Thursday, November 04, 2010

Image representing Orbitz as depicted in Crunc... American Airlines stops giving data to Orbitz
By Jeremy Lemer in New York
Published: November 4 2010 23:55 Last updated: November 4 2010 23:55

Shares in Orbitz slumped 17 per cent on Thursday after the online travel company said that American Airlines had decided to stop providing it with data – a move that would effectively prevent it from selling American tickets from next month.
American has long pushed for travellers and agents to connect directly with its computers and website to book tickets rather than using third-party sites and global distribution systems – intermediaries that collate pricing and reservations data – to reduce costs.

Barney Harford, Orbitz chief executive, said the move was a “broad attack on the travel distribution landscape”, not just his company.

American said it was negotiating in good faith to reach cost effective deals with Orbitz and others.

Michael Olson, analyst with Piper Jaffray, noted that “given Orbitz has significantly higher exposure to air and domestic bookings than the other online travel agencies, it will face the biggest headwind from this change”.

Sales of airline tickets have been declining as a proportion of revenues as Orbitz has focused on selling hotel rooms, but ticket sales still contributed about 38 per cent to total revenues in the third quarter.

Despite the news, Orbitz reported improved quarterly results. Net income more than doubled to about $15m on revenues, up 4 per cent to $194m.

Orbitz shares slid to $5.63 and are now down about 23 per cent year to date.
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