U.S. Navy Passes on Northrop Cruise Ships

The U.S. Navy has no interest in two passenger cruise ships that were being built by Northrop Grumman Corp. for a customer that’s operating under bankruptcy protection, the chief of naval operations told lawmakers.

Adm. Vernon Clark said the Navy reached the decision after its engineers examined one half-built cruise ship that Northrop was building at its Pascagoula, Miss., shipyard for riverboat operator American Classic Voyages Co.

Northrop had asked the Navy to consider possible military uses for the cruise ships.

The company had no immediate comment on Clark’s statement.

American Classic had planned to buy two ships from the defense contractor for $440 million each. But the company filed for Chapter 11 bankruptcy protection in October, leaving Northrop to record a $60-million charge and restate third-quarter financial results.

Shares of Los Angeles-based Northrop fell $1.81 to $114.75 on the Big Board.