Orbitz SEC Filing Details Travelport GDS Tie

Orbitz Worldwide received $108 million, or more than 10 percent of its net revenues, from incentive payments from Travelport GDS as part of a segment agreement that runs through 2014, according to the online travel agency's annual report, filed with the U.S. Securities and Exchange Commission last week. Travelport is a part-owner of Orbitz.

According to the SEC filing, Orbitz in 2008 was required to process 22 million segments through Galileo and 16 million segments through Worldspan, which amounts to more than 10 percent of the 372 million segments Travelport processed globally last year.

As part of its agreement with Travelport, which was renegotiated in August 2007 after Travelport acquired Worldspan, travel agency and marketing services behemoth Orbitz annually is required to process 16 million segments through Worldspan and a variable number through Galileo. If Orbitz falls short of the segment target, it must pay a penalty of $1.25 per segment below the minimum.

Orbitz annually pays $20 million to Travelport for access and related services, a figure contingent on volume commitments through the life of the contract. The company said its GDS connectivity costs increased $4 million in 2008. This year, based on the adjustable rate terms, Orbitz is required to process 20 million segments through Galileo.

The agency-GDS agreement stems from Travelport's initial public offering spin-off of Orbitz in July 2007. Travelport and its primary investor owners, including The Blackstone Group and Technology Crossover Ventures own 58 percent of Orbitz's common shares at the end of 2008.