<B>TechTalk</B>
<B>Deal Lands EDS Account For GetThere, Sabre GDS</B>
Plano, Texas-based Electronic Data Systems agreed to move internal bookings to the Sabre GDS and the GetThere self-booking tool as part of an agreement announced earlier this month in which Sabre would sell to Electronic Data Systems its airline infrastructure outsourcing business. EDS currently splits its travel among Amadeus, Galileo and Sabre. It also uses ResAssist for self-service reservations, but only in a beta mode. The combined GDS and self-booking business from EDS is worth "more than a couple million a year," said Sabre chairman, president and CEO Bill Hannigan. EDS spent $129 million on U.S.-booked air travel in 1999.
Analysts and other observers praised the deal, which shifts to EDS a business that generates about 25 percent of Sabre's revenues. Scheduled to close during the second quarter, the agreement is valued at about $778 million, of which Sabre will use about $570 million to pay debt. Sabre expects the deal will push its revenue growth to the high teens, from about 15 percent, and its earnings growth to above 20 percent, from the 17 percent to 20 percent range. EDS will gain outsourcing contracts with American Airlines, US Airways, Gulf Air and Dollar/Thrifty Rent-A-Car; data centers and data management assets and resources, including Sabre's Tulsa, Okla., data center; and 4,200 Sabre employees. Also as part of the agreement, EDS will manage Sabre's internal IT systems, and the two companies will jointly market each other's products.
"Sabre sheds itself of its legacy, literally, historically and culturally," said technology vendor and consultant Richard Eastman, president of The Eastman Group in Newport Beach, Calif. "It frees up some $100-plus million in working capital to focus on what has been Sabre's rapid growth segment--travel product distribution in the new networked, distributed and interactive hyperarchy of a digitally disparate information environment. While the folks at EDS must feel pretty good themselves, my hat's off to the Sabre team, who had to shed their history to effect this deal."
<B><A NAME="2">Orbitz Study Quantifies Airlines' GDS Costs</B>
Global distribution system booking fees in 2000 cost U.S. airlines $1.7 billion at $3.50 per segment, or 2.7 percent of the average ticket price, according to a study by Washington, D.C.-based airline consulting firm Global Aviation Associates, and sponsored by the airline-owned Orbitz consumer Web site. GDS fees are rising at about 5 percent annually, said GAA.
<B><A NAME="3">Concur Adds Customers, Citicorp Board Member</B>
Redmond, Wash.-based expense vendor Concur Technologies last week announced a strategic alliance with Fargo, N.D.-based e-business solutions company Great Plains to have the latter market the application service provider model of Concur Expense. The software will be resold by Great Plains' 2,000 resellers to midmarket companies. Earlier this month, Concur announced it had signed Oklahoma City-based Kerr-McGee Corp. for the same product, not long after also selling Concur Expense to 20 software firms. Also this month, Concur appointed to its board William Hannon, managing director for Citigroup Business Services.
<B><A NAME="4">Online Booking Notes</B>
Moving into the realm of Latin American online corporate travel planning, United Airlines late last month announced a strategic alliance to provide its customers with trilingual (English, Spanish and Portuguese) corporate booking from Miami-based Despegar.com. "As doing business on a global level continues to rise and company travel policies become stricter and its enforcement more complex, the need for B2B technologies in the area of corporate travel planning is growing significantly," said Despegar.com's regional business-to-business director Ignacio Nores. "Through our Despegar Corporate division, we are pleased to offer United Airlines an alternate channel to market its product to its customer base with a value-added, cost-efficient solution." Despegar Corporate has launched solutions in Argentina, Brazil, Chile, Colombia, Mexico, the United States and Spain. It has more than 50 customers. Despegar means "take off" in Spanish. ... Amadeus last month signed Airbus Industrie to deploy SAP Travel Management to about 2,500 users in Airbus Industrie headquarters in Toulouse, France. The GDS also recently partnered with Europebyair.com to provide "comprehensive travel products through a new business-to-business portal," including a low-fare search product that is part of a seven-language Web site with inventory from 15 airlines. ... Worldspan last month said it has selected IXL to enhance the user interface for Trip Manager, its corporate self-booking solution. Senior vice president and worldwide e-commerce general manager Sue Powers said IXL will boost the online booking product's ease of use. IXL recently instituted a renewed focus on its travel accounts, which include British Airways and Delta Air Lines (BTN, Jan 15).