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Orbitz Worldwide, Inc. Reports Second Quarter 2010 Results

CHICAGO, Aug 05, 2010 /PRNewswire via COMTEX/ --

Orbitz Worldwide, Inc. (NYSE: OWW) today announced results for the second quarter and six months ended June 30, 2010.

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"Orbitz Worldwide's second quarter results significantly exceeded our Adjusted EBITDA expectations, increasing 7 percent year over year, to $48.1 million. We posted solid year over year improvements in gross bookings, transactions, and hotel room nights," said Barney Harford, president & CEO of Orbitz Worldwide. "ebookers continued its strong performance with hotel room night growth of 58 percent. Both Orbitz for Business and our private label business also posted strong growth in transactions and hotel room nights."


                                Three Months Ended
    (in thousands, except            June 30,
                                     --------
                                                        Change
        per share data)             2010        2009      (a)
                                    ----        ----   -------

    Gross bookings (b)        $3,077,639  $2,619,964         17%
    Net revenue                 $193,491    $187,959          3%
      Net revenue margin (c)         6.3%        7.2%  -0.9 ppt
    Net income (loss)             $9,733     $10,276         -5%
    Basic EPS                      $0.10       $0.12        -22%
    Diluted EPS                    $0.09       $0.12        -25%
    Operating cash flow          $18,669    ($17,917)        **
    Capital spending              $9,732      $8,787         11%

    EBITDA (d)                   $41,642     $42,954         -3%
      Impairment                       -           -         **
      Other adjustments           $6,458      $2,002         **
    Adjusted EBITDA (d)          $48,100     $44,956          7%

    Transaction growth
     (b)(e)                            5%          3%     2 ppt
    Hotel room night growth
     (f)                               9%          2%     7 ppt



                                 Six Months Ended
    (in thousands, except            June 30,
                                     --------
                                                         Change
        per share data)             2010         2009      (a)
                                    ----         ----   -------

    Gross bookings (b)        $6,007,882   $4,985,336         21%
    Net revenue                 $380,644     $376,352          1%
      Net revenue margin (c)         6.3%         7.5%  -1.2 ppt
    Net income (loss)             $4,472    ($325,880)        **
    Basic EPS                      $0.05       ($3.89)        **
    Diluted EPS                    $0.04       ($3.89)        **
    Operating cash flow         $114,660      $98,795         16%
    Capital spending             $17,099      $20,544        -17%

    EBITDA (d)                   $66,995    ($266,268)        **
      Impairment                  $1,704     $331,527        -99%
      Other adjustments          $10,028       $7,125         **
    Adjusted EBITDA (d)          $78,727      $72,384          9%

    Transaction growth
     (b)(e)                           12%          -4%    16 ppt
    Hotel room night growth
     (f)                              11%           0%    11 ppt



      ** Not meaningful.

    (a)  Percentages are calculated on unrounded numbers.
          In the second quarter 2010, the company revised how it calculates
          global gross bookings and transactions to reduce these amounts
          for all cancellations made through its websites in order to more
          closely correspond with the way the company reports net revenue.
          Under this revised methodology, the company reduces global gross
          bookings and transactions for cancellations in the month the
          cancellation occurs, regardless of the booking date.
          Historically, these metrics were reduced for same-day
          cancellations only. The prior period data shown above has been
          updated to reflect this change. The company has also posted on
          its website (www.orbitz-ir.com) a schedule that updates
          historical gross bookings and transaction growth rates for this
    (b)   change.
    (c)  Represents net revenue as a percentage of gross bookings.
          Non-GAAP financial measures. Definitions of EBITDA and Adjusted
          EBITDA and a reconciliation of these non-GAAP financial measures
          to the most comparable GAAP financial measure are contained in
    (d)   Appendix A.
          Represents year over year transaction growth on a booked basis,
    (e)   net of all cancellations made through the company's websites.
          Represents year over year growth in stayed hotel room nights.
          Includes both standalone hotel room nights and hotel room nights
    (f)   included in vacation packages.


Second Quarter 2010 Financial Highlights

For the second quarter 2010, the company reported net income of $9.7 million or $0.09 per diluted share compared with net income of $10.3 million or $0.12 per diluted share for the second quarter 2009. Income before income taxes for the second quarter 2010 was up nine percent year over year. Adjusted EBITDA increased seven percent year over year to $48.1 million from $45.0 million for the second quarter 2009.

Gross Bookings and Net Revenue

Global gross bookings increased 17 percent (18 percent on a constant currency basis) year over year. This increase was due primarily to higher air fares and higher transaction volume. Air gross bookings increased 21 percent (22 percent on a constant currency basis) and non-air gross bookings increased seven percent (six percent on a constant currency basis) year over year. Domestic gross bookings increased 17 percent and international gross bookings increased 19 percent (20 percent on a constant currency basis) year over year.

Net revenue was $193.5 million for the second quarter 2010, an increase of three percent (two percent on a constant currency basis) year over year. Domestic net revenue was up two percent while international net revenue increased eight percent (six percent on a constant currency basis) year over year. The growth in net revenue was due primarily to an increase in standalone hotel and international air transactions as well as higher travel insurance revenue. These increases were partially offset by lower airline hosting and advertising revenue.


                                  Three Months Ended
                                       June 30,
                                       --------
      (in thousands)                  2010        2009  Change
                                      ----        ----  ------

      Gross Bookings
        Air                     $2,348,517  $1,937,180       21%
        Non-air                    729,122     682,784        7%
                                   -------     -------      ---
      Total Gross Bookings      $3,077,639  $2,619,964       17%

        Domestic                $2,658,118  $2,268,494       17%
        International              419,521     351,470       19%
                                   -------     -------      ---
      Total Gross Bookings (a)  $3,077,639  $2,619,964       17%

      Net Revenue
        Air                        $70,863     $68,966        3%
        Hotel                       52,105      46,074       13%
        Vacation Package            31,161      31,492       -1%
        Advertising and Media       12,420      14,289      -13%
        Other                       26,942      27,138       -1%
                                    ------      ------      ---
      Total Net Revenue           $193,491    $187,959        3%

      Transactional Net
       Revenue
          Domestic                $138,763    $132,680        5%
          International             41,187      37,887        9%
                                    ------      ------      ---
      Total Transactional Net     $179,950    $170,567        6%
          Revenue (b)

      Non-transactional Net
          Revenue
          Domestic                 $12,547     $16,362      -23%
          International                994       1,030       -3%
                                       ---       -----
      Total Non-transactional
       Net                         $13,541     $17,392      -22%
          Revenue (c)

          Domestic                $151,310    $149,042        2%
          International             42,181      38,917        8%
                                    ------      ------      ---
      Total Net Revenue           $193,491    $187,959        3%



                                   Six Months Ended
                                       June 30,
                                       --------
      (in thousands)                  2010        2009  Change
                                      ----        ----  ------

      Gross Bookings
        Air                     $4,480,761  $3,584,363       25%
        Non-air                  1,527,121   1,400,973        9%
                                 ---------   ---------      ---
      Total Gross Bookings      $6,007,882  $4,985,336       21%

        Domestic                $5,095,515  $4,283,573       19%
        International              912,367     701,763       30%
                                   -------     -------      ---
      Total Gross Bookings (a)  $6,007,882  $4,985,336       21%

      Net Revenue
        Air                       $142,488    $150,294       -5%
        Hotel                       95,573      85,515       12%
        Vacation Package            59,014      60,397       -2%
        Advertising and Media       24,638      28,295      -13%
        Other                       58,931      51,851       14%
                                    ------      ------      ---
      Total Net Revenue           $380,644    $376,352        1%

      Transactional Net
       Revenue
          Domestic                $269,029    $272,840       -1%
          International             83,370      68,583       22%
                                    ------      ------      ---
      Total Transactional Net     $352,399    $341,423        3%
          Revenue (b)

      Non-transactional Net
          Revenue
          Domestic                 $26,276     $33,223      -21%
          International              1,969       1,706       15%
                                     -----       -----
      Total Non-transactional
       Net                         $28,245     $34,929      -19%
          Revenue (c)

          Domestic                $295,305    $306,063       -4%
          International             85,339      70,289       21%
                                    ------      ------      ---
      Total Net Revenue           $380,644    $376,352        1%




           In the second quarter 2010, the company revised how it
           calculates global gross bookings and transactions to reduce
           these amounts for all cancellations made through its
           websites in order to more closely correspond with the way
           the company reports net revenue. Under this revised
           methodology, the company reduces global gross bookings and
           transactions for cancellations in the month the cancellation
           occurs, regardless of the booking date. Historically, these
           metrics were reduced for same-day cancellations only. The
           prior period data shown above has been updated to reflect
           this change. The company has also posted on its website
           (www.orbitz-ir.com) a schedule that updates historical
    (a)    gross bookings and transaction growth rates for this change.
           Transactional net revenue is comprised of net revenue from
           air bookings, hotel bookings, vacation packages, car
           bookings, cruise bookings, destination services and travel
    (b)    insurance.
           Non-transactional net revenue is primarily comprised of
    (c)    advertising and media revenue and airline hosting revenue.


  • Air net revenue was $70.9 million in the second quarter 2010, up three percent on both a reported and constant currency basis year over year. Domestic air net revenue was up one percent year over year due to higher net revenue per airline ticket and a slight increase in air transactions. The company's air transaction growth rate slowed in the second quarter 2010 as the company passed the anniversary of removing booking fees on most flights. International air net revenue increased $1.6 million or ten percent (14 percent on a constant currency basis) year over year due primarily to higher air transactions partially offset by lower net revenue per airline ticket.
  • Hotel net revenue was $52.1 million in the second quarter 2010, up 13 percent (nine percent on a constant currency basis) year over year. Hotel net revenue for the company's domestic brands increased due primarily to an increase in standalone hotel transactions. Hotel net revenue also increased due to another quarter of strong performance at ebookers driven by increases in both standalone hotel transactions and net revenue per hotel transaction. Net revenue at HotelClub declined due to lower volume in European destinations and a geographic mix shift towards hotel bookings in lower margin markets.
  • Vacation package net revenue decreased one percent in the quarter to $31.2 million due to lower domestic transactions primarily caused by higher package prices as a result of higher air fares and average daily rates for hotel rooms. Strong demand for packages at ebookers partially offset the decline in domestic vacation package net revenue.
  • Advertising and media revenue decreased 13 percent year over year to $12.4 million, primarily due to a decline in revenue from membership discount programs. Effective March 31, 2010, the company ended the membership discount program previously offered on its domestic websites.
  • Other net revenue, which primarily includes car rental, cruise, destination services, travel insurance and airline hosting revenue, decreased one percent (flat on a constant currency basis) year over year. This decrease was primarily due to the termination of one of the company's airline hosting agreements in the first quarter 2010. Higher travel insurance revenue due to higher attachment rates and higher air fares partially offset this decline.

In order to provide a more comparable view of the company's operating performance across periods, Appendix A to this press release adjusts gross bookings and net revenue for currency impacts. The company has also included a schedule of trended operating metrics in Appendix B to this press release.

Operating Expenses

Cost of revenue

Cost of revenue is primarily comprised of customer service costs, credit card processing fees and other costs including ticketing and fulfillment, customer refunds and charge-backs, affiliate commissions and connectivity and other processing costs.


                                   Three Months Ended
                                        June 30,                   $      %
                                        --------
                                      2010        2009    Change      Change
                                      ----        ----    ------      ------
                                           (in thousands)
    Customer service costs         $14,463     $13,209      $1,254          9%
    Credit card processing
     fees                           10,917       9,652       1,265         13%
    Other                           11,969      11,238         731          7%
        Total cost of revenue      $37,349     $34,099      $3,250         10%
                                   =======     =======      ======        ===
        % of net revenue              19.3%       18.1%


Cost of revenue increased to 19.3 percent of net revenue in the second quarter 2010 due to higher customer service staffing levels, higher customer service costs associated with the eruption of the Eyjafjallajokull volcano and higher credit card processing costs related to stronger merchant hotel gross bookings. In the second quarter 2009, the company's customer service staffing levels were low relative to the sharply higher transaction volume the company experienced following last year's air booking fee removals. The company has since increased its staffing levels to better support the higher transaction volume.

Selling, general and administrative expense (SG&A)

Selling, general and administrative expense is comprised of wages and benefits, contract labor costs, network communications, systems maintenance and equipment costs and other costs.


                                  Three Months Ended
                                       June 30,                   $     %
                                       --------
                                     2010        2009    Change     Change
                                     ----        ----    ------     ------
                                          (in thousands)
    Wages and benefits            $40,305     $39,798        $507         1%
    Contract labor                  4,576       5,672      (1,096)      -19%
    Network communications,
     systems                        6,152       6,731        (579)       -9%
        maintenance and equipment
    Other                           8,602       7,295       1,307        18%
      Total SG&A                  $59,635     $59,496        $139         0%
                                  =======     =======        ====       ===
        % of net revenue             30.8%       31.7%


SG&A expense for the second quarter 2010 was flat year over year. Higher equity-based compensation expense, lower foreign currency gains and higher travel expenses were offset by lower costs for severance, employee incentive compensation, contract labor and systems maintenance and equipment.

Marketing expense

The company's marketing expense is primarily comprised of online marketing costs, such as search and banner advertising, and offline marketing costs, such as television, radio and print advertising.Marketing expense in the second quarter 2010 was $55.3 million, an increase of three percent year over year. This increase was primarily due to higher online marketing spending at ebookers. Marketing expense as a percentage of net revenue for the second quarter 2010 was relatively flat year over year.

Interest Expense

Orbitz Worldwide incurred net interest expense of $10.9 million in the second quarter 2010 compared with $14.6 million in the second quarter 2009. This year over year decline was due primarily to lower outstanding borrowings and a lower effective interest rate on the company's term loan. At June 30, 2010, $400.0 million of the $492.0 million outstanding on the company's term loan had fixed interest rates. The weighted average effective interest rate on the term loan was 4.85 percent at June 30, 2010, down from 6.04 percent at June 30, 2009.

During the second quarter 2010, the company purchased and retired $14.0 million in principal amount of the term loan for approximately $13.5 million.

Cash Flow

Orbitz Worldwide reported operating cash flow of $114.7 million for the first half of 2010, an increase of 16 percent year over year. The increase in operating cash flow for the first half of 2010 was primarily driven by higher merchant gross bookings, improved marketing efficiency and lower interest payments, partially offset by lower booking fee revenue, changes in the timing of payments received from vendors and the payment of employee bonuses in the first quarter 2010. No bonus payment was made in the first half of 2009 based on 2008 results.

At June 30, 2010, cash and cash equivalents were $144.5 million compared with cash and cash equivalents of $68.1 million at June 30, 2009 (net of $63.3 million of borrowings under the revolving credit facility). The year over year increase in cash is driven in part by the $50.0 million of cash proceeds received from the stock purchase made by Travelport in January 2010.

Operational Highlights

  • In July, Chris Orton was named the company's Chief Marketing Officer. Chris is a leader in developing algorithmic approaches to online marketing and customer relationship management. Chris joined Orbitz Worldwide from eBay, Inc.
  • In July, Orbitz Worldwide launched its EasyConnect(TM) solution, an improved connectivity solution for channel managers and small to medium-sized hotel chains which will allow the company to expand its hotel supply more efficiently.
  • As of June 30, 2010, Orbitz Worldwide offered approximately 100,000 bookable hotels on its websites, including nearly 70,000 merchant hotels. Orbitz Worldwide websites offer over 40,000 hotels in the EMEA region and 16,000 hotels in the Asia Pacific region.
  • During the second quarter, Orbitz Worldwide renewed its global agreements with Starwood and Marriott. In addition, the company signed global agreements with a number of new European hotel partners during the second quarter, including Jury's, Falksteiner, Motel One and Bastion. The Company also signed a global agreement with New Zealand-based Scenic Hotel Group.
  • In June, Orbitz launched its Open Beach Guarantee, developed in partnership with participating Florida hotels, which offers full refunds on standalone hotel reservations if the beach at a customer's destination is closed due to the oil spill. Under the Open Beach Guarantee, customers who make a standalone hotel bookingat a participating property on Orbitz.com for travel between June 14 and September 30, 2010, will be eligible for a full refund on their hotel stay if a government agency closes or declares dangerous a beach within 20 miles of the property.
  • As of June 30, 2010, Orbitz had over 5,000 travel agents participating in its Orbitz for Agents program, a groundbreaking program that offers travel agents the opportunity to earn commissions on hotel reservations and customized travel package bookings made on behalf of their customers.
  • During the second quarter, the company launched a customized solution for LAN Airlines, providing their customers the ability to book vacation packages using the Orbitz Worldwide global network of suppliers.
  • In May, Orbitz Worldwide launched AdventureFinder (www.adventurefinder.com), a new travel website that provides instant access to the world's leading adventure vacations. The website allows consumers to research, customize, and plan active escapes quickly and easily.
  • Orbitz for Business completed a strong second quarter, delivering 39% year over year gross bookings growth. This growth reflects continued acceleration in corporate travel demand and the addition of new customers, such as Tourneau, Inc. In addition, Orbitz for Business signed renewals with existing customers including Clearwire LLC, Fellowes, Inc., Federal Signal Corporation and Mastec, Inc.
  • During the second quarter, Orbitz Worldwide signed global contracts with a number of destination marketing organizations including Vermont Department of Tourism & Marketing, Visit Denver, New Orleans Tourism & Marketing Corporation and Hong Kong Tourism Board to promote travel to those destinations. Orbitz Worldwide now has partner marketing agreements with nearly 175 destination marketing organizations.

Q3 2010 and Full Year 2010 Outlook

For the third quarter 2010, the company expects:

  • three percent to six percent year over year increase in net revenue;
  • 19 percent to 21 percent cost of revenue as a percentage of net revenue; and
  • flat to six percent year over year increase in Adjusted EBITDA.

For the full year 2010, the company expects:

  • marketing expense as a percentage of net revenue will approximate 2009 levels;
  • capital expenditures in the range of $36 million to $42 million; and
  • five percent to ten percent year over year increase in Adjusted EBITDA.

The outlook above assumes relatively stable foreign exchange rates.

Quarterly Conference Call

Orbitz Worldwide will host a conference call to discuss its second quarter 2010 results at 10:00 a.m. EDT (9:00 a.m. CDT) on Thursday, August 5, 2010. A live webcast of the conference call can be accessed through the Orbitz Worldwide Investor Relations website at www.orbitz-ir.com. An archive of the webcast and a transcript will also be available on the website for a period of at least 30 days.

About Orbitz Worldwide

Orbitz Worldwide is a leading global online travel company that uses innovative technology to enable leisure and business travelers to research, plan and book a broad range of travel products. Orbitz Worldwide owns a portfolio of consumer brands that includes Orbitz (www.orbitz.com), CheapTickets (www.cheaptickets.com), ebookers (www.ebookers.com), HotelClub (www.hotelclub.com), RatesToGo (www.ratestogo.com), the Away Network (www.away.com) and corporate travel brand Orbitz for Business (www.orbitzforbusiness.com). For more information on how your company can partner with Orbitz Worldwide, visit corp.orbitz.com.

Orbitz Worldwide uses its Investor Relations website to make information available to its investors and the public at www.orbitz-ir.com. You can sign up to receive email alerts whenever the company posts new information to the website.

Forward-Looking Statements

This press release and its attachments may contain forward-looking statements that involve risks, uncertainties and other factors concerning, among other things, Orbitz Worldwide's (the "Company's") expected financial performance and its strategic operational plans. The results presented are unaudited. The Company's actual results could differ materially from the results expressed or implied by such forward-looking statements and reported results should not be considered as an indication of future performance. The potential risks, uncertainties and other factors that could cause actual results to differ from those expressed by the forward-looking statements in this press release and its attachments include, but are not limited to, the economic recession and general state of the financial markets; competition in the travel industry; factors affecting the level of travel activity, particularly air travel volume; maintenance and protection of the Company's information technology and intellectual property; the outcome of pending litigation; the Company's level of indebtedness; risks associated with doing business in multiple currencies; trends in the travel industry; and general economic and business conditions. More information regarding these and other risks, uncertainties and factors is contained in the section entitled "Risk Factors" in the Company's filings with the Securities and Exchange Commission ("SEC") which are available on the SEC's website at www.sec.gov or the Company's Investor Relations website at www.orbitz-ir.com. You are cautioned not to unduly rely on these forward-looking statements, which speak only as of the date of this press release. All information in this press release and its attachments is as of August 5, 2010, and Orbitz Worldwide undertakes no obligation to publicly revise any forward-looking statement.

About Non-GAAP Financial Measures

This press release and its attachments include certain non-GAAP financial measures as defined by the SEC. These measures may be different from non-GAAP measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. generally accepted accounting principles (GAAP). Further information regarding the non-GAAP financial measures included in this press release is contained in Appendix A attached to this press release.

                          Orbitz Worldwide, Inc.
        Condensed Consolidated Statements of Operations (Unaudited)
              (in thousands, except share and per share data)


                                        Three Months Ended
                                             June 30,
                                          ------------------
                                           2010             2009
                                           ----             ----
      Net revenue                      $193,491         $187,959
      Cost and expenses
        Cost of revenue                  37,349           34,099
        Selling, general and             59,635           59,496
               administrative
        Marketing                        55,282           53,558
        Depreciation and
         amortization                    19,683           18,284
        Impairment of other
         assets                               -                -
        Impairment of goodwill
         and                                  -                -
                intangible assets
      Total operating expenses          171,949          165,437
                                        -------          -------
      Operating income (loss)            21,542           22,522

      Other (expense) income
        Net interest expense            (10,943)         (14,598)
        Other income                        417            2,148
      Total other (expense)             (10,526)         (12,450)
                                        -------          -------

      Income (loss) before
       income                            11,016           10,072
             taxes
      Provision (benefit) for
       income                             1,283             (204)
               taxes
      Net income (loss)                  $9,733          $10,276
                                         ======          =======

       Net income (loss) per
          share-basic:
         Net income (loss) per
          share                           $0.10            $0.12
                                          =====            =====
         Weighted average shares    101,927,549       83,873,230
               outstanding          ===========       ==========

       Net income (loss) per
          share-diluted:
         Net income (loss) per
          share                           $0.09            $0.12
                                          =====            =====
         Weighted average shares    105,671,169       84,208,662
               outstanding          ===========       ==========



                                         Six Months Ended
                                             June 30,
                                            ----------------
                                           2010             2009
                                           ----             ----
      Net revenue                      $380,644         $376,352
      Cost and expenses
        Cost of revenue                  75,599           69,455
        Selling, general and            123,425          125,924
               administrative
        Marketing                       112,939          117,827
        Depreciation and
         amortization                    38,669           32,672
        Impairment of other
         assets                           1,704                -
        Impairment of goodwill
         and                                  -          331,527
                intangible assets
      Total operating expenses          352,336          677,405
                                        -------          -------
      Operating income (loss)            28,308         (301,053)

      Other (expense) income
        Net interest expense            (22,254)         (29,111)
        Other income                         18            2,113
      Total other (expense)             (22,236)         (26,998)
                                        -------          -------

      Income (loss) before
       income                             6,072         (328,051)
             taxes
      Provision (benefit) for
       income                             1,600           (2,171)
               taxes
      Net income (loss)                  $4,472        ($325,880)
                                         ======        =========

       Net income (loss) per
          share-basic:
         Net income (loss) per
          share                           $0.05           ($3.89)
                                          =====           ======
         Weighted average shares     99,346,552       83,734,112
               outstanding           ==========       ==========

       Net income (loss) per
          share-diluted:
         Net income (loss) per
          share                           $0.04           ($3.89)
                                          =====           ======
         Weighted average shares    103,244,429       83,734,112
               outstanding          ===========       ==========


                        Orbitz Worldwide, Inc.
           Condensed Consolidated Balance Sheets (Unaudited)
                   (in thousands, except share data)


                                                   June 30,         December
                                                     2010           31, 2009
                                                  ---------          --------
      Assets
      Current assets:
        Cash and cash equivalents                   $144,520          $88,656
        Accounts receivable (net of
         allowance for doubtful                       62,420           54,708
                 accounts of $686 and $935,
                  respectively)
        Prepaid expenses                              16,917           17,399
        Due from Travelport, net                      20,972            3,188
        Other current assets                           5,341            5,702
                                                       -----            -----
      Total current assets                           250,170          169,653
      Property and equipment, net                    166,679          180,962
      Goodwill                                       709,131          713,123
      Trademarks and trade names                     153,514          155,090
      Other intangible assets, net                    10,271           18,562
      Deferred income taxes, non-
       current                                         9,101            9,954
      Other non-current assets                        53,370           46,898
      Total Assets                                $1,352,236       $1,294,242
                                                  ==========       ==========

      Liabilities and Shareholders'
       Equity
      Current liabilities:
        Accounts payable                             $24,784          $30,279
        Accrued merchant payable                     282,793          219,073
        Accrued expenses                             119,482          112,771
        Deferred income                               42,365           30,924
        Term loan, current                             9,956           20,994
        Other current liabilities                      5,719            5,162
                                                       -----            -----
      Total current liabilities                      485,099          419,203
      Term loan, non-current                         482,065          555,582
      Line of credit                                       -           42,221
      Tax sharing liability                          103,257          108,736
      Unfavorable contracts                            9,386            9,901
      Other non-current liabilities                   23,174           28,096
      Total Liabilities                            1,102,981        1,163,739
                                                   ---------        ---------
      Commitments and contingencies
      Shareholders' Equity:
        Preferred stock, $0.01 par value,
         100 shares authorized,                            -                -
              no shares issued or outstanding
        Common stock, $0.01 par value,
         140,000,000 shares                            1,014              838
                  authorized, 101,378,775 and
                   83,831,561 shares issued
                  and outstanding, respectively
        Treasury stock, at cost, 25,237
         and 24,521 shares                               (52)             (48)
                   held, respectively
        Additional paid in capital                 1,027,142          921,425
        Accumulated deficit                         (780,900)        (785,372)
        Accumulated other comprehensive
         income (loss) (net of                         2,051           (6,340)
              accumulated tax benefit of $2,558
               and $2,558,
              respectively)
      Total Shareholders' Equity                     249,255          130,503
                                                     -------          -------
      Total Liabilities and
       Shareholders' Equity                       $1,352,236       $1,294,242
                                                  ==========       ==========


                       Orbitz Worldwide, Inc.
    Condensed Consolidated Statements of Cash Flows (Unaudited)
                           (in thousands)


                                                       Six Months Ended
                                                           June 30,
                                                          ----------------
                                                        2010             2009
                                                        ----             ----
     Operating activities:
     Net income (loss)                                $4,472        ($325,880)
     Adjustments to reconcile net income
      (loss) to net cash
        provided by operating activities:
       Net gain on extinguishment of debt                (57)          (2,172)
       Depreciation and amortization                  38,669           32,672
       Impairment of other assets                      1,704                -
       Impairment of goodwill and intangible
        assets                                             -          331,527
       Amortization of unfavorable contract
        liability                                     (1,764)          (1,650)
       Non-cash net interest expense                   7,984            8,128
       Deferred income taxes                             114           (4,218)
       Stock compensation                              8,575            8,289
       Provision for bad debts                          (289)             230
       Changes in assets and liabilities:
        Accounts receivable                           (9,456)          (3,414)
        Deferred income                               12,340           15,971
        Due to/from Travelport, net                  (17,962)           9,543
        Accrued merchant payable                      75,306           52,638
        Accounts payable, accrued expenses and
            other current liabilities                 (1,888)          (9,296)
           Other                                      (3,088)         (13,573)
     Net cash provided by operating
      activities                                     114,660           98,795
                                                     -------           ------

     Investing activities:
       Property and equipment additions              (17,099)         (20,544)
       Changes in restricted cash                       (914)               -
     Net cash (used in) investing activities         (18,013)         (20,544)
                                                     -------          -------

     Financing activities:
       Proceeds from issuance of common stock,
        net                                           48,930                -
                of issuance costs
       Payment of fees to repurchase a portion
        of the term loan                                (248)               -
       Payments on the term loan                     (20,994)          (2,975)
       Payments to extinguish debt                   (13,488)          (7,774)
       Payments to satisfy employee tax
        withholding obligations                       (1,099)            (235)
                upon vesting of equity-based awards
       Proceeds from exercise of employee stock
        options                                           65                -
       Payments on tax sharing liability             (10,239)          (8,087)
       Proceeds from line of credit                        -           99,457
       Payments on line of credit                    (42,221)         (59,823)
       Proceeds from note payable                        800                -
     Net cash (used in) provided by financing
      activities                                     (38,494)          20,563
                                                     -------           ------
     Effects of changes in exchange rates
         on cash and cash equivalents                 (2,289)           1,380
                                                      ------            -----
     Net increase in cash and cash
      equivalents                                     55,864          100,194
     Cash and cash equivalents at beginning
      of period                                       88,656           31,193
     Cash and cash equivalents at end of
      period                                        $144,520         $131,387
                                                    ========         ========
     Supplemental disclosure of cash flow
      information:
       Income tax payments, net                       $1,902           $2,065
       Cash interest payments, net of
        capitalized interest of $18                  $13,781          $21,175
                 and $75, respectively
     Non-cash investing activity:
       Capital expenditures incurred not yet
        paid                                            $613           $2,300
     Non-cash financing activity:
       Repayment of term loan in connection
        with
           debt-equity exchange                      $49,564                -



             Appendix A: Non-GAAP Financial Measures


EBITDA and Adjusted EBITDA

EBITDA is a performance measure used by management that is defined as net income or net loss plus: net interest expense, provision (benefit) for income taxes and depreciation and amortization. Adjusted EBITDA represents EBITDA as adjusted for certain non-cash and unusual or non-recurring items as described below. Orbitz Worldwide uses and believes investors and other external users of the company's financial statements benefit from the presentation of EBITDA and Adjusted EBITDA in evaluating its operating performance because:

  • These measures provide greater insight into management decision making at Orbitz Worldwide as they are among the primary metrics by which management evaluates the operating performance of the company's business. Management believes that when viewed with GAAP results and the accompanying reconciliation, EBITDA and Adjusted EBITDA provide additional information that is useful for management and other external users to gain an understanding of the factors and trends affecting the ongoing cash earnings capability of the company's business, from which capital investments are made and debt is serviced. These supplemental measures are used by management and the board of directors to evaluate the company's actual results against management's expectations. The compensation of management and other employees within the company is also tied to the company's actual performance, as measured by Adjusted EBITDA relative to performance targets established by the company's board of directors and its compensation committee.
  • EBITDA measures performance apart from items such as interest expense, income taxes and depreciation and amortization. Management believes that the exclusion of interest expense is necessary to evaluate the cash earnings capability of the business. The company generally only funds working capital requirements with borrowed funds (specifically, funds borrowed under its revolving credit facility) in the fourth quarter of the year when its cash balances are typically the lowest. As a result, nearly all of the company's interest expense is not incurred to fund its operating activities. In addition, excluding interest expense from the company's non-GAAP measures is consistent with the company's intent to disclose the ongoing cash earnings capability of the business, from which capital investments are made and debt is serviced. Management believes that the exclusion of non-cash depreciation and amortization is also necessary to evaluate the cash earnings capability of the business. Management believes that the review of its non-GAAP measures in conjunction with other GAAP metrics, such as capital expenditures, is more useful in understanding the company's business than the inclusion of depreciation and amortization expense in the non-GAAP measures used by management, since depreciation and amortization expense has historically fluctuated as a result of purchase accounting and this expense involves management judgment (e.g. estimated useful lives).
  • Adjusted EBITDA corresponds more closely to the ongoing cash earnings capability of the company's business, by excluding the items described above, as well as certain other non-cash items, such as goodwill and intangible asset impairment charges and stock-based compensation, and other unusual and non-recurring items, such as restructuring charges and litigation settlements. Adjusted EBITDA does not exclude certain non-cash items, such as accruals of revenue and expense, because these items represent timing differences and management believes that by including these items, it is providing a better view of the cash earnings capability of the business.

EBITDA and Adjusted EBITDA, as presented for the three and six months ended June 30, 2010 and June 30, 2009, are not defined under GAAP and do not purport to be an alternative to net income or net loss as a measure of operating performance. EBITDA and Adjusted EBITDA have certain limitations in that they do not take into account the impact of certain expenses to the company's income statement, such as stock-based compensation, goodwill and intangible asset impairment charges, acquisition-related accounting and certain one-time items, if applicable. Because not all companies use identical calculations, this presentation of EBITDA and Adjusted EBITDA may not be comparable to other similarly-titled measures used by other companies.

The following table provides a reconciliation of net income (loss) to EBITDA:


                             Three Months             Six Months
                                Ended                   Ended
                              June 30,                June 30,
                              --------                --------
                              2010      2009         2010         2009
                              ----      ----         ----         ----
                                        (in thousands)

    Net income (loss)       $9,733   $10,276       $4,472    ($325,880)
    Net interest expense    10,943    14,598       22,254       29,111
    Provision (benefit)
     for                     1,283      (204)       1,600       (2,171)
        income taxes
    Depreciation and
     amortization           19,683    18,284       38,669       32,672
    EBITDA                 $41,642   $42,954      $66,995    ($266,268)
                           =======   =======      =======    =========



EBITDA was adjusted by the items listed and described in more detail below. The following table provides a reconciliation of EBITDA to Adjusted EBITDA.


                            Three Months               Six Months
                            Ended                        Ended
                               June 30,                June 30,
                               --------                --------
                               2010      2009         2010         2009
                               ----      ----         ----         ----
                                         (in thousands)

    EBITDA                  $41,642   $42,954      $66,995    ($266,268)
    Impairment of other
     assets (a)                   -         -        1,704            -
    Impairment of
     goodwill and                 -         -            -      331,527
        intangible assets
         (b)
    Stock-based
     compensation             5,721     3,709        8,902        8,800
        expense (c)
    Net gain on
     extinguishment            (446)   (2,172)         (57)      (2,172)
        of debt (d)
    Professional
     services fees (e)            -       465            -          497
    Restructuring (f)          (105)        -         (105)           -
    Litigation
     settlements (g)          1,288         -        1,288            -
    Adjusted EBITDA         $48,100   $44,956      $78,727      $72,384
                            =======   =======      =======      =======



            Represents a non-cash charge recorded in the first quarter
            2010 for the impairment of an asset related to in-kind
            marketing and promotional support from Northwest Airlines
            under the Charter Associate Agreement. As a result of the
            completion of the operational merger of Northwest Airlines
            and Delta Airlines into a single operating carrier,
            Northwest Airlines was no longer obligated to provide the
            company with in-kind marketing and promotional support
            after June 1, 2010. Management adjusts for this item
            because it represents a significant non-cash operating
            expense that is not reflective of the cash earnings
    (a)     capability of the business.
            Represents the non-cash charge recorded for the impairment
            of goodwill and intangible assets during the first quarter
            2009. Management adjusts for this item because it
            represents a significant non-cash operating expense that
            is not reflective of the cash earnings capability of the
    (b)     business.
            Primarily represents non-cash stock compensation expense;
            also includes expense related to restricted cash awards
            granted prior to the company's initial public offering in
            July 2007 ("IPO"). Management adjusts for this item as it
            represents a significant non-cash operating expense that
            is not indicative of the cash earnings capability of the
    (c)     business.
            Represents the net gain recorded upon extinguishment of
            portions of the company's term loan. Management adjusts
            for this item because it represents a significant non-
            recurring charge that is not indicative of the cash
    (d)     earnings capability of the business.
            Represents accounting and consulting services primarily
            associated with the IPO and post-IPO transition period.
            Management adjusted for these costs because they were non-
            recurring charges, representative of the company's
    (e)     transition to a public company.
            Represents a change in estimate related to a restructuring
            charge recorded in the second half of 2009. Management
            adjusts for restructuring costs because they are non-
            recurring charges that are not indicative of the cash
    (f)     earnings capability of the business.
            Represents charges related to accruals established for
            certain legal proceedings. Management adjusts for these
            items because they represent significant non-recurring
            charges that are not indicative of the cash earnings
    (g)     capability of the business.


Gross Bookings and Net Revenue, at Constant Currency

The Company's reporting currency is the U.S. Dollar. As a result, reported financial results are impacted by the strength or weakness of the U.S. Dollar relative to the currencies of the international markets in which the Company operates particularly the Pound Sterling, Euro and Australian Dollar. Management evaluates the Company's operating performance with and without the impact of changes in foreign exchange rates because it believes excluding the impact of foreign exchange rates provides a more comparable view of the Company's operating performance across periods. Management believes that when viewed with GAAP results and the accompanying reconciliation, management and other external users are better able to gain an understanding of the factors and trends affecting operating performance. The following table adjusts gross bookings and net revenue for foreign currency impacts across the relevant periods:


                                                Three Months Ended
                                                ------------------
                                                                     Total
                                                                     Orbitz
    (in thousands)                     Domestic    International   Worldwide
                                       --------    -------------  ----------

    Gross Bookings
    --------------
    Q2, 2010 Reported Gross
     Bookings                         $2,658,118        $419,521   $3,077,639
                                      ----------        --------   ----------

    Q2, 2009 Reported Gross
     Bookings                         $2,268,494        $351,470   $2,619,964
        Impact of Foreign Exchange
         Rates                                 -          (1,230)      (1,230)
                                             ---          ------       ------
    Q2, 2009 Gross Bookings at        $2,268,494        $350,240   $2,618,734
        Constant Currency

    Reported Gross Bookings Growth            17%             19%          17%
    Gross Bookings Growth at
     Constant Currency                        17%             20%          18%

    Net Revenue
    -----------
    Q2, 2010 Reported Net Revenue       $151,310         $42,181     $193,491
                                        --------         -------     --------

    Q2, 2009 Reported Net Revenue       $149,042         $38,917     $187,959
        Impact of Foreign Exchange
         Rates                                 -             951          951
                                             ---             ---          ---
    Q2, 2009 Net Revenue at
     Constant Currency                  $149,042         $39,868     $188,910

    Reported Net Revenue Growth                2%              8%           3%
    Net Revenue Growth at Constant
     Currency                                  2%              6%           2%





                                                 Six Months Ended
                                                 ----------------
                                                                     Total
                                                                     Orbitz
    (in thousands)                     Domestic    International   Worldwide
                                       --------    -------------  ----------

    Gross Bookings
    --------------
    Q2, 2010 Reported Gross
     Bookings                         $5,095,515        $912,367   $6,007,882
                                      ----------        --------   ----------

    Q2, 2009 Reported Gross
     Bookings                         $4,283,573        $701,763   $4,985,336
        Impact of Foreign Exchange
         Rates                                 -          41,764       41,764
                                             ---          ------       ------
    Q2, 2009 Gross Bookings at        $4,283,573        $743,527   $5,027,100
        Constant Currency

    Reported Gross Bookings Growth            19%             30%          21%
    Gross Bookings Growth at
     Constant Currency                        19%             23%          20%

    Net Revenue
    -----------
    Q2, 2010 Reported Net Revenue       $295,305         $85,339     $380,644
                                        --------         -------     --------

    Q2, 2009 Reported Net Revenue       $306,063         $70,289     $376,352
        Impact of Foreign Exchange
         Rates                                 -           5,875        5,875
                                             ---           -----        -----
    Q2, 2009 Net Revenue at
     Constant Currency                  $306,063         $76,164     $382,227

    Reported Net Revenue Growth               -4%             21%           1%
    Net Revenue Growth at Constant
     Currency                                 -4%             12%           0%



              Appendix B: Trended Operational Metrics




                                                                        2009
                                                                        ----
                                                          Q1          Q2
                                                         ---         ---
    Gross Bookings (in thousands)
        Domestic
           Air                                        $1,421,051  $1,714,962
           Non-air                                       594,028     553,532
                                                         -------     -------
           Total Domestic Gross Bookings               2,015,079   2,268,494

        International
           Air                                           226,132     222,218
           Non-air                                       124,161     129,252
                                                         -------     -------
           Total International Gross
            Bookings                                     350,293     351,470

        Orbitz Worldwide
           Air                                         1,647,183   1,937,180
           Non-air                                       718,189     682,784
                                                         -------     -------
           Total Gross Bookings                       $2,365,372  $2,619,964

    Year over Year Gross Bookings
     Growth
           Domestic                                          -13%         -9%
           International                                     -34%        -29%
           Orbitz Worldwide                                  -17%        -13%
        At Constant Currency
           Domestic                                          -13%         -9%
           International                                     -18%        -15%
           Orbitz Worldwide                                  -14%        -10%

    Year over Year Growth
           Transaction Growth                                -12%          3%
           Hotel Room Night Growth                            -1%          2%

    Net Revenue (in thousands)
    Transactional Net Revenue
        Domestic
           Air                                           $66,063     $53,577
           Non-air                                        74,097      79,103
                                                          ------      ------
           Total Domestic Transactional Net
            Revenue                                      140,160     132,680

        International
           Air                                            15,265      15,389
           Non-air                                        15,431      22,498
                                                          ------      ------
           Total International Transactional
            Net Revenue                                   30,696      37,887

        Orbitz Worldwide
           Air                                            81,328      68,966
           Non-air                                        89,528     101,601
                                                          ------     -------
           Total Orbitz Worldwide                       $170,856    $170,567
                        Transactional Net Revenue

    Non-transactional Net Revenue
           Domestic                                      $16,861     $16,362
           International                                     676       1,030
                                                             ---       -----
           Total Orbitz Worldwide                        $17,537     $17,392
                        Non-transactional Net Revenue

        Orbitz Worldwide
           Air                                           $81,328     $68,966
           Non-air                                       107,065     118,993
                                                         -------     -------
           Total Orbitz Worldwide Net
            Revenue                                     $188,393    $187,959

    Year over Year Net Revenue Growth
    Transactional Net Revenue
           Domestic                                           -8%        -18%
           International                                     -39%        -24%
           Orbitz Worldwide                                  -16%        -20%
    Transactional Net Revenue at
     Constant
        Currency
           Domestic                                           -8%        -18%
           International                                     -23%         -9%
           Orbitz Worldwide                                  -11%        -17%

    Non-transactional Net Revenue                              4%         -5%

    Orbitz Worldwide Net Revenue                             -14%        -19%


    Orbitz Worldwide Net Revenue                             -10%        -15%
        At Constant Currency




                                                                        2009
                                                                        ----
                                                          Q3          Q4
                                                         ---         ---
    Gross Bookings (in thousands)
        Domestic
           Air                                        $1,595,580  $1,627,674
           Non-air                                       540,456     455,896
                                                         -------     -------
           Total Domestic Gross Bookings               2,136,036   2,083,570

        International
           Air                                           212,524     234,811
           Non-air                                       151,793     138,374
                                                         -------     -------
           Total International Gross
            Bookings                                     364,317     373,185

        Orbitz Worldwide
           Air                                         1,808,104   1,862,485
           Non-air                                       692,249     594,270
                                                         -------     -------
           Total Gross Bookings                       $2,500,353  $2,456,755

    Year over Year Gross Bookings
     Growth
           Domestic                                           -5%         15%
           International                                     -16%         35%
           Orbitz Worldwide                                   -7%         18%
        At Constant Currency
           Domestic                                           -5%         15%
           International                                      -9%         16%
           Orbitz Worldwide                                   -5%         15%

    Year over Year Growth
           Transaction Growth                                  7%         20%
           Hotel Room Night Growth                             3%         13%

    Net Revenue (in thousands)
    Transactional Net Revenue
        Domestic
           Air                                           $47,945     $46,408
           Non-air                                        79,675      70,372
                                                          ------      ------
           Total Domestic Transactional Net
            Revenue                                      127,620     116,780

        International
           Air                                            11,930      13,066
           Non-air                                        29,616      25,511
                                                          ------      ------
           Total International Transactional
            Net Revenue                                   41,546      38,577

        Orbitz Worldwide
           Air                                            59,875      59,474
           Non-air                                       109,291      95,883
                                                         -------      ------
           Total Orbitz Worldwide                       $169,166    $155,357
                        Transactional Net Revenue

    Non-transactional Net Revenue
           Domestic                                      $16,393     $18,095
           International                                   1,044       1,241
                                                           -----       -----
           Total Orbitz Worldwide                        $17,437     $19,336
                        Non-transactional Net Revenue

        Orbitz Worldwide
           Air                                           $59,875     $59,474
           Non-air                                       126,728     115,219
                                                         -------     -------
           Total Orbitz Worldwide Net
            Revenue                                     $186,603    $174,693

    Year over Year Net Revenue Growth
    Transactional Net Revenue
           Domestic                                          -24%        -12%
           International                                     -18%         49%
           Orbitz Worldwide                                  -23%         -2%
    Transactional Net Revenue at
     Constant
        Currency
           Domestic                                          -24%        -12%
           International                                     -12%         25%
           Orbitz Worldwide                                  -22%         -5%

    Non-transactional Net Revenue                            -12%        -10%

    Orbitz Worldwide Net Revenue                             -22%         -3%


    Orbitz Worldwide Net Revenue                             -21%         -6%
        At Constant Currency




                                                                        2010
                                                                        ----
                                                          Q1          Q2
                                                         ---         ---
    Gross Bookings (in thousands)
        Domestic
           Air                                        $1,816,137  $2,073,924
           Non-air                                       621,260     584,194
                                                         -------     -------
           Total Domestic Gross Bookings               2,437,397   2,658,118

        International
           Air                                           316,107     274,593
           Non-air                                       176,739     144,928
                                                         -------     -------
           Total International Gross
            Bookings                                     492,846     419,521

        Orbitz Worldwide
           Air                                         2,132,244   2,348,517
           Non-air                                       797,999     729,122
                                                         -------     -------
           Total Gross Bookings                       $2,930,243  $3,077,639

    Year over Year Gross Bookings
     Growth
           Domestic                                           21%         17%
           International                                      41%         19%
           Orbitz Worldwide                                   24%         17%
        At Constant Currency
           Domestic                                           21%         17%
           International                                      25%         20%
           Orbitz Worldwide                                   22%         18%

    Year over Year Growth
           Transaction Growth                                 20%          5%
           Hotel Room Night Growth                            13%          9%

    Net Revenue (in thousands)
    Transactional Net Revenue
        Domestic
           Air                                           $52,846     $53,867
           Non-air                                        77,420      84,896
                                                          ------      ------
           Total Domestic Transactional Net
            Revenue                                      130,266     138,763

        International
           Air                                            18,779      16,996
           Non-air                                        23,404      24,191
                                                          ------      ------
           Total International Transactional
            Net Revenue                                   42,183      41,187

        Orbitz Worldwide
           Air                                            71,625      70,863
           Non-air                                       100,824     109,087
                                                         -------     -------
           Total Orbitz Worldwide                       $172,449    $179,950
                        Transactional Net Revenue

    Non-transactional Net Revenue
           Domestic                                      $13,729     $12,547
           International                                     975         994
                                                             ---         ---
           Total Orbitz Worldwide                        $14,704     $13,541
                        Non-transactional Net Revenue

        Orbitz Worldwide
           Air                                           $71,625     $70,863
           Non-air                                       115,528     122,628
                                                         -------     -------
           Total Orbitz Worldwide Net
            Revenue                                     $187,153    $193,491

    Year over Year Net Revenue Growth
    Transactional Net Revenue
           Domestic                                           -7%          5%
           International                                      37%          9%
           Orbitz Worldwide                                    1%          6%
    Transactional Net Revenue at
     Constant
        Currency
           Domestic                                           -7%          5%
           International                                      19%          6%
           Orbitz Worldwide                                   -2%          5%

    Non-transactional Net Revenue                            -16%        -22%

    Orbitz Worldwide Net Revenue                              -1%          3%


    Orbitz Worldwide Net Revenue                              -3%          2%
        At Constant Currency


SOURCE Orbitz Worldwide, Inc.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Orbitz Worldwide Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.