Orbitz Worldwide, Inc. Reports Third Quarter 2009 Results
CHICAGO, Nov. 5 /PRNewswire-FirstCall/ -- Orbitz Worldwide, Inc. (NYSE: OWW) today announced results for the third quarter and nine months ended September 30, 2009.
Orbitz Worldwide, Inc. (NYSE: OWW) today announced results for the third quarter and nine months ended September 30, 2009. In a separate press release Orbitz Worldwide also announced equity investments totaling $100 million from PAR Investment Partners and Blackstone-controlled Travelport. PAR will exchange $49.68 million of Orbitz Worldwide senior term debt for 8.16 million shares of Orbitz Worldwide common stock. Travelport will purchase 9.025 million shares of newly-issued Orbitz Worldwide common stock for $5.54 per share.
"Over the course of this year we have dramatically improved value for our customers by removing air booking fees, eliminating hotel change and cancellation fees, launching Hotel Price Assurance and Total Price hotel search results, and cutting hotel booking fees. As a result we´ve seen accelerating trends in our business, including a 27 percentage point increase in the year-on-year growth rate in air tickets in the third quarter 2009 as compared with the first quarter 2009," said Barney Harford, president & CEO, Orbitz Worldwide. "In Europe ebookers delivered 43 percent year-on-year growth in hotel room nights as a result of its migration to the global platform and improved hotel supply."
"The $50 million equity investment and $49.68 million debt exchange we announced today highlight the confidence of two highly sophisticated investors, PAR and Blackstone-controlled Travelport," continued Harford. "These transactions will enable us to reduce our debt by $50 million, increase our cash by $50 million, and give us additional operating flexibility as we pursue the global hotel distribution opportunity."
"We are very pleased to be announcing $44 million in Adjusted EBITDA for the third quarter, slightly up from the third quarter of last year, despite the removal of flight booking fees, the elimination of hotel change and cancellation fees and the reduction in hotel booking fees. We achieved accelerating worldwide transaction growth in the third quarter and fourth quarter performance to date shows further acceleration," said Marsha Williams, SVP and CFO of Orbitz Worldwide. "I am pleased with the equity investments we are announcing today as they will significantly strengthen our balance sheet and provide additional financial flexibility."
Net revenue was $187 million for the third quarter of 2009, down 22 percent (21 percent on a constant currency basis) from the third quarter of last year. This net revenue decline was due primarily to the removal of most air booking fees and the significant reduction of hotel booking fees on the company´s domestic websites, as well as a decline in average hotel room rates globally. The company reported net income of $7 million or $0.08 per diluted share for the third quarter of 2009, compared with a net loss of $287 million or ($3.44) per diluted share for the same period last year. Adjusted EBITDA increased to $44 million from $43 million for the third quarter of 2008. Adjusted EBITDA margin increased to 24 percent for the third quarter of 2009 from 18 percent for the same quarter last year.
For the nine months ended September 30, 2009, net revenue was $563 million, down 18 percent (16 percent on a constant currency basis) from the same period of 2008. This net revenue decline was due primarily to the removal of most air booking fees, a significant reduction in domestic hotel booking fees, a decline in average hotel room rates globally, and continued softness at our HotelClub brand. The company reported a net loss of $319 million or ($3.80) per diluted share for the first nine months of 2009, compared with a net loss of $307 million or ($3.69) per diluted share for the same period last year. The year-to-date net loss in both years was due primarily to non-cash goodwill and intangible asset impairment charges. Adjusted EBITDA increased 17 percent to $117 million for the nine months ended September 30, 2009 compared with the same period in 2008. This year-on-year increase in Adjusted EBITDA was driven by the significant operating cost reductions made in the past 12 months and better returns on the company´s online marketing spending.
Third Quarter 2009 Financial Highlights
-- Air net revenue (which consists of revenue from standalone air bookings) was $60 million in the third quarter, down 31 percent (30 percent on a constant currency basis) from the third quarter of 2008. Domestic air net revenue declined 32 percent due to the removal of booking fees in
early April on flights booked through Orbitz.com and CheapTickets.com, offset in part by higher air transactions as a result of both lower fees and lower air fares. The company´s domestic air transaction growth rate increased by 27 percentage points in the third quarter of 2009 versus the first quarter of 2009 when the company still charged fees on all airline tickets. International air net revenue declined 29 percent year-on-year (24 percent on a constant currency basis) due primarily to lower airline ticket prices. Despite a decline in revenue, international air transactions increased during the quarter.
-- Hotel net revenue (which consists of revenue from standalone hotel bookings) was $52 million in the third quarter, down 27 percent (25 percent on a constant currency basis) from the third quarter of 2008 due largely to lower hotel room rates and lower hotel booking fees.
However, both hotel net revenue and transactions increased at our ebookers brand, reflecting in part the strength of our new technology platform.
-- Dynamic packaging net revenue decreased 5 percent in the quarter to $30
million on a year-on-year basis, due to lower average daily rates for
hotel rooms and the initial recognition of car breakage revenue during
the third quarter of 2008. Domestic dynamic packaging transactions grew
15 percent in the quarter compared with the same period last year, as
consumers continue to find great travel bargains in our packaging
-- Advertising and media net revenue declined 10 percent in the third quarter to $15 million on a year-on-year basis, reflecting the overall slowdown in the economy and the travel industry.
-- Other net revenue, which primarily includes car, cruise, destination services and travel insurance revenue, decreased 11 percent (9 percent on a constant currency basis) in the quarter compared with the same period last year, primarily due to fewer car transactions, partially offset by higher average car rental rates.
-- In September, Orbitz.com eliminated all Orbitz change and cancellation
fees on hotel bookings.
-- As of September 30, Orbitz Worldwide offered 97,000 bookable hotel
properties on its websites, including 61,000 merchant hotel properties
and 36,000 retail hotel properties. Orbitz Worldwide websites offer
40,000 hotel properties in the EMEA region and 14,000 hotel properties
in the Asia Pacific region.
-- During the third quarter, Orbitz Worldwide signed contracts with a number of destination marketing organizations including Texas Tourism, Dominican Republic Ministry of Tourism, Visit California, Barbados Tourism Authority and Arizona Office of Tourism to promote travel to those destinations across our global websites and to provide travel information to our customers. Orbitz Worldwide now has partner marketing agreements with nearly 160 destination marketing organizations.
-- Orbitz for Business had one of its most successful quarters in terms of new business generation, signing numerous companies including Panda Restaurant Group, Inc. and Yamaha Motor Corp., U.S.A. In addition, Orbitz for Business partnered with LivePerson, Inc. to offer on-line chat services to its corporate travelers. This service is expected to personalize the booking experience, increase travel policy compliance and improve multi-product attachment.
-- In October, Orbitz Worldwide made several enhancements to its sites to improve the customer experience and to help drive hotel sales. These enhancements include:
-- Orbitz.com and CheapTickets.com launched new and refreshed home pages and Orbitz.com launched new landing pages that are designed to update the look and feel of the website.
-- HotelClub launched a refreshed website, which includes a new user interface, significantly improved graphics and a more SEO-friendly format.
-- ebookers launched a new and refreshed home page, which brings more consistency to its brands across Europe.
-- Ronnie Gurion recently joined Orbitz Worldwide as Vice President, Distribution, with responsibility for building our private label offerings.
-- Deborah Italiano recently joined Orbitz Worldwide as Vice President, Brand Marketing, with responsibility for domestic consumer research, segmentation and brand strategy.