Skift Take
Travelports' woes demonstrate the challenges ahead for its GDS peers Sabre and Apollo. One day -- and that day will be soon -- a new generation of online travel agencies and smarter airline websites will render their current services obsolete.
Travelport Ltd., the unprofitable travel-reservation system controlled by Blackstone Group LP, is heading for a showdown with lenders that refused to give up the right to accelerate a $1.5 billion payment.
The loan holders balked at removing a so-called springing maturity from their debt due August 2015, meaning it will need to be repaid along with $747 million of bonds in 2014 unless Travelport retires all the notes by May of that year. While lenders allowed the company to raise $470 million of debt to retire some of the bonds, CreditSights Inc. says Travelport won’t earn enough money to pay for the rest.
Blackstone, which acquired Travelport in a $4.3 billion buyout in 2006, faces the prospect of ceding more ownership to loan holders as a restructuring is “inevitable,” according to KDP Investment Advisors Inc. The lenders are poised to get paid before any other creditors and first in line on claims against Travelport’s assets in a bankruptcy, after debt holders gained a share of equity in the company’s indirect parent under a swap of so-called pay-in-kind loans, a March filing showed.
“There’s been a whole bunch of financial engineering that’s been going on here,” Roger King, an analyst at New York- based CreditSights, said in a telephone interview. “But the company hasn’t grown.”
Falling Revenue
Jill Brenner, a spokeswoman for Travelport, didn’t return telephone calls seeking comment on the company’s finances. Peter Rose, a spokesman for Bl
