Travelport reports modest first quarter results, recuperates from Expedia departure

May 14, 2008 | Online Travel

Excluding Worldspan, Travelport's grew net revenue and EBITDA grew by 3% and 8% in the first quarter 2008. Worldspan revenues declined by 14% compared with the same period in 2007, mainly due to the loss of segments from Expedia.

Travelport announced its financial results for the first quarter ended March 31, 2008. Travelport recognized net revenue and adjusted net revenue of $666 million and EBITDA of $145 million in the first quarter of 2008. Adjusted EBITDA in the first quarter was $173 million, representing a decline of (7)% over the same period last year, due to the year-over-year decline in EBITDA from Worldspan arising from the loss of Expedia segments prior to Travelport’s acquisition of Worldspan.

Travelport CEO and President, Jeff Clarke, stated: “The first quarter of 2008 demonstrated the strength of Travelport’s geographic breadth, diversification and business model. Excluding the impact of Worldspan, Travelport grew adjusted net revenue and adjusted EBITDA by 3% and 8%, respectively. Despite a soft travel environment in the quarter, the strengthening of new and emerging markets continues to benefit Travelport’s businesses given our higher value-added services for international travel suppliers and customers throughout the world.”

Mike Rescoe, Travelport executive vice president and CFO, stated: “We continue to successfully execute on our re-engineering and Worldspan synergy programs. During the quarter we realized $42 million of cost savings from our original re-engineering program. This is an incremental $23 million, to the $19 million that we realized during the first quarter of 2007. Also during the quarter, we realized $10 million from Worldspan synergies. During the quarter, we repurchased approximately $44 million in principal amount of our bonds and ended the quarter with $207 million of cash. In addition, we recently entered into a multi-year interest rate swap which effectively converts $1 billion of our floating rate term loan debt to a fixed rate of 5.4%. This interest rate swap allows us to significantly reduce potential volatility in earnings and cash flows from interest rate fluctuations and locks in an improvement in interest rates on a substantial portion of our debt.”

Galileo
Adjusted net revenue and adjusted EBITDA from Galileo were $412 million and $145 million in the first quarter of 2008, a decrease of (1)% and an increase of 6%, respectively, compared to the first quarter of 2007. Lower revenue resulted from a (3)% decline in Galileo segments, particularly in the Americas where segments were down (7)%, partially offset by higher yield per segment. Agency inducements increased $8 million, or 5%, compared to the first quarter of 2007, approximately half of which was driven by unfavorable exchange rates. In addition, Galileo reduced its operating expenses, excluding inducements to agents, by $21 million, or 17%. Despite a modest decline in revenue and an increase in inducements, adjusted EBITDA margins improved 226 bps, or 7%, as a result of the operating expense savings.

Worldspan
Adjusted net revenue from Worldspan was $180 million for the first quarter of 2008, reflecting a decline of (14)% compared with the same period in 2007, mainly due to the loss of segments from Expedia. Adjusted EBITDA from Worldspan was $43 million for the first quarter of 2008, which represents a decline of (35)% compared to the same quarter in 2007 and reflects the short- term reverse leverage impact of lower revenue.

GTA
Net revenue and EBITDA for GTA were $74 million and $9 million, respectively, in the first quarter of 2008. Adjusted net revenue and adjusted EBITDA for GTA were $74 million and $9 million, an increase of 30% and 125%, respectively, compared with the first quarter of 2007. Global Total Transaction Value (TTV) grew 20% in the quarter, driven primarily by a mix of improved pricing, favorable currency trends and growth in transactions. Operating expenses for GTA increased 24% during the first quarter of 2008, however, excluding the impact of currency rates, operating expenses would have only increased approximately 10% compared to the first quarter of 2007. The impact of higher sales volumes and a cost base growing at a slower rate enabled GTA to increase adjusted EBITDA margins from 7% in the first quarter of 2007 to 12% for the first quarter of 2008.