Orbitz profit tops Street on bookings; shares soar

By Dow Jones Newswires
Posted Aug. 5, 2010 at 10:26 a.m.

Online travel agency Orbitz Worldwide recorded a better-than-expected quarterly profit on gains in bookings, sending its shares up nearly 13 percent.

The company, which owns travel sites Orbitz.com and Cheaptickets.com, said the total value of its travel bookings increased by 17 percent from a year ago, when the industry was hammered by a recession that drained travel demand.

“We had strong performance in pretty much all of our business,” Chief Executive Barney Harford told Reuters.

“We’re certainly seeing strengthening demand, especially coming from the corporate side of things,” he said. “We’re seeing air fares up significantly.”

Orbitz and its rivals — Expedia Inc. and Priceline — are seeing steady improvement in bookings this year as the industry rebounds.

But Harford said, “It’s really a long way below where it was in 2008 still.”

Orbitz said it expects net revenue to increase by 3 percent to 6 percent in the third quarter, in line with analysts’ expectations of $203.3 million.

The company said second-quarter profit was $9.7 million, or 9 cents a share, compared with $10.3 million, or 12 cents a share, a year ago.

Net revenue rose 3 percent to $193.5 million.

Analysts on average were expecting earnings of 5 cents a share on revenue of $198.2 million, according to Thomson Reuters I/B/E/S.

Orbitz shares were up 66 cents to $5.80 in morning trading on the New York Stock Exchange.


Domestic bookings increased 17 percent, while international bookings increased 19 percent.

Morningstar analyst Warren Miller noted positive stock reactions for all three publicly traded online travel agencies but said bookings growth reflects weakness a year ago. Such rapid growth is unsustainable, he said.

“It’s kind of a general travel trend that you’re seeing. The travel economy is a lot better at this point than a lot of investors were expecting,” Miller said.

“I certainly don’t expect several consecutive quarters of a very strong travel economy,” he said.


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