Travelport Adjusts Fees and Technology to Navigate the Recovery
Photo Credit: An aircraft that is flown by American Airlines, which is a partner with Travelport. Travelport, a travel technology company, has shown ingenuity in managing the pandemic and its relations with airlines and agencies. American Airlines
Skift Take
The pandemic dealt travel distribution companies a weak hand. Given that it's the third-largest player, Travelport has to play every card right in the recovery. So far, it appears to have done that.
Travelport's business used to be predictable and low stakes. The transaction processor — which acts as a distribution middleman between travel agencies and airlines — consistently squeezed out modest revenue growth while routinely rolling over and whittling down about $2 billion in debt. Yet the pandemic strained its model, and the management team led by CEO Greg Webb must sail through a narrow passage and across turbulent waters.
The pandemic caused business travel to crater, slashing Travelport's revenue by 70 percent in 2020, according to Fitch Ratings. Net debt ballooned to about ten times earnings, and Fitch has forecast that the debt ratio may last until "at least 2023."
Travelport's financial shock absorbers lack vital padding. As of the end of March 2021, cash on its balance sheet stood at $114 million, after a total cash burn of $131 million in the first three months of the year, Fitch said. The second quarter was tracking to be better, however.
The debt problem i
