OneTravel Holdings will emerge from
bankruptcy in 45 to 60 days with a new owner, a downsized staff, a
reduced cost structure and new technology that will enable the
company to be profitable, according to OneTravel President and CEO
Ed Wegel.
But it remains
unclear whether the agents who sued OneTravels subsidiary FS
SunTours (a.k.a. SunTrips) will ever see their unpaid back
commissions.
OneTravel filed
for Chapter 11 bankruptcy on July 7. OneTravels No. 1 secured
creditor, Palisades Master Fund, extended a loan of approximately
$3 million to the company to keep it afloat while the
reorganization takes place. Palisades also put up a bid to buy the
company.
Were talking to potential buyers, said
Wegel.
Well receive bids
in the next several weeks. In six weeks well hold an auction, and
the company will be sold.
The core
business, which consists of the travel Web sites OneTravel.com, 11thHour.com, CheapSeats.com and DiscountHotels.com, is sound, Wegel said, with $260
million in gross annual bookings.
OneTravel has
attributed its troubles to its purchase of SunTours, a traditional
wholesaler outside of its online business model. That acquisition
turned out not to be successful, Wegel said.
But the online
businesses have not been profitable either for a number of reasons,
he acknowledged.
The company grew
too fast. It needed to reorganize. CheapSeats bought OneTravel from
Amadeus, and there was an integration expense.
The company has
now trimmed $8 million out of its yearly costs by cutting staff and
shifting from keyword marketing on Yahoo and Google to more direct-to-consumer
marketing.
It recently
implemented dynamic packaging on its sites, Wegel said.
Weve increased
our net margin from 7.5% to 10%, said Wegel. The big ones are in
the 14% range.
To achieve such
margins, the company needs to become less airline-centric, he said,
and sell more hotels and car rentals in packages. The company also
plans to redesign its sites to increase their stickiness and their
conversion rates.
Al Anolik, the
attorney representing agents who claim in a class action that they
are owed more than $1 million in commissions, vows to be a thorn in
OneTravels side.
In early July,
Anolik filed to force FS SunTours into involuntary Chapter 7
bankruptcy. At press time, he said he had not yet received a
response to his petition, and he said that OneTravel may try to
pull SunTours into Chapter 11 (reorganization) instead of Chapter 7
(liquidation), Anolik said.
If they ask for
reorganization, then we will protest and say that as part of the
reorganization they should pay off some agents, he said.
To contact
reporter David Cogswell, send e-mail to [email protected].