Navigant International released its
second-quarter financial results on Aug. 8, the same day that
Carlson Wagonlit Travel completed its acquisition of Navigant,
creating what CWT called the "second-largest travel management
company in the world" with $26 billion in annual sales.
With integration
efforts about to accelerate, Navigant's public report about the
quarter ending June 26 will be its last, because it is now a
subsidiary of privately held CWT.
Navigant, which
does business as TQ3 Navigant, reported that profits rose 10.4% to
$6.4 million on flat revenue of $125.9 million. Transaction volumes
during the three-month period rose 4.3%. Navigant said it believes
the trend in the marketplace is pricing stabilization, in contrast
to its reductions in average price per transaction that was the
norm in 2003 and 2004.
The company also
said that it believes it has turned the corner in taking margin
hits when corporate clients adopt online solutions, a trend that
continued in the first six months of 2006, and that it "continues
to make progress in reducing call center and on-site staffing costs
commensurate with online adoption levels."
Meanwhile, CWT's
merger with Navigant occurred as Carlson Cos. and an affiliate of
JPMorgan Chase, One Equity Partners, acquired Accor's 50% stake in
CWT. With that part of the plan complete, and the regulatory
process complete, Carlson now owns 55% of CWT, and One Equity
Partners owns 45%.
CWT said that based
on Travel Weekly's 2006 Power List, the combined organization,
would rank No. 2 in the world, "just slightly behind American
Express."
The past 10 days
have been busy, with Cendant, Priceline, Sabre, TRX and Worldspan
also reporting results.
Northwest and
Delta, both in Chapter 11, also reported second-quarter results,
and both lost money in the quarter. But those figures can be
misleading, because both carriers must record all reorganization
items in their expenses.
Northwest, for
example, posted a $285 million loss. But excluding reorganization
items, many of which the airline likely will never have to pay, it
would have reported a $179 million profit.
Those
reorganization items, for example, include $348 million in
restructured aircraft lease and debt charges. When an airline uses
the Chapter 11 process to negotiate a lower lease rate for
aircraft, the reduced amount the lessor will receive is included in
the airline's expenses as a potential claim filed by the lessor,
who could seek to recover the difference as a condition of the
airline's emergence from Chapter 11. In reality, the airline is
likely to have to pay only a fraction upon emergence, in cash or
equity.
Similarly, if Delta
were allowed to exclude reorganization items, it would have
reported a $175 million profit instead of a $2.2 billion
loss.
To
contact the reporters who wrote this article, send e-mail to Dennis
Schaal or Andrew Compart at [email protected] or [email protected].