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Travelocity's Flying High

Showing that the travel sector is still strong despite the ticketing slowdown last fall, online travel operation Travelocity.com Inc. posted pro forma income of 9 cents per share for its fourth quarter on gross travel bookings of $630.2 million.

The effects of the Sept. 11 tragedy and subsequent downturn in travel shows clearly when fourth quarter bookings are compared with the third quarter's $784.8 million. In the year-ago quarter, bookings were $696.4 million.

Fourth quarter revenues were $68.1 million compared to $65.5 million in the fourth quarter of the prior year and $78.5 million for the third quarter of 2001.

For the year, Travelocity reported gross travel bookings were $3.1 billion, up 27 percent from the $2.5 billion reported in 2000. Revenues for 2001 were $301.8 million, exceeding 2000 pro forma revenues by 50 percent. Pro forma profits for the year were 30 cents a share, "before special items and Sabre interest."

The travel operation is 70 percent owned by Sabre Holdings Corp. .

"In an industry that had an average decline in travel bookings of 15 percent, we grew 27 percent," said Terrell B. Jones, president and chief executive officer of Travelocity. "With the economic slowdown and lingering effects of September 11, the travel industry faced some of its most difficult challenges in 2001. Yet, our business emerged from this adversity stronger than before, fueled by the growing channel shift toward online travel. That's because we deliver travel better than the physical world."

For the fourth quarter, profit before special items and Sabre interest was $4.9 million, slightly ahead of the third quarter and compared to a loss of $2.4 million, or 5 cents per share for the fourth quarter of 2000.

Analysts polled by Thomson/First Call on average were expecting 10 cents a share for the quarter.

Earlier this month Travelocity lowered its revenue guidance for the quarter about 9 percent, but left its earnings estimate intact. And at the time, Fort Worth, Texas-based Travelocity also said it expects 20 percent to 30 percent revenue growth for 2002.

The company attributed the revenue shortfall to unexpectedly slow sales of airline tickets during the December holiday travel period, combined with the lingering effects of the September and November tragedies and related air fare reductions.

Travelocity, which said on Jan. 7 that it had just hit the 20 million mark in ticket sales volume, closed Wednesday down 44 cents at $22.68.

At the end of the year, the company's cash and marketable securities rose to $114.1 million, compared to $71.6 million for the fourth quarter of 2000.

On a GAAP basis, which includes goodwill amortization expense and other non-cash items, the company reported a loss before Sabre interest and income taxes of $84.5 million, or $1.70 per fully diluted share, for the year, compared to a loss of $109 million, or $2.11 per fully diluted share in 2000.