Travelport still trying to shake a (now 2) billion dollar hang-over

Travelport's Q3 06 results are out. Net revenue is at $631mm - down from last quarter's $693mm. B2C net revenue was $193, well down on Q2 of $221mm - in fact on par with Q2 2005 results of $195. But that is not the story. The story is that there was a "Net loss of $1.2 billion which included a pretax non-cash impairment charge of approximately $1.2 billion".

Two big questions from this line.

Firstly - how are they still being laboured with the hang over of turning $7b into $4.3b? I thought it clear that his monkey was off the back last quarter?

Secondly - a non-cash impairment of $1.2 bil means that there is a net loss of $1.2bil means a zero EBITDA (actually -$1.3mm).

The answer in the first one is buried deep in the Q3 press release where they say

"the Company recorded a total impairment charge of $2.4 billion (which includes the estimate of $1.2 billion taken in the June quarter), representing the difference in the carrying value of goodwill of the Company’s B2C and B2B reporting units and the implied fair value of goodwill of those reporting units"

In other words - I called the "monkey off the back" too early. I went back to the Q2 results and listened to Q3 call to see if I missed it. I did not. In the Q2 results they estimated the impairment of $1bil but through the period of Q2 realised that it was double that. Ouch!

The second - appears to be legitimately put down to continued restructuring and business challenges. They say on the conference call that B2C (Oribit, HotelClub/RatesToGo, Cheaptickets and eBookers) are at break even. Presumably held back mainly by eBookers (see also the delay in role out of their new Orbitz backed platform).

Hopefully finally we can call Travelport free.