Worldspan plans to go public in a $310 million offer, although the exact amounts it would retain from the transaction are far from certain. The Global Distribution System (GDS), sold by American, Delta, and Northwest airlines last year to private investors, is a major supplier to web-based travel sellers.
As a publicly traded company, it would be on equal footing with its three chief rivals, Amadeus, Galileo, and Sabre, each of which is traded or is part of a listed firm. However, the flotation plan appears to mark a financial move rather than any long-term strategic change, says distribution expert Richard Eastman of the Eastman Group consultancy.
Worldspan says that for 2003 its online bookings rose 19%, while bookings through the traditional GDS channel dropped 12%. Worldspan relies on Expedia, Hotwire, Orbitz and Priceline, which combined delivered about 43% of its total 2003 transactions; the largest, Expedia, generated more than 10% of company revenues.
Worldspan chairman Rakesh Gangwal notes that keeping this business is costly because "on-line inducements are materially higher than on the traditional side". Its Expedia incentives are due to be renegotiated in July.
On the GDS side, Worldspan revealed in its flotation filing that it is embroiled in a dispute with Delta over transaction fees, and the airline has withdrawn some marketing support. Still, Worldspan processed about 30% of US airline GDS transactions last year, it says.
Source: Airline Business
