Business

Orbitz 4Q loss narrows, stock slides on revenue outlook

CHICAGO — Orbitz Worldwide said Thursday that its fourth-quarter loss narrowed and adjusted earnings rose as the company continued to book more business from international and hotel operations.

However, shares plunged 7.4 percent in early trade as the online travel agency’s near-term revenue outlook fell short of expectations. Unlike competitors Expedia and Priceline.com, Orbitz stock has fallen in the last year.

Chief Executive Barney Harford said the company completed its long ongoing migration to a global technology platform. He characterized 2011 as “an investment year” for the company and predicted Orbitz would be reaping the rewards of those investments this year.

The company, which operates its namesake site as well as CheapTickets and its European focused ebookers site, predicted full-year adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) would grow in a high-single to low-double digit.

The estimate compares favorably with the outlook rival Expedia provided last week, which was for midsingle percentage growth in adjusted Ebitda. Like Orbitz, Expedia is in the midst of uniting its businesses on a single technology platform. However, while Orbitz said Thursday it completed its tech migration, Expedia expected to continue tech investments this year, resulting in slow earnings growth particularly in the first half.

Orbitz forecast weaker-than-expected revenue for the first quarter at $187 million to $193 million versus the consensus analyst estimate of $196 million, based on a survey by Thomson Reuters.

However, Orbitz predicted first-quarter Ebitda would likely grow, possibly as much as 16 percent. Orbitz forecast $17 million to $20 million in adjusted Ebitda in the current quarter, compared with $17.3 million in the year-prior period.

Gross bookings fell 1.3 percent, which the company attributed to another quarter of higher air fares, a mix shift toward international air carriers and higher average daily rates for hotel rooms.

Stand-alone air bookings posted a three percent decline and domestic bookings fell 2.8 percent. However, non-air bookings increased 3.9 percent while international bookings were up 5.9 percent. It continues a trend of recent quarters, in which Orbitz increasingly relies on its smaller, growth segments of non-air and international to offset moderation in the larger air and domestic businesses.