GetThere Gets There With IPO

<B> GetThere Gets There With IPO</B>

By Cheryl Rosen

Palo Alto, Calif. - GetThere.com is about to become a publicly traded corporation--and already has swapped millions of options on its soon-to-be-released stock with big new airline and travel agency partners.

The former Internet Travel Network, which in recent months changed its name and much of its management to better fit the Wall Street image of a publicly traded company (BTN, July 19), on Sept. 15 formally filed an S-1 registration form with the Securities and Exchange Commission.

Amidst pages of financial information, the SEC filing noted options for 7.7 million shares of stock granted in recent days to partners including Air Canada, America West Airlines and Northwest Airlines--and, surprisingly, American Express, whose AXI corporate online booking system is a major competitor to GetThere's ITN Global Manager.

As part of the deal, GetThere.com will develop booking products for the carriers to use on their own Web sites, and will serve as the primary booking engine for Air Canada, America West and United.

One industry insider said the deal involves the carriers giving GetThere not just cash, but also airline tickets that the online company then will sell to its own customers, in exchange for the stock options.

The GetThere news overshadowed another airline investment in e-commerce last week, that of British Airways in Biztravel.com, a Web site for unmanaged business travelers that in August was acquired by a group including Rosenbluth International, Continental Airlines, Marriott and others (BTN, Sept. 6).

In a pact announced the day before the IPO filing, GetThere and American Express agreed to cooperate on marketing, developing and integrating an American Express branded version of ITN Global Manager with Amex's travel technology platform. When the system is ready, American Express corporate customers will be able to choose either Global Manager or AXI, which Amex developed with Microsoft, as fully integrated modules in their end-to-end travel systems.

American Express expects to spend the next four to six months building a customized version of ITN Global Manager and integrating it with the Amex platform. The first cobranded product, which will include Amex's low-fare search technology as well as Global Manager features, should be ready for market by the first quarter of 2000.

At the same time, Amex will continue rolling out AXI's newly released version 4.0 and working on version 5.0 with Microsoft, its first development partner.

"This isn't shifting our strategy, but expanding our portfolio of offerings," said Brigitte Baumann, senior vice president and general manager of Amex's Corporate Services Interactive unit. "We have a strong relationship we'd like to continue with Microsoft. And we'd like to develop another one with GetThere.com."

GetThere.com president Gadi Meier, interviewed the day before the S-1 filing, said the financial investment by the airlines represents "a third of the company or less," and is far less important than the support it signifies for the e-commerce distribution channel. "We were not seeking out capital," he said. "The commitments are the significant message; the equity is just a way of strengthening our relationship."

As the travel distribution channel begins to shift toward electronic commerce, Meier said, "these are critical decisions for the airlines. They need to be competitive and line up with partners--and we have a lot of models under our belts, and millions of customers."

British Airways, too, is anxious to build its understanding of electronic booking as it begins to see the number of customers choosing the self-service option build.

While senior vice president of global e-commerce David Charlton said it is getting "1 to 2 percent" of its worldwide volume online--the same number cited by virtually every supplier in this hyper-competitive space--he also acknowledged the number in the United States is "higher than that and starting to grow rapidly."

Indeed, BA is projecting that in the next three to five years, half its business will come in electronically, with the majority of customers coming from independent sites, not airline sites, Charlton said. "This is a great opportunity for us to work with a partner we can learn from here in the U.S., and have a bit of a jumpstart before online booking really comes to Europe."

Thanks to the SEC filing, the industry now also can get a peek at the hard numbers of GetThere's business. Like virtually everyone staking a claim in e-commerce, it has yet to make a profit, incurring net losses of $20.3 million for the six months ended July 31, 1999, and accumulating $45.9 million in debt. But it also notes the sale of 1.9 million shares of series C preferred stock at $5.125 per share, and warrants for millions of future shares to its airline investors.