ebookers Writedown Sours Cendant Results

Cendant has written down a massive US$425 million on its ebookers business, according to the 2005 annual results. 
 
Just recently, Cendant forecast an "impairment" (writedown) charge for ebookers, a European travel e-business, of “between US$200 million to US$300 million”.
 
Meanwhile, product pricing has also emerged as a significant issue for Cendant with its GDS and car hire business recording higher transaction volumes but lower revenue.
 
Revenue from GDS and supplier services (Galileo) fell two per cent during 2005 – contrasting with a six per cent increase in global GDS segment volume “offset by decreased subscriber fee income.”
 
Once again volumes were way up for Avis and Budget – 18 per cent – but pre-tax earnings slumped 10 per cent because of increased vehicle costs and fleet expansion to support demand.
 
To arrest this trend, Cendant has “initiated domestic price increases to mitigate the impact of higher fleet cost and has achieved modest year-on-year increases in pricing thus far in 2006.”
 
In other news, the company will persist with its plan to separate Cendant into four independent, publicly traded, pure play companies later this year.
 
President Ronald Nelson said: “We remain on track to complete the spin-offs of Real Estate Services and Hospitality in the second and third quarters of 2006, respectively, and the separation of Travel Distribution from Vehicle Services in October.”
 
Ends.
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