This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Orbitz Loses Out on American Airlines: What Wall Street's Saying

Manish Hemrajani, Oppenheimer (Market Perform)
OWW shares were down ~5% yesterday after American Airlines announced the withdrawal of its fares from Orbitz after the companies failed to reach a commercial agreement, alluding to a similar dispute between the two in 2010. Fares for US Airways will be withdrawn on Sept. 1; however, American/US Airways tickets will continue to be available to business customers through Orbitz for Business. We view this as a negative for Orbitz, which generates meaningful revenue from US airline ticket sales (Air 27% of revenue) as compared to other US OTAs [online travel agencies]. We believe the dispute could make other OTA peers uncomfortable, but in the near term, potential beneficiaries of the dispute would be airline suppliers, and, to a lesser extent, Expedia.

Eric Sheridan, UBS (Buy; $11 PT)
We note a few key differences vs. the last time OWW faced such a dispute with American (Dec. '10 - Jun '11): a) American had not merged with US Airways (thus, larger now); b) fares were pulled from both consumer & business sites (vs. just consumer this time); & c) air represented a larger portion of OWW total bookings (standalone air bookings were ~74% of total in 2010 vs. 63% 2014E). We note that at the time, OWW management had stated they were able to recapture ~half of AA ticket volumes by shifting business to other airlines. We expect a resolution over the coming months, resulting in minimal full year revenue impact.

Jake Fuller, FBR Capital Markets (Market Perform, $9)
American Airlines and US Air are dropping off OWW. While we estimate that the carrier may account for as much as 5-6% of OWW annual revenue, we expect any hit to be much smaller. Why? 1) The carrier is still on the OWW corporate platform and was not in the 2011 fight, 2) In the last scuffle, OWW said it was able to shift about half of American demand to other carriers, 3) We would not expect this issue to extend for a full year. The stock was off 5% yesterday, but the actual EBITDA risk here is likely only ~ $1M if we assume the fight extends for a period of 3 months.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
OWW $0.00 0.00%
AAL $34.94 -2.90%
AAPL $94.06 -0.81%
FB $117.69 0.82%
GOOG $695.89 0.70%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs