By Martin Kelly, Editor, Travel Trends
THINGS have gone from bad to worse at embattled Orbitz, one of the world’s largest online travel companies, which has just appointed a young gun CEO whose first tasks will be to sack more staff – 100 left last year – and cut costs by a further US$20m to $US25m (on top of US$20m already announced).
Outgoing CEO Steve Barnhart, who has “resigned to pursue other interests”, was left to make the announcements, saying the fresh cost cuts will target contractors while “there will be some full-time employee reductions”.
Clearly the strategy is for Barnhart to take the flak for the mess Orbitz now finds itself in, giving new CEO Barney Harford something of a clean slate to whip the company into shape. But it will not be that simple.
Harford, a 37yo former Asia Pacific boss of Expedia, has never run a company, let alone such a complex beast as Orbitz, an unwieldy amalgam of businesses thrown together during boom times now hurting on a number of fronts, including falling bookings and significant debt.
It’s a major gamble by the Orbitz board at a crucial time in the company’s history. Clearly things aren’t working. Cost-cutting and staff reductions will only have a short- term impact. Systemic change is needed – soon. Will it happen? Watch this space. Travel Trends: January 12, 2009