American Airlines Group Inc. sent shares of Orbitz Worldwide Inc. tumbling the most in three months after pulling fares from the online reservation service in a dispute over a new contract.
The move is effective immediately for data from the company’s American Airlines unit. Fares from merger partner US Airways will disappear Sept. 1 after its accord expires, Fort Worth, Texas-based American said today in a statement.
Orbitz, which has been listing American flights and fares without a contract, depends more on U.S. airline ticket sales than other online travel services like Expedia Inc. and Priceline Group Inc., said Manish Hemrajani, an Oppenheimer & Co. analyst. American, the world’s largest airline, said it expects “minimal disruptions” for customers.
“It’s key for Orbitz more so than the others,” Hemrajani said in an interview. “It’s important to them to have American on their side. I wouldn’t imagine they’d be comfortable in letting them go.”
The loss of American may affect about 1.8 percent of Orbitz’s revenue this year, he said. The company had sales of $847 million in 2013. American also withdrew data from Orbitz in a 2010 dispute, and the online service provider’s shares “severely underperformed” the stock market and competitors during that time, the analyst said.
“We have worked tirelessly with Orbitz to reach a deal with the economics that allow us to keep costs low and compete with low-cost carriers,” American President Scott Kirby said in the statement. “While our fares are no longer on Orbitz, there are a multitude of other options available for our customers.”
About 75 percent of online bookings occur on carriers’ own websites, Hemrajani said.
The change primarily affects Orbitz.com and Cheaptickets.com. Corporate clients using Orbitz for Business to book travel are not affected, both companies said.
“Our sites offer hundreds of airlines which are eager to capture the revenue American is choosing to forgo, and we will continue to show our customers a broad range of flight options to thousands of destinations in the U.S. and worldwide,” Chris Chiames, a spokesman for Chicago-based Orbitz, said in an e-mailed statement.
Tickets already purchased through Orbitz remain valid, although changes to existing reservations now must be made on each airline’s reservation sites, according to American.
Orbitz shares dropped 4.6 percent to $8.04 at the close in New York, the biggest daily decline since May 20. About 8.1 million shares were traded, more than four times its three-month daily average. American slid less than 1 percent to $39.09.
American and Orbitz in April 2013 settled a legal dispute over competing systems to provide fare and flight schedule data to online reservation systems. Terms of the lawsuit settlement weren’t disclosed.
The airline also settled similar litigation with Sabre Holdings Corp. and Travelport LP in which it accused the companies of trying to block its entry into the electronic flight-data and reservations market.