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8-K - FORM 8-K - Travelport LTD | y92818e8vk.htm |
EX-99.2 - EX-99.2 - Travelport LTD | y92818exv99w2.htm |
Exhibit 99.1
Amendment No. 1, dated September 23, 2011, to Travelport Holdings Limiteds Disclosure
Statement for the Prepetition Solicitation of Votes with Respect to the Prepackaged Plan of
Reorganization of Travelport Holdings Limited, dated September 21, 2011
Statement for the Prepetition Solicitation of Votes with Respect to the Prepackaged Plan of
Reorganization of Travelport Holdings Limited, dated September 21, 2011
This amendment, dated September 23, 2011 (this Amendment), amends and
restates certain information in the Disclosure Statement, dated September 21, 2011, for the
Prepetition Solicitation of Votes with Respect to the Prepackaged Plan of Reorganization of
Travelport Holdings Limited (the Disclosure Statement). This Amendment forms a part of
and should be read in conjunction with the Disclosure Statement, including all risk factors
contained therein (as may be amended and restated by this Amendment). Capitalized terms used but
not defined herein shall have the meanings ascribed to them in the Disclosure Statement.
This Amendment updates, amends and restates certain information in the Disclosure Statement,
and, accordingly, to the extent inconsistent, the information in this Amendment supersedes the
information contained in the Disclosure Statement. Any statement that is updated or superseded
shall not be deemed to constitute a part of the Disclosure Statement except as amended, restated
and/or superseded by this Amendment. Information contained in the Disclosure Statement and not
addressed in this Amendment remains unchanged.
Copies of the Disclosure Statement may be obtained at no cost by contacting:
AlixPartners, LLP
2101 Cedar Springs Road, Suite 1100
Dallas, TX 75201
Attn: John Franks
1-888-369-6608
2101 Cedar Springs Road, Suite 1100
Dallas, TX 75201
Attn: John Franks
1-888-369-6608
The language in the risk factor located at pages 39-40 in Section VI.C of the Disclosure Statement is amended and restated in its entirety as follows:
Trends in pricing and other terms of agreements among airlines and travel agencies have become less
favorable to Travelport, and a further deterioration may occur in the future which could reduce
Travelports revenue and margins.
A significant portion of Travelports revenue is derived from fees paid by airlines for
bookings made through Travelports GDS. Airlines have sought to reduce or eliminate these fees in
an effort to reduce distribution costs. One manner in which they have done so is to differentiate
the content, in this case, the fares and inventory, that they provide to Travelport and to
Travelports GDS competitors from the content that they distribute directly themselves. In these
cases, airlines provide some of their content to GDS, while withholding other content, such as
lower cost web fares, for distribution via their own supplier.com websites unless the GDS agree to
participate in a cost reduction program. Certain airlines have also threatened to withdraw
content, in whole or in part, from individual GDS as a means of obtaining lower booking fees or,
alternatively, to charge GDS to access their lower cost web fares. Airlines also have aggressively
expanded their use of the direct online distribution model for tickets in the United States and in
Europe in the last ten years, with such ticket sales generating more than 30% of revenue for airlines in the United States in 2008,
compared to less than 3% of revenue in 1999. There also has been an increase in the number of
airlines which have introduced unbundled, à la carte sales and optional services, such as fees
for checked baggage or premium seats, which threaten to further fragment content and disadvantage
GDS by making it more difficult to deliver a platform that allows travel agencies to shop for a
single, all-inclusive price for travel.
Travelport has entered into full-content agreements with most major carriers in the Americas
and Europe, and a growing number of carriers in the Middle East and Africa, which provides
Travelport with access to the full scope of fares and inventory which the carriers make available
through direct channels, such as their own supplier.com websites, with a contract duration usually
ranging from three to seven years. In addition, Travelport has entered into agreements with most
major carriers in the Asia Pacific Region which provide it with access to varying levels of their
content. Travelport may not be able to renew these agreements on a commercially reasonable
basis
or at all. If Travelport is unable to renew these agreements, it may be disadvantaged compared to
Travelports competitors, and Travelports financial results could be adversely impacted. The
full-content agreements have required Travelport to make significant price concessions to the
participating airlines. If Travelport is required to make additional concessions to renew or
extend the agreements, it could result in an increase in Travelports distribution expenses and
have a material adverse effect on Travelports business, financial condition or results of
operations. Moreover, as existing full-content agreements come up for renewal, there is no
guarantee that the participating airlines will continue to provide their content to Travelport to
the same extent or on the same terms as they do now. For example, Travelports contracts with two
of the largest U.S. travel suppliers, US Airways and American Airlines, representing approximately
8% of transaction processing revenue for the year ended December 31, 2010, were up for renewal in
2011. On July 29, 2011, Travelport and American Airlines announced that the existing full content
agreements between American and Travelports GDS, Apollo, Galileo and Worldspan, have been extended
concurrently and are no longer due to expire in 2011. On August 28, 2011, Travelport announced
that its existing content agreement with US Airways will continue well into 2012. Travelport is in
discussions with American Airlines and US Airways to renew or extend their current full-content
agreements with Travelport. In addition, certain full-content agreements may be terminated earlier
pursuant to the specific terms of each agreement. A substantial reduction in the amount of content
received from the participating airlines or changes in pricing options could also negatively affect
Travelports revenue and financial condition. Equally, the removal of the discounts presently
provided to these carriers under these agreements could also positively affect Travelports revenue
and financial condition.
In addition, GDS have implemented, in some countries, an alternative business and financial
model, generally referred to as the opt-in model, for travel agencies. Under the opt-in model,
travel agencies are offered the opportunity to pay a fee to the GDS or to agree to a reduction in
the financial incentives to be paid to them by the GDS in order to be assured of having access to
full content from participating airlines or to avoid an airline-imposed surcharge on GDS-based
bookings. There is pressure on GDS to provide highly competitive terms for such opt-in models as
many travel agencies are dual automated, subscribing to more than one GDS at any given time. The
opt-in model has been introduced in a number of situations in parallel with full-content
agreements between Travelport and certain airlines to recoup certain fees from travel agencies and
to offset some of the discounts provided to airlines in return for guaranteed access to full
content. The rate of adoption by travel agencies, where opt-in has been implemented, has been
very high. If airlines require further discounts in connection with guaranteeing access to full
content and in response thereto the opt-in model becomes widely adopted, Travelport could receive
lower fees from the airlines. These lower fees are likely to be only partially offset by new fees
paid by travel agencies and/or reduced inducement payments to travel agencies, which would
adversely affect Travelports results of operations. In addition, if travel agencies choose not to
opt in, such travel agencies would not receive access to full content without making further
payment, which could have an adverse effect on the number of segments booked through Travelports
GDS.
The level of fees and commissions Travelport pays to travel agencies is subject to continuous
competitive pressure as Travelport renews its agreements with them. If Travelport is required to
pay higher rates of commissions, it will adversely affect Travelports margins.
The language in the risk factor located at page 42 in Section
VI.C of
the Disclosure Statement is
amended and restated in its entirety as follows:
Travel suppliers are seeking alternative distribution models, including those involving direct
access to travelers, which may adversely affect Travelports results of operations.
Travel suppliers are seeking to decrease their reliance on third-party distributors, including
GDS, for distribution of their content. For example, some travel suppliers have created or
expanded efforts to establish commercial relationships with online and traditional travel
agencies to book travel with
those suppliers directly, rather than through a GDS. Many airlines, hotels, car rental companies
and cruise operators have also established or improved their own supplier.com websites, and may
offer incentives such as bonus miles or loyalty points, lower or no transaction or processing fees,
priority waitlist clearance or e-ticketing for sales through these channels. In addition,
metasearch travel websites facilitate access to supplier.com websites by aggregating the content of
those websites. Due to the combined impact of direct bookings with the airlines, supplier.com
websites and other non-GDS distribution channels, the percentage of bookings made without the use
of a GDS at any stage in the chain between suppliers and end-customers, which Travelport estimates
was approximately 58% in 2010, may continue to increase. In this regard, American Airlines
terminated certain agreements with Orbitz Worldwide in November 2010, in pursuit of a direct
connect relationship with American Airlines rather than Orbitz Worldwide making bookings through
Travelports GDS. Although the agreements were subsequently
extended and are no longer due to expire in 2011, legal action on the
matter continues. In
addition, efforts by other major airlines to encourage Travelports subscribers to book directly
rather than through Travelports GDS will adversely affect Travelports results of operations.
Furthermore, recent trends towards disintermediation in the global travel industry could
adversely affect Travelports GDS business. For example, airlines have made some of their
offerings unavailable to unrelated distributors, or made them available only in exchange for lower
distribution fees. Some low cost carriers distribute exclusively through direct channels,
bypassing GDS and other third-party distributors completely and, as a whole, have increased their
share of bookings in recent years, particularly in short-haul travel. In addition, several travel
suppliers have formed joint ventures or alliances that offer multi-supplier travel distribution
websites. Finally, some airlines are exploring alternative global distribution methods developed
by new entrants to the global distribution marketplace. Such new entrants propose technology that
is purported to be less complex than traditional GDS, which they claim enables the distribution of
airline tickets in a manner that is more cost-effective to the airline suppliers because no or
lower inducement payments are paid to travel agencies. If these trends lead to lower participation
by airlines and other travel suppliers in Travelports GDS, then Travelports business, financial
condition or results of operations could be materially adversely affected.
In addition, given the diverse and growing number of alternative travel distribution channels,
such as supplier.com websites and direct connect channels between travel suppliers and travel
agencies, as well as new technologies that allow travel agencies and consumers to bypass a GDS,
increases in travel volumes, particularly air travel, may not translate in the same proportion to
increases in volume passing through Travelports GDS, and Travelport may therefore not benefit from
a cyclical recovery in the travel industry to a similar extent as other industry participants.