Revenue, Earnings Grow For Distribution Systems
<B> Revenue, Earnings Grow For Distribution Systems</B>
By Deborah Mora
Travel technology companies continued their amazing growth in the second quarter, with revenues up 28.4 percent for The Sabre Group, 33.5 percent for Pegasus Systems and 9.2 percent for Galileo International. Sabre and Galileo are the only two public GDSs; Amadeus and Worldspan are owned by airlines and do not disclose their financials.
The Sabre Group reported record-breaking revenue and earnings of $577 million and $69 million, respectively. Earnings rose 17 percent compared with the same period in 1997, "due to the US Airways outsourcing contract, Year 2000 compliance project for American Airlines, growth in international airline bookings and a booking fee increase implemented in February 1998," said Michael Durham, president and CEO.
Direct worldwide reservations dipped 2.4 percent since last year's second quarter to 1.3 million. Direct bookings within the United States also showed a decline of 0.7 percent, while direct international bookings excluding Asia/Pacific grew 10.2 percent.
Company officials cited the introduction of a new non-billable booking code for certain types of airline bookings and the transfer of bookings in Asia to Abacus International as reasons for the decline in direct worldwide reservations.
Sabre's new five-year, $64 million contract to provide passenger reservations and inventory control systems for Southwest Airlines also bodes well for the company's future earnings.
Although Galileo's revenues grew just 9.3 percent to $380.6 million in the quarter, earnings grew 25.1 percent to $53.9 million for the quarter due to continued cost-cutting measures.
Worldwide bookings rose less than 1 percent year-over-year, despite the 2.2 percent drop in U.S. bookings. Air bookings remain flat, although car, hotel and leisure bookings rose 4.7 percent year-over-year.
Pegasus Systems' revenues for the second quarter rose 33.5 percent to $6.8 million, compared with the same period in 1997. The company also reported a quarterly net income of $1.4 million, versus the $93,000 loss reported for the same quarter in 1997.
"The growth of our Internet-based hotel reservation services, particularly of our proprietary site, TravelWeb.com, was the highlight of this quarter," said Pegasus president and CEO John Davis.
Total Internet hotel reservations processed by Pegasus rose 56 percent from the first quarter of 1998, representing more than $37.2 million in hotel room sales.