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Orbitz Shares Jump After 1Q Results, Hotel Deal

The Associated Press

CHICAGO (AP) — Shares of Orbitz Worldwide Inc. surged on Wednesday after the online travel company reported a sharply wider first-quarter loss, but announced an aggressive pricing promotion designed to steal market share from its rivals.

Nearly all of the company's loss came from a hefty one-time write-down and investors seemed optimistic. Orbitz shares jumped 37 cents, or 17.5 percent, to $2.48 in afternoon trading. The stock has traded between $1.10 and $8.58 during the past 52 weeks.

For the quarter ended March 31, Orbitz said its loss widened to $336 million, or $4.02 per share, from $15 million, or 18 cents per share, a year earlier.

Orbitz noted that its results included a $332 million impairment charge on goodwill and intangibles that was due in part to a sharp decline in the company's stock price during the quarter.

Quarterly revenue fell 14 percent to $188 million. Orbitz attributed $11 million of its revenue decline to fluctuations in foreign currency rates.

Analysts polled by Thomson Reuters, who generally exclude impairment charges and other one-time items, forecast a loss of 16 cents per share on revenue of $192.5 million.

As spending on business and leisure travel has dropped in the global economic downturn, Orbitz and other online travel agencies have taken more aggressive measures to steal business from their rivals.

During the first quarter, the major online travel companies have all eliminated their air booking fees — at least temporarily. Last month, Orbitz also launched a promotion that slashed booking fees on hotels through July 15.

And on Tuesday, Orbitz launched "Hotel Price Assurance," which guarantees that it will refund the difference if another consumer books the same hotel for less at a later date. Orbitz already offers "Price Assurance" for airline bookings.

Orbitz noted that it lowered its marketing costs during the quarter by nearly 25 percent to $64 million. The company also reduced selling, general and administrative expenses by 14 percent to $66 million, driven mostly by staff and contractor cuts in November 2008 and January 2009.