Hornblower Group, the cruise operator that operates the NYC Ferry system, has been acquired by a private equity firm after filing for bankruptcy — though the city says this will not impact ferry service.
The San Francisco-based company said Wednesday that the private equity firm Strategic Value Partners (SVP) would acquire a majority stake in the firm, injecting $121 million in financing to Hornblower coffers and reducing its overall debt load by $720 million.
The company filed for Chapter 11 bankruptcy protection in Texas and shut down its American Queen Voyages livery, which runs Mississippi River cruises using old-time paddlewheel steamboats.
A spokesperson for Hornblower said that since American Queen is a subsidiary of Hornblower, the parent company had to file for bankruptcy protection on its behalf, but contended the rest of the company’s operations are “siloed” from American Queen, which was never able to recover from the COVID-19 pandemic.
The former majority stakeholder in Hornblower, private equity firm Crestview Partners, will maintain a minority interest in the seafaring company.
The city’s Economic Development Corporation (EDC), the quasi-public agency that owns and oversees NYC Ferry, says that the bankruptcy filing will have no service impacts on the ferry system, which launched in 2017 and last year served a record 6.8 million passengers.
“Hornblower Group’s business decision to restructure a separate part of their organization will have no impact on NYC Ferry operations or any commitments made in the NYC Ferry contract,” said EDC spokesperson Jeff Holmes. “There will be no disruptions to the system and NYC Ferry riders will continue to receive the same exceptional service, reliability, and convenience when riding.”
Hornblower CEO Kevin Rabbitt said that the injection of capital into the firm will allow it to continue growing in New York City and elsewhere.
“This will not affect NYC Ferry service whatsoever,” said Rabbitt. “In fact, this deal injects new capital into the parent company while eliminating debt unrelated to ferry operations, which will allow the system to continue its record growth across the five boroughs.”
NYC Ferry launched in 2017 and has completed more than 35 million passenger trips since then, according to EDC. Last year, the city inked a new, $405 million contract with Hornblower to run the ferry for another five years.
The ferry system has long faced criticism for relying heavily on government subsidies, far more than it takes in from fare revenue. The $405 million deal was worth 2.5 times more than the $160 million the ferry expects to bring in from fares. In 2022, City Comptroller Brad Lander released a damning audit that found the city subsidized each $2.75 ferry ride to the tune of $12.88.
Following that audit, the Adams administration unveiled its new “Ferry Forward” initiative to reform the system’s finances, which included raising the price of a single-ride fare to $4. EDC says since the start of Ferry Forward, the subsidy level has fallen to $8.55 per ride.
Ferries run along routes largely crossing the East River between Manhattan, Brooklyn, and Queens, though riders can take a ferry as far as Throggs Neck in the Bronx or Far Rockaway in Queens.
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