Impact of lost United agreement drags Travelport into Q2 loss

Declining profits at global distribution system Travelport have been offset by an upturn in revenues derived from processing transactions.

Announcing its second quarter results today the Atlanta-based technology giant said performance was in line with expectation despite a softer market in the key Europe and US regions.

Segment volumes were down in the second quarter to the end of June compared to the first quarter of the year but revenue per segment (REVPAS) was up 2% to $5.34, while average rate of agency commission grew 1%.

Travelport attributed this to enhanced content and product offering including a tripling of hotel content to 700,000 properties, multiple airline agreements and new technology launches, in particular in the mobile sector.

Gordon Wilson, president and chief executive of Travelport, said: “I am pleased to announce continued growth in revenue per segment driven by our enhanced content and product offering and demonstrating the strength in our underlying business model.

“Our first half performance is in line with management expectations despite the continued macroeconomic uncertainty which resulted in softer Q2 year-on-year segment volume as compared to Q1 across both the USA and Europe, the largest travel geographies.”

The Travelport figures included the impact of the loss of the United Airlines Master Services Agreement which ended this year as part of the merger with Continental Airlines.

They showed a second quarter 5% year-on-year net revenue decline of $24 million to $506 million and an identical percentage fall in operating income to $63 million.

Adjusted EBITDA (a measure of profitability once costs are taken into account) for the period, was down 12% to $120 million, a fall of $16 million.

Travelport said the loss of the United Airlines business was equivalent to the EBITDA decline leaving it flat when the impact of this was excluded.

Year to date, net income has declined marginally by $5 million but adjusted EBITDA is down $23 million or 8%, although excluding the United Airlines impact this figure is at $9 million.

In the six months to the end of June Travelport reported it has generated $30 million, or 31%, more cash from operations compared to the same period in 2011.

This came from a $35 million decrease in interest payment due to lower rates and hedging.

Net debt was $3,067 million which comprised debt of $3,366 million less $162 million in cash and cash equivalents and less $137 million of cash held as collateral.

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