The competitive dynamics of the Global Distribution System (GDS) industry took a potentially significant turn last month when Delta Air Lines, Northwest Airlines and American Airlines parent AMR agreed to sell their shares in Worldspan.
The carriers, with stakes of 40%, 34% and 26% in Worldspan respectively, are selling out to Citicorp Venture Capital equity partnership and Teachers Merchant Bank, based in Toronto. The sale is subject to financing, governmental and regulatory approvals.
The carriers were motivated to sell, in large part, by their burning need for cash; estimates of the transaction's price - which was not publicly announced - ranged between $750 million and $1 billion.
Independent travel industry consultant Chicke Fitzgerald says the sale "provides validation by the financial community that travel technology is still a good place to invest".
Other observers predict that Worldspan's new owners will not hold on to their asset for long.
Henry Harteveldt, principal analyst at Forrester Research, says: "Once travel recovers and GDS deregulation dust settles, its new owners will flip Worldspan." He says potential buyers include database-orientated firms with a strong presence in travel like IBM or EDS, a media conglomerate like AOL Time Warner, or a financier like Carl Icahn, who formerly owned TWA, a Worldspan founder.
Source: Airline Business
