Orbitz Posts Third Quarter Profit Even as Revenues Drop

Orbitz Worldwide posted its third quarter results, saying it returned to profitability although revenues dropped, mainly because it dropped air booking fees and reduced hotel booking fees.

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. Orbitz said 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.

Orbitz 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 its HotelClub brand.

Global gross bookings declined 6 percent (5 percent on a constant currency basis) for the quarter compared with the same period last year. This decline was primarily due to lower air fares and lower average hotel room rates, partially offset by an increase in transactions.

Air gross bookings declined 7 percent (6 percent on a constant currency basis) and non-air gross bookings decreased 5 percent (3 percent on a constant currency basis) compared with the third quarter of last year.

Domestic gross bookings decreased 5 percent compared with the third quarter of 2008, and international gross bookings were down 13 percent (6 percent on a constant currency basis) compared with the same quarter last year.

Net revenue for the quarter was $187 million, a decrease of 22 percent (21 percent on a constant currency basis) from the third quarter of 2008, with domestic net revenue down 23 percent and international net revenue down 19 percent (13 percent on a constant currency basis).

Separately Orbitz announced it had received 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.