Third Quarter Summary:
Net Revenue of $570 million and Operating Income before impairment of $93 million (Note 1).
EBITDA before impairment of $160 million (Note 1).
Adjusted Net Revenue of $571 million and Adjusted EBITDA of $178 million, representing a (10)% and (7)% decrease as compared to the third quarter of 2008, respectively.
Generated $191 million in Cash from Operations in the nine months ended September 30, 2009.
The Company currently expects to recognize a non-cash impairment charge related to its goodwill and other intangible assets for its GTA business in the range of $800 million - $900 million. This is due to the recent performance of the GTA business and our expectations for the future performance of the travel wholesale industry. The Company is finalizing the amount of the impairment and expects to file its financial statements in the Quarterly Report on Form 10-Q with the SEC on November 13, 2009.
Travelport Limited, the parent company of the Travelport group of companies, today announced certain financial results for the third quarter ended September 30, 2009. Travelport recognized Net Revenue of $570 million, Operating Income before impairment of $93 million and Adjusted Net Revenue of $571 million for the third quarter of 2009, representing a (10)% decrease as compared to the same period last year. Travelport achieved EBITDA before impairment of $160 million and Adjusted EBITDA of $178 million in the third quarter of 2009, representing decreases of (5)% and (7)%, respectively, as compared to EBITDA and Adjusted EBITDA in the same period last year.
Travelport CEO and President, Jeff Clarke, stated: "The travel industry is demonstrating signs of improvement as the global economic recovery takes hold. We have witnessed an improvement in year over year GDS industry volumes in the third quarter. Furthermore, October 2009 was the first month this year to show GDS industry volume growth. Travelport is well positioned to capitalize on this recovery should it continue. Our continued investments in technology and low cost base have proven resilient through the economic crisis and will allow us to leverage growth into the future."
Philip Emery, Travelport CFO, stated: "As part of our review for potential impairment of intangibles, we identified an impairment of the goodwill and other intangible assets for our GTA business. We are still finalizing the review, but expect to record a non-cash impairment charge in the range of $800 million - $900 million that will negatively impact our EBITDA results. Our GTA business continues to be a market leader, has year to date Adjusted EBITDA margins in excess of 20% and is a positive cash flow contributor to the Company. This impairment will reduce the carrying value of goodwill and intangible assets for our GTA business to be in the range of $700 million - $800 million. The impairment was identified due to the recent performance of the GTA business and our expectations for the future performance of the travel wholesale industry. The impairment charge is non-cash and will not impact our debt covenants. Travelport´s financial condition remains strong. For the nine months ended September 30, 2009, Travelport recorded Adjusted EBITDA of $494 million, generated $191 million in cash from operations and ended the period with $235 million in cash and cash equivalents."
Financial Highlights Third Quarter 2009
Net Revenue and Segment EBITDA for our GDS business were $488 million and $156 million, respectively, for the third quarter of 2009. Adjusted Net Revenue and Adjusted Segment EBITDA for our GDS business were $489 million and $162 million, respectively, for the third quarter of 2009. This resulted in an (8)% reduction in Adjusted Net Revenue and no change in Adjusted Segment EBITDA as compared to the third quarter of 2008. Lower revenue resulted from a (5)% decline in segments and lower ancillary revenue as compared to the third quarter of 2008. Operating expenses for GDS, excluding agency inducements and commissions, decreased by $(24) million, or (15)%, compared to the third quarter of 2008, which included $(9) million of favorable currency changes.
Net Revenue and Segment EBITDA before impairment for GTA were $82 million and $31 million, respectively, for the third quarter of 2009. Adjusted Net Revenue and Adjusted Segment EBITDA for GTA for the third quarter of 2009 were $82 million and $31 million, respectively, representing a $(21) million decline in Adjusted Revenue and a $(15) million decrease in Adjusted Segment EBITDA compared to the third quarter of 2008. Global Total Transaction Value ("TTV") declined (12)% in the quarter primarily due to (11)% fewer room nights. Net Revenue declined (20)% in the quarter due to the reduction in TTV, a (4)% decrease due to unfavourable exchange rate movements and a reduction in our average daily rates achieved. Operating expenses for GTA decreased $(3) million, or (6)% compared to the third quarter of 2008 driven by cost reductions offset by a $2 million increase in bad debts.
Travelport Limited currently owns approximately 48% of the outstanding equity of Orbitz Worldwide. Travelport accounts for its investment in Orbitz Worldwide under the equity method of accounting. During the third quarter of 2009, Travelport recorded $3 million in income from its investment in Orbitz Worldwide, a $141 million improvement from the prior year.
The Company has entered into a definitive agreement pursuant to which we will purchase $50 million of newly-issued common shares of Orbitz Worldwide. After this investment, and a simultaneous agreement between Orbitz Worldwide and PAR Investment Partners to exchange approximately $49.68 million of Orbitz debt for Orbitz common shares, Travelport will continue to own approximately 48% of Orbitz Worldwide´s outstanding shares. The transactions are expected to close in January 2010 and are subject to shareholder approval in accordance with the New York Stock Exchange rules and other customary closing conditions.