Orbitz Worldwide, Inc. Reports Fourth Quarter and Full Year 2008 Results

- Net income was $8 million for the quarter compared with a net loss of $11 million for the fourth quarter of 2007

- Adjusted EBITDA for the quarter was $35 million, a decrease of five percent from the fourth quarter of 2007

Orbitz Worldwide, Inc. (NYSE:OWW) today announced results for the fourth quarter and full year ended December 31, 2008. Net revenue was $180 million for the fourth quarter of 2008, down nine percent from $197 million for the fourth quarter of 2007. Over half of the year-over-year decline in net revenue, or approximately $9 million, was due to the impact of foreign currency fluctuations. The company reported net income of $8 million or $0.10 per diluted share for the fourth quarter compared with a net loss of $11 million or ($0.13) per diluted share in the fourth quarter of 2007. Adjusted EBITDA for the fourth quarter was $35 million, a decrease of five percent from the fourth quarter of 2007.

For the full year, Orbitz Worldwide's net revenue increased one percent to $870 million versus $859 million in the prior year. The company reported a net loss of $299 million, which included a $297 million non-cash charge for the impairment of goodwill and intangible assets, or ($3.58) per diluted share for 2008 compared with a net loss of $85 million for 2007. Adjusted EBITDA was $136 million for the full year, a decrease of six percent compared with 2007.

"During the fourth quarter, global economic softness significantly impacted our performance and created more uncertainty for the entire travel industry," said Barney Harford, president and CEO of Orbitz Worldwide. "In response to this softness, we took immediate steps in both November and January to reduce costs, and as a result, we believe Orbitz Worldwide is better positioned to manage through this challenging environment."

  Summary Operating Results

  (In millions, except per share data)



                              Fourth Quarter            Full Year

                               2008    2007  Change    2008      2007 Change



  Gross bookings (a)         $2,156   $2,356   -8%  $10,808   $10,791     0%

  Net revenue (b)              $180     $197   -9%     $870      $859     1%

  EBITDA (c)                    $41      $29   41%    ($172)      $98    **

  Adjustments                   ($6)      $8    **     $308       $46    **

  Adjusted EBITDA (c)           $35      $37   -5%     $136      $144    -6%

  Net income (loss)              $8     ($11)   **    ($299)     ($85)   **

  Basic and Diluted EPS       $0.10   ($0.13)   **   ($3.58)       **    **

  Operating cash flow          ($45)      $4    **      $76       $69    10%

  Capital spending              $16      $17   -6%      $58       $53     9%



  ** Not meaningful.

  (a)  Excludes gross bookings for an offline U.K. travel subsidiary (see

       Note l in Adjusted EBITDA table contained in Appendix A).

  (b)  The net impact of purchase accounting adjustments recorded in 2007

       accounted for $6 million of the overall increase in net revenue from

       the full year 2007 to the full year 2008.

Fourth Quarter 2008 Financial Highlights

Gross Bookings and Net Revenue

For the fourth quarter of 2008, Orbitz Worldwide's gross bookings were down eight percent (six percent on a constant currency basis) compared with the fourth quarter of 2007. Air gross bookings declined nine percent (eight percent on a constant currency basis) and non-air and other gross bookings decreased six percent (one percent on a constant currency basis) compared with the fourth quarter of 2007. International gross bookings decreased 18 percent (two percent on a constant currency basis) for the quarter due primarily to softness in Europe.

  Gross Bookings and Net Revenue

  (In millions)



                                Fourth Quarter           Full Year

                                 2008    2007  Change   2008     2007 Change



  Gross Bookings (a)

    Air                        $1,593  $1,760   -9%   $7,883   $7,964   -1%

    Non-air / Other               563     596   -6%    2,925    2,827    3%



    Domestic                    1,867   2,004   -7%    9,134    9,393   -3%

    International                 289     352  -18%    1,674    1,398   20%



    Worldwide                  $2,156  $2,356   -8%  $10,808  $10,791    0%



  Net Revenue (b)

    Air                           $67     $81  -17%     $339     $375  -10%

    Non-air / Other               113     116   -3%      531      484   10%



    Domestic                      153     153    0%      686      679    1%

    International                  27      44  -39%      184      180    2%



    Worldwide                    $180    $197   -9%     $870     $859    1%

Net revenue for the fourth quarter of 2008 was $180 million, a decrease of nine percent from $197 million in the fourth quarter of 2007.

-- Air net revenue was $67 million for the fourth quarter of 2008, down 17 percent (15 percent on a constant currency basis) from $81 million in the fourth quarter of 2007. Domestic air net revenue declined nine percent driven by lower volume in the quarter, while international air net revenue declined 50 percent (43 percent on a constant currency basis) driven by lower volume and lower margins. The global decline in volume during the quarter was primarily the result of the adverse impact of current economic conditions on air traveler demand.

-- Non-air and other net revenue, which consists primarily of car, hotel, dynamic packaging, advertising and travel insurance revenue, was $113 million for the fourth quarter of 2008, down three percent (four percent growth on a constant currency basis) from $116 million in the fourth quarter of 2007. Bookings for all non-air products were soft in the quarter except for dynamic packaging, which continued to grow at a solid rate.

-- Domestic net revenue was $153 million for the fourth quarter of 2008, which was flat with the fourth quarter of 2007. Lower domestic volume for all products except dynamic packaging and cruises was offset by higher advertising, travel insurance and service fee revenue in the quarter.

-- International net revenue was $27 million for the fourth quarter of 2008, a decrease of 39 percent (23 percent on a constant currency basis) from $44 million in the fourth quarter of 2007. Weak economic conditions in Europe and lower air margins contributed to the net revenue decline in the quarter.

The company has posted on its website (http://orbitz-ir.com/) a schedule that adjusts net revenue for purchase accounting impacts, the sale of the offline U.K. travel subsidiary and currency fluctuations in order to provide a more comparable view of operating performance across periods.

Operating Expenses

Orbitz Worldwide's cost of revenue declined $8 million to $33 million, or 18.3 percent of net revenue, for the fourth quarter of 2008 versus the fourth quarter of 2007. This decline in cost of revenue was due to lower volume in the quarter and significantly lower charge-backs at one of the company's international locations.

Marketing expense in the fourth quarter was $58 million, an increase of two percent compared with the same period last year. This increase was due to higher online marketing costs as the competition to generate online traffic in the travel industry continues to be fierce.

Selling, general and administrative (SG&A) expense decreased $21 million in the fourth quarter of 2008 to $48 million from $69 million in the same period of 2007. This decrease is attributable to lower bonus and stock compensation expense as well as higher capitalized development costs. In addition, the company's operating expenses were reduced by $14 million (non- cash) in the quarter due to a reduction in the present value of the company's tax sharing liability to the founding airlines arising from a lower projected effective state income tax rate.

In November 2008 and January 2009, Orbitz Worldwide took actions to reduce its cash operating costs by approximately $40 to $45 million on an annualized basis. These actions included a reduction in work force, a reduction in outside contractors, and other operating expense cuts. Management believes that these measures will better position the company to face the challenging economic prospects for the global travel industry.

Interest Expense

Orbitz Worldwide incurred interest expense of $16 million in the fourth quarter of 2008 compared with $17 million in the fourth quarter of last year. This year-over-year decline in interest expense for the quarter was primarily due to a lower effective interest rate on the term loan compared with the same period last year. At December 31, 2008, $400 million of the $593 million outstanding on the term loan had a fixed interest rate and the company's weighted average effective interest rate on the term loan was 6.15 percent.

Cash Flow

Orbitz Worldwide had an operating cash outflow of $45 million for the fourth quarter of 2008. This cash outflow was primarily attributable to the seasonal nature of the merchant hotel business as payments to hotels typically exceed cash inflows from new reservations in the fourth quarter. However, a decline in international merchant hotel bookings and lower average daily hotel rates, due in part to softening economic conditions, also contributed to the cash outflow in the quarter.

At December 31, 2008, cash and cash equivalents (net of borrowings under the company's revolving line of credit) were $10 million compared with $24 million at December 31, 2007. The year-over-year decline in net cash was primarily driven by higher capital expenditures due to investments made to complete the migration of ebookers' country sites to the new technology platform and tax sharing payments made to the company's founding airlines. This decline was partially offset by an increase in operating cash flow of $7 million for the year ended December 31, 2008.

Operational Highlights

-- Orbitz Price Assurance, launched in mid-2008, continues to deliver meaningful value to consumers. Under Price Assurance, if the price of an airline ticket booked on Orbitz.com drops and another customer subsequently books the same airline ticket on Orbitz.com for a lower price, Orbitz will automatically send the customer a cash refund for the difference in fare up to $250. During 2008, the company issued thousands of checks to its customers under this program.

-- ebookers completed the process of migrating all 13 of its country sites in Europe to Orbitz Worldwide's new technology platform.

-- Orbitz Worldwide signed distribution agreements with Accor Group in Europe and Millennium and Copthorne Hotels in Europe and the Middle East. These agreements add over 2,700 new hotels to the company's international merchant and retail hotel offering.

-- Orbitz for Business International went live in Canada and the U.K. Orbitz for Business also had continued success signing up new corporate accounts including Club Med Sales Inc., Dynegy Inc., Indiana University, Libbey Glass Inc. and Yamaha Corporation of America.

-- HotelClub announced an exclusive agreement with Virgin Blue Airlines to provide a seamless hotel booking solution.

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