Orbitz Is Said to Explore Sale, Draw Buyout Interest

Orbitz Worldwide Inc., the online travel agent that runs Orbitz.com and Cheaptickets.com, is exploring a sale, people with knowledge of the matter said.

The company is working with a financial adviser as it reaches out to potential buyers, said the people, asking not to be identified discussing private information. Chicago-based Orbitz has drawn interest from private equity funds and other Internet companies, the people said, without identifying potential buyers.

Orbitz has long been the smallest player in online travel without the benefit of economies of scale, according to Daniel Kurnos, an analyst at Benchmark Co. The company may be seeking to gain that scale in an increasingly competitive space, he said. U.S. airlines are flying at record capacity in the U.S. as fuel -- their largest expense -- is at the lowest level in six years.

“Someone from the outside looking for a a foothold in the industry” would be a logical suitor for Orbitz, Kurnos said, including Google Inc.

Aaron Stein, a spokesman for Google, declined to comment.

Tourist Dollars

Last year, Google licensed hotel-booking software from Room 77 Inc., a startup backed by Expedia Inc. Google has bolstered investments in travel to capture a bigger portion of the dollars spent by tourists who book hotels and plane tickets online. The deal stepped up competition with Priceline Group Inc., then one of Google’s biggest customers in buying search ads. Darren Huston, Priceline’s CEO, said in the company’s third-quarter conference call in November that it has reduced its reliance on Google.

“In terms of competition, there’s obviously a lot of noise in the marketplace,” Huston said then. “If anything our dependence, particularly on Google, has lessened.”

Orbitz jumped as much as 15 percent in New York trading and ended up 8.6 percent at $9.95, giving the company a market value of about $1.1 billion. The company was part of Travelport Ltd., which Blackstone Group LP acquired in 2006 for about $4.3 billion. It went public in July 2007.

A representative for Orbitz declined to comment on the company’s plans. Tnooz.com reported earlier this month that Orbitz was working on a major transaction, saying the scale and type of a deal was unclear.

Before it's here, it's on the Bloomberg Terminal.