Travelport Holdings (Jersey) Ltd (to be renamed Travelport) announced (19-Jan-2010) its intention to proceed with an unregistered offering of shares within the US, in connection with an IPO of shares being made to institutions in the UK and to eligible institutional investors internationally. The proposed IPO is intended to raise USD1,775 million, with the net proceeds used to retire debts. The transaction is expected to close in 1Q2010, subject to market and other customary conditions.
Travelport announces IPO
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CAPA airline profit outlook. Record margins from capacity restraint, but upswings are not forever
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The higher level of airline operating margin from a given GDP growth rate has been due to several factors. Lower oil prices have played their part, particularly since mid-2014, as does a higher level of global traffic growth than would previously have been expected from relatively sluggish GDP growth. In addition to these external issues, perhaps the most significant factor is a greater degree of capacity discipline. This is now most deeply rooted in the US, which is now by far the most profitable airline region, helping to drive the global result.
On a more cautionary note, the IMF has recently cut its global GDP forecasts, citing Brexit and other geopolitical risks. In addition, profit warnings in recent weeks from IAG, easyJet and Lufthansa are a reminder that cyclical upswings do not last forever. A test of the airline industry's improved profitability will be its resilience in a downturn.
Airline product differentiation to customers still in its infancy: CAPA Americas Summit (VIDEO)
Global airlines increasingly pursue the notion of de-commoditising their products in order to create a strategic level of differentiation. But the reality is that the concept of creating new airline customer value propositions remains in its infancy; airlines and other travel companies are still navigating the intricacies of determining how to deliver more differentiated passenger experiences.
Understanding passenger preferences is a huge piece of the puzzle to be solved as travel providers work toward greater product distinction and personalisation. At the same time, passenger preference for the lowest price will always dictate a high level of commoditisation within the travel industry.
The key for travel providers is finding the right balance, and most admit that they are far away from mastering the move from product commoditisation to personalisation. But some signs are emerging that the industry is achieving small moves in that direction.