American, Delta and Northwest airlines today closed the sale of Atlanta-based Worldspan for $745 million collectively, plus tens of millions in additional considerations, to Travel Transaction Processing Corp., a company newly formed by Citigroup Venture Capital Equity Partners L.P. and Teachers' Merchant Bank of Toronto
(BTN, March 10).
Delta, which owned 40 percent of the global distribution system provider, said it received "an immediate cash payment" of about $285 million. "Additionally, Delta will receive credits totaling approximately $125 million over nine years against future Worldspan-provided services, and a $45 million subordinated promissory note, which matures in 2012." According to Delta executive vice president and COO M. Michele Burns, "This transaction provides incremental liquidity to bolster our balance sheet. Delta continues to seek out every opportunity to strengthen our company and looks forward to continuing to receive the same high level of technical services from Worldspan." Thirty-four percent owner Northwest said it gained approximately $280 million, "plus additional credits for future services from Worldspan." American, which owned 26 percent of the company, was paid $180 million and a $39 million promissory note. "The cash infusion will bolster American's cash position, but it will not alter the airline's need to fully implement its turnaround plan, which includes the removal of $4 billion of annual costs," AA announced.
Worldspan said airline veteran Rakesh Gangwal has taken on the roles of chairman, president and CEO, replacing Paul Blackney, who now is a special advisor and board member. "Many opportunities and challenges face the travel distribution industry today, and Worldspan and its employees are ready," according to a press statement citing Gangwal. The announcement also indicated that Gangwal will focus on "global expansion" and "information technology and hosting services for airlines and other travel suppliers."