May 26, 2002 (08:05 PM EDT)
Orbitz Ready For Offering Despite Legal Turbulence
Read the Original Article at InformationWeek
The top three travel Web sites will soon compete on the stock market as well as in the marketplace. Orbitz, the site owned by five major airlines, filed its plan last week to sell shares on Nasdaq. Rival Expedia is already publicly traded, as is Travelocity's parent company, Sabre Holdings Corp.
Orbitz is pushing ahead despite several legal threats. The U.S. departments of Justice and Transportation are investigating whether Orbitz's owners--American, Continental, Delta, Northwest, and United--give preferential treatment to the Web site in the form of lower fares than other sites and travel agents receive. A group of travel agents has filed a class-action lawsuit, claiming Orbitz and several of the founding airlines are engaging in anti-competitive behavior. Orbitz says several state attorneys general are reviewing its business practices.
Nevertheless, Orbitz hopes to take advantage of recent demand for travel-related Internet stocks by raising as much as $125 million through an initial public offering. Expedia has seen its share prices rise since September, reaching around $80 last week, up from a 52-week low of $19.10. Travelocity rebounded from a 52-week low of $9.92 to about $28 last month when Sabre acquired it.
Orbitz is No. 3 in sales, but its revenue of $32.2 million for the quarter ended March 31 was nearly triple that of the previous three months. But the site still had an operating loss of more than $9 million. For investors to stay interested, that number needs to take off.