literally started, I think, July 6. So we've had the team together all of 3 weeks, basically the whole thing built. So as I said, it will take a little bit of time for us to learn how to work together. And again, the culture journey is really just beginning. So I think you're right to say that '27 is a bit of a transitory year. As I said, it's certainly -- we're expecting better things in the back half of '27 than where we see today, because I think a lot of these things will have time to sink in. So yes, I think you would call '28 probably the first normalized year. And then I guess, lastly to point out, I would say, really, again, it's all around Norwegian. If you look at Oceania and Regent, it's not like we have 3 brands that have issues. So I would say we clearly are running 2 brands well, and that obviously gives me a lot of confidence we can sort out our issues in this brand. So I think it's a fair assessment the way you looked at it.

Our next question is from Ben Chaiken with Mizuho.

Maybe another one on '27, but specifically as it pertains to the North American to Europe customer. And I guess this is obviously separate from baseloading. I guess what does the pace look like today? Has it recovered since the beginning of the conflict? And then maybe part 2, should we expect a drag as those customers are presumably booking '27 at a lower price or at least historically given the conflict?

Yes. I think -- again, as you think about 2027, as John said earlier, we are seeing better trends. We're seeing sequential improvement each quarter in 2027. I think it's very early to determine how North Americans are going to Europe, but I can say that the business on the books, again, in the latter part of '27, continues to improve. And in terms of the back side of your question, in terms of a drag customers booking 2027, look, I think when we look at what happened this year, we were clearly behind the booking curve for our European 2026 season. That forced us to do some more -- have a more promotional environment combined with the higher airfare. But I think it's very early to make any sort of assertions on 2027 in Europe other than to say that it is continuing to improve.

And who knows where the conflict will be 3 months, let alone 6 months down the road.

Our next question is from Brandt Montour with Barclays.

I was hoping, John, you've been obviously studying what your competitors are doing, and you've been talking for a few months now on converting to a more traditional baseloading revenue management style. Have you guys thought at all about how your consumers and your travel agents will react to this new strategy from Norwegian, obviously, sort of trying to convince them that not to wait for a lower price and that the price is not going to go lower into sailing date, which, again, they probably have been used to from the Norwegian brand over the past decade. So I guess the question is, do you expect them to sort of adjust to this new plan?

Yes. I mean I think we talked about that on our last call that when you do this, you don't really know how long it will take to retrain, so to speak, the guest and the travel community. But I think given again that this will align us more with where the industry is as a whole, I don't think this is a multiyear thing. Does it work instantly right out of the chute? I guess we're going to find that out. But I also think we have some plans and ideas, which we need to like further develop them that will help expedite this process. So I think there are things we can do to ensure that it goes quicker rather than longer. It's clearly the right thing to do over the long run. And again, when you look at our other brands, you see that it works better, no great surprise. So no, we have a lot of confidence in this. So the right thing to do.

Our next question is from Matthew Boss with JPMorgan.

So John, on your current booked position, which you cited as below optimal for the next 12 months, how much of this do you attribute to macro or items out of your control? And then, Mark, just relative to the 4Q exit rate for net yields now expected down 6% to 7%, could you just help bottoms-up bridge the opportunity you see in the back half of '27 versus the baseline, it sounds like negative yields in the first half?

Yes, Matt, as to the first part, I would say being below the curve is -- I mean, maybe on the margin, it's slightly due to macro events, but the vast, vast majority of our problems, as I've said all along, are self-inflicted, which, again, we love the industry, we love the environment. They're just execution issues, which we can fix because that's totally in our control. I think, hopefully, we've proved that to you guys by -- I've been here all of 5 months, but 2 quarters in a row, $200 million-plus quarters of cost takeouts, you'll see more to come there because there's more to go. So we just have to execute, work as a team, and we can fix this. So no, I'd say it's mostly on us, not the macro.

Yes. And Matt, in terms of the exit rate on yields for Q4, obviously, as I've said in my prepared remarks, we are expecting the first half to be negative, but that's primarily as a result of Q1. So we are expecting to see sequential improvement in the quarters over the course of 2027. So we're seeing improving trends. I think when you think about load factors, there's opportunity for load factors. There's opportunities to get better base business on the books. And of course, just managing our overall revenue management funnel better. So certainly a lot of opportunities. And I think it's going to come down to, again, getting our team -- we have our team in place, executing and making that slow change. But we are starting to see that in the latter part of 2027.

But it is early.

Yes, I want to caution everybody, it is early.

Our next question is from Conor Cunningham with Melius Research.

We've kind of danced around this, I think, a bit the past few quarters. When you talk about being behind on the booked position, I was hoping you might actually put a number on what that might mean. Like how far behind are you on the first half of '27 versus a normal year? And I'm not trying to spin this as a positive, but it seems like it's actually good that you are behind as you let your changes to your RM strategy kind of take hold. So I was hoping for an actually more granular discussion around it. I just think it's important given the expected inflection in the second half of '27.

Conor, well, I certainly don't think we're dancing around it. I think it would behoove us. We don't provide that level of granular detail. I will remind everybody on the call, generally speaking, our targeted range is around between 60% to 65% as a system at the holdings level. And obviously, when you look at our performance, both in Q3 and Q4, and expected in Q1, that is a reflection of us being behind the booking curve. So we are improving that. That is part of our overall strategy to get back on a normalized booking curve, which will just pay off in many different ways. But I think to get granular between quarters really is not going to serve a great purpose.

Our next question is from James Hardiman with Citi.

So John, you've now been at the helm for a little while now and obviously doing a lot of sort of background work here. I've asked this question a million times in a million ways, but I'll give it a shot again. And it's a product-related question. Just given the magnitude of the yield declines that we've seen not only this year, but not keeping pace with the rest of the industry in previous years. I'm curious if you could dig in a little bit on sort of how you see the Norwegian product from a competitive perspective. You talked in the prepared remarks about how customer satisfaction scores are, if anything, they're up. But it seems to me like the whole industry is just getting better in terms of their product offerings. And so I guess it's a long-winded way of saying, is it possible that even if you've kept pace with sort of historical Norwegian standards, maybe you just haven't kept pace with an industry that's growing their ship offerings and their private destination offerings? And if that's the case, how is that going to work as you try to remove $225 million of annualized costs and $1 billion of CapEx moving forward? Is there the potential that ultimately, you're going to fall further and further behind from a competitive perspective?

Yes. So you're right. I've been here all of 5 months, but I'll tell you what I think. No, I don't think it's a product offering issue. And when I talk to lots of people in the trade, big travel agents and consumers, I think people generally say our hardware is definitely competitive and you have great ships, you have great crew, you have good experiences. I think our island, I'm hoping as many of you will see this new island that, as Mark said, has its soft opening next week. I think our island is top notch. I think our waterpark is going to be unbelievable. So no, I'll come back to -- I really think our issue is all in how we've marketed or not marketed. I think it's a combination of both. We clearly spend way too much money at the lower end of the funnel, not at the top of the funnel. So when we all came in here and I was like, okay, let's go do media mix models, which sounds very basic, and no great surprise. We weren't really spending money where we needed to, and we weren't being very efficient. So in my mind, it's all about marketing and getting the product back in front of the consumer, because when we get them there, like we said, the scores are great, repeat visits are great. So it's just driving that demand. I really don't think that we have a product issue at all. I think we just got to get the top of the funnel going faster and better.

And James, just to elaborate on that, when you think about the customers who are on board, we continue to see very solid trends in terms of their overall onboard spend. So it just reinforces the fact that we've got to sharpen our marketing message on the Norwegian brand. And just one follow-up. I think you had mentioned somewhere in your question around the cost and the impact on product. I want to reiterate that the items that we've announced this year over the last 2 quarters, none of that touches product. That's all behind the scenes, efficiencies, corporate back office. So I just want to be very clear about that. In terms of going forward, we expect similar things, again, not impacting the product and in many cases, enhancing it.

Yes. I was about to point out. In some cases, we've actually enhanced. So it's a good point.

Our next question is from Robin Farley with UBS.

I wanted to ask, you've talked about, in 2025 and 2026, how some itinerary plans in Europe were not ideal in terms of like the length of the itineraries and the amount of open jaw cruises. And I know that itineraries can take a while to turn around. So the 2027 maybe was planned before a lot of other changes that you've been making. So is there anything that you would call out for 2027 that we should be aware of in terms of itineraries that like might not quite be ideal? Or would you say that 2027 is going to be a change compared to I think, some of the issues you've called out in prior years. And then I don't know if you're allowing part 2 of question 1, but Mark's comment about the first half of '27 negative yields being mostly due to Q1 and then sequential improvement, does that actually mean Q2 would not be down? That's kind of what it sounded like that maybe that would be not negative in Q2. So just to clarify that, if you're allowing that sort of part 2.

Yes. So Robin, I'll just jump on the last part of the question in terms of first half. We've said we expect it to be negative, primarily from Q1, but I'm not going to parse it out between quarters. But other than the rest, we do expect sequential improvement.

Yes. And on the question about the open jaws, yes, obviously, now that we're working better as a holistic team, we're working to see what changes we can make in '27 and '28 so that we don't have as many open jaw itineraries going forward. But I think as you sort of indicated in your question, some of that is dependent on when you can find slots in different ports. So it's not like if you could flip a switch and change everything today, you would. So some of this just takes more time, because it's not all in our control when we can make some of these changes. But each year, it should get better and better and sort of revert back to what we saw 4 or 5 years ago is our norm. So I would just say you'll see sequential improvement over the years as we head back in the opposite direction there.

Our next question is from Vince Ciepiel with Cleveland Research Company.

You talked about improving trends as you look at the '27 position moving through the year. Just curious if you could comment on what you've seen in bookings more recently in terms of the cadence over the last few months. And if this conflict kind of reigniting that's been noticeable, or if you think cruise bookers are kind of looking through it into next year and putting those sailings on the books regardless?

Yes. Vince, look, yes, when you look at where we are today and we look at the geopolitical landscape, there's certainly been a lot of volatility. When you look at what we just did with our semiannual sale, we did see some improvements there. So generally speaking, I think going back to what John said, this industry is still very strong. I think the macro environment, while sometimes volatile, still is very productive for cruise demand. So I think as we can continue to execute and change -- improve our demand-generating engine and, of course, get the right marketing message out there to the targeted customer, I think that's just going to continue to help us. But again, that takes time. That doesn't happen overnight. And I think we're going to continue to see, as we've said, continued improvement sequentially in 2027.

And I wouldn't say -- because you used the word, I think you said noticeable impact. I would say maybe the booking curve on certain things has moved in a little bit closer just due to the global uncertainties, but I don't think that's material. But I think you see that on the margin.

Our next question is from Richard Clarke with Bernstein.

If I look on your Slide 11 about your implied 4Q guidance, obviously, a fair shift in the NCC ex fuel guidance from down 0.9% in Q3 to up 1.1% in Q4. Just anything one-off in why costs start growing again in Q4, and maybe how we should think about, therefore, the exit rate on cost growth into 2027?

Yes. No, great question. So look, I think that's primarily around timing in terms of some of the quarterly cadence and as well as, as we think about doing some of our new marketing initiatives and creative that obviously we would expect to start hitting in Q4. But nothing structurally that would indicate that carries over into 2027. Again, as we continue to reemphasize, we continue to push hard on the cost front. We've announced $225 million in the last 2 quarters. We continue to believe that there's going to be more efficiencies to be had. So we're going to continue to make solid progress on that front.

Our next question is from Anthony Berni with Jefferies.

This is Anthony on for David Katz. Sticking with that cost bit, how do you feel about the $100 million cost savings you noted? Should we be expecting more 9-figure programs in the future? Are the remaining cost takeouts you've mentioned a little bit more incremental? And could you give us any color on where we should expect to see those?

Well, I would say -- Mark can jump in here. I would say, yes, we continue to see meaningful cost opportunities. I'm not really going to size them, but I would say they're meaningful. Again, as Mark said, they're not guest focused at all. I mean it's just inefficiencies and ways we can use technology better. I think we've talked in the past that we have lots of tests underway, whether it's AI-based, whether it's offshoring. So no, I think there's plenty more we can do on that. So I would say, I think we said on the last call, a lot of these cost cuts, we can get done in the next 2, 3 quarters. So we'll just keep marching quarter-by-quarter and reporting back to you. But I think you'll see meaningful improvements as we move down the road.

Yes. Just to add a bit more color. As we've talked about before, our global sourcing initiatives program, that's still at its early stages. So we certainly believe that there's broader opportunity around that. But again, our aim, as we've done the last 3 years, is really to deliver sub-inflationary or better unit cost performance. So that's our goal, and we continue to march along that path, and we're pretty confident that we will achieve that.

Our next question is from Trey Bowers with Wells Fargo.

Just a couple of questions on the island and the waterpark. I see that the waterpark went on sale in May. Just if you guys could put some numbers around what kind of early action you're seeing on buy-in, what you're kind of embedding in your guide starting in Q4 and into next year in terms of utilization, how much yield impact? I don't know to what extent you're willing to do that, but if we could just get some numbers for a feel for what the benefit of the island could be. And then I guess related to that, with the new Head of Marketing on board, when should we expect to see a real marketing push around Great Stirrup Cay?

I'll do the island. I mean, you're right, we're not going to go into granularity, which you kind of guessed that. I would say the new marketing, interim marketing will literally roll out in the next week to 2 weeks. I mean you've started to see some, but I think what I would really call the sort of marketing that I think of or you probably think of will roll out literally in the next couple of weeks. When you think about the soft opening is next week, I think once that word of mouth gets out there, you got a lot of social marketing people that will hit the island over the coming weeks and certainly for the grand opening. So I think once all that sort of starts to blast out, I think we'll see a much bigger impact. But in terms of granularity, it's too early.

Yes, I agree with John. It's just too early. We do have a lot of good activations that are coming up in not only the grand opening, but some other activations. So we're hopeful that that's going to be a momentum driver, but a bit early to make any assertions in terms of what that's going to flow through to '27. We obviously do believe that the island will be an enhancement, not only to our guests, but obviously, at the end of the day, bottom line. But it's very early. We just really haven't hit it hard on the marketing front yet.

Our next question is from Andrew Didora with Bank of America.

So in the presentation this morning, you outlined your 2027 deployment strategy. I know nothing has really changed too much on an annual basis, but there was some shifting in the Caribbean, maybe a little bit more growth in the seasonally weaker 3Q. Just curious what is driving that? And I guess, bigger picture, how do you think about your deployment strategy next year as it relates to just your overall booking strategy?

Andrew, look, I think as you think about 2027 and our deployment mix, when you look at it holistically, you're right, you're not seeing any broad swings or broad major strategic changes. As we've said before, we believe in the strategy. You do see some marginal on the margin changes. And I think your reference to the Caribbean in Q2 and Q3, it was probably about a 1 to 2 percentage point shift between quarters and things of that nature, that would just be natural redeployment of certain vessels or certain assets. So nothing indicative of a larger change.

Our next question is from Kevin Kopelman with TD Cowen.

I just had a follow-up. You talked about Q1 being pressured a few times. I was hoping you could just level set us putting a little bit of finer point on that. Q1, should we be thinking of it as similar to Q4? Or any other color you can basically give us on how you're seeing today beginning of next year shape up?

Yes. Again, we're not really going into any sort of granularity like that. But if you think about what I said in the prepared remarks and in my answers to questions, again, if you just think about demand generation, a new group of people, changing how you're doing baseloading, which obviously will take time, that's going to have much more of an impact in later quarters in '27. And as I said, really that piece '28, the baseloading, all those things take time. So again, half of our team showed up in the last 2, 3 weeks. So really impacting Q1 is just very difficult. So it's not that the macro environment changed or anything like that. It's sort of all these pieces that we're putting in place, as they come together, they're going to benefit us, I guess, is the right way to say as we move through the year. And I think as we said, given that sequentially each quarter looks better, I think you can already start or we can start to see some of this falling into place, but it's just going to take a few quarters here. I think we have time for one last question.

Our last question is from Chris Stathoulopoulos at SIG.

So I appreciate the graphics here on Slide 8 with the new RM tactics. I just want to understand why the, I guess, for lack of a word, not delay, but the new tactics here in the baseloading pricing strategy, so later in '27, '28. Is that really a function of testing? Or is there some required IT or stack build-out there? I'm just curious why that can't be accelerated. And I also understand that how that might work with more of the contemporary Norwegian brand. Curious if part of this build-out requires some further back testing and evaluation across the more premium brands like Oceania and Regent, and how that might be received in the marketplace?

No, those are very different things, and there's no test. We're not saying we're delayed. We are going forward right now. Just if you think about the '27, the first quarter, it's obviously much more booked, the second quarter to a certain extent. So we're starting now. I'm just saying the impact will obviously be much more consequential in the back half because there's less stuff booked in '27. But no, there's no delay. I mean, we've already begun to work on all this in terms of changing pricing in select markets. So we're doing it sort of from the ground up, market by market, sailing by sailing, because you can't crop dust here. So no, if I gave you that impression, that's not right. It's really more when will the impact happen. It's underway as we speak. All right. I think that's it. Thank you guys very much for joining us, and thank you for all the questions, and we look forward to following up with you in the coming days.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.