Expedia Can't Be Happy as Orbitz Worldwide Limps Toward the Finish Line

Business as usual is the message that Orbitz Worldwide officials articulate as the company awaits falling into the arms of Expedia Inc. But the in-limbo status of the Chicago-based online travel agency seems to be adversely impacting operations.

This can't be welcome news for Expedia officials, who may be on the cusp of acquiring less than they bargained for. Expedia won't comment on Orbitz Worldwide's just-reported second quarter earnings as the two companies, for now, are still competitors.

Among the lowlights for the second quarter of 2015, Orbitz Worldwide saw its room night growth take a huge hit. Room nights sold in the second quarter decelerated to a 3 percent increase, down from a 20 percent increase a year earlier.

Propelled by acquisitions, Expedia Inc.'s room night growth in the second quarter increased more than 10 times faster.

Fraudulent transactions leapfrogged a dramatic 154 percent to $23.8 million at Orbitz Worldwide. That was the primary factor behind Orbitz Worldwide's cost of revenue soaring 34 percent year over year to $63.9 million.

From In the Black to In the Red

The company went from being in the black to the red zone in the profit or loss column, notching a $4.2 million net loss in the second quarter of 2015 compared with net income of nearly $6.9 million in the year-earlier period.

Net revenue dropped 3 percent year-over-year to $239.6 million, and that revenue fell in nearly every category, including air (14 percent), vacation packages (14 percent), and advertising and media (4 percent), when measured against the second quarter of 2014.

One of the only positive signs in the second quarter of 2015 was standalone hotel net revenue, which climbed 10 percent to $99.4 million.

Standalone hotel net revenue rose to 42 percent of hotel net revenue, up from 36 percent a year earlier.

Orbitz Worldwide's overall decrease in net revenue in the second quarter of 2015 was "driven by lower air and vacation package volume and lower net revenue per air and vacation package transaction, partially offset by higher hotel and car transaction volume and higher net revenue per hotel transaction," the company stated.

Bad Credit Cards

On the fraudulent transactions' issue, Orbitz Worldwide stated that these crimes are being committed by people who illegally obtain others' credit card information outside the Orbitz Network, and the company is taking "extensive action designed to increase our ability to identify, process, mitigate and prevent fraudulent transactions in the future."

The company stated that its remedial actions to combat fraudulent transactions are having a positive impact but it still expects the level of fraudulent bookings in the third and fourth quarters of 2015 to surpass those of the second half of 2014.

Orbitz Worldwide, according to SeekingAlpha.com, missed analysts' consensus earnings per share estimates by $0.14 and revenue expectations by $14.26 million.

Expedia Inc. officials -- and assuredly Orbitz Worldwide management -- were hoping for better too.