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‘Recessionary environment’ hits Travelport profits
Sunday, 11 May, 2009
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Galileo, Worldspan and GTA parent Travelport saw a 21% profits decline in the first quarter of the year.
Adjusted EBITDA was down to $136 million in the period to March 31, against $173 million at the same time last year.
CEO and president Jeff Clarke said: "The weak travel environment continues to be difficult for the entire travel industry.
“Travelport’s results reflect the impact of the continued global recessionary environment.
“GDS segments declined (16)% and GTA TTV [total transaction value] declined (30)% year over year for the first quarter.
“While Travelport’s cost reduction initiatives have positioned the company to better withstand this downturn, we continue to expect 2009 to be a challenging year as our incremental year-over-year cost savings will not be sufficient to offset the weak demand for travel services.
“We continue to leverage our low cost base to fund investments and position the company to take advantage of the rebound in travel when it occurs.
“I am particularly pleased that the GDS business held margins throughout this difficult period."
Adjusted Net Revenue and Adjusted EBITDA for the GDS business were $512 million and $161 million, respectively. This resulted in a (14)% reduction in Adjusted Net Revenue and a (13)% reduction in Adjusted EBITDA.
Adjusted Net Revenue and Adjusted EBITDA for GTA were $42 million and $(10) million, respectively, representing a $(32) million decline in Adjusted Revenue and a $(19) million decrease in Adjusted EBITDA.
Chief financial officer Mike Rescoe added: "During the quarter, we realised $36 million of Worldspan synergies, an incremental $26 million as compared to the first quarter of 2008.
“We have now taken actions to achieve savings at or better than our target of $150 million in annual run rate cost savings and will exceed this target through additional actions in the coming quarters.
“In addition, in response to the current economic climate, the company has taken, and will continue to take, actions to further reduce and keep its cost base low while continuing to invest for the future.
“For the first quarter 2009, Travelport used $(9) million in cash from operations, an overall improvement of $42 million from the same period in 2008.
“The first quarter has traditionally been the seasonally weakest quarter for cash generation and Travelport ended the period with $268 million in cash and cash equivalents."
by Phil Davies
Phil Davies
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