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Tax benefit gives Orbitz a boost

by Marina Cracchiolo
May 9, 2013


Shares of Orbitz Worldwide, Inc. surged Thursday after the Chicago-based online travel agency announced hefty first-quarter profits – thanks to a sizeable  income tax benefit.

The Internet company reported net income of $146.2 million or $1.34 per diluted share, in sharp contrast to the year-ago quarter’s net loss of $6.5 million or 6 cents a share.

Revenues rose 6.9 percent to $202.9 million from $189.8 million a year ago.

The latest quarter’s bottom line was inflated by a one-time $158.5 million income tax benefit. 

The  earnings release drove Orbitz shares up $1.37, or 21 percent, to a Thursday close of $7.82.

The company’s shares, which were trading below $3 as recently as February, have mounted a substantial increase in recent months.

The latest results represent a “strong quarter” for Orbitz, particularly in its stronger hotel bookings, said Goldman Sachs analyst Heath Terry.  The company’s upbeat revenue guidance for second quarter 2013 was also welcome, he said.

Orbitz said it expects an increase of net revenue will grow in the second quarter to a range of $214 million to $220 million, implying a year-over-year growth 6.5 percent to 9.5 percent, Terry noted; that would exceed the 4.5 percent the analyst had been expecting. 

Orbitz said in  conference call with analysts  that “ebookers” helped boost revenue in the first quarter, and said the company experienced double-digit growth in both standalone rooms and hotel and vacation packages.

Air revenue was down four percent in the quarter, fueled by lower air volume in the U.S. and Europe, the company said.

Mobile reservations made up a quarter of Orbitz’s overall reservations, and the company’s future lies in mobile business, the company’s top executive said. “It’s still early days,” Orbitz CEO Barney Hartford told analysts.