Cost savings "will not be sufficient" - Clarke
Travelport Limited has reported a 21% slump in pre-tax earnings in the first quarter of 2009.
Travelport, which owns two major GDSs, Galileo and Worldspan, announced adjusted revenue of $554m (€407m) and pre-tax earnings of $136m (€100m), down 17% and 21% respectively year-on-year.
The travel group blamed a "weak travel environment" and the impact of the global recession.
Jeff Clarke, Travelport's ceo and president, warned of a tough year ahead as cost cutting measures look set to fail to make up for a decline in travel.
"While Travelport's cost reduction initiatives have positioned the company to better withstand this downturn, we continue to expect 2009 to be a challenging year as our incremental year-over-year," he said.
"Cost savings will not be sufficient to offset the weak demand for travel services."
Travelport GDS saw net revenue fall 14% to $511m from $592m (€375m) in Q1 2008. Pre-tax earnings dropped 13% to $161m (€118m) from $185m (€136m).
Looking to the future, Mr Clarke said Travelport would continue "to fund investments and position the company to take advantage of the rebound in travel when it occurs."
Travelport's cfo Mike Rescoe said he expected to break a target of $150m (€110m) in cost savings for the year.
"In addition, in response to the current economic climate, the company has taken, and will continue to take, actions to further reduce and keep its cost base low," he added.
In February Travelport reported a pre-tax profit of $716m (€525m) for 2008, a 3% increase on its figure for 2007.
But the travel group said its adjusted net revenue for the year had declined by 3% to $2,530bn (€1,856m) compared to the previous year.
www.travelport.com