Orbitz Worldwide, Inc. (NYSE:OWW)
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2 Years : From May 2011 to May 2013
Orbitz Worldwide Inc. (OWW) narrowed its loss in the first quarter as the online-travel agency reported growth in its European-focused travel business and stronger demand for hotel and vacation packages.
Shares in the company, which operates its namesake site as well as CheapTickets and European-focused ebookers, were up 8% to $4.21 in recent trading as the bottom-line was better than expected.
Orbitz Thursday said its ebookers business, which focuses on European travelers, recorded a 33% jump in the number of hotel-room nights booked in the first quarter, helping lift room nights back to growth after they slid throughout 2011.
Europe, though plagued by a sovereign debt crisis and economic uncertainty, has been a growth driver along with other international markets as the U.S. business matures for online travel agencies.
Orbitz, however, relies on domestic and air travel more than international and hotel business relative to its bigger competitors Expedia Inc. (EXPE) and Priceline.com Inc. (PCLN). That weights Orbitz results toward the areas of travel with the most plodding growth trends, though Orbitz has been working to expand its hotel and international business.
Indeed, air revenue represented the biggest portion of Orbitz's top line in the latest period, and it fell 0.4% while the smaller hotel and vacation-package businesses had 9.5% and 17% revenue gains, respectively.
Overall, gross bookings rose 5.6% to $3.14 billion. More hotel and vacation-package volume, as well as higher air fares and average daily rates for hotel rooms. It also benefited from a favorable shift in air carrier mix.
Looking ahead, the company predicted revenue growth of 4% to 8% for the year, mostly ahead of the 4% growth currently expected by analysts polled by Thomson Reuters. It specified its full-year earnings outlook, calling for 7% to 12% increase in adjusted earnings before interest, taxes, depreciation and amortization--a profitability metric known as Ebitda.
The current-quarter outlook was tepid. Orbitz forecast revenue of $205 million to $211 million, bracketing the $208 million analyst consensus, and it expects adjusted Ebidta to decline. However, profit moderation in the second quarter jives with executives' earlier caveats that earnings growth would occur more in the second half of the year than the first.
In the latest period, Orbitz reported a loss of $6.5 million, or 6 cents a share, compared with a year-earlier loss of $10.9 million, or 11 cents a share. Analysts polled by Thomson Reuters expected a loss of 8 cents a share.
Revenue rose 2.6% to $189.8 million, reflecting increased hotel and vacation package revenue. The company's forecast in February called for revenue of $187 million to $193 million, which was below analyst estimates at the time.
Overhead costs rose 2.5%, slowing from the fourth quarter's 5.7% and the third's 17%. Orbitz in February completed an expensive technology-platform migration, the investments for which had weighed on the bottom line last year. With the migration behind it, Orbitz has said it expects other investments, such as a complex launch of a partnership with American Express Co. (AXP), would push earning growth into the back half of the year.
-By Joan E. Solsman and Mia Lamar, Dow Jones Newswires; 212-416-2291; firstname.lastname@example.org