Travelport’s GDS segments were up 5% in the fourth quarter, an indication that a travel bounce-back is under way, CEO Jeff Clarke said during the company’s quarterly earnings report on Wednesday.
Clarke said it was the only quarter in 2009 in which Travelport reported a year-over-year increase in GDS segments. Further, Clarke said the company's GDS segments were up 6% in the first quarter of 2009, as of mid-March.
"We’re not calling a full recovery here," Clarke said. "We’re pleased to see solid, single-digit growth, and we’re hoping for even more improvement going forward."
Net revenue from Travelport’s GDS business totaled $467 million in the fourth quarter, a 2% increase from a year earlier. Revenue did not keep pace with the increase in GDS segments because travel agency commissions rose 10% due to increased volume and increased commission rates, Travelport said.
Growth in GDS segments was good news for Travelport, owner of the Galileo and Worldspan res systems, but Clarke also spoke of "headwinds" the company faces in the first half of 2010.
Clarke said Travelport will take a $25 million hit due to Delta and Northwest merging their IT systems. Instead of managing two systems (PARS for Northwest and Deltamatic for Delta), Travelport is now managing just one, resulting in savings for the combined airline.
Travelport also anticipates an unfavorable foreign-exchange impact totaling $16 million in 2010.
Factoring in these challennges, Clarke forecasted that Travelport’s adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the first quarter and the first half of 2010 would be similar to the corresponding periods in 2009.