During a Travelport earnings call today—its first since The Blackstone Group purchased it from Cendant Corp. in August—Travelport CEO Jeff Clarke announced a 100 percent agency opt in to its Content Continuity Program, through the Galileo global distribution system, as well as a substantial loss for the quarter. While quarterly revenue for the Parsippany, N.J.-based company was up 5 percent from 2005, Travelport experienced a net loss of $1.1 billion, which senior executives attributed to three items: a pretax non-cash impairment charge of approximately $1.2 billion and separation and restructuring costs of $20 million and $11 million, respectively, from Travelport's recent sale to Blackstone.
In a conference call this morning, Travelport CFO Daryl Raiford—who during the call also announced he is leaving Travelport to pursue other opportunities—said if it were not for the impact of those three items, the company's EBITDA would remain unchanged and operating income would have grown 5 percent.
Clarke said much of the company's growth in the United States is owed to its consumer brands, Orbitz and CheapTickets, which grew gross bookings by over 40 percent. The reason bookings outgrew growth, he said, is primarily because airline bookings do not flow into Travelport's revenue. "It's unlike hotel, where it's a market mix and we benefit from an increase in those prices," he added.
Meanwhile, the company said it has visibility into future economics thanks to new airline contracts established with Galileo, Travelport's global distribution system, the first GDS to come to new terms with all Big Six carriers since deregulation (BTN, July 17)
. Though Clarke declined to give specifics, he said Travelport has identified $75 million in savings. "We're comfortable with that number," he said, "but I don't want to talk about any particular actions until we're able to communicate those internally."
Clarke also declined to divulge details of agency negotiations for its Content Continuity Program, which cuts agency incentives. "There have been no surprises in the opt-in process and it's been very consistent," he said. "I don't want to be more specific because of the sensitive and competitive nature of negotiations."
Earlier this year, Travelport was set to spin off from Cendant, its then-parent company, when Cendant came forward and said it received several unsolicited inquiries from private equity firms about the sale of Travelport, which includes Galileo, Orbitz, Orbitz for Business/Travelport and global travel content wholesaler GTA. The Blackstone Group emerged as the ultimate buyer this June (BTNonline, June 30)
"We're excited to begin our operations as an independent company and proud of our solid performance in the second quarter despite the significant changes underway in our business," Clarke said in a statement released today.