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Filed Pursuant to Rule 424(b)(4)
Registration No. 333-142797

34,000,000 Shares

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Orbitz Worldwide, Inc. is offering 34,000,000 shares of its common stock. This is our initial public offering, and no public market currently exists for our common stock. The initial public offering price is $15.00 per share.


Our common stock has been approved for listing on the New York Stock Exchange under the symbol "OWW".


Investing in our common stock involves risks. See "Risk Factors" beginning on page 14.


Price $15.00 Per Share


 
  Price to
Public

  Underwriting Discounts and
Commissions

  Proceeds to
Company

Per Share         $ 15.00         $ 0.825         $ 14.175
Total   $ 510,000,000   $ 28,050,000   $ 481,950,000

We have granted the underwriters a 30-day option to purchase up to an aggregate of 5,100,000 additional shares of common stock on the same terms set forth above. See the section of this prospectus entitled "Underwriting."

The Securities and Exchange Commission and state securities regulators have not approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares to purchasers on or about July 25, 2007.


Morgan Stanley   Goldman, Sachs & Co.   Lehman Brothers   JPMorgan

Credit Suisse   UBS Investment Bank

  Thomas Weisel Partners LLC  

 

Pacific Crest Securities

 

 

Piper Jaffray

 

 

Stifel Nicolaus

 

July 19, 2007


GRAPHIC



TABLE OF CONTENTS

 
  Page
Prospectus Summary   1
Risk Factors   14
Special Note Regarding Forward-Looking Statements   33
Market and Industry Data and Forecasts   33
Use of Proceeds   34
Dividend Policy   34
Capitalization   35
Dilution   36
Unaudited Pro Forma Combined Consolidated Condensed Financial Information   37
Selected Historical Combined Consolidated Financial and Other Data   41
Management's Discussion and Analysis of Financial Condition and Results of Operations   46
Business   79
Management   111
Principal Stockholders   137
Arrangements Between Our Company and Related Parties   139
Description of Capital Stock   151
Shares Eligible for Future Sale   160
Certain Material U.S. Federal Tax Consequences for Non-U.S. Holders of Common Stock   162
Underwriting   164
Legal Matters   170
Experts   170
Where You Can Find More Information   171
Index to Combined Consolidated Financial Statements   F-1

        No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

        Through and including August 14, 2007 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

        Orbitz, Orbitz Matrix, Flex Search, OrbitzTLC, OrbitzTLC Mobile Access, the Orbitz design, the stylized "O" design and other trademarks or service marks of Orbitz Worldwide appearing in this prospectus are the property of Orbitz Worldwide. This prospectus also contains additional trade names, trademarks and service marks belonging to us and to other companies. We do not intend our use or display of other parties' trademarks, trade names or service marks to imply, and such use or display should not be construed to imply, a relationship with, or endorsement or sponsorship of us by, these other parties.

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PROSPECTUS SUMMARY

        This summary highlights selected information contained elsewhere in this prospectus. This summary may not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, especially the risks of investing in our common stock discussed under "Risk Factors" beginning on page 14, and the combined consolidated financial statements and related notes thereto included elsewhere in this prospectus, before making an investment decision.

        As used in this prospectus, unless otherwise stated or the context otherwise requires, references to we, us, our, the company, the successor and Orbitz Worldwide and similar references refer collectively to Orbitz Worldwide, Inc. and its subsidiaries, and references to "Orbitz" refer to Orbitz, Inc., an entity in the combined reporting group. Unless otherwise stated or the context otherwise requires, references to "Travelport" refer to Travelport Limited, the parent company of the Travelport group of companies, and its subsidiaries. In August 2006, Cendant's travel distribution businesses (including Orbitz Worldwide) were acquired by affiliates of The Blackstone Group and Technology Crossover Ventures, or TCV, which, together with One Equity Partners, we collectively refer to as Travelport's controlling holders, and were renamed Travelport, which we refer to as the Blackstone Acquisition. References in this prospectus to Cendant refer to Cendant Corporation prior to the Blackstone Acquisition. Cendant is now named Avis Budget Group, Inc., and we sometimes refer to it in this prospectus as "Avis Budget" following the Blackstone Acquisition.


ORBITZ WORLDWIDE, INC.

Overview

        We are a leading global online travel company that uses innovative technology to enable leisure and business travelers to research, plan and book a broad range of travel products. We own and operate a strong portfolio of consumer brands that includes: Orbitz, CheapTickets, ebookers, HotelClub, RatesToGo and the Away Network and corporate travel brands, Orbitz for Business and Travelport for Business. We provide customers with access to a comprehensive set of travel products, including air, hotels, vacation packages, car rentals, cruises, travel insurance and destination services from over 80,000 suppliers worldwide.

        We provide compelling value propositions for both our customers and suppliers. For our customers, we offer access to comprehensive travel inventory from a broad base of suppliers. We employ customer-friendly features and innovative technologies, such as our proactive OrbitzTLC care offering and the industry's first Matrix display, to provide differentiated user experiences. In addition, we provide relevant travel-related content, such as user-generated travel reviews and other content, for our customers to research, plan and book travel. For our suppliers, we represent a cost-effective distribution channel that reaches millions of potential customers. Each of our brands has been positioned to target a defined customer segment, and collectively, our U.S. brands have a base of nearly 48 million registered users and more than 25 million unique visitors each month.

        We are a leader in air travel, the largest online travel segment. This offers us a significant opportunity to drive growth in non-air categories, specifically hotels and vacation packages that are customized by travelers, which we refer to as dynamic vacation packages. These categories offer significant growth potential and attractive revenue per transaction and are areas in which we are currently under-penetrated relative to our major online competitors. There are also substantial growth opportunities in fast growing regions outside of the U.S. for our strong international brands: ebookers, HotelClub and RatesToGo. Finally, we believe that we have a significant opportunity to improve our financial performance by continuing to realize operating efficiencies from the global integration of our operations (similar to the success we achieved with the integration of Orbitz and CheapTickets in 2005), by sharing best practices across our global operations and by launching our common, scaleable global technology platform. We



believe the organic growth opportunities inherent to us and to the overall marketplace, coupled with expected tangible operating improvements, position us well for strong profit growth.

        The strength of our brands, quality of our products and efficacy of our marketing programs have enabled us to become one of the largest online travel companies in the world, based on gross bookings. In 2006, we generated approximately $10 billion in gross bookings globally, including $8.7 billion in the U.S. We were also the fastest growing major online travel company in the U.S. in 2006 with domestic gross bookings growth of 38%. For the combined year ended December 31, 2006 and for the three months ended March 31, 2007, we generated $752 million and $212 million of net revenue, respectively, and $117 million and $30 million of adjusted EBITDA, respectively. For a discussion of adjusted EDITDA, see the section below entitled "Summary Historical Combined Consolidated Financial and Other Data." Our net loss was $146 million and $10 million for the combined year ended December 31, 2006 and the three months ended March 31, 2007, respectively. Our working capital deficit was $283 million and $398 million for the combined year ended December 31, 2006 and the three months ended March 31, 2007, respectively.

Our History

        Orbitz Worldwide, the online travel division of Travelport, was formed through the combination of Orbitz and the online travel assets of Cendant's travel distribution services division. Orbitz was originally formed by a group of leading U.S. airlines in 1999 to participate in the rapidly growing online travel industry. The airline investors in Orbitz consisted of American Airlines, Continental Airlines, Delta Air Lines, Northwest Airlines and United Air Lines. The Orbitz website was launched in 2001. In November 2004, Orbitz was acquired by Cendant and assumed responsibility for Cendant's domestic online travel business, which included CheapTickets, a leading online travel brand focused on the value-conscious traveler, and later Flairview Travel, which operates the international online hotel websites, HotelClub.com and RatesToGo.com. In February 2005, Cendant acquired ebookers, a leading international online travel brand with an online presence in 13 countries in Europe. Orbitz Worldwide now operates as one of three business units within Travelport. We employ over 1,600 employees in over 20 countries.

Industry Background

        The worldwide travel industry is a large and dynamic market. We believe that aggregate gross bookings in the global airline, hotel, vacation package, car rental and cruise industry were approximately $900 billion in 2005. Approximately 75% of global travel gross bookings are currently made in the U.S., Europe and the Asia Pacific region. The World Travel and Tourism Council expects total travel and tourism dollars spent in the Asia Pacific region, the U.S. and Europe to grow annually 10%, 6% and 6%, respectively, for the five year period between 2005 and 2010.

        Online travel is the largest e-commerce category and the fastest growing segment of the travel industry.    The emergence of the Internet as the most efficient way to book travel has revolutionized the way millions of people research and purchase travel and has led to the growth of online travel companies. In 2006, the online travel industry in the North American, European and Asia Pacific regions grew by 30% to approximately $196 billion in gross bookings and represented the single largest e-commerce category. With less than 30% of travel bookings in these regions made online today, the online travel industry is well positioned for significant, long-term growth. We believe the online travel industry is under-penetrated and will continue to grow significantly faster than the overall travel industry. PhoCusWright, an independent travel, tourism and hospitality research firm, projects the percentage of travel booked online in these regions to reach 40% by 2008. PhoCusWright projects this increase in penetration to drive growth in online travel bookings and to result in a 24% compound annual growth rate, or CAGR, from 2006 to 2008.

        The U.S. is the largest online travel marketplace and continues to experience strong growth.    The U.S. online travel marketplace totaled $116 billion in gross bookings in 2006, and PhoCusWright projects it will grow at a CAGR of approximately 19% from 2006 to 2008. Growth in the U.S. will continue to be driven by an

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increase in the percentage of bookings made online, which PhoCusWright projects will grow from 47% in 2006 to 59% in 2008. PhoCusWright expects online bookings of leisure air travel to grow at a 17% CAGR from 2006 to 2008. In the U.S., the fastest-growing and most profitable online travel categories include vacation packages and hotels. PhoCusWright projects vacation packages (including dynamic packaging) and hotel bookings will both grow at a CAGR of 20% from 2006 through 2008.

        Growth in online travel is expected to be even stronger outside of the U.S.    In 2006, according to PhoCusWright, Europe and the Asia Pacific region experienced online travel growth of 41% and 34% to reach $57 billion and $23 billion in gross bookings, respectively. Growth in these regions will continue to be driven by the percentage of bookings made online, which PhoCusWright projects will grow from 17% in 2006 to 29% in 2008. PhoCusWright projects this increase in online penetration will result in overall gross bookings growth in excess of 30% for these two regions from 2006 through 2008.

Company Strengths

        We believe our success in becoming one of the world's leading online travel companies has been driven by the following competitive strengths:

        Strong global brands with industry-leading positions.    Our portfolio of widely-recognized online travel brands serves a broad range of travelers worldwide, including leisure and business travelers. Each brand has been positioned to target a defined customer segment, and collectively, our U.S. brands have a base of nearly 48 million registered users and more than 25 million unique visitors each month. Our brands are also among the leaders in their respective geographic regions. Our U.S. business, comprised of Orbitz, CheapTickets, Orbitz for Business and Travelport for Business, is the second largest online travel company and in 2006 was the fastest growing major online travel company in the U.S. based on gross bookings. Internationally, ebookers, HotelClub and RatesToGo hold strong positions in the fast-growing European and Asia Pacific regions.

        Technology leadership.    We have a strong track record in pioneering online travel technologies and innovations to provide superior customer experiences. Our easy-to-use, intuitive websites incorporate technology-enabled, user-friendly tools, such as the Orbitz Matrix display, that simplify and improve a customer's ability to book the right trip at the right price or create a dynamic package efficiently. We employ scalable search technologies that have allowed us to introduce consumer-friendly and innovative products. For example, our Flex Search technology allows customers to incorporate travel flexibility such as alternate travel dates, times and airports into their searches to find lower fares. We have also developed our OrbitzTLC proactive customer care platform, which sends permission-based alerts to a customer's email address or cell phone to notify him or her of situations that could affect travel plans or cause delays.

        Marketing and e-commerce expertise.    We believe our online and offline marketing techniques increase brand awareness, drive qualified traffic to our websites and improve the rate at which visitors become customers, while managing customer acquisition costs to deliver profitable growth. We believe we have a core competency in e-marketing. We design our online marketing strategies to be cost-effective by using efficient performance-based programs, such as paid search advertising, cost-per-click placements and affiliate marketing. We use broadcast advertising, such as television, radio and print, to highlight brand differentiation and emphasize to consumers our compelling product features. We believe our marketing efforts have been effective and contribute to an increase in our gross bookings.

        Breadth and diversity of our offering.    We provide our customers with access to a vast array of travel inventory and travel-related content to deliver a complete travel experience. We strive to continually grow and diversify our travel offering. Our U.S. websites provide access to products and services from hundreds of airlines, over 80,000 hotels, most major car rental brands and 70 cruise lines around the world. Our full service offering includes access to vacation packages, destination services and travel insurance. We also have valuable travel information integrated into our websites, such as user-generated travel reviews and

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Frommer's content, to help customers make travel decisions. To differentiate and personalize the experience, we designed and implemented a comprehensive customer care program that provides travel alerts and mobile access to flight status and hotel availability information 24 hours a day, 7 days a week.

        Strong growth potential.    We believe we are well positioned to capture significant growth by focusing on opportunities in our under-penetrated travel categories and geographies.

            Hotels and Dynamic Packaging:  Hotel and dynamic package bookings generate higher revenue per transaction than air bookings and are expected to outgrow other travel categories. Due to our historical focus on air travel, we are under-penetrated in these non-air categories relative to our peers. We believe we are well positioned to grow our hotel and dynamic packaging businesses given our leadership in air travel, strong brand recognition, opportunity to cross-sell non-air products, strength in hotel and dynamic packaging technologies, significant customer base, and broad travel supplier relationships.

            International:  We believe we are well positioned to grow our international brands and capture a share of the 32% annual growth in online travel that Europe and the Asia Pacific region are projected to deliver through 2008. Among the primary contributors to our growth will be our existing presence in these regions through our strong brands including ebookers, HotelClub and RatesToGo; our new global technology platform; and our ability to share best practices between our U.S. and international operations.

        Continued improvements in operating efficiencies.    In all aspects of our global business, we focus on cost efficiencies and continuously seek to improve the Orbitz Worldwide low cost operating model. The integration of Orbitz and CheapTickets has streamlined our U.S. operations, saving us tens of millions of dollars annually. We have also reduced support and fulfillment costs by automating certain tasks and moving various functions to low cost regions. We are in the process of completing our new global technology platform and expect to begin moving data and processing transactions booked through the ebookers websites onto this platform in mid-2007, a process we call migration. This platform is expected to drive significant cost savings as it will allow us to operate multiple websites using a shared set of technologies and resources, thereby enabling us to reduce development costs, streamline back office operations and efficiently deploy innovative features across multiple global websites.

        Highly experienced management team.    Our senior leadership team, including Steve Barnhart, President and Chief Executive Officer, and Mike Nelson, Chief Operating Officer, has extensive experience with us or our predecessor companies. Other members of our management team include: Marsha Williams, Chief Financial Officer, who was previously CFO of Equity Office Properties and also has had senior level experience at Crate and Barrel and Amoco Corporation, Bahman Koohestani, Chief Information Officer, who was one of the early executives at Netscape Communications, and Randy Wagner, Chief Marketing Officer, who joined Orbitz Worldwide from McDonald's, where she was a senior member of the marketing team. Our Chairman, Jeff Clarke, who is President and Chief Executive Officer of Travelport, has 21 years of experience in the technology industry, including senior management positions with Hewlett-Packard, Compaq Computer and, most recently, CA, Inc. (formerly Computer Associates Inc.).

Company Strategy

        Our objective is to improve our financial performance while continuing to build our leadership position in the global online travel industry. The key elements of our strategy include:

        Capture global growth opportunities in non-air travel.    Our leadership in air travel provides us with a significant opportunity for continued growth in non-air travel categories, which can generate up to ten times higher revenue per transaction than air-only transactions. We have increased our penetration of the fast-growing hotel and dynamic packaging categories and expect to continue to increase our non-air revenue mix through a number of initiatives. For example, we encourage consumers to book non-air travel

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products during and after the air booking process through targeted marketing. By expanding our telesales team and enhancing our travel technologies, we are improving our ability to service and book complex itineraries and to provide a more flexible offering. Additionally, by improving and expanding our relationships with hotels and destination services providers, we are increasingly improving our ability to offer the best available inventory.

        Grow our business internationally.    Through our international brands, ebookers, HotelClub and RatesToGo, we believe we are well positioned for international growth. In 2006, our international businesses contributed 19% of our net revenue. Our geographic mix combined with strong international growth in the online travel industry represents a sizeable growth opportunity for us. As part of this growth plan, we are prioritizing ebookers as the first of our brands to migrate onto our new global technology platform. We expect the new platform will provide better user experiences, lead to continued strong growth in these regions and result in cost savings to us.

        Differentiate our brands through continued customer-centered innovation.    We believe our customer care innovations have created significant value for, and loyalty among, our customers while strengthening and differentiating our brands. We are actively branding these customer care innovations as OrbitzTLC. We will continue to innovate and launch leading customer-focused initiatives, such as OrbitzTLC Mobile Access and additional tools in 2007. We plan to differentiate CheapTickets by improving functionality to enhance the overall experience for value-conscious travelers.

        Invest in targeted content and community.    We are selectively investing in tools, products and partnerships to attract new customers by engaging them early in their travel decision-making processes and to retain existing customers by providing them with a forum to share their travel experiences. We are also expanding our offering to improve user experiences, increase retention of customers and encourage travelers to spend more time on our websites. Our enhanced offering includes useful content such as user-generated reviews, destination travel guides through the Away Network and targeted microsites, such as Gay, Family and Eco-Tourism. These initiatives, coupled with our large base of visitors with attractive demographics, provide additional advertising revenue potential for our business.

        Cultivate new strategic distribution channels and pursue targeted acquisitions.    We are seeking to gain access to new, fast-growing strategic distribution channels. We plan to continue to establish new distribution partnerships similar to our existing white label relationships under which we power websites, such as United Escapes for United Air Lines and the vacation package offerings of Yahoo! Inc. and Intercontinental Hotel Group. With our white label solutions we provide technology to third- parties which enables them to operate websites under their own brands. We are targeting partnerships with third parties to open new channels through which to generate bookings. We also plan to continue to build and invest in our corporate travel offering to capture the strong online growth in corporate travel bookings. Lastly, we may pursue targeted acquisitions that complement our product offering, provide access to new distribution channels, drive higher customer retention, strengthen our presence in Europe and the Asia Pacific region, and enhance our financial prospects.

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Our Structure

        The chart below depicts our organizational structure immediately following consummation of the offering:

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Our Relationship with Travelport

        General.    Following the completion of this offering, Travelport will indirectly own 48,912,526 shares of our common stock, representing approximately 60% of our outstanding common stock. As a result, Travelport's controlling holders will have the power to elect all of the members of our board of directors and will have the power to control all matters requiring stockholder approval or consent. In addition, our certificate of incorporation will contain provisions that recognize that we and Travelport may engage in the same or similar business activities, have an interest in the same areas of corporate opportunities and continue to have contractual and business relations with each other, including some of our directors continuing to serve as directors of Travelport. Further, under our certificate of incorporation, neither Travelport nor any officer or director of Travelport will be liable to us or our stockholders for a breach of fiduciary duties by reason of any such activities, with some exceptions. For additional information, see the section of this prospectus entitled "Description of Capital Stock—Certificate of Incorporation Provisions Relating to Corporate Opportunities and Interested Directors."

        Competition.    Travelport operates in the same highly competitive industry as we do and could compete with us. In addition, upon consummation of this offering, Travelport will be in a unique position to influence and control the operation of our business and the management of our affairs since it will indirectly own approximately 60% of our common stock. As a result, Travelport will effectively control us and may be able to restrict us from taking certain actions, such as raising additional capital, which may compromise our ability to compete effectively. Prior to this offering, we will grant Travelport and its affiliates, including future affiliates, perpetual licenses to use certain of our intellectual property. Travelport and its affiliates will be prohibited from sublicensing our intellectual property (other than our supplier link airline direct connect technology) to any third party for competitive use, unless Travelport incorporates or uses our intellectual property with Travelport products or services to enhance or improve Travelport products or services (but not to provide our intellectual property to third parties on a stand-alone basis). Travelport and its affiliates will be able to use such intellectual property to compete directly with us.

        GDS Services.    To varying extents suppliers utilize global distribution systems, or GDSs, to connect their inventory of products and services with travel agencies, who in turn distribute those products and

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services to travelers. Certain of our businesses utilize Galileo and Apollo, which are subsidiaries of Travelport, for GDS services. In addition, on December 6, 2006, Travelport announced that it had entered into a definitive agreement to acquire Worldspan Technology, Inc. Worldspan provides Orbitz with GDS services and Orbitz is currently in litigation with Worldspan over the interpretation of this agreement. In connection with the proposed acquisition, we are negotiating a new agreement with Travelport, which would replace our existing agreements with both Galileo and Worldspan. As a result, Travelport would provide virtually all of our GDS services. The proposed acquisition of Worldspan by Travelport has not yet been consummated and remains subject to regulatory approvals.

Concurrent Debt Financing

        Concurrently with the consummation of this offering, we intend to enter into a new senior secured credit agreement with a syndicate of financial institutions, including affiliates of certain of the underwriters of this offering, consisting of a seven-year $600 million senior secured term loan and a six-year senior secured revolving credit facility that will provide for borrowings of up to $85 million. The term loan and the revolving credit facility will bear interest at floating rates tied to LIBOR. We expect to use approximately $530 million of the net proceeds from the term loan to repay indebtedness we owe to Travelport and to pay a dividend to Travelport. The new credit agreement will contain restrictions on our operating flexibility. On the closing date of this offering, approximately $65 million in letters of credit will remain outstanding under Travelport's credit facility under an arrangement we have with them to maintain these letters for us.

        As a result, upon completion of this offering, we will have significant debt obligations that could restrict our operations and limit our ability to compete in the online travel marketplace. We expect to dedicate a significant portion of our cash flows from operations to principal and interest payments under our new senior secured credit agreement. This means there will be less cash available for working capital, capital expenditures, acquisitions and other general corporate purposes. If we incur additional indebtedness, it could make it more difficult for us to satisfy our payment obligations and further limit our ability to compete in the online travel marketplace.

Risk Factors

        Our business is subject to numerous risks, as more fully described in the section entitled "Risk Factors." We urge you to carefully consider all the information presented in the "Risk Factors" section of this prospectus beginning on page 14.


Additional Information

        Our principal executive offices are located at 500 W. Madison Street, Suite 1000, Chicago, IL 60661. The telephone number of our principal executive offices is (312) 894-5000, and we maintain a website at www.orbitz.com. Information contained on our website does not constitute a part of this prospectus.

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THE OFFERING

Common stock   34,000,000 shares
Underwriters' option   5,100,000 shares
Common stock to be outstanding immediately after this offering   82,912,526 shares
Use of proceeds   We expect to receive net proceeds from this offering, after deducting offering expenses and underwriting discounts and commissions, of approximately $475 million or approximately $547 million if the underwriters exercise in full their option to purchase 5,100,000 additional shares. We intend to use all of the net proceeds from this offering to repay indebtedness we owe to Travelport.
    Concurrently with the consummation of this offering, we intend to enter into a new senior secured credit agreement. We expect to use approximately $530 million of borrowings under the term loan portion of this facility to repay indebtedness we owe to Travelport and to pay a dividend to Travelport.
    Travelport intends to use such proceeds and the dividend to repay indebtedness outstanding under its credit facilities.
    For further information, see the section of this prospectus entitled "Use of Proceeds."
Risk factors   Please read the section entitled "Risk Factors" beginning on page 14 for a discussion of some of the factors you should carefully consider before deciding to invest in our common stock.

        Our common stock has been approved for listing on the New York Stock Exchange under the symbol "OWW".

        Unless we specifically state otherwise, the share information in this prospectus does not give effect to:

    the underwriters' option to purchase up to an aggregate of 5,100,000 additional shares of common stock;

    3,034,891 shares of common stock issuable upon the exercise of options with an exercise price equal to the public offering price that will be outstanding at the consummation of this offering;

    2,705,804 shares of common stock issuable in connection with restricted stock units that will be outstanding at the consummation of this offering; and

    359,305 shares of our common stock issuable under our equity incentive plans.

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SUMMARY HISTORICAL COMBINED CONSOLIDATED FINANCIAL AND OTHER DATA

        The combined consolidated statement of operations data for each of the years ended December 31, 2004, December 31, 2005 and the periods January 1, 2006 through August 22, 2006 and August 23, 2006 through December 31, 2006 and the balance sheet data as of December 31, 2006 have been derived from our audited financial statements and the condensed combined consolidated statement of operations for the three months ended March 31, 2006 and March 31, 2007 and the balance sheet data as of March 31, 2007 have been derived from our unaudited condensed combined consolidated financial statements included elsewhere in this prospectus. The following tables contain summary unaudited pro forma as adjusted financial data. The summary unaudited pro forma as adjusted financial data have been derived by the application of pro forma and other adjustments to our historical financial statements to give effect to the Blackstone Acquisition, this offering, the concurrent debt financing and the use of the proceeds therefrom, in each case, as if each event had occurred as of January 1, 2006, in the case of the statements of operations and as of December 31, 2006, in the case of balance sheet. The unaudited information was prepared on a basis consistent with that used in preparing our audited combined consolidated financial statements and includes all adjustments, consisting of normal and recurring items, that we consider necessary for a fair presentation of the financial position and results of operations for the unaudited periods.

        On August, 23, 2006, affiliates of The Blackstone Group and TCV created for the Blackstone Acquisition completed the acquisition of the Travelport businesses of Cendant, including the businesses which comprise the combined reporting group of Orbitz Worldwide. The balance sheet and statement of operations data as of December 31, 2006 and for the period August 23, 2006 through December 31, 2006 and the three months ended March 31, 2007 have been carved out of Travelport and include the financial condition, results of operations and cash flows for the combined reporting group of Orbitz Worldwide on a successor basis, which we refer to as the successor, reflecting the impact of the preliminary purchase price allocation. The balance sheet and statement of operations data for periods prior to August 23, 2006 have been carved out of Cendant and include the financial condition, results of operations and cash flows for the combined reporting group of Orbitz Worldwide on a predecessor basis, which we refer to as the predecessor. The predecessor basis reflects the carrying value of the combined reporting group of Orbitz Worldwide at Cendant's historical basis. Financial information for the successor and predecessor has been separated by a vertical line on the face of the statement of operations data to identify the different bases of accounting. Our combined consolidated financial statements include the financial condition, results of operations and cash flows of CheapTickets since October 2001, Flairview Travel since April 2004, Orbitz since November 2004 and ebookers since February 2005.

        Our historical combined consolidated financial statements do not reflect what our financial position, results of operations and cash flows would have been had we operated as a separate, standalone company without the shared resources of Cendant in the predecessor periods and Travelport in the successor period. Additionally, our historical financial position and results of operations are not necessarily indicative of our financial position or results of operations as of any future date or for any future period.

        You should read the following summary historical combined consolidated financial and other data in conjunction with the sections of this prospectus entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Unaudited Pro Forma Combined Consolidated Condensed Financial Information," "Selected Historical Combined Consolidated Financial and Other Data" and our historical combined consolidated financial statements and related notes included elsewhere in this prospectus.

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  Predecessor
   
  Successor
 
 
  Predecessor
   
  Successor
  Combined(1)
   
   
 
 
   
   
   
   
   
  Pro Forma
As Adjusted
Three
Months
Ended
March 31,
2007(2)

 
 
  Year Ended
December 31,

  January 1,
2006
through
August 22,
2006

   
  August 23,
2006
through
December 31,
2006

   
  Pro Forma
As Adjusted
Year Ended
December 31,
2006(2)

  Three
Months
Ended
March 31,
2006

   
  Three
Months
Ended
March 31,
2007

 
 
   
  Year Ended
December 31,
2006

   
 
 
  2004
  2005
   
   
 
 
  (in millions, except share and per share data)

 
Statements of Operations Data:                                                              
Net revenue   $ 244   $686   $ 510       $ 242   $ 752   $ 753   $ 182       $ 212   $ 212  

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Cost of revenue     43   101     75         38     113     113     29         38     38  
Selling, general and administrative     217   517     379         201     580     602     145         152     158  
Depreciation and amortization     32   78     37         18     55     50     16         13     13  
Impairment of goodwill and intangible assets     10   400     122             122                      
   
 
 
     
 
 
 
     
 
 
Total operating expenses     302   1,096     613         257     870     765     190         203     209  
   
 
 
     
 
 
 
     
 
 

Operating income/(loss)

 

 

(58

)

(410

)

 

(103

)

 

 

 

(15

)

 

(118

)

 

(12

)

 

(8

)

 

 

 

9

 

 

3

 

Interest expense

 

 

2

 

22

 

 

18

 

 

 

 

9

 

 

27

 

 

80

 

 

7

 

 

 

 

19

 

 

17

 
Other income, net       2     1             1     1                  
   
 
 
     
 
 
 
     
 
 

Loss before income taxes

 

 

(60

)

(430

)

 

(120

)

 

 

 

(24

)

 

(144

)

 

(91

)

 

(15

)

 

 

 

(10

)

 

(14

)

Provision (benefit) for income taxes

 

 

3

 

(42

)

 

1

 

 

 

 

1

 

 

2

 

 

3

 

 

1

 

 

 

 


 

 


 
   
 
 
     
 
 
 
     
 
 

Net loss

 

$

(63

)

$(388

)

$

(121

)

 

 

$

(25

)

$

(146

)

$

(94

)

$

(16

)

 

 

$

(10

)

$

(14

)
   
 
 
     
 
 
 
     
 
 
Earnings per share:                                                              
  Net loss per share:                                                              
    Basic and diluted                                   $ (1.13 )                 $ (0.17 )
                                   
                 
 
  Weighted average shares outstanding:                                                              
    Basic and diluted                                     82,912,526                     82,912,526  

       

 
  As of
December 31, 2006

  As of
March 31, 2007

 
 
  Actual
  Actual
  Pro Forma
As Adjusted(4)

 
 
  (in millions)

 
Balance Sheet Data:                    
Cash and cash equivalents   $ 28   $ 48   $ 95  
Working capital (deficit)(3)     (283 )   (398 )   (357 )
Total assets     2,061     2,127     2,058  
Notes payable to Travelport(5)     0     860     0  
Long-term debt(6)     0     0     594  
Total long-term liabilities(5)     407     1,165     791  
Total invested equity/stockholders' equity     1,267     422     721  

(See footnotes on following page)

10


 
  Predecessor
   
  Successor
  Combined
  Predecessor
   
  Successor
 
  Year Ended December 31,
   
   
   
   
  Three
Months
Ended
March 31,
2006

   
  Three
Months
Ended
March 31,
2007

 
  January 1, 2006
through August 22,
2006

   
  August 23, 2006
through December 31,
2006

  Year Ended
December 31,
2006

   
 
  2004
  2005
   
   
 
  (in millions)

Other Data:                                                  

Gross bookings(7)

 

$

1,987

 

$

7,435

 

$

6,832

 

 

 

$

3,193

 

$

10,025

 

$

2,432

 

 

 

$

2,941
  Air gross bookings(8)     1,338     5,392     5,046         2,397     7,443     1,800         2,151
  Non-air and other gross bookings(9)     649     2,043     1,786         796     2,582     632         790
  Domestic gross bookings     1,782     6,334     5,986         2,762     8,748     2,129         2,530
  International gross bookings     205     1,101     846         431     1,277     303         411

Net revenue

 

 

244

 

 

686

 

 

510

 

 

 

 

242

 

 

752

 

 

182

 

 

 

 

212
  Air net revenue(10)     86     323     235         120     355     89         99
  Non-air and other net revenue(11)     158     363     275         122     397     93         113
  Domestic net revenue     216     542     411         200     611     147         166
  International net revenue     28     144     99         42     141     35         46

EBITDA(12)

 

 

 

 

 

(330

)

 

 

 

 

 

 

 

 

 

(62)

 

 

8

 

 

 

 

22
Adjusted EBITDA(12)           90                     117     10         30

(1)
The combined results of the successor and the predecessor for the periods in 2006 and that of the predecessor in prior years are not necessarily comparable due to the change in basis of accounting resulting from the Blackstone Acquisition and the associated change in capital structure. The presentation of the 2006 results on this combined basis does not comply with generally accepted accounting principles in the U.S.; however, we believe that this provides useful information to assess the relative performance of the businesses in all periods presented in the financial statements on an ongoing basis. The captions included within our statements of operations that are materially impacted by the change in basis of accounting include net revenue, depreciation and amortization and impairment of goodwill and intangible assets. We have disclosed the impact of the change in basis of accounting for each of these captions in the section of this prospectus entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations."

(2)
On a pro forma as adjusted basis to give pro forma effect to the Blackstone Acquisition, this offering, the concurrent debt financing and the use of the proceeds therefrom, in each case, as if each event had occurred on January 1, 2006. See the section of this prospectus entitled "Unaudited Pro Forma Combined Consolidated Condensed Financial Information."

(3)
Defined as current assets minus current liabilities.

(4)
The amounts presented in the pro forma as adjusted combined balance sheet data are adjusted to reflect the issuance of 34,000,000 shares of our common stock in this offering at $15.00 per share and the use of the estimated net proceeds therefrom, after deducting underwriting discounts and commissions and estimated offering expenses, and the concurrent debt financing and the use of the proceeds therefrom. See "Unaudited Pro Forma Combined Consolidated Condensed Financial Information."

(5)
On January 26, 2007 and January 30, 2007, we became the obligor on two intercompany notes payable to subsidiaries of Travelport, in the aggregate principal amounts of approximately $25 million and $835 million, respectively, and recorded a $835 million reduction to net invested equity. The unpaid principal of these notes accrues interest at a fixed annual rate of 10.25% until the earlier of payment in full or the maturity date of February 19, 2014. These notes may be paid in whole or in part at any time at our option without penalty.

(6)
Represents the concurrent debt financing of $600 million of which $6 million is short term.

(7)
Represents the total amount paid by a consumer for transactions booked under both the retail and merchant models at the time of booking.

(8)
Represents the total amount paid by a consumer for air transactions booked under both the retail and merchant models at the time of booking. Excludes gross bookings from the air component of dynamic packaging.

(9)
Represents the total amount paid by a consumer for hotel, vacation package, car rental, cruise and other transactions booked under both the retail and merchant models at the time of booking.

11


(10)
Comprises commissions and fees earned on air transactions under our retail model and merchant model. Excludes net revenue from the air component of dynamic packaging.

(11)
Comprises commissions and fees earned on hotel, vacation package, car rental and cruise transactions under our retail model and merchant model, as well as advertising revenue and fees and commissions earned from the sale of third party travel-related products on our websites, insurance, our affinity card and other services.

(12)
EBITDA, a performance measure used by management, is defined as net loss plus: interest expense, provision for income taxes and depreciation and amortization, as shown in the table below. Adjusted EBITDA represents EBITDA as adjusted for certain items as described in the table below.

    EBITDA and adjusted EBITDA, as presented for the year ended December 31, 2005, on a combined basis for the year ended December 31, 2006 and for the three months ended March 31, 2006 and March 31, 2007, are not defined under U.S. generally-accepted accounting principles, and do not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Because not all companies use identical calculations, this presentation of EBITDA and adjusted EBITDA may not be comparable to other similarly-titled measures of other companies.

    We use, and we believe investors benefit from the presentation of, EBITDA and adjusted EBITDA in evaluating our operating performance because they provide us and our investors with an additional tool to compare our operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our core operations. We believe that EBITDA and adjusted EBITDA are useful to investors and other external users of our financial statements in evaluating our operating performance and cash flow because:

    EBITDA is widely used by investors to measure a company's operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired; and

    investors commonly adjust EBITDA information to eliminate the effect of non-recurring items such as restructuring charges, as well as non-cash items such as impairment of goodwill and intangible assets and equity compensation, all of which vary widely from company to company and impact comparability.

        Our management uses adjusted EBITDA:

    as a measure of operating performance to assist in comparing performance from period to period on a consistent basis;

    as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations; and

    as a performance evaluation metric off which to base executive and employee incentive compensation programs.

        The following table provides a reconciliation of net loss to EBITDA:

 
   
   
  Predecessor
   
  Successor
 
 
  Predecessor
  Combined
   
 
 
  Three Months
Ended
March 31,
2006

   
  Three Months
Ended
March 31,
2007

 
 
  Year Ended
December 31,
2005

  Year Ended
December 31,
2006

   
 
 
  (in millions)

 
Net loss   $ (388 ) $ (146 ) $ (16 )     $ (10 )

Interest expense

 

 

22

 

 

27

 

 

7

 

 

 

 

19

 

Provision (benefit) for income taxes

 

 

(42

)

 

2

 

 

1

 

 

 

 


 

Depreciation and amortization

 

 

78

 

 

55

 

 

16

 

 

 

 

13

 

 

 



 



 



 

 

 



 

EBITDA

 

$

(330

)

$

(62

)

$

8

 

 

 

$

22

 

 

 



 



 



 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12


    EBITDA was adjusted by the items listed and described in more detail below. The following table provides a reconciliation of EBITDA to Adjusted EBITDA:

 
   
   
  Predecessor
   
  Successor
 
  Predecessor
  Combined
   
 
  Three Months
Ended
March 31,
2006

   
  Three Months
Ended
March 31,
2007

 
  Year Ended
December 31,
2005

  Year Ended
December 31,
2006

   
 
  (in millions)

EBITDA   $ (330)   $ (62)   $ 8         $ 22  
Goodwill and intangible impairment expense(a)     400     122       —           —  
Purchase accounting adjustments(b)     2     43       —           6  
Corporate allocations and other direct corporate costs(c)     10     13       4           3  
Global platform expense(d)         5       1           2  
Stock-based compensation expense(e)     8     6       1           1  
Restructuring and moving expenses(f)         7       —           —  
Travelport corporate solutions adjustments(g)     (3)     (3)     (1)         —  
Public company costs(h)     (14)     (14)     (3)         (4)
ebookers' pre-acquisition EBITDA(i)     (5)                 —  
CheapTickets' integration and ebookers restructuring costs(j)     22                 —  
   
 
 
     
Adjusted EBITDA(k)   $ 90   $ 117     $ 10         $ 30  
   
 
 
     

(a)
Represents the charge recorded for impairment of goodwill and intangible assets. The impairment is primarily related to a decline in ebookers' fair value relative to its carrying value, which was the result of poor operating performance occurring after the asset was acquired by Cendant.

(b)
Represents the purchase accounting adjustments made at the time of the acquisitions in order to reflect the fair value of deferred revenue and accrued liabilities on the opening balance sheet date. These adjustments, which are non-recurring in nature, reduced deferred revenue and accrued liabilities and resulted in a reduction in revenue and operating income for the year ended December 31, 2005 and the period August 23, 2006 through December 31, 2006 and the three months ended March 31, 2007.

(c)
Represents corporate allocations and direct costs for services performed on our behalf by Cendant or Travelport. After the completion of this offering, we will perform these services with either internal or outside resources, although we may utilize Travelport for certain services under the transition services agreement. Also includes $3 million, $3 million and almost nil of direct costs incurred by us on behalf of Travelport for the year ended December 31, 2005, the combined year ended December 31, 2006 and for the three months ended March 31, 2007, respectively. We have included our estimate of the costs we expect to incur after the completion of this offering as described in footnote (h) below.

(d)
Represents costs associated with operating two technology platforms simultaneously as we invest in our new global technology platform. These development and duplicative technology expenses are expected to cease in 2008 following the migration of certain of our operations to the global technology platform.

(e)
Represents non-cash stock-based compensation expense.

(f)
Represents non-recurring costs incurred as part of our separation from Cendant and the cost of relocating our corporate offices.

(g)
Represents the difference in the historical amounts earned from Galileo by our corporate travel solutions business and the amount that would have been earned under our new arrangement with Galileo if such arrangement had been in place as of the beginning of the period presented.

(h)
Represents our estimate of the cash costs expected to be incurred for certain headquarters and public company costs after completion of this offering, including costs for services which were previously provided by Travelport or Cendant. These include tax, treasury, internal audit, board of director's costs, and similar items. Also included are costs for D&O insurance, audit, investor relations and other public company costs.

(i)
Represents the ebookers' pre-acquisition EBITDA as the business was acquired on February 28, 2005.

(j)
Represents costs associated with the integration of CheapTickets and Orbitz and the costs associated with the ebookers restructuring.

(k)
Includes EBITDA of Tecnovate, our Indian Services Organization, of $2 million, $5 million, $1 million and nil for the ten months ended December 31, 2005, the combined year ended December 31, 2006, the three months ended March 31, 2006 and the three months ended March 31, 2007, respectively. Also includes revenue of Travelbag, a former UK offline travel subsidiary, of $24 million, $28 million, $6 million and $7 million and EBITDA of $1 million, $4 million, $(1) million and almost nil and gross bookings of $218 million, $245 million, $60 million and $66 million for the ten months ended December 31, 2005, the combined year ended December 31, 2006, the three months ended March 31, 2006 and the three months ended March 31, 2007, respectively. The sale of Travelbag closed on July 16, 2007.

13



RISK FACTORS

        Investing in our common stock involves a high degree of risk. You should carefully consider and evaluate all the information in this prospectus, including the risks and uncertainties described below, before purchasing our common stock. If any of the following risks actually occur, our business, financial condition, operating results or cash flow could be materially and adversely affected, and you might lose all or part of your investment in our common stock. Additional risks and uncertainties not presently known to us or not believed by us to be material may also negatively impact us.

Risks Relating to Our Business

Our revenue is derived from the travel industry and a prolonged substantial decrease in travel volume, particularly air travel, as well as other industry trends, could adversely affect us.

        Our revenue is derived from the worldwide travel industry. As a result, our revenue is directly related to the overall level of travel activity, particularly air travel volume, and is therefore significantly impacted by declines in or disruptions to travel in the U.S., Europe and the Asia Pacific region, which are our key regions, due to factors entirely outside of our control. Such factors include:

    global security issues, political instability, acts or threats of terrorism, hostilities or war and other political issues that could adversely affect travel volume in our key regions;

    epidemics or pandemics, such as the avian flu and SARS;

    natural disasters, such as hurricanes and earthquakes;

    general economic conditions, particularly to the extent that adverse conditions may cause a decline in travel volume;

    the financial condition of travel suppliers, including the airline and hotel industry, and the impact of such financial condition on the cost and availability of air travel and hotel rooms;

    changes to regulations governing the airline and travel industry;

    fuel price escalation;

    work stoppages or labor unrest at any of the major airlines or airports;

    increased airport security that could reduce the convenience of air travel;

    travelers' perception of the occurrence of travel related accidents, or of the scope, severity and timing of the other factors described above; and

    changes in occupancy and room rates achieved by hotels.

        If there is a prolonged substantial decrease in travel volumes, particularly air travel, for these or any other reason, it would have an adverse impact on our business, financial condition and results of operations.

We rely on the value of our brands, and the costs of maintaining and enhancing our brand awareness are increasing.

        We believe that satisfying our customers and maintaining and expanding our brands, including Orbitz, CheapTickets, ebookers, Orbitz for Business, Travelport for Business, HotelClub, RatesToGo, and the Away Network, are important aspects of our efforts to attract and expand our customer and advertiser base. As our competitors spend increasingly more on marketing and advertising, we are required to spend more in order to maintain and enhance our brand recognition. In addition, we have spent considerable money and resources to date on the establishment and maintenance of our brands, and we will continue to spend money on, and devote resources to, advertising and marketing, as well as other brand building efforts, to preserve and enhance consumer awareness of our brands. We may not be able to successfully maintain or enhance consumer awareness of our brands, and, even if we are successful in our branding efforts, such efforts may not be cost-effective. If we are unable to maintain or enhance consumer

14



awareness of our brands and generate demand in a cost-effective manner, it would have a material adverse effect on our business, financial condition and results of operations.

We are dependent upon third party systems and service providers, including Worldspan, and any disruption or adverse change in their businesses could have a material adverse effect on our business.

        We currently rely on certain third party computer systems, service providers and software companies, including the electronic central reservation systems and GDSs of the airline, hotel and car rental industries. In particular, our businesses rely on third parties to:

    conduct searches for airfares;

    process hotel room transactions;

    process credit card payments; and

    provide computer infrastructure critical to our business.

        In addition, we rely on Travelport's India Service Organization, or ISO, which is a group of business process outsourcing companies based in India, to provide us with call center and telesales services, back office administrative services such as ticketing fulfillment, hotel rate loading and quality control, loyalty program support and information technology services, as well as financial services such as accounts payable and bank reconciliations.

        Any interruption in these third party services, failure to adapt to changes in technology in the travel industry or deterioration of performance could have a material adverse effect on us.

        Further, we currently utilize GDSs, including Worldspan, Galileo and Amadeus International, to process a significant portion of our travel bookings, and any interruption or deterioration in our GDS partners' products or services could prevent us from searching and booking airline and car rental reservations, which would have a material adverse effect on our business.

        Orbitz is currently involved in a lawsuit and other business disputes with Worldspan, its GDS for Orbitz.com. The legal action has resulted, and may in the future result, in substantial costs and diversion of resources and management attention. Resolution of this matter may not be available on acceptable terms or at all. Any failure to manage and resolve this difficult relationship with an important vendor, or any adverse outcome in the litigation, could cause us to incur significant damages and/or costs associated with fundamental changes to our products and operations. In addition, any resolution of Orbitz's disputes with Worldspan might require us to accept ongoing terms less favorable than those available to our competitors in the marketplace and could impact our ability to compete or operate our business effectively.

        Our success is dependent on our ability to maintain relationships with our technology partners. In the event our arrangements with any of such third parties are impaired or terminated, we may not be able to find an alternative source of systems support on a timely basis or on commercially reasonable terms, which could result in significant additional cost or disruptions to our businesses. In addition, some of our agreements with third party service providers can be terminated by those parties on short notice and, in many cases, provide no recourse for service interruptions. Such an event could have a material adverse effect on our business, financial condition and results of operations.

We license our search technology from a third party. If we are unable to renew these licenses on favorable terms, or at all, this could have a material adverse effect on our business.

        We license our search technology from a third party, ITA Software, Inc., or ITA. We have developed proprietary support services and software architecture that enable us to use this search technology in connection with our booking engine. These licenses may expire before the end of 2007, and we may not be able to renew them on a commercially reasonable basis or at all, which would have a material adverse effect on our business. If we are not able to renew these licenses or find alternative search technology that is compatible with our systems architecture on a timely basis or on commercially reasonable terms this could result in significant additional costs or disruptions to our business. If ITA is unable to continue to

15



obtain comprehensive availability data from a GDS, we may not be able to operate our business effectively and our financial performance may suffer.

We depend on our supplier relationships and adverse changes in these relationships or our inability to enter into new relationships could negatively affect our access to travel offerings and reduce our revenue.

        In addition to airlines, we rely significantly on our relationships with hotel and other travel suppliers. Adverse changes in any of these relationships, or the inability to enter into new relationships, could negatively impact the availability and competitiveness of travel products offered on our websites. Our arrangements with travel suppliers may not remain in effect on current or similar terms, and the net impact of future pricing options may adversely impact our revenue. In addition, travel suppliers are increasingly focused on driving online demand to their own websites. Travel suppliers typically do not charge a service fee for booking products on their own websites, and as a result, their travel offerings may be more attractive to consumers.

        We are in continuous dialogue with our major hotel suppliers about the nature and extent of their participation in our various distribution channels. Improving economic conditions increase occupancy rates for hotel rooms, which may result in suppliers making fewer rooms available to us or reducing the amount we are able to earn in connection with hotel transactions. The significant reduction by any of our major suppliers in their business with our companies for a sustained period of time or their complete withdrawal could have a material adverse effect on our business, financial condition and results of operations.

        In addition, we currently depend on one of Travelport's other businesses, Gulliver's Travel Associates, or GTA, for access to hotel inventory in certain international regions. We intend to continue our relationship with GTA for a period of time after this offering as we establish our own direct relationships with hotel suppliers in these international regions. If we are unable to successfully establish direct relationships with hotel suppliers or to replace the GTA inventory in a timely manner or on comparable terms, we may not be able to operate our business effectively, and our financial performance may suffer.

        Our arrangements with the airlines generally do not require the airlines to provide any specific quantity of airline tickets or to make tickets available for any particular route or at any particular price. The significant reduction on the part of any of our major suppliers of their participation in our system for a sustained period of time or their complete withdrawal could have a material adverse effect on our business, financial condition and results of operations. Moreover, the airline industry has experienced a shift in market share from full-service carriers to low-cost carriers that focus primarily on discount fares to leisure destinations and we expect this trend to continue. Some low-cost carriers, such as Southwest, have not historically distributed their tickets through us or other third-party intermediaries.

The travel industry is highly competitive, and we are subject to risks relating to competition that may adversely affect our performance, including adjustments to customer processing fees.

        Our businesses, which consist primarily of our travel websites, operate in the highly competitive travel industry. Our continued success depends, in large part, upon our ability to compete effectively against numerous competitors, some of which have significantly greater financial, marketing, personnel and other resources than we have. If we cannot compete effectively against our competitors, we may lose customers or be unable to acquire new customers, which would adversely affect our financial performance.

        Factors affecting the competitive success of our businesses include price, the availability of travel inventory, brand recognition, customer service, ease of use, fees charged to travelers, accessibility and reliability. We compete with online travel companies such as Expedia, Hotels.com and Hotwire, which are owned by Expedia, Inc.; Travelocity and lastminute.com, which are owned by Sabre Holdings Corporation; Priceline.com, including its international hotel business; and smaller regional operators.

        We also face competition from a number of large Internet companies and services that have expertise in developing online commerce and in facilitating Internet traffic, including Google, AOL and Yahoo!, the latter two of which partner with Travelocity to offer travel products and services directly to consumers. We

16



may also compete with metasearch companies such as Kayak.com, Sidestep, Inc. and Yahoo! Farechase, which are companies that utilize their search technology to aggregate travel search results across supplier, online travel and other websites. We also compete with suppliers, such as airlines, hotel and car rental companies who distribute their products through their own websites. Suppliers who sell on their own websites typically do not charge a processing fee and, in some instances, offer advantages such as bonus miles or loyalty points as an incentive to use their websites, which could make their offerings more attractive to consumers than offerings through third-party distributors like us. While our primary competitors also charge customer processing fees, we believe we are more dependent on such fees and we would be negatively impacted if competitive dynamics caused us to reduce or eliminate these fees. In the offline travel company category, our competitors include Liberty Travel Inc. and American Express Travel Related Services Company, Inc. Competition from these and other sources could have a material adverse effect on our business, financial condition and results of operations.

        Some of our competitors may be able to secure services and products from travel suppliers on more favorable terms. In addition, the introduction of new technologies and the expansion of existing technologies may increase competitive pressures. Increased competition may result in reduced operating margins, as well as loss of industry share and brand recognition. We may not be able to compete successfully against current and future competitors, which would have a material adverse effect on our business, financial condition and results of operations.

We rely on information technology to operate our businesses and maintain our competitiveness, and any failure to adapt to technological developments or industry trends could harm our business.

        We depend upon the use of sophisticated information technologies and systems, including technologies and systems utilized for reservations, communications, procurement and administrative systems. Certain of our businesses also utilize third-party fare search solutions and GDSs or other technologies. As our operations grow in both size and scope, we must continuously improve and upgrade our systems and infrastructure to offer an increasing number of customers enhanced products, services, features and functionality, while maintaining the reliability and integrity of our systems and infrastructure. Our future success also depends on our ability to adapt our services and infrastructure to meet rapidly evolving industry standards while continuing to improve the performance, features and reliability of our service in response to competitive service and product offerings and the changing demands of the marketplace. In particular, expanding our systems and infrastructure to meet any projected future increases in business volume will require us to commit substantial financial, operational and technical resources before those increases materialize, with no assurance that they actually will. Furthermore, our use of such technology could be challenged by claims that we have infringed upon the patents, copyrights or other intellectual property rights of others.

        One of our brands, ebookers, operates on systems that require a significant amount of manual processing, which has resulted in substantial costs for reporting and maintenance. If we are unable to improve its systems to address these concerns, we will continue to incur these excess costs and be unable to take advantage of efficiencies of scale. We are in the process of implementing a new enterprise resource planning system developed by Oracle throughout our businesses in order to improve our ability to report information accurately, reduce our reliance on manual processing, and enhance our ability to respond to market developments more quickly. Delays or difficulties in implementing the system may keep us from achieving the desired results in a timely manner, to the extent anticipated, or at all.

        In addition, we may not be able to maintain our existing systems, obtain new technologies and systems, or replace or introduce new technologies and systems as quickly as our competitors or in a cost-effective manner. Also, we may fail to achieve the benefits anticipated or required from any new technology or system, or we may be unable to devote financial resources to new technologies and systems in the future. If any of these events occur, our business could suffer.

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System interruptions and the lack of redundancy may cause us to lose customers or business opportunities.

        Our inability to maintain and improve our information technology systems and infrastructure may result in system interruptions. For example, ebookers operates on systems that are less reliable than our U.S. systems and, as a result, is more likely to suffer from service slowdowns or outages. System interruptions and slow delivery times, unreliable service levels, prolonged or frequent service outages, or insufficient capacity may prevent us from efficiently providing services to our customers, which could result in our losing customers and revenue or incurring liabilities. In addition to the risks from inadequate maintenance or upgrading, our information technologies and systems are vulnerable to damage or interruption from various causes, including:

    natural disasters, war and acts of terrorism;

    power losses, computer systems failure, Internet and telecommunications or data network failures, operator error, losses and corruption of data, and similar events;

    computer viruses, penetration by individuals seeking to disrupt operations or misappropriate information and other physical or electronic breaches of security; and

    the failure of third party systems or services that we rely upon to maintain our own operations.

        We do not have backup systems for certain critical aspects of our operations, many other systems are not fully redundant and our disaster recovery planning may not be sufficient. In addition, we may have inadequate insurance coverage or insurance limits to compensate for losses from a major interruption, and remediation may be costly and have a material adverse effect on our operating results and financial condition. Any extended interruption in our technologies or systems could significantly curtail our ability to conduct our businesses and generate revenue.

We may not protect our intellectual property effectively, which would allow competitors to duplicate our products and services. This could make it more difficult for us to compete with them.

        Our success and ability to compete depend, in part, upon our technology and other intellectual property, including our brands. Among our significant assets are our software and other proprietary information and intellectual property rights. We rely on a combination of copyright, trademark and patent laws, trade secrets, confidentiality procedures and contractual provisions to protect these assets. However, we have a limited number of patents and our software and related documentation are protected principally under trade secret and copyright laws, which afford only limited protection, and the laws of some jurisdictions provide less protection for our proprietary rights than the laws of the U.S. In connection with the master license agreement, which will govern Travelport's use of certain of our intellectual property, we are granting Travelport an exclusive license to our supplier link technology, including our patents related to that technology. Under the exclusive license, we are granting Travelport the first right to enforce those patents, and so we will only be able to bring actions to enforce those patents if Travelport declines to do so. Unauthorized use and misuse of our intellectual property could have a material adverse effect on our business, financial condition and results of operations, and the legal remedies available to us may not adequately compensate us for the damages caused by unauthorized use.

        Further, intellectual property challenges have been increasingly brought against members of the travel industry. These legal actions have in the past and might in the future result in substantial costs and diversion of resources and management attention. In addition, we may need to take legal action in the future to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others, and these enforcement actions could result in the invalidation or other impairment of intellectual property rights we assert. For additional information, see the section of this prospectus entitled "Business—Legal Proceedings."

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Prior to this offering, we will grant Travelport perpetual licenses to use certain of our intellectual property, which could facilitate Travelport's ability to compete with us.

        Prior to this offering, we will enter into a number of agreements with Travelport, including a master license agreement which will govern each of our and Travelport's rights to use certain of the other's intellectual property following this offering. The master license agreement will permit Travelport and its affiliates to use and, in some cases, sublicense to third parties certain of our intellectual property, including:

    a future corporate agency reseller product that we may develop as part of our global technology platform (currently in development);

    the back end supplier connectivity functionality of our global technology platform;

    the look and feel of the Orbitz website, to the extent used in certain Travelport products; and

    our supplier link airline direct connect technology.

        Travelport and its affiliates may use these technologies as part of, or in support of, their own products or services, including in some cases to compete with us directly.

        The master license agreement will permit Travelport to sublicense our intellectual property (other than our supplier link airline direct connect technology) to a party that is not an affiliate of Travelport, except that Travelport may not sublicense our intellectual property to any such third party for a use that competes with our business, unless Travelport incorporates or uses our intellectual property with Travelport products or services to enhance or improve Travelport products or services (but not to provide our intellectual property to third parties on a stand-alone basis). Travelport and its affiliates will be permitted to use our intellectual property to provide their own products and services to third parties that compete with us. With respect to our supplier link airline direct connect technology, Travelport will have an unrestricted license. These Travelport rights could facilitate Travelport's, its affiliates' and third parties' ability to compete with us, which could have a material adverse effect on our business, financial condition and results of operation. For additional information, see the section of this prospectus entitled "Arrangements Between Our Company and Related Parties—Master License Agreement."

We are dependent on Travelport for our GDS services. If Travelport becomes unwilling or unable to provide these services to us, our business would be materially and adversely affected.

        To varying extents suppliers use GDSs to connect their inventory of products and services with travel agencies, who in turn distribute and book transactions for those products and services for travelers through the GDSs' systems. Certain of our businesses utilize Galileo and Apollo, which are subsidiaries of Travelport, for GDS services. In addition, on December 6, 2006, Travelport announced that it had entered into a definitive agreement to acquire Worldspan Technology, Inc. Worldspan provides Orbitz with GDS services, and Orbitz is currently in litigation with Worldspan over the interpretation of this agreement. In connection with the proposed acquisition, we are negotiating a new agreement with Travelport which would replace our existing GDS agreements with each of Galileo and Worldspan. As a result, Travelport GDSs would provide virtually all of our GDS services. The proposed acquisition of Worldspan by Travelport has not yet been consummated and remains subject to regulatory approvals and our contractual obligations to Travelport for GDS services may limit our ability to pursue alternative GDS options or direct connections to travel suppliers during the term of the agreement with Travelport, which would expire on December 31, 2014. As a result, we would become even more dependent on Travelport for the provision of GDS services. If Travelport became unwilling or unable to provide these services to us, we may not be able to obtain alternative providers on a commercially reasonable basis, in a timely manner or at all and our business would be materially and adversely affected.

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Our business could be negatively impacted by our inability to effectively launch our new global technology platform.

        We are in the process of completing our new global technology platform and expect to begin migrating ebookers' websites onto this platform in mid-2007. Our ability to achieve cost savings and economies of scale through migration of our various businesses to this global platform is important to our future success and growth. Any failure or delay in the launch of our global technology platform or the migration of our various websites to the platform, or the realization of less than anticipated cost savings, could have a material adverse effect on our business and financial performance.

Our business and financial performance could be negatively impacted by adverse tax events.

        New sales, use, occupancy or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time. Those enactments could adversely affect our domestic and international business operations, and our business and financial performance.

        Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. These events could require us to pay additional tax amounts on a prospective or retroactive basis, as well as require us to pay fines and/or penalties and interest for past amounts deemed to be due. In addition, our revenue may decline because we have to charge more for our products and services.

        Additionally, new, changed, modified or newly interpreted or applied tax laws could increase our compliance, operating and other costs, as well as the costs of our products or services. Further, these events could decrease the capital we have available to operate our business. Any or all of these events could adversely impact our business and financial performance.

        We and others in the online travel industry are currently subject to various occupancy tax-related lawsuits in numerous jurisdictions in the U.S. that are described in the section of this prospectus entitled "Business—Legal Proceedings." Other jurisdictions may be considering similar lawsuits. An adverse ruling in the existing occupancy tax cases could require us to pay tax retroactively and prospectively, and possibly penalties, interest or fines. The proliferation of new occupancy tax cases could result in substantial additional defense costs. These events could also adversely impact our business and financial performance.

We are involved in various legal proceedings and may experience unfavorable outcomes, which could harm us.

        We are involved in various legal proceedings, including, but not limited to, actions relating to intellectual property, in particular patent claims against us, tax matters, employment law and other negligence, breach of contract and fraud claims, some of which are described in this prospectus in the section entitled "Business—Legal Proceedings," that involve claims for substantial amounts of money or for other relief or that might necessitate changes to our business or operations. The defense of these actions may be both time consuming and expensive. If any of these legal proceedings were to result in an unfavorable outcome, it could have a material adverse effect on our business, financial position and results of operations and could cause the market value of our common stock to decline.

We have identified a material weakness in our internal controls over financial reporting that, if not corrected, could result in material misstatements in our financial statements.

        We are not currently required to comply with Section 404 of the Sarbanes Oxley Act of 2002, and are therefore not required to make an assessment of the effectiveness of our internal controls over financial reporting for that purpose. However, in connection with the audit of our financial statements for the years ended December 31, 2004 and 2005 and the periods January 1, 2006 through August 22, 2006 and August 23, 2006 through December 31, 2006, our auditors and we have identified certain matters involving our internal control over financial reporting that constitute a material weakness under standards established by the Public Company Accounting Oversight Board ("PCAOB").

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        The PCAOB defines a material weakness as a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of our annual or interim financial statement will not be presented or detected by our employees. A significant deficiency is defined as a control deficiency, or a combination of control deficiencies, that adversely affects the company's ability to initiate, authorize, record, process, or report external financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the company's annual or interim financial statements that is more than inconsequential will not be prevented or detected. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A deficiency in design exists when:

    a control necessary to meet the control objective is missing; or

    an existing control is not properly designed so that, even if the control operates as designed, the control objective is not always met.

        A deficiency in operation exists when a properly designed control does not operate as designed, or when the person performing the control does not possess the necessary authority or qualifications to perform the control effectively.

        The material weakness identified results from currently inadequate external reporting, technical accounting and tax staff, inadequate integrated financial systems and financial reporting and closing processes, and inadequate written policies and procedures. Specifically, the following items were identified:

    we do not currently have a sufficient complement of external reporting, technical accounting or tax staff commensurate to support standalone external financial reporting under public company or SEC requirements;

    we do not have a fully integrated financial consolidation and reporting system, and as a result, extensive manual analysis, reconciliation and adjustments are required in order to produce financial statements for external reporting purposes; and

    we have not completed a reevaluation and documentation of the policies and procedures used for external financial reporting, accounting and income tax purposes.

        We are in the process of implementing changes to strengthen our internal controls. Additional measures may be necessary and the measures we expect to take to improve our internal controls may not be sufficient to address the issues identified, to ensure that our internal controls are effective or to ensure that such material weakness or other material weaknesses would not result in a material misstatement of our annual or interim financial statements. In addition, other material weaknesses or significant deficiencies may be identified in the future. If we are unable to correct deficiencies in internal controls in a timely manner, our ability to record, process, summarize and report financial information accurately and within the time periods specified in the rules and forms of the SEC will be adversely affected. This failure could negatively affect the market price and trading liquidity of our common stock, cause investors to lose confidence in our reported financial information, subject us to civil and criminal investigations and penalties, and generally materially and adversely impact our business and financial condition.

Our business could be negatively affected by changes in search engine algorithms and search engine relationships.

        We utilize Internet search engines, principally through the purchase of travel-related keywords and inclusion in metasearch results, to generate traffic to our websites. Search engines frequently update and change the logic which determines the placement and display of results of a user's search, such that the placement of links to our websites can be negatively affected. In a similar way, a significant amount of our

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business is directed to our own websites through our relationships with search engines, including metasearch companies, and our participation in pay-per-click advertising campaigns on Internet search engines whose pricing and operating dynamics can experience rapid change commercially, technically and competitively. If a major search engine changes its algorithms in a manner that negatively affects the search engine ranking of our brands or our third-party distribution partners or changes its pricing, operating or competitive dynamics in a negative manner, it could have a material adverse effect on our business, financial condition or results of operations. Some of our search engine relationships, including relationships with metasearch companies, include preferential terms. These relationships may not continue on favorable terms, or at all.

We are exposed to risks associated with online commerce security and credit card fraud.

        The secure transmission of confidential information over the Internet is essential in maintaining customer and supplier confidence in our services. Substantial or ongoing security breaches, whether instigated internally or externally on our system or other Internet based systems, could significantly harm our business. We currently require customers to guarantee their transactions with their credit card online. We rely on licensed encryption and authentication technology to effect secure transmission of confidential customer information, including credit card numbers. It is possible that advances in computer capabilities, new discoveries or other developments could result in a compromise or breach of the technology that we use to protect customer transaction data.

        We incur substantial expense to protect against and remedy security breaches and their consequences. However, our security measures may not prevent security breaches. In particular, we have identified certain areas requiring improvement in the security of ebookers systems. We may be unsuccessful in implementing our remediation plan to address these potential exposures. A party (whether internal, external, an affiliate or unrelated third party) that is able to circumvent our security systems could steal proprietary information or cause significant interruptions in our operations. Security breaches also could damage our reputation and expose us to a risk of loss or litigation and possible liability. Security breaches could also cause customers and potential customers to lose confidence in our security, which would have a negative effect on the demand for our products and services.

        Moreover, public perception concerning security and privacy on the Internet could adversely affect customers' willingness to use our websites. A publicized breach of security, even if it only affects other companies conducting business over the Internet, could inhibit the growth of the Internet and, therefore, our services as a means of conducting commercial transactions.

After the completion of this offering, Travelport's controlling holders will continue to control us and may have strategic interests that differ from ours or yours.

        Upon the consummation of this offering, Travelport will indirectly own approximately 60% of our outstanding common stock. In addition, investment funds associated with Travelport's controlling holders beneficially own all or substantially all of the outstanding voting interests of Travelport's ultimate parent company. As a result of this ownership, Travelport's controlling holders will be entitled to elect all or substantially all of our directors, to appoint new management and to determine the outcome of actions requiring the approval of the holders of our outstanding voting stock, including adopting most amendments to our certificate of incorporation and approving or rejecting proposed mergers or sales of all or substantially all of our assets, regardless of whether any such transactions are in your best interests. Through their control of the ultimate parent of Travelport, Travelport's controlling holders will indirectly control us and all of our subsidiaries upon the closing of this offering.

        The interests of Travelport's controlling holders may differ from yours in material respects. For example, Travelport's controlling holders and their affiliates are in the business of making investments in companies, and currently have, and may from time to time in the future acquire, interests in businesses

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that directly or indirectly compete with certain portions of our business or are suppliers or customers of ours. In addition, Travelport's controlling holders, either through Travelport, one of its subsidiaries or other unrelated entities, may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. So long as investment funds associated with or designated by Travelport's controlling holders continue to indirectly own a significant amount of the outstanding shares of our common stock, even if such amount is less than 50%, Travelport's controlling holders will continue to be able to strongly influence or effectively control our decisions. You should consider that the interests of these holders may differ from yours in material respects.

Our certificate of incorporation and separation agreement with Travelport will limit our ability to engage in many transactions without the consent of Travelport.

        Our certificate of incorporation and separation agreement with Travelport will provide Travelport with a greater degree of control and influence in the operation of our business and the management of our affairs than is typically available to stockholders of a publicly-traded company. Certain of these controls relate to our status as a restricted subsidiary under Travelport's indentures because as a restricted subsidiary, our actions can cause a breach of the covenants under Travelport's indentures. Also, the agreements governing the indebtedness of Travelport restrict Travelport's ability to, among other things, permit us to incur indebtedness and will restrict our ability to apply the proceeds of any equity offering. Until Travelport ceases to beneficially own shares entitled to 33% or more of the votes entitled to be cast by the holders of our then outstanding common stock, the prior consent of Travelport will be required for:

    any consolidation or merger of us or any of our subsidiaries with any person, other than a subsidiary;

    any sale, lease, exchange or other disposition or any acquisition or investment, other than certain permitted investments, by us, other than transactions between us and our subsidiaries, or any series of related dispositions or acquisitions, except for those for which we give Travelport at least 15 days prior written notice and which involve consideration not in excess of $15 million in fair market value, except (1) any disposition of cash equivalents or investment grade securities or obsolete or worn out equipment and (2) the lease, assignment or sublease of any real or personal property, in each case, in the ordinary course of business;

    any change in our authorized capital stock or our creation of any class or series of capital stock;

    the issuance or sale by us or one of our subsidiaries of any equity securities or equity derivative securities or the adoption of any equity incentive plan, except for (1) the issuance of equity securities by us or one of our subsidiaries to Travelport or to another restricted subsidiary of Travelport and (2) the issuance by us of equity securities under our equity incentive plans in an amount not to exceed $15 million per year in fair market value annually;

    the amendment of various provisions of our certificate of incorporation and bylaws;

    the declaration of dividends on any class of our capital stock;

    the authorization of any series of preferred stock;

    the creation, incurrence, assumption or guaranty by us or any of our subsidiaries of any indebtedness, except for (1) up to $675 million of indebtedness at any one time outstanding under our credit agreement and (2) up to $25 million of other indebtedness so long as we give Travelport at least 15 days prior written notice of the incurrence thereof;

    the creation, existence or effectiveness of any consensual encumbrance or consensual restriction by us or any of our subsidiaries on (1) payment of dividends or other distributions, (2) payment of

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      indebtedness, (3) the making of loans or advances and (4) the sale, lease or transfer of any properties or assets, in each case, to Travelport or any of its restricted subsidiaries;

    any change in the number of directors on our board of directors, the establishment of any committee of the board, the determination of the members of the board or any committee of the board, and the filling of newly created memberships and vacancies on the board or any committee of the board; and

    any transactions with affiliates of Travelport involving aggregate payments or consideration in excess of $10 million, except (1) transactions between or among Travelport or any of its restricted subsidiaries, including us; (2) the payment of reasonable and customary fees paid to, and indemnities provided for the benefit of, officers, directors, employees or consultants of Travelport, any of its direct or indirect parent companies or any of its restricted subsidiaries, including us; (3) any agreement as in effect on the date of the consummation of this offering; and (4) investments by The Blackstone Group and certain of its affiliates in our or our subsidiaries' securities so long as (i) the investment is being offered generally to other investors on the same or more favorable terms and (ii) the investment constitutes less than 5% of the proposed or outstanding issue amount of such class of securities.

        These restrictions could prevent us from pursuing transactions or relationships that would otherwise be in the best interests of our stockholders. These restrictions could also limit stockholder value by preventing a change of control that you might consider favorable. For additional information on our status as a restricted subsidiary, see the section of the prospectus entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations—Travelport's Indenture Limitations Affecting Orbitz Worldwide."

We will have significant indebtedness following this offering.

        As of March 31, 2007, on a pro forma basis after giving effect to the concurrent debt financing and the use of proceeds of this offering, we would have had approximately $600 million of outstanding debt.

        Our substantial level of indebtedness could have important consequences to us, including the following:

    our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired;

    we will be required to use a substantial portion of our cash flow from operations to make debt service payments on our senior secured credit agreement, which will reduce the funds available to us for other purposes such as potential acquisitions and capital expenditures;

    we will be exposed to fluctuations in interest rates because our senior secured credit agreement will have a variable rate of interest;

    we may have a higher level of indebtedness than some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in planning for, or responding to, changing conditions in our industry, including increased competition; and

    we may be more vulnerable to general economic downturns and adverse developments in our business.

        If we incur additional indebtedness, it could make it more difficult for us to satisfy our payment obligations and could increase the severity of these risks.

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We are a restricted subsidiary under the indentures governing some of Travelport's indebtedness which limit Travelport's ability to permit us to take certain actions.

        While we are not a party to Travelport's bond indentures, we are a restricted subsidiary of Travelport under the indentures which limit Travelport's ability to allow us to take certain actions while we are a majority-owned subsidiary of Travelport or otherwise consolidated in Travelport's financial statements. Among these restrictions are limitations on Travelport's ability to permit us to incur indebtedness, issue preferred stock, sell assets (including our equity interests), and enter into agreements such as credit facilities if such agreements limit our ability to pay dividends. For additional information, see the section of this prospectus entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations—Travelport's Indenture Limitations Affecting Orbitz Worldwide."

We have a history of net operating losses and may incur losses in the future.

        Our net operating losses were $58 million, $410 million and $118 million for the years ended December 31, 2004 and 2005 and the combined twelve months ended December 31, 2006, respectively. For the three months ended March 31, 2007, we had net operating income of $9 million; however, we may not be able to maintain such profitability in future periods. In addition, under our business plan, we will continue to incur significant sales and marketing expenses as we expand our business. We may continue to incur net operating losses and may never be profitable in future periods.

We depend on the airline industry and may be adversely affected by changes in the financial condition of one or more of these airlines.

        We depend on a relatively small number of airlines for a significant portion of our revenue. Several major U.S. airlines (including Delta Air Lines and Northwest Airlines) have either filed for reorganization under the United States Bankruptcy Code, recently exited bankruptcy, discussed publicly the risks of bankruptcy or are struggling financially. If any of our suppliers currently in bankruptcy liquidates or does not emerge from bankruptcy, or another of our major suppliers declares bankruptcy and is similarly unable to recover, and we are unable to compensate for the loss by offering comparable travel options on comparable terms, our businesses would be adversely affected.

Government regulation could impose taxes or other burdens on us, which could increase our costs or decrease demand for our products.

        We rely upon generally available interpretations of tax laws and regulations in the states, countries and locales in which we operate and for which we provide travel inventory. We cannot be sure that these interpretations are accurate or that the responsible taxing authority is in agreement with our views. The imposition of additional taxes could cause us to have to pay taxes that we currently do not collect or pay or increase the costs of our products or services to track and collect such taxes which would increase our costs of operations.

        Federal legislation imposing limitations on the ability of states to tax Internet based sales was enacted in 1998. The Internet Tax Freedom Act, which was extended by the Internet Tax Non-Discrimination Act, exempts specific types of sales transactions conducted over the Internet from multiple or discriminatory state and local taxation through November 1, 2007. If this legislation is not renewed upon expiration, state and local governments could impose additional taxes on Internet-based sales and these taxes could decrease the demand for our products and increase our costs of operations.

We may not realize anticipated benefits from past and future acquisitions or have the ability to complete future acquisitions.

        In the past, we have pursued an active acquisition strategy as a means of strengthening our businesses and have sought to integrate acquisitions into our operations to achieve economies of scale. For example,

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in 2005, we completed the acquisition of ebookers. The success of any future acquisition strategy will continue to depend upon our ability to find suitable acquisition candidates on favorable terms and to finance and complete these transactions. In addition, upon completion of an acquisition, we may encounter a variety of difficulties, including trouble integrating the acquired business into our operations, the possible defection of a significant number of employees, the loss in value of acquired intangibles, the diversion of management's attention and unanticipated problems or liabilities. These difficulties may adversely affect our ability to realize anticipated cost savings and revenue growth from our acquisitions. In addition, acquisitions may not be as accretive to our earnings as we expect or at all, and may negatively impact our results of operations through, among other things, the incurrence of debt to finance any acquisition, non-cash write-offs of goodwill or intangibles and increased amortization expenses in connection with intangible assets. For example, for the period from January 1, 2006 through August 22, 2006, the predecessor recorded a pre-tax non-cash goodwill and intangible asset impairment charge of $122 million, primarily relating to reduced return expectations at ebookers, of which $115 million reduced the value of goodwill and $7 million reduced the value of other intangible assets. Acquisition integration activities can also put further demands on management, which could negatively impact operating results.

Our businesses are highly regulated, and any failure to comply with such regulations or any changes in such regulations could adversely affect us.

        We operate in a highly regulated industry both in the U.S. and internationally. Our business, financial condition and results of operations could be adversely affected by unfavorable changes in or the enactment of new laws, rules and regulations applicable to us, which could decrease demand for our products and services, increase costs or subject us to additional liabilities. Moreover, regulatory authorities have relatively broad discretion to grant, renew and revoke licenses and approvals and to implement regulations. Accordingly, such regulatory authorities could prevent or temporarily suspend us from carrying on some or all of our activities or otherwise penalize us if our practices were found not to comply with the then current regulatory or licensing requirements or any interpretation of such requirements by the regulatory authority. Our failure to comply with any of these requirements or interpretations could have a material adverse effect on our operations. In addition, the various regulatory regimes to which we are subject may conflict so that compliance with the regulatory requirements in one jurisdiction may create regulatory issues in another.

        Our business is subject to laws and regulations relating to our sales and marketing activities, including those prohibiting unfair and deceptive advertising or practices. Our travel services are subject to regulation and laws governing the offer and/or sale of travel products and services, including laws requiring us to register as a "seller of travel" in various jurisdictions and to comply with certain disclosure requirements. As a seller of air transportation products in the U.S., we are also subject to regulation by the Department of Transportation, which has authority to enforce economic regulations, and may assess civil penalties or challenge our operating authority.

        Our failure to comply with these laws and regulations may subject us to fines, penalties and potential criminal violations. Any changes to these laws or regulations or any new laws or regulations may make it more difficult for us to operate our businesses and may have a material adverse effect on our operations.

Our processing, storage, use and disclosure of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements, differing views of personal privacy rights or security breaches.

        In the processing of our traveler transactions, we receive and store a large volume of personally identifiable information. This information is increasingly subject to legislation and regulations in numerous jurisdictions around the world. This government action is typically intended to protect the privacy and security of personal information, including credit card information, that is collected, processed and transmitted in or from the governing jurisdiction.

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        We could be adversely affected if domestic or international legislation or regulations are expanded to require changes in our business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our business. For example, in the aftermath of the terrorist attacks of September 11, 2001 in the U.S., government agencies have been contemplating or developing initiatives to enhance national and aviation security, including the Transportation Security Administration's Computer Assisted Passenger Prescreening System, known as CAPPS II. These initiatives may result in conflicting legal requirements with respect to data handling.

        Travel businesses have also been subjected to investigations, lawsuits and adverse publicity due to allegedly improper disclosure of passenger information. As privacy and data protection have become more sensitive issues, we may also become exposed to potential liabilities as a result of differing views on the privacy of travel data. These and other privacy concerns, including security breaches, could adversely impact our business, financial condition and results of operations.

Our international operations are subject to additional risks not encountered when doing business in the U.S., and our exposure to these risks will increase as we expand our international operations.

        Our international operations involve risks that may not exist when doing business in the U.S. With employees in over 20 countries outside the U.S., we generated 19% of our net revenue for the year ended December 31, 2006 from our international operations. In order to achieve widespread acceptance in each country we enter, we must tailor our services to the unique customs and cultures of that country. Learning the customs and cultures of various countries, particularly with respect to travel patterns and practices, is a difficult task and our failure to do so could slow our growth in international markets.

        In addition, we are subject to certain risks as a result of having international operations, and from having operations in multiple countries generally, including:

    delays in the development of the Internet as a broadcast, advertising and commerce medium in overseas markets;

    difficulties in staffing and managing operations due to distance, time zones, language and cultural differences, including issues associated with establishing management systems infrastructure in various countries;

    differences and unexpected changes in regulatory requirements and exposure to local economic conditions;

    increased risk of piracy and limits on our ability to enforce our intellectual property rights;

    preference of local populations for local providers;

    restrictions on the withdrawal of non-U.S. investment and earnings, including potentially substantial tax liabilities if we repatriate any of the cash generated by our international operations back to the U.S.;

    diminished ability to legally enforce our contractual rights;

    currency exchange restrictions; and

    withholding and other taxes on remittances and other payments by subsidiaries.

Third parties may claim that we have infringed on their intellectual property rights, which could expose us to substantial damages and restrict our operations.

        We have faced, are facing and in the future could face claims that we have infringed the patents, copyrights, trademarks or other intellectual property rights of others. For additional information, see the section of this prospectus entitled "Business—Legal Proceedings." In addition, we may be required to

27



indemnify travel suppliers for claims made against them. Any claims against us or them could require us to spend significant time and money in litigation or pay damages. Such claims could also delay or prohibit the use of existing, or the release of new, products, services or processes, and the development of new intellectual property. We could be required to obtain licenses to the intellectual property that is the subject of the infringement claims, and resolution of these matters may not be available on acceptable terms or at all. Intellectual property claims against us could have a material adverse effect on our business, financial condition and results of operations, and such claims may result in a loss of intellectual property protections that relate to certain parts of our business.

Our ability to attract, train and retain executives and other qualified employees is crucial to our results of operations and future growth.

        We depend substantially on the continued services and performance of our key executives, senior management and skilled personnel, particularly our professionals with experience in our business and operations, including our information technology and systems. Any of these individuals may chose to terminate their employment with us at any time. The specialized skills we require are difficult and time-consuming to acquire and, as a result, such skills are in short supply. We expect that this shortage will continue. A lengthy period of time is required to hire and train replacement personnel when skilled personnel depart the company. An inability to hire, train and retain a sufficient number of qualified employees could materially hinder our business by, for example, delaying our ability to bring new products and services to market or impairing the success of our operations. Even if we are able to maintain our employee base, the resources needed to attract and retain such employees may adversely affect our profits, growth and operating margins.

Fluctuations in the exchange rate of the U.S. dollar and other foreign currencies may adversely impact our results of operations.

        While most of our revenue is denominated in U.S. dollars, a portion of our costs and revenue, is or will be denominated in other currencies, such as the pound sterling, the Euro and the Australian dollar. As a result, we face exposure to adverse movements in currency exchange rates. The results of our operations are exposed to foreign exchange rate fluctuations as the financial results of those operations are translated from local currency into U.S. dollars upon consolidation. If the U.S. dollar weakens against the local currency, the translation of these foreign-currency-denominated balances will result in increased net assets, net revenue, operating expenses, and net income or loss. Similarly, our net assets, net revenue, operating expenses, and net income or loss will decrease if the U.S. dollar strengthens against local currency. Additionally, transactions denominated in currencies other than the functional currency may result in gains and losses that may adversely impact our results of operations.

We expect to have significant ongoing business relationships with Travelport, and if Travelport were to default on its indebtedness, Travelport's ability to perform under our agreements with it would be adversely affected.

        We expect to have significant ongoing business relationships with Travelport after the offering and Travelport has incurred a substantial amount of indebtedness. A breach of the covenants under Travelport's senior secured credit agreement or the indentures governing its notes could result in a default. Upon the occurrence of an event of default, all outstanding amounts under the senior secured credit agreement, the indentures, or both, could become immediately due and payable. In addition, the terms of Travelport's debt agreements do not fully prohibit the incurrence of additional indebtedness which may exacerbate the risk of default. Further, if the lenders under the senior secured credit agreement accelerate the repayment of borrowings, Travelport may not have sufficient assets to repay those amounts, and the lenders may foreclose on the assets that Travelport has pledged as collateral under this agreement. If any of these events occur, Travelport's ability to perform its obligation under its agreements with us would be adversely affected.

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Seasonal fluctuations in the travel industry could adversely affect us.

        Some of our businesses experience seasonal fluctuations, reflecting seasonal trends for the products and services we offer. These trends cause our revenue to be generally highest in the second and third calendar quarters of the year as travelers plan and book their spring and summer travel, and then flatten in the fourth and first calendar quarters of the year. Our results may also be affected by seasonal fluctuations in access to the inventory made available to us by our travel suppliers. For instance, during seasonal periods when demand is high, suppliers may impose blackouts for their inventory that prohibit us from selling their inventory during such periods. As a result, we may be required to borrow cash in order to fund operations or to meet debt service obligations during seasonal slowdowns or at other times. Our inability to finance our funding needs during a seasonal slowdown or at other times could have a material adverse effect on us.

Risks Relating to Becoming an Independent Public Company

Orbitz Worldwide has no operating history as an independent company, and our historical combined consolidated financial information is not necessarily representative of the results we would have achieved as an independent company and may not be a reliable indicator of our future results.

        The historical combined consolidated financial information included in this prospectus does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as an independent company during the periods presented or those that we will achieve in the future, primarily as a result of the following factors:

    Our businesses have been operated by Cendant and now Travelport as part of their broader corporate organizations, rather than as an independent company. Travelport or one of its affiliates have historically performed various corporate functions for us, including, but not limited to, tax administration, certain governance functions (including compliance with the Sarbanes-Oxley Act of 2002 and internal audit) and external reporting. Our historical and combined consolidated results reflect allocations of corporate expenses from Travelport for these and similar functions. These allocations are less than the comparable expenses we believe we would have incurred had we operated as an independent company.

    Currently, our businesses are integrated with the other businesses of Travelport. Historically, we have shared economies of scope and scale in costs, employees, vendor relationships and customer relationships, as well as pursued integrated strategies with Travelport and other businesses, including the GDS and wholesale travel businesses. We will enter into a transition services agreement and other agreements with Travelport; however, such temporary arrangements may not capture the benefits our businesses have enjoyed as a result of being integrated with the other businesses of Travelport. The loss of these benefits could have an adverse effect on our business, financial condition and results of operations following the completion of the offering.

    Generally, our working capital requirements and capital for our general corporate purposes, including acquisitions and capital expenditures, have historically been satisfied as part of the corporate-wide cash management policies of Travelport. Following the completion of this offering, Travelport will not be providing us with funds to finance our working capital or other cash requirements. Without the opportunity to obtain financing from Travelport, we may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, strategic relationships or other arrangements.

        Other significant changes may occur in our cost structure, management, financing and business operations as a result of the offering that we cannot predict and may have a material adverse effect on our business, financial condition and results of operations.

29


We may be unable to make the changes necessary to operate as an independent company on a timely or cost-effective basis, and we may experience increased costs after the offering or as a result of the offering.

        Travelport will be contractually obligated to provide to us only those services specified in the transition services agreement and the other agreements into which we intend to enter in connection with this offering. All services to be provided under the transition services agreement will be provided for a specified period of time, generally until December 31, 2007, with some exceptions. We may be unable to replace in a timely manner or on comparable terms the services or other benefits that Travelport previously provided to us that are not specified in the transition services agreement or the other agreements, or the services or benefits that are so specified upon the expiration of the periods for which they are to be provided under those agreements. Also, upon the expiration of the transition services agreement or such other agreements, many of the services that are covered in such agreements will be provided internally or by unaffiliated third parties, and we expect that in some instances, we will incur higher costs to obtain such services than we incurred under the terms of the agreements with Travelport. In addition, if Travelport does not continue to effectively perform the transition and other services called for under the transition services agreement and other agreements, we may not be able to operate our businesses effectively and our financial performance may suffer.

As an independent public company we expect to expend additional time and resources to comply with rules and regulations that do not currently apply to us, including rules related to internal controls over financial reporting, and failure to comply may lead investors to lose confidence in our financial information.

        As an independent public company, the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC, as well as the rules of the NYSE, will require us to implement additional corporate governance practices and adhere to a variety of reporting requirements and complex accounting rules. Compliance with these public company obligations will increase our legal and financial compliance costs and place significant additional demands on our finance and accounting staff and on our financial, accounting and information systems.

        In particular, as a public company, our management will be required to conduct an annual evaluation of our internal controls over financial reporting and include a report of management on our internal controls in our annual reports on Form 10-K. In addition, we will be required to have our independent public accounting firm attest to and report on management's assessment of the effectiveness of our internal controls over financial reporting. Under current rules, we will be subject to these requirements beginning with our annual report on Form 10-K for our fiscal year ending December 31, 2008. If we are unable to conclude that we have effective internal controls over financial reporting or, if our independent auditors are unable to provide us with an attestation and an unqualified report as to the effectiveness of our internal controls over financial reporting, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our common stock.

Actual or potential conflicts of interest may develop between our management and directors as well as the management and directors of Travelport.

        Because of their positions with Travelport or its subsidiaries, substantially all of our executive officers hold interests in the ultimate parent of Travelport. Following the offering, these officers will retain some of these interests. The individual holdings of these interests may be significant for some of them compared to their total assets. Even though our executive officers will be our employees upon completion of the offering, continued ownership by our officers of these interests creates, or, may create the appearance of, conflicts of interest when these officers are faced with decisions that could have different implications for Travelport than the decisions have for us. For example, potential conflicts of interest could arise in connection with the resolution of any dispute between Travelport and us regarding terms of the agreements governing the relationship between Travelport and us after this offering, including the

30



transition services agreement, the master license agreement, the tax sharing agreement or any commercial agreements between the parties or their affiliates. Potential conflicts of interest could also arise if we enter into any other commercial arrangements with Travelport in the future.

        Mr. Jeff Clarke will serve as Chairman of our Board of Directors, while retaining his role as President, Chief Executive Officer and Director of Travelport. The fact that Mr. Clarke will hold a position with both Travelport and us could create, or appear to create, potential conflicts of interest for him when he faces decisions that may affect both Travelport and us. In addition, Mr. Paul C. Schorr IV, who is a senior managing director at The Blackstone Group, and Mr. William J.G. Griffith, who is a general partner of TCV, and who both currently serve on the board of directors of Travelport, will serve on our board of directors effective upon consummation of this offering. The fact that Mr. Schorr and Mr. Griffith will hold positions with their respective entities, Travelport and us, could create, or appear to create, potential conflicts of interest when they face decisions that may affect two or more of these entities.

        Further, our certificate of incorporation will provide that no officer or director of Travelport who is also an officer or director of ours will be liable to us or our stockholders for breach of any fiduciary duty by reason of the fact that any such individual directs a corporate opportunity to Travelport instead of us, or does not communicate information regarding a corporate opportunity to us because the officer or director has directed the corporate opportunity to Travelport. These provisions may have the effect of exacerbating the risk of conflicts of interest between Travelport and us because the provisions effectively shield an overlapping director/executive.

Risks Relating to Our Common Stock

There is no established trading market for our common stock, and the market price of our common stock may be highly volatile or may decline regardless of our operating performance.

        There has not been a public market for our common stock prior to this offering. A trading market for our common stock may not develop or become liquid. If you purchase shares of our common stock in this offering, you will pay a price that was not established in the public trading markets. The initial public offering price will be determined by negotiations between the underwriters and us. You may not be able to resell your shares above the initial public offering price and may suffer a loss on your investment.

        Broad market and industry factors may adversely affect the market price of our common stock, regardless of our actual operating performance. Factors that could cause fluctuations in the stock price may include, among other things:

    actual or anticipated variations in quarterly operating results;

    changes in financial estimates by us or by any securities analysts who might cover our stock;

    conditions or trends in our industry;

    changes in the market valuations of other travel service providers;

    announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures;

    announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us;

    capital commitments;

31


    additions or departures of key personnel; and

    sales of our common stock, including sales of our common stock by our directors and officers or Travelport.

You will experience immediate and substantial dilution as a result of this offering and may experience additional dilution in the future.

        If you purchase common stock in this offering, you will experience immediate and substantial dilution insofar as the public offering price will be substantially greater than the tangible book value per share of our outstanding common stock after giving effect to this offering. For additional information, see the section of this prospectus entitled "Dilution." The exercise of options to be outstanding immediately following the closing of this offering and future equity issuances will result in further dilution to investors.

Future sales of our common stock may cause our stock price to decline.

        If our stockholders sell substantial amounts of our common stock in the public market following this offering, the market price of our common stock could decline. These sales might also make it more difficult for us to sell additional equity securities at a time and price that we deem appropriate. Upon completion of this offering, we will have 82,912,526 shares of common stock outstanding. Of these outstanding shares, all of the shares of our common stock sold in this offering will be freely tradable in the public market. The remaining 48,912,526 shares of our common stock will be restricted securities as defined in Rule 144 under the Securities Act.

        We and our directors and executive officers and Travelport have agreed that, subject to limited exceptions, for a period of 180 days from the date of this prospectus, we and they will not, without the prior written consent of Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co., offer, sell or dispose of any shares of our common stock or any securities convertible into, or exercisable or exchangeable for, shares of our common stock. However, Morgan Stanley & Co. Incorporated and Goldman, Sachs & Co. in their sole discretion may release any of the securities subject to these lock-up agreements at any time without notice.

        Subject to the 180-day lock-up agreement, restricted securities may be sold into the public market in the future without registration under the Securities Act to the extent permitted under Rule 144. 48,912,526 shares held by Travelport will be available for sale 180 days after the date of this prospectus pursuant to Rule 144 subject to volume or other limits. In addition, commencing 180 days after the date of this prospectus, Travelport will have registration rights which could allow this holder to sell its shares freely through a future registration statement filed under the Securities Act.

        In addition, 3,034,891 shares reserved for issuance pursuant to options and 2,705,804 shares related to restricted stock units, in each case, to be outstanding immediately following the closing of this offering and 359,305 shares available for grant under our equity incentive plans following the closing of this offering, if issued or granted, will become eligible for sale in the public market once permitted by provisions of various vesting agreements, lock-up agreements and Rule 144, as applicable. For additional information, see the section of this prospectus entitled "Shares Eligible for Future Sale."

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        Some of the statements under "Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business" and elsewhere in this prospectus may contain forward-looking statements that reflect our current views with respect to, among other things, future events and financial performance. We generally identify forward-looking statements by terminology such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of those words or other comparable words but the absence of these words does not necessarily mean that a statement is not forward-looking.

        Any forward-looking statements contained in this prospectus are based upon the historical performance of us and our subsidiaries and on our current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us, the underwriters or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. Our actual results could differ materially from those anticipated in forward-looking statements for many reasons, including the factors described in the section entitled "Risk Factors" in this prospectus. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this prospectus.

        Unless required by law, we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. You should, however, review the factors and risks we describe in the reports we will file from time to time with the SEC, after the date of this prospectus.


MARKET AND INDUSTRY DATA AND FORECASTS

        This prospectus includes market and industry data and forecasts that we have developed from independent research firms, such as PhoCusWright Inc., publicly-available information, various industry publications, other published industry sources and our internal data and estimates. Independent consultant reports, industry publications and other published industry sources generally indicate that the information contained therein was obtained from sources believed to be reliable, but do not guarantee the accuracy and completeness of such information. Although we believe that the publications and reports are reliable, neither we nor the underwriters have independently verified the data. Our internal data, estimates and forecasts are based upon information obtained from our investors, partners, trade and business organizations and other contacts in the markets in which we operate and our management's understanding of industry conditions. Although we believe that such information is reliable, we have not had such information verified by any independent sources.

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USE OF PROCEEDS

        We will receive net proceeds of approximately $475 million from the sale of 34,000,000 shares of common stock in this offering, after deducting underwriting commissions and discounts of $28 million and estimated offering expenses of $7 million. If the underwriters exercise in full their option to purchase 5,100,000 additional shares of common stock, then we estimate that our net proceeds from this offering will be approximately $547 million. We intend to use all of the net proceeds from this offering to repay a portion of the $860 million intercompany notes on which we are the obligor and to pay a dividend to Travelport. The unpaid principal amount of these notes accrues interest at a rate of 10.25% annually and these notes mature on February 19, 2014. The proceeds of these notes were used to purchase assets in an internal reorganization.

        Concurrently with the consummation of this offering, we intend to enter into a seven-year $600 million senior secured term loan and a six-year senior secured revolving credit facility that will provide for borrowings of up to $85 million. The term loan and the revolving credit facility will bear interest at floating rates tied to LIBOR. We expect to use approximately $530 million of the net proceeds from the term loan to repay the remainder of the $860 million of indebtedness we owe to Travelport and to pay a dividend to Travelport. On the closing date of this offering, approximately $65 million in letters of credit will remain outstanding under Travelport's credit facility under an arrangement we have with them to maintain these letters for us.

        Travelport's debt agreements require that Travelport use the net proceeds from the sale of our equity in this offering to repay indebtedness. Travelport intends to use such proceeds and the dividend to repay indebtedness outstanding under its credit facilities. Affiliates of the underwriters, including Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co., Lehman Brothers Inc., J.P. Morgan Securities Inc., Credit Suisse Securities (USA) LLC, and UBS Securities LLC, are lenders under Travelport's senior secured term loan facility and may receive a significant portion of the net proceeds of the offering.


DIVIDEND POLICY

        We do not intend to declare or pay any cash dividends on our common stock in the foreseeable future other than the dividend to Travelport. Any future determination to pay dividends will be at the discretion of our board of directors, may require the consent of Travelport and will depend on a number of factors, including our financial condition, results of operations, capital requirements, restrictions contained in existing and future financing instruments and other factors that our board of directors may deem relevant.

        Under Delaware law, dividends may be payable only out of surplus, which is our net assets minus our liabilities and our capital, or, if we have no surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.

34



CAPITALIZATION

        The following table sets forth our cash and cash equivalents and our capitalization as of March 31, 2007:

    on an actual basis;

    on a pro forma basis to give effect to the concurrent debt financing and the use of the net proceeds therefrom, as described in the section of this prospectus entitled "Prospectus Summary—Concurrent Debt Financing," as if each event had occurred on March 31, 2007 immediately prior to the offering;

    on a pro forma as adjusted basis to give effect to the following events as if each event had occurred on March 31, 2007:

    the conversion of Travelport's net investment into shares of common stock and additional paid in capital; and

    the sale of 34,000,000 shares of our common stock that we are offering at $15.00 per share after deducting underwriting discounts and commissions and estimated offering expenses, and the use of the estimated net proceeds therefrom, as described in "Use of Proceeds".

        You should read the following table in conjunction with our combined consolidated financial statements and related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus:

 
  As of March 31, 2007
 
  Actual
  Pro forma
  Pro forma
As Adjusted

 
  (dollars in millions,
except per share data)

Cash & cash equivalents   $ 48   $ 95   $ 95
   
 
 
Total debt(1)   $ 860   $ 912   $ 600
   
 
 
Invested equity/stockholders' equity:                  
  Travelport's net investment     420     420    
  Preferred stock, par value $0.01 per share (100 shares authorized, 0 shares issued and outstanding, on a pro forma as adjusted basis)            
  Common stock, par value $0.01 per share (140,000,000 shares authorized, 82,912,526 shares issued and outstanding, on a pro forma as adjusted basis)             1
  Additional paid in capital             718
  Accumulated other comprehensive income     2     2     2
   
 
 
    Total invested equity/stockholders' equity     422     422     721
   
 
 
Total capitalization   $ 1,282   $ 1,334   $ 1,321
   
 
 

(1)
On January 26, 2007 and January 30, 2007, we became the obligor on two intercompany notes payable to subsidiaries of Travelport, in the aggregate principal amounts of approximately $25 million and $835 million, respectively, and recorded a $835 million reduction to net invested equity. The unpaid principal of these notes accrues interest at a fixed annual rate of 10.25% until the earlier of payment in full or the maturity date of February 19, 2014. These notes may be paid in whole or in part at any time at our option without penalty. These notes will be repaid with the proceeds from this offering and the concurrent debt financing as described in the section of the prospectus entitled "Prospectus Summary—Concurrent Debt Financing."

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DILUTION

        If you invest in our common stock, your interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock and the pro forma net tangible book value per share of our common stock after this offering. Dilution results from the fact that the per share offering price of the common stock is substantially in excess of the net tangible book value per share attributable to the existing equity holder. Net tangible book value represents net book equity excluding intangible assets, if any.

        Our pro forma net tangible book deficit before completion of this offering as of March 31, 2007, before giving effect to the sale of 34,000,000 shares of our common stock, was $(1,166) million or $(23.84) per share.

        In addition, after giving effect to the sale of 34,000,000 shares of our common stock and after deducting underwriting discounts and commissions, estimated offering expenses and other related transaction costs payable by us, our pro forma as adjusted net tangible book deficit as of March 31, 2007 was $(867) million or $(10.46) per share.

        The following table illustrates the pro forma immediate increase in book value of $13.38 per share for the existing equity holder and the immediate dilution of $25.46 per share to new stockholders purchasing shares of our common stock in this offering, assuming the underwriters do not exercise their option to purchase additional shares of common stock:

Initial public offering price per share         $ 15.00  
  Pro forma net tangible book deficit per share prior to this offering as of March 31, 2007   $ (23.84 )      
  Decrease in net tangible book deficit per share attributable to stockholders purchasing shares in this offering     13.38        
   
       
Pro forma as adjusted net tangible book deficit per share after this offering           (10.46 )
         
 
Dilution to new stockholders per share         $ 25.46  
         
 

        The following table summarizes, on the same pro forma basis as of March 31, 2007, the differences between the existing equity holder and the new stockholders in this offering with respect to the number of shares purchased from us, the total consideration paid, and the average price per share paid before deducting the underwriting discount and estimated offering expenses:

 
  Shares Purchased
  Total Consideration
   
 
  Average
Price
Per Share

 
  Number
  Percentage
  Amount
  Percentage
 
  (in thousands)

  (in thousands)

   
Existing equity holder   48,913   59 % $ 420,000   45 % $ 8.59
New investors   34,000   41     510,000   55     15.00
   
 
 
 
     
Total   82,913   100.0 % $ 930,000   100.0 %    
   
 
 
 
     

        If the underwriters' exercise their option to purchase additional shares of common stock in full, the pro forma net tangible book deficit per share as of March 31, 2007 would be approximately $(9.85) per share and the dilution in pro forma net tangible book value per share to new stockholders would be $24.85 per share. Furthermore, the percentage of our shares held by existing equity owners would decrease to approximately 56% and the percentage of our shares held by new stockholders would increase to approximately 44%.

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UNAUDITED PRO FORMA COMBINED CONSOLIDATED CONDENSED FINANCIAL INFORMATION

        The following unaudited pro forma combined consolidated condensed financial information has been derived by the application of pro forma adjustments to our historical financial statements. In connection with the Blackstone Acquisition, all of our assets and liabilities were revised to reflect the fair values on the date of acquisition, based upon our allocation of the overall purchase price to the underlying net assets acquired. The historical combined consolidated financial statements present separately the financial position and results of operations on a successor and predecessor basis.

        Our historical financial statements and the related notes included elsewhere in this prospectus for the successor and predecessor have been separated by a vertical line on the face of the combined consolidated financial statements to identify the different bases of accounting. In addition, our historical combined consolidated results of operations and financial position may not be indicative of future performance and do not necessarily reflect what our combined results of operations and financial position would have been had we operated as a separate, standalone entity.

        The accompanying unaudited pro forma combined consolidated condensed statement of operations for the year ended December 31, 2006 and the three months ended March 31, 2007 is presented:

    on an actual basis for the predecessor and successor periods;

    on a combined basis summing the results for the 2006 predecessor and successor periods;

    on a pro forma basis to give effect to the Blackstone Acquisition as if the acquisition had occurred on January 1, 2006; and

    on a pro forma basis to give effect to the concurrent debt financing and remittance of a portion of the net proceeds to Travelport as if this had occurred on January 1, 2006; and

    on a pro forma as adjusted basis to give effect to the conversion of Travelport's net investment into shares of common stock and additional paid in capital, this offering and remittance of the net proceeds to Travelport, which we refer to as the transaction, as if this had occurred on January 1, 2006.

        The accompanying unaudited pro forma combined consolidated condensed balance sheet at March 31, 2007 is presented:

    on an actual basis for the successor; and

    on a pro forma basis to give effect to the concurrent debt financing and remittance of a portion of the proceeds to Travelport as if this had occurred on March 31, 2007; and

    on a pro forma as adjusted basis to give effect to the conversion of Travelport's net investment into shares of common stock and additional paid in capital, this offering and remittance of the net proceeds to Travelport, which we refer to as the transaction, as if this had occurred on March 31, 2007.

        The unaudited pro forma adjustments and the offering adjustments are based on available information and certain assumptions that we believe are reasonable and are described below in the accompanying notes. The unaudited information was prepared on a basis consistent with that used in preparing our audited combined consolidated financial statements and includes all adjustments, consisting of normal and recurring items, that we consider necessary for a fair presentation of the financial position and results of operations for the unaudited periods.

        The unaudited pro forma combined consolidated condensed statement of operations and balance sheet should be read in conjunction with the sections of this prospectus entitled "Selected Historical Combined Consolidated Financial and Other Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our historical combined consolidated financial statements and related notes thereto included elsewhere in this prospectus. The unaudited pro forma combined consolidated condensed statement of operations should not be considered indicative of actual results that would have been achieved had the transactions been consummated on the date indicated. Also, the unaudited pro forma combined consolidated condensed financial statements should not be viewed as indicative of our financial condition results of operations as of any future dates or for any future period.

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UNAUDITED PRO FORMA COMBINED CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2006
(dollars in millions, except share and per share data)

 
   
 









   
  Combined
 
 
  Predecessor
January 1,
2006 to
August 22,
2006

  Successor
August 23,
2006 to
December 31,
2006

   
  Blackstone Acquisition
  Concurrent Debt Financing
   
   
 
 
  Year Ended
December 31,
2006

  Adjustments
  Pro Forma
  Adjustments
  Pro forma
  Transaction
Adjustments

  Pro forma
As Adjusted

 
Net revenue   $ 510       $ 242   $ 752   $ 1   (a) $ 753   $     753       $ 753  

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Cost of revenue     75         38     113         113         113         113  
Selling, general and administrative     379         201     580         580         580     22 (f)   602  
Depreciation and amortization     37         18     55     (5 )(b)   50         50         50  
Impairment of goodwill and intangible assets     122             122     (122 )(c)                    
   
     
 
 
 
 
 
 
 
 
Total operating expenses     613         257     870     (127 )   743         743     22     765  
   
     
 
 
 
 
 
 
 
 
Operating income (loss)     (103 )       (15 )   (118 )   128     10         10     (22 )   (12 )

Interest expense, net

 

 

18

 

 

 

 

9

 

 

27

 

 


 

 

27

 

 

53

(e)

 

80

 

 


 

 

80

 
Other income/(expense)     1             1         1         1         1  
   
     
 
 
 
 
 
 
 
 
Income (loss) before income taxes     (120 )       (24 )   (144 )   128     (16 )   (53 )   (69 )   (22 )   (91 )
Provision (benefit) for income taxes     1         1     2     1   (d)   3       (d)   3       (d)   3  
   
     
 
 
 
 
 
 
 
 
Income (loss) from continuing operations   $ (121 )     $ (25 ) $ (146 ) $ 127   $ (19 ) $ (53 ) $ (72 ) $ (22 ) $ (94 )
   
     
 
 
 
 
 
 
 
 
Earnings per share:                                                            
Net loss per share:                                                            
  Basic and diluted                                                       $ (1.13 )

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Basic and diluted                                                         82,912,526  
                                                       
 

(a)
Reflects an adjustment to increase revenue by $1 million as a result of fair value adjustments in connection with the Blackstone Acquisition for deferred revenue of $3 million offset by the amortization of certain contracts with suppliers with terms considered below market of $2 million. The net increase in revenue reflects the difference in applying purchase accounting as of January 1, 2006 for the pro forma as opposed to August 23, 2006 for the actuals, as the balance of deferred revenue was greater as of August 23, 2006 due to the normal seasonality in the operations of the business. Thus, the reduction of revenue due to purchase accounting was greater in the historical financial statements for the period August 23, 2006 to December 31, 2006 than the amount that would have been lost had the acquisition occurred on January 1, 2006.

(b)
Reflects our estimates of the allocation of the overall Blackstone Acquisition purchase price to property and equipment, developed technology, customer contracts and relationships, vendor contracts and relationships, or other identifiable intangible assets, resulting in $5 million less depreciation and amortization expense.

(c)
Impairment of goodwill and intangible assets of $122 million is excluded as the goodwill and intangible assets would be stated at fair value at the beginning of the period and therefore an impairment would not exist in the period presented.

(d)
Represents the tax effect of the pro forma adjustments of $1 million and of the transaction adjustments of nil. The actual tax effect depends, among other factors, on the jurisdictions associated with borrowing and our ability to realize taxable income in those jurisdictions, as well as on the deferred tax consequences. An effective tax rate has been used instead of the statutory tax rate due to a valuation allowance being established against certain deferred tax assets.

(e)
Reflects the adjustment to interest expense for the estimated interest expense of $50 million resulting from the $600 million of debt to be borrowed concurrently with the consummation of this offering using an assumed interest rate of 8.36% and other fees related to the credit facility.

Interest rate sensitivity:


A 1/8% change in interest rates would impact pro forma interest expense related to our proposed new indebtedness by approximately $1 million.

(f)
Represents $22 million of estimated stock compensation expense as if the new equity incentive plan being put in place at the time of this offering had been effective on January 1, 2006.

38



UNAUDITED PRO FORMA COMBINED CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2007
(dollars in millions, except share and per share data)

 
  Three Months
Ended
March 31,
2007

  Concurrent Debt Financing
   
   
 
 
  Transaction
Adjustments

  Pro forma
As Adjusted

 
 
  Adjustments
  Pro forma
 
Net revenue   $ 212       $ 212       $ 212  

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Cost of revenue     38         38       $ 38  
Selling, general and administrative     152         152     6 (a) $ 158  
Depreciation and amortization     13         13       $ 13  
Impairment of intangible assets             0       $  
   
 
 
 
 
 
Total operating expenses     203         203     6   $ 209  
   
 
 
 
 
 

Operating income (loss)

 

 

9

 

 


 

 

9

 

 

(6

)

 

3

 

Interest expense, net

 

 

19

 

 

(2

)(b)

 

17

 

 


 

$

17

 
Other income/(expense)                   $  
   
 
 
 
 
 

Income (loss) before income taxes

 

 

(10

)

 

2

 

 

(8

)

 

(6

)

$

(14

)
Provision (benefit) for income taxes           (c)       (c) $  
   
 
 
 
 
 
Income (loss) from continuing operations   $ (10 ) $ 2   $ (8 ) $ (6 ) $ (14 )
   
 
 
 
 
 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Net loss per share:                                
  Basic and diluted                           $ (0.17 )

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Basic and diluted                             82,912,526  

(a)
Represents $6 million of estimated stock compensation expense as if the new equity incentive plan being put in place at the time of this offering had been effective on January 1, 2007.

(b)
Reflects the adjustment to interest expense for the elimination of $15 million for historical interest expense due to the intercompany loan, the estimated interest expense of $13 million resulting from the $600 million of debt to be borrowed concurrently with the consummation of this offering using an assumed interest rate of 8.36% and other fees related to the credit facility.


Interest rate sensitivity:

A 1/8% change in interest rates would impact pro forma interest expense related to our proposed new indebtedness by almost nil.

(c)
Represents the tax effect of the concurrent debt financing and transaction adjustments of nil. The actual tax effect depends, among other factors, on the jurisdictions associated with borrowing and our ability to realize taxable income in those jurisdictions, as well as on the deferred tax consequences. An effective tax rate has been used instead of the statutory tax rate due to a valuation allowance being established against certain deferred tax assets.

39



UNAUDITED PRO FORMA
COMBINED CONSOLIDATED CONDENSED BALANCE SHEET
AS OF MARCH 31, 2007
(dollars in millions, except share and per share data)

 
  March 31, 2007
 
   
  Concurrent Debt Financing
   
   
 
  Orbitz
Worldwide

  Transaction
Adjustments

  Pro forma
As Adjusted

 
  Adjustments
  Pro forma
Assets                              
Current assets:                              
 
Cash and cash equivalents

 

$

48

 

$

47

  (a)

$

95

 

$


  (b)

$

95
  Other current assets     94         94           94
   
 
 
 
 
Total current assets     142     47     189         189
 
Goodwill

 

 

1,194

 

 


 

 

1,194

 

 


 

 

1,194
  Trademarks and trade names     311         311         311
  Other non-current assets     480     5   (a)   485     (121 )(c)   364
   
 
 
 
 
Total assets   $ 2,127   $ 52   $ 2,179   $ (121 ) $ 2,058
   
 
 
 
 

Liabilities & Invested Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Current liabilities:                              
  Accrued expenses     295         295         295
  Other current liabilities     245     6   (a)   251         251
   
 
 
 
 
Total current liabilities     540     6     546         546
   
 
 
 
 
 
Long-term debt

 

 


 

 

594

  (a)

 

594

 

 


 

 

594
  Notes payable to Travelport     860     (548 )(a)   312     (312 )(b)  
  Other non-current liabilities     305         305     (108 )(b)   197
   
 
 
 
 
Total liabilities     1,705     52     1,757     (420 )   1,337
   
 
 
 
 

Invested equity/stockholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Travelport's net investment     420         420     (420 )(d)  
  Accumulated other comprehensive income (loss)     2         2         2
  Preferred stock, par value $0.01 per share (100 shares authorized, 0 shares issued and outstanding pro forma as adjusted)                    
  Common stock: par value $0.01 per share, (140,000,000 shares of common stock authorized, 82,912,526 shares of common stock issued and outstanding, pro forma as adjusted)                 1   (e)   1
  Additional paid in capital                 718   (f)   718
   
 
 
 
 
Total invested equity/stockholder's equity     422         422     299     721
   
 
 
 
 
Total liabilities and invested equity   $ 2,127   $ 52   $ 2,179   $ (121 ) $ 2,058
   
 
 
 
 

(a)
Represents the estimated proceeds to be received from the concurrent debt financing of $600 million of which $6 million is short term. The proceeds, less estimated deferred financing costs of $5 million and $47 million to be retained for operational purposes, will be remitted to Travelport to pay down the intercompany notes and related accrued interest.

(b)
Represents the net increase in equity and cash to be received of $475 million from the proceeds of this offering, assuming no exercise by the underwriters of their option to purchase additional shares, less estimated underwriters and offering expenses of $35 million. The net proceeds will be used to pay down the remaining intercompany note balance of $312 million and the remaining proceeds will be remitted to Travelport in the form of a dividend of $163 million, based upon balances as of March 31, 2007. We expect the dividend upon the consummation of this offering to be approximately $112 million due to movements in intercompany and cash balances. These amounts do not take into consideration a $20 million decrease in cash that will occur as a result of the sale of Travelbag, a former UK offline travel subsidiary, which closed on July 16, 2007.

(c)
Represents the forgiveness of the net intercompany receivable that will occur concurrently with this offering.

(d)
Represents the net decrease of Travelport's net investment due to conversion of the net investment into 48,912,526 common shares at $0.01 par value and $419 million additional paid in capital.

(e)
Represents the increase to common shares of $1 million resulting from the conversion of Travelport's net investments into shares of common stock and new shares issued in this offering.

(f)
Represents the increase in additional paid in capital resulting from (1) $419 million from the conversion of Travelport's net investment into shares of common stock; (2) $475 million from the proceeds of this offering; (3) dividend paid to Travelport of $163 million; and (4) forgiveness of net intercompany receivables of $13 million.

40



SELECTED HISTORICAL COMBINED CONSOLIDATED FINANCIAL AND OTHER DATA

        The following table presents our selected historical combined consolidated financial and other data. The statement of operations data for each of the years ended December 31, 2004, December 31, 2005 and the periods January 1, 2006 through August 22, 2006 and August 23, 2006 through December 31, 2006 and the balance sheet data as of December 31, 2005 and 2006 have been derived from our audited financial statements and the condensed combined consolidated statements of operations for the three months ended March 31, 2006 and March 31, 2007 and the balance sheet data as of March 31, 2007 have been derived from our unaudited condensed combined consolidated financial statements, included elsewhere in this prospectus. The statement of operations data for the years ended December 31, 2002, December 31, 2003 and the balance sheet data as of December 31, 2002, December 31, 2003 and December 31, 2004 are derived from unaudited financial statements that are not included in this prospectus. The unaudited information was prepared on a basis consistent with that used in preparing our audited combined consolidated financial statements and includes all adjustments, consisting of normal and recurring items, that we consider necessary for a fair presentation of the financial position and results of operations for the unaudited periods.

        On August, 23, 2006, affiliates of The Blackstone Group and TCV completed the acquisition of the Travelport businesses of Cendant, including the businesses which comprise the combined reporting group of Orbitz Worldwide. The balance sheet and statement of operations data as of December 31, 2006 and for the period August 23, 2006 through December 31, 2006 and the three months ended March 31, 2007 have been carved out of Travelport and include the financial condition, results of operations and cash flows for the combined reporting group of Orbitz Worldwide on a successor basis, reflecting the impact of the preliminary purchase price allocation. The balance sheet and statement of operations data for periods prior to August 23, 2006 have been carved out of Cendant and include the financial condition, results of operations and cash flows for the combined reporting group of Orbitz Worldwide on a predecessor basis, reflecting the carrying values of the combined reporting group of Orbitz Worldwide at Cendant's historical basis. Financial information for the successor and predecessor has been separated by a vertical line on the face of the statement of operations and other data to identify the different bases of accounting. Our combined consolidated financial statements include the financial condition, results of operations and cash flows of CheapTickets since October 2001, Flairview Travel since April 2004, Orbitz since November 2004 and ebookers since February 2005.

        Our historical combined consolidated financial statements do not reflect what our financial position, results of operations and cash flows would have been had we operated as a separate, standalone company without the shared resources of Cendant in the predecessor periods and Travelport in the successor period. Additionally, our historical financial position and results of operations are not necessarily indicative of our financial position or results of operations as of any future date or for any future period.

        You should read the following selected historical combined consolidated financial and other data in conjunction with the section of this prospectus entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our historical combined consolidated financial statements and related notes included elsewhere in this prospectus.

41


 
  Predecessor
   
  Successor
  Combined(1)
  Predecessor
  Successor
 
 
   
   
   
   
  January 1,
2006
through
August 22,
2006

   
  August 23,
2006
through
December 31,
2006

   
  Three
Months
Ended
March 31,
2006

  Three
Months
Ended
March 31,
2007

 
 
  Year Ended December 31,
   
   
 
 
   
  Year Ended
December 31,
2006

 
 
  2002
  2003
  2004
  2005
   
 
 
   
 
 
  (unaudited)

   
   
   
   
   
   
   
   
 
 
  (in millions)

   
 
Statements of Operations Data:                                                          
Net revenue     $122     $154     $244   $686     $510         $242     $752     $182     $212  

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Cost of revenue     9     15     43   101     75         38     113     29     38  
Selling, general and administrative     130     181     217   517     379         201     580     145     152  
Depreciation and amortization     9     15     32   78     37         18     55     16     13  
Impairment of goodwill and intangible assets     232     2     10   400     122             122          
   
 
 
 
 
     
 
 
 
 
Total operating expenses     380     213     302   1,096     613         257     870     190     203  
   
 
 
 
 
     
 
 
 
 

Operating income/(loss)

 

 

(258

)

 

(59

)

 

(58

)

(410

)

 

(103

)

 

 

 

(15

)

 

(118

)

 

(8

)

 

9

 

Interest expense

 

 

3

 

 


 

 

2

 

22

 

 

18

 

 

 

 

9

 

 

27

 

 

7

 

 

19

 
Other income, net               2     1             1          
   
 
 
 
 
     
 
 
 
 
Loss before income taxes     (261 )   (59 )   (60 ) (430 )   (120 )       (24 )   (144 )   (15 )   (10 )

Provision (benefit) for income taxes

 

 


 

 


 

 

3

 

(42

)

 

1

 

 

 

 

1

 

 

2

 

 

1

 

 


 
   
 
 
 
 
     
 
 
 
 
Net loss   $ (261 ) $ (59 ) $ (63 ) $(388 ) $ (121 )     $ (25 ) $ (146 ) $ (16 ) $ (10 )
   
 
 
 
 
     
 
 
 
 
 
   
   
   
   
   
   
  Successor
 
 
  Predecessor
   
  Successor
 
 
   
  As of March 31,
 
 
  As of December 31,
 
 
  2002
  2003
  2004
  2005
   
  2006
  2007
 
 
  (unaudited)

   
   
   
   
   
 
 
  (in millions)

   
 
Balance Sheet Data:                                          
Cash and cash equivalents   $   $ 2   $ 24   $ 33       $ 28   $ 48  
Working capital (deficit)(2)     (70 )   (51 )   (204 )   (259 )       (283 )   (398 )
Total assets     221     302     1,878     2,060         2,061     2,127  
Total long-term liabilities     24     221     295     269         407     1,165  
Total invested equity     112     5     1,303     1,424         1,267     422  

(1)
The combined results of the successor and the predecessor for the periods in 2006 and that of the predecessor in prior years are not necessarily comparable due to the change in basis of accounting resulting from the Blackstone Acquisition and the associated change in capital structure. The presentation of the 2006 results on this combined basis does not comply with generally accepted accounting principles in the U.S.; however, we believe that this provides useful information to assess the relative performance of the businesses in all periods presented in the financial statements on an ongoing basis. The captions included within our statements of operations that are materially impacted by the change in basis of accounting include net revenue, depreciation and amortization and impairment of goodwill and intangible assets. We have disclosed the impact of the change in the basis of accounting for each of these captions in the section of this prospectus entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations."

(2)
Defined as current assets minus current liabilities.

42


 
  Predecessor
   
  Successor
  Combined
  Predecessor
   
  Successor
 
  Year Ended December 31,
  January 1,
2006
through
August 22,
2006

   
  August 23,
2006
through
December 31,
2006

   
  Three
Months
Ended
March 31,
2006

   
  Three
Months
Ended
March 31,
2007

 
   
  Year Ended
December 31,
2006

   
 
  2004
  2005
   
   
 
   
   
 
   
   
   
   
  (in millions)

   
   
   
   
 
   
   
   
   
   
   
   
   
   
Other Data:                                                  
Gross bookings(3)   $ 1,987   $ 7,435   $ 6,832       $ 3,193   $ 10,025   $ 2,432       $ 2,941
  Air gross bookings(4)     1,338     5,392     5,046         2,397     7,443     1,800         2,151
  Non-air and other gross bookings(5)     649     2,043     1,786         796     2,582     632         790
  Domestic gross bookings     1,782     6,334     5,986         2,762     8,748     2,129         2,530
  International gross bookings(6)     205     1,101     846         431     1,277     303         411

Net revenue

 

 

244

 

 

686

 

 

510

 

 

 

 

242

 

 

752

 

 

182

 

 

 

 

212
  Air net revenue(7)     86     323     235         120     355     89         99
  Non-air and other net revenue(8)     158     363     275         122     397     93         113
  Domestic net revenue     216     542     411         200     611     147         166
  International net revenue(9)     28     144     99         42     141     35         46

EBITDA(10)

 

 

 

 

 

(330

)

 

 

 

 

 

 

 

 

 

(62

)

 

8

 

 

 

 

22
Adjusted EBITDA(10)           90                     117     10         30

(3)
Represents the total amount paid by a consumer for transactions booked under both the retail and merchant models at the time of booking.

(4)
Represents the total amount paid by a consumer for air transactions booked under both the retail and merchant models at the time of booking. Excludes gross bookings from the air component of dynamic packaging.

(5)
Represents the total amount paid by a consumer for hotel, vacation package, car rental, cruise and other transactions booked under both the retail and merchant models at the time of booking.

(6)
Gross bookings excludes $142 million of ebookers gross bookings for the period from January 1, 2005 through February 28, 2005 and $48 million of Travelbag gross bookings for that period. Gross bookings includes Travelbag gross bookings of $218 million for the period from March 1, 2005 through December 31, 2005, $245 million for the year ended December 31, 2006, $60 million for the three months ended March 31, 2006 and $66 million for the three months ended March 31, 2007.

(7)
Comprises commissions and fees earned on air transactions under our retail model and merchant model. Excludes net revenue from the air component of dynamic packaging.

(8)
Comprises commissions and fees earned on hotel, vacation package, car rental and cruise transactions under our retail model and merchant model, as well as advertising revenue and fees and commissions earned from the sale of third party travel-related products on our websites, insurance, our affinity card and other services.

(9)
Net revenue excludes $16 million of ebookers revenue for the period from January 1, 2005 through February 28, 2005 and $7 million of Travelbag revenue for that period.

(10)
EBITDA, a performance measure used by management, is defined as net loss plus: interest expense, provision for income taxes and depreciation and amortization, as shown in the table below. Adjusted EBITDA represents EBITDA as adjusted for certain items as described in the table below.


EBITDA and adjusted EBITDA, as presented for the year ended December 31, 2005, on a combined basis for the year ended December 31, 2006 and the three months ended March 31, 2006 and March 31, 2007, are not defined under U.S. generally-accepted accounting principles, and do not purport to be an alternative to net income as a measure of operating performance or to cash flows from operating activities as a measure of liquidity. Because not all companies use identical calculations, this presentation of EBITDA and adjusted EBITDA may not be comparable to other similarly-titled measures of other companies.


We use, and we believe investors benefit from the presentation of, EBITDA and adjusted EBITDA in evaluating our operating performance because they provide us and our investors with an additional tool to compare our operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our core operations.

43


    We believe that EBITDA and adjusted EBITDA are useful to investors and other external users of our financial statements in evaluating our operating performance and cash flow because:

    EBITDA is widely used by investors to measure a company's operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired; and

    investors commonly adjust EBITDA information to eliminate the effect of non-recurring items such as restructuring charges, as well as non-cash items such as impairment of goodwill and intangible assets and equity compensation all of which vary widely from company to company and impact comparability.

        Our management uses adjusted EBITDA:

    as a measure of operating performance to assist in comparing performance from period to period on a consistent basis;

    as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations; and

    as a performance evaluation metric off which to base executive and employee incentive compensation programs.

        The following table provides a reconciliation of net loss to EBITDA:

 
   
   
  Predecessor
   
  Successor
 
 
  Predecessor
  Combined
  Three
Months
Ended
March 31,
2006

   
  Three
Months
Ended
March 31,
2007

 
 
  Year Ended December 31,
2005

  Year Ended December 31,
2006

   
 
 
   
  (in millions)

   
   
 
Net loss   $ (338 ) $ (146 ) $ (16 )     $ (10 )
Interest expense     22     27     7         19  
Provision (benefit) for income taxes     (42 )   2     1          
Depreciation and amortization     78     55     16         13  
   
 
 
     
 
EBITDA   $ (330 ) $ (62 ) $ 8       $ 22  
   
 
 
     
 

    EBITDA was adjusted by the items listed and described in more detail below. The following table provides a reconciliation of EBITDA to Adjusted EBITDA:

 
   
   
  Predecessor
   
  Successor
 
 
  Predecessor
  Combined
  Three
Months
Ended
March 31,
2006

   
  Three
Months
Ended
March 31,
2007

 
 
  Year Ended
December 31,
2005

  Year Ended
December 31,
2006

   
 
 
   
  (in millions)

   
   
 
EBITDA   $ (330 ) $ (62 ) $ 8       $ 22  
Goodwill and intangible impairment expense(a)     400     122              
Purchase accounting adjustments(b)     2     43             6  
Corporate allocations and other direct corporate costs(c)     10     13     4         3  
Global platform expense(d)         5     1         2  
Stock-based compensation expense(e)     8     6     1         1  
Restructuring and moving expenses(f)         7              
Travelport corporate solutions adjustments(g)     (3 )   (3 )   (1 )        
Public company costs(h)     (14 )   (14 )   (3 )       (4 )
ebookers' pre-acquisition EBITDA(i)     (5 )                
CheapTickets' integration and ebookers restructuring costs(j)     22                  
   
 
 
     
 
Adjusted EBITDA   $ 90   $ 117   $ 10       $ 30  
   
 
 
     
 

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(a)
Represents the charge recorded for impairment of goodwill and intangible assets. The impairment is primarily related to a decline in ebookers' fair value relative to its carrying value, which was the result of poor operating performance occurring after the asset was acquired by Cendant.

(b)
Represents the purchase accounting adjustments made at the time of the acquisitions in order to reflect the fair value of deferred revenue and accrued liabilities on the opening balance sheet date. These adjustments, which are non-recurring in nature, reduced deferred revenue and accrued liabilities and resulted in a reduction in revenue and operating income the year ended December 31, 2005 and for the period August 23, 2006 through December 31, 2006 and the three months ended March 31, 2007.

(c)
Represents corporate allocations and direct costs for services performed on our behalf by Cendant or Travelport. After the completion of this offering, we will perform these services with either internal or outside resources, although we may utilize Travelport for certain services under the transition services agreement. Also includes $3 million, $3 million and almost nil of direct costs incurred by us on behalf of Travelport for the year ended December 31, 2005, the combined year ended December 31, 2006 and for the three months ended March 31, 2007, respectively. We have included our estimate of the costs we expect to incur after the completion of this offering as described in footnote (h) below.

(d)
Represents costs associated with operating two technology platforms simultaneously as we invest in our global technology platform. These development and duplicative technology expenses are expected to cease in 2008 following the migration of certain of our operations to the global technology platform.

(e)
Represents non-cash stock-based compensation expense.

(f)
Represents non-recurring costs incurred as part of our separation from Cendant and the costs of relocating our corporate offices.

(g)
Represents the difference in the historical amounts earned from Galileo by our corporate travel solutions business and the amount that would have been earned under our new arrangement with Galileo if such arrangement had been in place as of the beginning of the period presented.

(h)
Represents our estimate of the cash costs expected to be incurred for certain headquarters and public company costs after completion of this offering, including costs for services which were previously provided by Travelport or Cendant. These include tax, treasury, internal audit, board of director's costs, and similar items. Also included are costs for D&O insurance, audit, investor relations and other public company costs.

(i)
Represents the ebookers pre-acquisition EBITDA as the business was acquired on February 28, 2005.

(j)
Represents costs associated with the integration of CheapTickets and Orbitz and the costs associated with the ebookers restructuring.

(k)
Includes EBITDA of Tecnovate, our Indian Services Organization, of $2 million, $5 million, $1 million and nil for the ten months ended December 31, 2005, the combined year ended December 31, 2006, the three months ended March 31, 2006 and the three months ended March 31, 2007, respectively. Also includes revenue of Travelbag, a former UK offline travel subsidiary, of $24 million, $28 million, $6 million and $7 million and EBITDA of $1 million, $4 million, $(1) million and almost nil and gross bookings of $218 million, $245 million, $60 million and $66 million for the ten months ended December 31, 2005, the combined year ended December 31, 2006, the three months ended March 31, 2006 and the three months ended March 31, 2007, respectively. The sale of Travelbag closed on July 16, 2007.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

        The following discussion and analysis of our results of operations and financial condition covers periods both prior to and subsequent to the consummation of the acquisition by affiliates of The Blackstone Group and TCV of the Travelport business of Cendant, which we refer to as the Blackstone Acquisition. Accordingly, the discussion and analysis of historical periods prior to August 23, 2006 does not reflect the effect that the Blackstone Acquisition had on us, including the effect of purchase accounting on our results. You should read the following discussion of our results of operations and financial condition in conjunction with Selected Historical Combined Consolidated Financial and Other Data, Unaudited Pro Forma Combined Consolidated Condensed Financial Information and the audited combined consolidated financial statements and related notes thereto included elsewhere in this prospectus. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the "Risk Factors" section of this prospectus. Actual results may differ materially from those contained in any forward-looking statements.

Overview

        We are a leading global online travel company that uses innovative technology to enable leisure and business travelers to research, plan and book a broad range of travel products. Orbitz Worldwide is a combined reporting group comprised of Travelport's online travel businesses, which includes Orbitz, CheapTickets, ebookers, HotelClub, RatesToGo and the Away Network, and corporate travel brands, Orbitz for Business and Travelport for Business. We provide customers with access to a comprehensive set of travel products, from over 80,000 suppliers worldwide, including air, hotels, vacation packages, car rentals, cruises, travel insurance and destination services, such as ground transportation, event tickets and tours through an efficient, customized and user-friendly system.

        We are a leader in air travel, the largest online travel segment. This offers us a significant opportunity to drive growth in non-air categories, specifically hotels and dynamic vacation packages that are customized by travelers. These categories offer significant growth potential and attractive revenue per transaction and are areas in which we are currently under-penetrated relative to our major online competitors. There are also substantial growth opportunities in fast growing regions outside of the U.S. for our strong international brands: ebookers, HotelClub and RatesToGo. Finally, we believe that we have significant opportunity to improve our financial performance by continuing to realize operating efficiencies from the global integration of our operations (similar to the success we achieved with the integration of Orbitz and CheapTickets), by sharing best practices across our global operations and by launching our common, scaleable global technology platform. We believe the organic growth opportunities inherent to us and to the overall marketplace, coupled with expected tangible operating improvements, position us well for strong profit growth.

        As a full service online travel company, we generate revenue through multiple sources. Similar to traditional travel agencies, through our retail business, we earn fees and commissions from travel suppliers for airline tickets, hotel rooms, car rentals and other travel products and services booked by consumers on our websites, and we charge consumers a service fee for booking airline tickets and certain other travel products. We also receive incentive payments from GDSs and other distribution channels, including Galileo, Apollo and Worldspan, when we use their systems to book airline tickets, hotel rooms and car rentals. Our merchant business generates significantly higher revenue per transaction than our retail business. Our merchant fees are based on the difference between the total amount the customer pays and the negotiated net rate the supplier charges for the travel product. Other revenue is derived primarily from technology licensing and advertising.

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History of Acquisitions

        As part of Cendant from 2001 to 2006, we made a series of acquisitions. Since our purchase of CheapTickets in October 2001, we have created a full service online travel company through various acquisitions, each of which allows us to serve both travel suppliers and consumers more efficiently and effectively. Whereas CheapTickets was focused on value-conscious consumers, primarily in the U.S., we added other complementary brands such as Lodging.com, which is not currently an active brand, in August 2002; the Neat Group, which provides dynamic packaging technology where travelers can build customized trips based on customer preference for flights, car rentals, hotels, and leisure activities, in April 2003; and Flairview Travel, which owns HotelClub and RatesToGo, in April 2004, when we expanded into international markets. In November 2004, we acquired the full service online travel company Orbitz, which expanded our U.S. presence and furthered our reach into the corporate and managed travel marketplace. We acquired Away.com in January 2005, which serves as a complement to our online travel businesses by providing relevant travel information, sponsored links, and other services to travel consumers. Finally, we acquired ebookers and AsiaHotels.com, which is now part of Flairview, in February 2005 to further expand our presence in the United Kingdom, continental Europe and Asia.

Blackstone Acquisition of the Travelport businesses of Cendant, including Orbitz Worldwide

        On August 23, 2006, Cendant's travel distribution businesses (including Orbitz Worldwide) were acquired by affiliates of The Blackstone Group and TCV, including the businesses which comprise the combined reporting group of Orbitz Worldwide. As a result, the businesses which comprise the combined reporting group of Orbitz Worldwide prior to the Blackstone Acquisition are considered the predecessor. The combined consolidated financial statements as of December 31, 2006 and for the period August 23, 2006 through December 31, 2006 include the financial condition, results of operations and cash flows for the combined reporting group of Orbitz Worldwide on a successor basis, reflecting the effect of purchase accounting of the Blackstone Acquisition utilizing the preliminary purchase price allocation. The combined consolidated financial statements for periods prior to August 23, 2006 include the financial condition, results of operations and cash flows for the combined reporting group of Orbitz Worldwide on a predecessor basis, reflecting the historical carrying values of the combined reporting group of Orbitz Worldwide. Financial information for the successor and predecessor has been separated by a vertical line on the face of the combined consolidated financial statements to identify the different basis of accounting. Our combined consolidated results of operations, financial position and cash flows may not be indicative of our future performance and do not necessarily reflect what our combined consolidated results of operations, financial position and cash flows would have been had we operated as a separate, standalone entity during the periods presented, including changes in our operations and capitalization as a result of the Blackstone Acquisition.

Industry Trends

        Increased usage and familiarity with the Internet has driven rapid growth in online travel gross bookings. According to PhoCusWright, in 2006, 47% of leisure and corporate travel bookings occurred online in the U.S., a higher percentage than any other region. Penetration rates globally have increased considerably over the past few years, and PhoCusWright expects this trend to continue.

        Online travel companies typically provide airline, hotel, car rental, and other reservation and fulfillment services to customers. Online travel companies earn fees and commissions from travel suppliers for airline tickets, hotel rooms, car rentals and other travel products and services booked, as well as incentive payments from GDSs and other distribution channels. The rapid and significant changes in the travel industry have affected and will continue to affect the revenue and profitability per transaction for online travel companies. As discussed in more detail below, these changes include:

    efforts by major airlines to reduce distribution costs through increasing direct distribution through their own websites, which reduces travel agent commissions, overrides and GDS fees;

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    an increase in the proportion of airline seats that are sold and actually filled at departure, which we refer to as load factors;

    an increase in ticket prices, which we believe generally decreased in the first half of 2007, combined with a reduction in flight capacities by the major airlines; and

    a rise in occupancy rates in the hotel sector.

        The U.S. airline sector has experienced significant turmoil in recent years, with several of the largest airlines seeking the protection of Chapter 11 bankruptcy proceedings. The need to rationalize high fixed cost structures to better compete with low cost carriers offering "no frills" flights at discounted prices, as well as jet fuel price inflation, have caused the airlines to recently undertake a series of merger opportunities to better share fixed costs and reduce redundant flight routes. In addition, carriers have aggressively pursued cost reductions in every aspect of their operations. These cost reduction efforts include distribution costs, which the airlines have pursued by increasing direct distribution through their own proprietary websites, as well as seeking to reduce travel agent commissions and overrides. The airlines have also been successful in reducing their fees with the GDSs as a result of the contract negotiations in mid-to-late 2006 when their previous GDS contracts expired. These reductions negatively affected offline and online travel agents as large agencies have historically received a meaningful portion of their air remuneration from GDSs.

        In addition, the U.S. airline industry has experienced increased load factors as well as ticket prices. These trends have affected our ability to provide consumers with access to net rate inventory which we use in our merchant air businesses, including air tickets for package travel offerings, and has resulted in reduced discounts for our merchant air business.

        Together, these factors have driven a decline in air revenue per ticket in recent years.

        Until recently, the hotel sector has been characterized by robust demand and limited supply, resulting in increasing occupancy rates which has led hotel revenue managers to increase their average daily rates, or ADRs. While increasing ADRs generally has a positive effect on online travel hotel operations as remuneration increases proportionally with net room rates, higher ADRs can also affect underlying demand and higher occupancy rates can restrict our ability to provide consumers with access to merchant hotel inventory, particularly in high occupancy destinations popular with our travel base, including Orlando, Las Vegas and New York. Higher occupancy rates also have historically tended to drive lower margins as hotel suppliers have less need for third-party intermediaries for distribution. Recently, the hotel sector has been experiencing decreased occupancy trends with increasing supply and generally steady demand.

        Despite some of these trends, growth in the online travel industry has been robust and has coincided with an increased interest from travelers in booking several components of their travel experience simultaneously. These components may include, but are not limited to, airline tickets, hotel rooms and car rentals. Online travel companies have taken advantage of the opportunity to offer travelers a comprehensive set of package options, including many different combinations of travel products and the ability to select their preferred supplier for each, all in a timely and efficient manner and often for less than booking each component individually. This rise in demand for vacation packages is driving additional industry profitability as the average package transaction size is meaningfully larger than a standalone product and often carries a higher margin. Additionally, by making destination services, such as ground transportation, event tickets and tours, available to travelers, online travel companies have been able to extend their value proposition beyond traditional travel (air, hotel and car) and shape the travelers' experiences once they arrive at their destinations.

        Several trends suggest continued strength for online travel companies. Increased Internet usage and availability of high speed Internet access, greater convenience and ease of use of booking travel online and increased breadth of travel products offered online are expected to drive global growth in online travel. PhoCusWright projects rapid growth of vacation packages bookings (including dynamic packaging) in the

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U.S., increasing 45% from $6.5 billion in 2006 to $9.4 billion in 2008. There is also significant potential to serve small, medium and large businesses through website interfaces rather than traditional corporate travel agencies.

Separation from Travelport and Related Party Transactions

        Historically, we have not operated as an independent standalone company. Our combined consolidated financial statements included in this prospectus have been derived from the historical financial statements of Cendant for the predecessor periods and from the historical financial statements of Travelport for the successor period. The combined consolidated financial information may not reflect what our results of operations, financial position and cash flows would have been had we operated as a separate, standalone company without the shared resources of Cendant in the predecessor periods and Travelport in the successor period, and may not be indicative of our future results of operations, financial position and cash flows. For additional information, see the section of this prospectus entitled "Risk Factors."

        Concurrently with the closing of this offering, we will enter into multiple agreements with Travelport, formalizing our ongoing relationship and providing for continued services to be provided by Travelport and us for our mutual benefit. It is expected that the costs of such services will be on a basis consistent with the costs allocated to us in the historical combined consolidated financial statements. As these agreements are between a parent and its controlled entities, they cannot by definition be considered arms' length transactions. However, we believe the terms are at least as favorable as could be obtained from unaffiliated third parties. For additional information, see the section of this prospectus entitled "Arrangements Between Our Company and Related Parties."

        In addition to certain general and corporate overhead functions that have been provided to us historically by either Cendant or Travelport, and which are discussed below, we have numerous ongoing relationships with Travelport affiliates that are significant to our revenue-producing activities. The following sets forth a summary of the services provided to us by these related parties.

        GDS Services.    To varying extents suppliers utilize GDSs to connect their inventory of products and services with travel agencies, who in turn distribute those products and services to travelers. Certain of our businesses utilize Galileo and Apollo, which are subsidiaries of Travelport, for GDS services. In addition, on December 6, 2006, Travelport announced that it had entered into a definitive agreement to acquire Worldspan. Worldspan provides Orbitz with GDS services under an agreement, referred to as the Worldspan Contract, which is purportedly effective through October 2011. However, Orbitz is currently in litigation with Worldspan and one of Orbitz's claims is that various contractual provisions, including the term of the contract and the exclusivity provision, are void and unenforceable. The Worldspan Contract with Orbitz has historically been accounted for as an unfavorable contract, as management believes that the rates received under this contract are below market. The agreement was signed on November 1, 2001, at a time when Worldspan and Orbitz had common owners which included Delta Air Lines, Northwest Airlines and American Airlines. In connection with the proposed acquisition, we are negotiating a new agreement with Travelport which would replace our existing GDS agreements with each of Galileo and Worldspan. As a result, Travelport GDSs would provide virtually all of our GDS services. The proposed acquisition of Worldspan by Travelport has not yet been consummated and remains subject to regulatory approvals.

        For the years ended December 31, 2004 and December 31, 2005 and for the periods January 1, 2006 through August 22, 2006 and August 23, 2006 through December 31, 2006, our net revenue from Galileo related GDS services was $24 million, $34 million, $36 million and $19 million, respectively. For the three months ended March 31, 2006 and March 31, 2007, $14 million and $16 million was related to these services.

        Hotel Sourcing.    We utilize the services of GTA, a subsidiary of Travelport, for access to certain international hotel inventory where we do not have our own sourcing team. We pay GTA a fee for such services based upon actual bookings made.

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        Corporate Travel Services.    We offer corporate travel fulfillment solutions through the Travelport for Business and Orbitz for Business brands. Travelport for Business provides corporate travel management services to Travelport and its subsidiaries, which include full-service ticketing and fulfillment services, a custom configured corporate online booking tool and access to a corporate travel call center.

        For all of the services provided, we believe the assumptions and methodologies underlying the revenue recognized and costs incurred with related Travelport companies are reasonable. However, such amounts may not be indicative of, nor is it practical or meaningful for us to estimate for all historical periods presented, the actual revenue or expenses that would have been incurred had we operated independently of Travelport and Cendant.

General Corporate Overhead and Direct Billed Expenses

        The combined consolidated financial statements reflect an allocation of both general corporate overhead expenses and directly billed expenses incurred on our behalf by Cendant in the predecessor period and by Travelport in the successor period. General corporate overhead expenses have been allocated based on a percentage of our forecasted revenue. Directly billed expenses were based upon our actual utilization of the services. Costs subject to the general corporate overhead allocation and direct bill include executive management, tax, insurance, accounting, legal, treasury, information technology, telecommunications, call center and real estate expenses.

        For the three months ended March 31, 2006 and 2007, we were allocated $2 million and $3 million, respectively, of general corporate overhead expenses.

        For the three months ended March 31, 2006 and 2007, we were allocated almost nil and almost nil, respectively, of directly billed expenses.

        For the years ended December 31, 2004 and December 31, 2005 and the periods January 1, 2006 through August 22, 2006 and August 23, 2006 through December 31, 2006, we were allocated $3 million, $8 million, $5 million and $3 million, respectively, of general corporate overhead expenses.

        For the years ended December 31, 2004 and December 31, 2005 and the periods January 1, 2006 through August 22, 2006 and August 23, 2006 through December 31, 2006, we were allocated $4 million, $1 million, $1 million and $1 million, respectively, of directly billed expenses.

        We believe the assumptions and methodologies underlying the allocations of general corporate overhead and directly billed expenses from Cendant and Travelport are reasonable. However, such expenses are not necessarily comparable between the predecessor and successor periods, and are not indicative of, nor is it practical or meaningful for us to estimate for all historical periods presented, the actual level of expenses that would have been incurred had we operated independently of Travelport and Cendant.

Public Company and Ongoing Services Costs

        Incremental costs associated with operating as an independent public company may include changes in our labor and wage base, additional facilities and equipment, legal fees, insurance, and costs which might be incurred as a public company, including board of director compensation and the cost associated with public company filings. For the combined twelve months ended December 31, 2006, we estimate the incremental costs, net of corporate allocations and direct costs incurred by us for Travelport business operations, would have been approximately $1 million. For the three months ended March 31, 2006 and 2007, we estimate the incremental costs, net of corporate allocations and direct costs incurred by us for Travelport business operations, would have been almost nil and $1 million, respectively.

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Key Operating Metrics

        Our operating results are affected by certain key metrics that represent overall transaction activity and subsequent financial performance generated by our travel services. Two of the most important of these metrics are gross bookings and net revenue. Gross bookings is defined as the total amount paid by a consumer for transactions booked under both the retail and merchant models at the time of booking. Net revenue is defined as commissions and fees generated through our retail and merchant models as well as advertising revenue and certain other fees and commisions.

        Gross bookings provide insight into changes in overall travel activity levels, changes in industry-wide online booking activity, and more specifically, changes in the number of bookings through our websites. We follow net revenue trends for our various brands, geographies and product categories to gain insight into the profitability of our business across these categories. Both metrics are critical in determining the ongoing growth of our business.

        The table below details our gross bookings and net revenue for our domestic and international businesses for the three months ended March 31, 2007 and 2006:

 
  Three Months Ended
March 31, 2007

 
  Domestic
  International
  Total
 
  (in millions)

Gross bookings   $ 2,530   $ 411   $ 2,941
Net revenue     166     46     212
 
  Three Months Ended
March 31, 2006

 
  Domestic
  International
  Total
 
  (in millions)

Gross bookings   $ 2,129   $ 303   $ 2,432
Net revenue     147     35     182

        For our domestic business, which is comprised principally of Orbitz, CheapTickets and our corporate travel businesses, gross bookings increased $401 million, or 19%, from the three months ended March 31, 2006 to the three months ended March 31, 2007. The domestic gross bookings increase in the three month period was driven primarily by increased air volume on Orbitz and CheapTickets and the growth in dynamic package bookings. For our international business, which is comprised principally of ebookers, HotelClub and RatesToGo, gross bookings increased $108 million, or 36%. The international gross bookings increase in the three month period was driven primarily by the growth in air volume at ebookers and the growth in hotel volume at ebookers and Flairview Travel.

        From the three months ended March 31, 2006 compared to the three months ended March 31, 2007, net revenue from our international business increased as a percent of our total net revenue from 19% to 22%.

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        The table below details our gross bookings and net revenue for our air and non-air and other businesses for the three months ended March 31, 2007 and 2006:

 
  Three Months Ended
March 31, 2007

 
  Air
  Non-Air
and Other

  Total
 
  (in millions)

Gross bookings   $ 2,151   $ 790   $ 2,941
Net revenue     99     113   $ 212
 
  Three Months Ended
March 31, 2006

 
  Air
  Non-Air
and Other

  Total
 
  (in millions)

Gross bookings   $ 1,800   $ 632   $ 2,432
Net revenue     89     93   $ 182

        From the three months ended March 31, 2006 compared to the three months ended March 31, 2007, the net revenue of our non-air and other business as a percent of our total net revenue increased from 51% to 53%. This increase was driven primarily by growth in dynamic packaging and hotel volume and a shift in mix from retail to merchant hotel bookings.

        The table below details our gross bookings and net revenue for our domestic and international businesses for the years ended December 31, 2006, 2005 and 2004:

 
  Year Ended December 31, 2006 (Combined)
 
  Domestic
  International
  Total
 
  (in millions)

Gross bookings   $ 8,748   $ 1,277   $ 10,025
Net revenue     611     141     752
 
  Year Ended December 31, 2005
 
  Domestic
  International
  Total
 
  (in millions)

Gross bookings   $ 6,334   $ 1,101   $ 7,435
Net revenue     542     144     686
 
  Year Ended December 31, 2004
 
  Domestic
  International
  Total
 
  (in millions)

Gross bookings   $ 1,782   $ 205   $ 1,987
Net revenue     216     28     244

        For our domestic business, which is comprised principally of Orbitz, CheapTickets and our corporate travel businesses, gross bookings increased $2,414 million, or 38%, from 2005 to 2006 and $4,552 million from 2004 to 2005, which includes a full year of bookings from Orbitz, which was acquired in November 2004. Assuming the acquisition of Orbitz as of the beginning of 2004, domestic gross bookings grew 15% from $5,504 million in 2004 to $6,334 million in 2005. The gross bookings increase in 2006 was driven primarily by increased air volume on Orbitz and CheapTickets and the growth in dynamic package bookings. For our international business, which is comprised principally of ebookers, HotelClub and RatesToGo, gross bookings increased $176 million, or 16%, from 2005 to 2006 and increased $896 million from 2004 compared to 2005. The majority of the increase from 2004 to 2005 was due to the acquisition of

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ebookers in February 2005. The increase in 2006 was driven primarily by inclusion of a full year of ebookers' online business, although growth was partially offset by a decrease in ebookers' offline business.

        From 2004 to 2006, the net revenue of our international business as a percent of our total net revenue increased from 11% to 19%. This shift was driven primarily by the acquisition of ebookers.

        The table below details our gross bookings and net revenue for our air and non-air and other businesses for the years ended December 31, 2006, 2005 and 2004:

 
  Year Ended December 31, 2006 (Combined)
 
  Air
  Non-Air
and Other

  Total
 
  (in millions)

Gross bookings   $ 7,443   $ 2,582   $ 10,025
Net revenue     355     397     752
 
  Year Ended December 31, 2005
 
  Air
  Non-Air
and Other

  Total
 
  (in millions)

Gross bookings   $ 5,392   $ 2,043   $ 7,435
Net revenue     323     363     686
 
  Year Ended December 31, 2004
 
  Air
  Non-Air
and Other

  Total
 
  (in millions)

Gross bookings   $ 1,338   $ 649   $ 1,987
Net revenue     86     158     244

        From 2004 to 2006, the net revenue of our air business as a percent of our total net revenue shifted from 35% to 47%. This shift was driven primarily by the acquisition of Orbitz in November 2004 and ebookers in February 2005, both of which have significant air businesses.

Description of Our Net Revenue, Costs and Expenses

        Net Revenue.    Our net revenue is derived primarily from travel-related commissions received for airline, hotel, car rental and other reservation and fulfillment services, service fees and GDS fees. We also derive a relatively small portion of our net revenue from advertising and certain other third-party fees. We record revenue net of all amounts paid to our suppliers under both the retail and merchant models. Through our merchant business, we generate higher revenue per transaction as our fees are based on the difference between the total amount the customer prepays and the negotiated net rate the supplier charges for the travel product.

        Under our retail model, we pass reservations booked by consumers to the travel provider in return for a commission. Under the merchant model, we negotiate with suppliers for access to travel content at negotiated net rates. Under the merchant model, we facilitate the booking of those travel products by consumers, either on a standalone basis or as part of a dynamically packaged combination of products, at a price that includes an amount sufficient to pay the travel supplier the net rate along with an estimate of the amount of any occupancy and other local taxes that may be due, plus an additional amount we charge for service fees.

        Air revenue includes commissions or fees earned under our retail model, as well as revenue earned under the merchant model. The vast majority of our air revenue is generated from our retail model. We also receive booking incentives from GDSs as well as consumer service fees, including additional fees for air reservations utilizing paper tickets and for exchanging and reissuing tickets.

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        Non-air revenue is primarily comprised of hotel, vacation packages, car rental, and cruise transactions, including commissions and fees earned under our retail model, as well as revenue earned under the merchant model. The majority of our hotel transactions are completed under the merchant model, whereas the vast majority of our car rental and cruise transactions are completed under the retail model. We also earn booking incentives from GDSs for hotel and car rental bookings made through our websites.

        Other revenue is derived from relationships with various third-parties including advertisers, travel insurers and commissions from destination service providers. We also earn fees on our affinity card and hosting and other services.

        Cost of Revenue.    Cost of revenue consists of direct costs incurred to generate our revenue, including credit card processing and related costs, costs for call center operations, fulfillment and customer service, and certain technology costs. In general, cost of revenue is variable and is higher as a percentage of revenue for merchant transactions where we have to incur credit card processing fees and higher service costs.

        Selling, General and Administrative Expenses.    Selling, general and administrative expenses consist primarily of wages and benefits, advertising, consulting fees and professional fees. Advertising costs include online advertising such as search engine marketing, display advertising, affiliate programs and email marketing as well as offline advertising such as traditional television, radio and print advertising.

        Depreciation and Amortization.    Depreciation consists primarily of depreciation expense recorded on property and equipment. Amortization expense consists primarily of amortization recorded on intangible assets, leasehold improvements and capitalized software.

        Impairment of Goodwill and Intangible Assets.    Impairment of goodwill and intangible assets results from our assessment of the carrying value of certain assets based upon our estimation of the fair market value of such assets. Our assessment in 2006 included consideration from the Blackstone Acquisition, including the allocation of fair value to Orbitz Worldwide. For the years ended December 31, 2004 and December 31, 2005 and the period from January 1, 2006 through August 22, 2006, impairment of goodwill and intangible assets was approximately $10 million, $400 million and $122 million, respectively. These impairments are primarily a result of the decline in the fair value to the carrying value of ebookers, which performed poorly after the acquisition by Cendant due to various operational issues. Specifically, after Cendant purchased ebookers in 2005, a significant portion of bookings were being made offline, such as through call centers, and these bookings were declining. In addition, the business was operating with multiple technology platforms and inefficient marketing programs. Finally, there was a high degree of management turnover. As a result, financial performance in 2005 and 2006 deteriorated. In late 2005, Orbitz management assumed responsibility for ebookers and implemented changes to marketing, technology and overall operations. Since then, financial performance at ebookers has improved. As a result of these operating issues, the financial performance of ebookers fell short of the cash flow forecasts prepared by Cendant at the time of the acquisitions that were used to support the valuations.

        Interest Expense.    Interest expense consists primarily of imputed non-cash interest on long-term liabilities related to a tax sharing agreement among Orbitz and Continental Airlines, Delta Air Lines, Northwest Airlines, United Air Lines and American Airlines. For additional information, see the section below entitled "Critical Accounting Policies."

        Income Taxes.    The provision for income taxes is determined using the asset and liability method, under which deferred tax assets and liabilities are calculated based upon the temporary differences between the financial statement and income tax basis of assets and liabilities using currently enacted tax rates.

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Results of Operations

        The financial statements present our results for the years ended December 31, 2005 and for the period from January 1, 2006 through August 22, 2006 on a predecessor basis (reflecting Orbitz Worldwide's ownership by Cendant) and the period from August 23, 2006 through December 31, 2006 on a successor basis (reflecting Orbitz Worldwide's ownership by Travelport). In addition, the financial statements present our results for the three months ended March 31, 2006 on a predecessor basis and for the three months ended March 31, 2007 on a successor basis.

        For the purpose of management's discussion and analysis of results of operations, we have provided a summary of the successor and predecessor results for the 2006 period for the purpose of comparing those combined results with that of the predecessor in 2005. The results of the two periods are not necessarily comparable due to the change in basis of accounting resulting from the impact of the Blackstone Acquisition. The presentation of the 2006 results on this combined basis does not comply with accounting principles generally accepted in the U.S.; however, we believe that this provides useful information to assess the relative performance of the businesses in all periods presented in the financial statements. The impact of the Blackstone Acquisition is discussed in the relevant section and includes the impact on net revenue, the fair value of deferred revenue and supplier liabilities and depreciation and amortization and impairment of goodwill and intangible assets.

        In accordance with SFAS 141, "Business Combinations," at the date of the Blackstone Acquisition, the assets and liabilities were recorded at their estimated fair values to reflect our portion of the overall Blackstone Acquisition purchase price. This resulted in an increase in the value of intangible assets and a corresponding increase in amortization expense.

 
  Predecessor
 

  Successor
  Combined
  Predecessor
 

  Successor
 
  Year Ended
December 31,
2005

  January 1, 2006
through
August 22,
2006

 

  August 23,
2006 through
December 31,
2006

  Twelve Months
Ended
December 31,
2006

  Three Months
Ended
March 31,
2006

 

  Three Months
Ended
March 31,
2007

 
   
   
 

  (dollars in millions)

   
 

   
Net revenue   $ 686   $ 510       $242     $  752     $ 182       $212

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Cost of revenue     101     75       38     113       29       38
Selling, general and administrative     517     379       201     580       145       152
Depreciation and amortization     78     37       18     55       16       13
Impairment of goodwill and intangible assets     400     122       —     122            
   
 
     
 
 
     
Total operating expenses     1,096     613       257     870       190       203
   
 
     
 
 
     
Operating income/(loss)     (410 )   (103 )     (15)   (118)     (8 )     9
Interest expense     22     18       9     27       7       19
Other income, net     2     1       —     1          
   
 
     
 
 
     
Loss before income taxes     (430 )   (120 )     (24)   (144)     (15 )     (10)
Provision (benefit) for income taxes     (42 )   1       1     2       1      
   
 
     
 
 
     
Net (loss)   $ (388 ) $ (121 )     $(25)   $(146)   $ (16 )     $(10)
   
 
     
 
 
     

55


Three Months ended March 31, 2006 compared to the Three Months ended March 31, 2007

Net Revenue

 
  Three Months
Ended March 31,

   
   
 
 
  2006
  2007
  $ Change
  % Change
 
 
  (dollars in millions)

 
Air   $ 89   $ 99   $ 10   11 %
Non-air     72     89     17   24  
Other     21     24     3   15  
Net revenue   $ 182   $ 212   $ 30   16 %

        Net revenue increased $30 million, or 16%, from $182 million for the three months ended March 31, 2006 compared to $212 million for the three months ended March 31, 2007.

        Air.    Net revenue from air bookings increased $10 million, or 11%, from $89 million for the three months ended March 31, 2006 compared to $99 million for the three months ended March 31, 2007. Higher domestic volume drove a $12 million increase in air net revenue. Partially offsetting the higher domestic volume was an $8 million reduction in net revenue due to lower average commissions on our air transactions and reduced paper ticket fees as airlines continue to move toward electronic ticketing; $2 million of this $8 million decrease was the result of the final contractual step-down in commissions paid to us by the airlines with which we have charter associate agreements. An increase in international air volume primarily drove the remaining $6 million increase in net revenue.

        Non-air.    Net revenue from non-air bookings increased $17 million, or 24%, from $72 million for the three months ended March 31, 2006 compared to $89 million for the three months ended March 31, 2007. The increase in non-air net revenue was primarily due to a shift in mix from retail to merchant bookings, increased domestic ADR, and increased volume from dynamic packaging and hotel bookings. Net revenue from dynamic packaging in the first quarter of 2007 increased $8 million, primarily as a result of domestic volume growth which was driven in part by the introduction of the Air + Car packaging combination on our domestic websites. Net revenue from hotel bookings in the first quarter of 2007 increased $9 million driven primarily by higher domestic and international volume and improved domestic merchant mix.

        Other.    Other net revenue increased $3 million, or 15%, from $21 million for the three months ended March 31, 2006 compared to $24 million for the three months ended March 31, 2007. This increase was primarily driven by the growth in insurance and advertising revenue.

Cost of Revenue

 
  Three Months
Ended March 31,

   
   
 
 
  2006
  2007
  $ Change
  % Change
 
 
  (dollars in millions)

 
Cost of revenue   $ 29   $ 38   $ 9   31 %
% of net revenue     16 %   18 %          

        Cost of revenue increased $9 million, or 31%, from $29 million for the three months ended March 31, 2006 compared to $38 million for the three months ended March 31, 2007. Higher domestic transaction volume, primarily from dynamic packages and hotels, drove a year-over-year increase of $7 million. The remaining increase was driven by higher year-over-year cost of revenue at ebookers and Flairview Travel.

56


Selling, General and Administrative Expenses

 
  Three Months Ended
March 31,

   
   
 
 
  2006
  2007
  $ Change
  % Change
 
 
  (dollars in millions)

 
Selling, general and administrative   $ 145   $ 152   $ 7   5 %
% of net revenue     80 %   72 %          

        Selling general and administrative expenses increased $7 million, or 5%, from $145 million for the three months ended March 31, 2006 compared to $152 million for the three months ended March 31, 2007. Marketing expense was $72 million and $82 million at March 31, 2006 and 2007, respectively, representing an increase of $10 million in the quarter primarily due to higher online spending, driven largely by higher transaction volume, and expanded advertising campaigns promoting our Orbitz brand. This increase was partially offset by a decrease in wages and benefits and other operating expenses in our domestic and international businesses.

        As a percentage of net revenue, selling, general and administrative expense decreased from 80% for the three months ended March 31, 2006 compared to 72% for the three months ended March 31, 2007. This reduction is primarily due to greater operational efficiency as the business has grown total net revenue year-over-year.

Depreciation and Amortization

 
  Three Months Ended
March 31,

   
   
 
 
  2006
  2007
  $ Change
  % Change
 
 
  (dollars in millions)

 
Depreciation and amortization   $ 16   $ 13   $ (3 ) (19 )%
% of net revenue     9 %   6 %          

        Depreciation and amortization decreased $3 million, or 19%, from $16 million from the three months ended March 31, 2006 compared to $13 million from the three months ended March 31, 2007. As a percentage of net revenue, depreciation and amortization represented 9% for the three months ended March 31, 2006 compared to 6% for the three months ended March 31, 2007. This net decrease in depreciation and amortization expense of $3 million resulted from a $7 million decrease in depreciation expense and a $4 million increase in amortization expense. The decrease in depreciation expense and increase in amortization expense is primarily related to purchase accounting resulting from the Blackstone Acquisition on August 23, 2006.

Interest Expense

 
  Three Months Ended
March 31,

   
   
 
  2006
  2007
  $ Change
  % Change
 
  (dollars in millions)

Interest expense   $ 7   $ 19   $ 12   *
% of net revenue     4 %   9 %        

*
Not meaningful

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        Interest expense increased by $12 million from $7 million for the three months ended March 31, 2006 compared to $19 million for the three months ended March 31, 2007. As a percentage of net revenue, interest expense represented 4% for the three months ended March 31, 2006 and 9% for the three months ended March 31, 2007. Interest expense increased primarily as a result of $15 million in interest related to the $860 million of notes payable entered into during January 2007. The remaining increase is primarily interest expense related to the tax sharing agreement.

Provision for Income Taxes

 
  Three Months Ended
March 31,

   
   
 
  2006
  2007
  $ Change
  % Change
 
  (dollars in millions)

Provision for income taxes   $ 1   $   $ (1 ) *
% of net revenue     1 %   %        

*
Not meaningful

        We recorded a tax provision of $1 million for the three months ended March 31, 2006 and no provision for the three months ended March 31, 2007. For the three months ended March 31, 2006 and 2007, our provision was due primarily to losses for which we did not record a tax benefit.

Year Ended December 31, 2006 (Combined) Compared to Year Ended December 31, 2005

Net Revenue

 
  Year Ended December 31,
   
   
 
 
  2005
  2006
  $ Change
  % Change
 
 
  (dollars in millions)

 
Air   $ 323   $ 355   $ 32   10 %
Non-air     282     309     27   10  
Other     81     88     7   9  
   
 
 
 
 
Net revenue   $ 686   $ 752   $ 66   10 %
   
 
 
 
 

        Net revenue increased $66 million, or 10%, from $686 million in 2005 to $752 million in 2006. Excluding a $43 million reduction in 2006 net revenue and a $3 million reduction in 2005 net revenue due to purchase accounting adjustments, our 2006 net revenue grew 15% compared to 2005. These purchase accounting adjustments primarily related to the write-off of deferred revenue.

        Air.    Net revenue from air bookings increased $32 million, or 10%, from $323 million in 2005 to $355 million in 2006. Higher domestic volume drove a $56 million increase in air net revenue and a full-year contribution of net revenue from ebookers helped drive an additional $8 million year-over-year net revenue increase. Partially offsetting the higher domestic volume was a $17 million reduction in net revenue due to lower average commissions on our air transactions and reduced paper ticket fees as airlines continue to move toward electronic ticketing. In addition, 2006 air net revenue was reduced by $8 million as a result of the final contractual step-down in commissions paid to us by the airlines with which we have charter associate agreements. The remaining air net revenue decrease was driven by a $7 million write-off of deferred revenue in 2006 arising from purchase accounting adjustments made in connection with the Blackstone Acquisition.

        Non-air.    Net revenue from non-air bookings increased $27 million, or 10%, from $282 million in 2005 to $309 million in 2006. Excluding a $34 million reduction in 2006 non-air net revenue and a $3 million reduction in 2005 non-air net revenue (a net $31 million year-over-year reduction) due to purchase accounting adjustments, our non-air net revenue grew 20% from 2005. This increase in non-air

58



net revenue was primarily due to a shift in mix from retail to merchant bookings, increased domestic ADR, and increased volume from dynamic packaging and hotel bookings. Net revenue from dynamic packaging in 2006 increased $25 million, before purchase accounting adjustments, primarily as a result of volume growth which was driven in part by new packaging combinations on our domestic websites such as Air + Car and Air + Car + Hotel. Net revenue from hotel bookings in 2006, before purchase accounting adjustments, increased $25 million from 2005 primarily as a result of a favorable increase in our domestic merchant mix and an increase in hotel net revenue at ebookers. Other non-air net revenue, including car rental and cruise bookings, increased by $8 million in 2006 as a result of incremental volume, and to a lesser degree, higher car rental prices.

        Other.    Other net revenue increased $7 million, or 9%, from $81 million in 2005 to $88 million in 2006. Excluding a $2 million reduction in 2006 net revenue due to purchase accounting adjustments, 2006 other net revenue grew 11% over 2005. The increase in other net revenue was primarily attributable to an increase in insurance revenue driven by higher domestic air, car and dynamic packaging transactions and an increase in attractions and destination services transactions.

Cost of Revenue

 
  Year Ended December 31,
   
   
 
 
  2005
  2006
  $ Change
  % Change
 
 
  (dollars in millions)

 
Cost of revenue   $ 101   $ 113   $ 12   12 %
% of net revenue     15 %   15 %          

        Cost of revenue increased $12 million, or 12%, from $101 million in 2005 to $113 million in 2006. Excluding the impact of the $43 million deferred revenue write-off in 2006 related to the Blackstone Acquisition, cost of revenue would have been 14% of net revenue in 2006. The increase in cost of revenue was driven by our higher domestic transaction volume, primarily from dynamic packages and hotels. Partially offsetting this increase was $11 million of cost reductions due primarily to customer service and fulfillment outsourcing and off-shoring efforts.

Selling, General and Administrative Expenses

 
  Year Ended December 31,
   
   
 
 
  2005
  2006
  $ Change
  % Change
 
 
  (dollars in millions)

 
Selling, general and administrative   $ 517   $ 580   $ 63   12 %
% of net revenue     75 %   77 %          

        Selling, general and administrative expenses increased $63 million, or 12%, from $517 million in 2005 to $580 million in 2006. As a percentage of net revenue, selling, general and administrative expense increased from 75% in 2005 to 77% in 2006 due to the write-off of $43 million in deferred revenue in 2006 arising from purchase accounting adjustments made in connection with the Blackstone Acquisition. Excluding the impact of the deferred revenue write-off, selling, general and administrative expenses would have been 73% of net revenue in 2006.

        The increase in selling, general and administrative expenses was due to a $27 million increase in labor expenses, including internal wages and outside services, primarily as a result of increased staff levels to support our growth in operations, including $9 million for the full-year impact of ebookers. Marketing expense was $224 million and $275 million for the years ended 2005 and 2006, respectively, representing an increase of $53 million due primarily to higher online spending, expanded advertising campaigns promoting our Orbitz brand, and the full-year impact of ebookers. We also incurred $5 million in additional expenses related to the development of our global technology platform. These cost increases were partially offset by a $22 million reduction in costs related to one-time integration expenses incurred in 2005 following the Orbitz and ebookers acquisitions.

59



Depreciation and Amortization

 
  Year Ended December 31,
   
   
 
 
  2005
  2006
  $ Change
  % Change
 
 
  (dollars in millions)

 
Depreciation and amortization   $ 78   $ 55   $ (23 ) (29 %)
% of net revenue     11 %   7 %          

        Depreciation and amortization decreased $23 million, or 29%, from $78 million in 2005 to $55 million in 2006. As a percentage of net revenue, depreciation and amortization represented 11% in 2005 as compared to 7% in 2006. This decrease in depreciation and amortization expense resulted from the acceleration of depreciation in 2005 related to the reduction in estimated useful lives of certain assets as a part of the integration of CheapTickets and Orbitz, partially offset by the 2006 incremental amortization expense on our definite lived intangible assets as a result of the step-up in fair value resulting from the Blackstone Acquisition. Amortization of customer, vendor and other relationship related intangible assets totaled $13 million and $12 million in 2005 and 2006, respectively.

Impairment of Goodwill and Intangible Assets

 
  Year Ended December 31,
   
   
 
 
  2005
  2006
  $ Change
  % Change
 
 
  (dollars in millions)

 
Impairment of intangible assets   $ 400   $ 122   $ (278 ) (70 %)
% of net revenue     58 %   16 %          

        Impairment of goodwill and intangible assets declined $278 million, or 70%, from $400 million in 2005 to $122 million in 2006. The impairment is primarily a result of the decline of the fair value to the carrying value of ebookers, which performed poorly after the acquisition by Cendant due to various operational issues.

Interest Expense

 
  Year Ended December 31,
   
   
 
 
  2005
  2006
  $ Change
  % Change
 
 
  (dollars in millions)

 
Interest expense   $ 22   $ 27   $ 5   23 %
% of net revenue     3 %   4 %          

        Interest expense increased by $5 million, or 23%, from $22 million in 2005 to $27 million in 2006. As a percentage of net revenue, interest expense represented 3% in 2005 and 4% in 2006. Interest expense increased primarily as a result of imputed interest on the tax sharing liabilities. For additional information, see the section below entitled "Tax Sharing Liability."

Provision (Benefit) for Income Taxes

 
  Year Ended December 31,
   
   
 
  2005
  2006
  $ Change
  % Change
 
  (dollars in millions)

Provision (benefit) for income taxes   $ (42 ) $ 2   $ 44   *
% of net revenue     *     *          

*
Not meaningful

60


        We recorded a benefit from income taxes of $42 million in 2005 as compared to recording a provision for income taxes of $2 million in 2006. In 2005, our tax benefit was derived from the loss incurred, partially offset by the impairment of goodwill and intangibles, as well as losses from operations for which we recorded no tax benefit. In 2006, although we incurred a pre-tax loss, these losses were primarily from operations and impairment of intangible assets for which we recorded no tax benefit.

Results for the Year Ended December 31, 2005 Compared to the Year Ended December 31, 2004

 
  Predecessor
 
 
  Year Ended December 31,
 
 
  2004
  2005
 
 
  (in millions)

 
Net revenue   $ 244   $ 686  
Costs and expenses              
Cost of revenue     43     101  
Selling, general and administrative     217     517  
Depreciation and amortization     32     78  
Impairment of goodwill and intangible assets     10     400  
   
 
 
Total operating expenses     302     1,096  
   
 
 
Operating loss     (58 )   (410 )
Interest expense     2     22  
Other income, net         2  
   
 
 
Loss before income taxes     (60 )   (430 )
Provision (benefit) for income taxes     3     (42 )
   
 
 
Net loss   $ (63 ) $ (388 )
   
 
 

Net Revenue

 
  Year Ended December 31,
 
  2004
  2005
 
  (in millions)

Air   $ 86   $ 323
Non-air     96     282
Other     62     81
   
 
Net revenue   $ 244   $ 686
   
 

        Net revenue increased $442 million from $244 million in 2004 to $686 million in 2005. This increase in net revenue was due primarily to the acquisitions of ebookers, Orbitz and Flairview which were consummated in February 2005, November 2004 and April 2004, respectively.

        Air.    Net revenue from air bookings increased $237 million from $86 million in 2004 to $323 million in 2005. This increase in air revenue was due to a full year of revenue from Orbitz and a partial year of revenue from ebookers.

        Non-air.    Net revenue from non-air bookings increased $186 million from $96 million in 2004 to $282 million in 2005. This increase in non-air revenue was primarily due to increased transaction volumes in dynamic packaging, hotel and car rental bookings due to a full year of revenue from Orbitz and Flairview and a partial year of revenue from ebookers.

61



        Other.    Other net revenue increased $19 million from $62 million in 2004 to $81 million in 2005. This increase in other revenue was largely attributable to a full year of revenue from Orbitz and Flairview and a partial year of revenue from ebookers.

Cost of Revenue

 
  Year Ended December 31,
 
 
  2004
  2005
 
 
  (dollars in millions)

 
Cost of revenue   $ 43   $ 101  
% of net revenue     18 %   15 %

        Cost of revenue increased $58 million from $43 million in 2004 to $101 million in 2005. As a percentage of net revenue, cost of revenue represented 18% in 2004 compared to 15% in 2005. Cost of revenue increased primarily due to a full year of expenses from Orbitz and Flairview and a partial year of expenses from ebookers. As part of the Orbitz integration, we were able to realize approximately $9 million in cost savings due to our customer care offshoring and outsourcing efforts.

Selling, General and Administrative Expenses

 
  Year Ended December 31,
 
 
  2004
  2005
 
 
  (dollars in millions)

 
Selling, general and administrative   $ 217   $ 517  
% of net revenue     89 %   75 %

        Selling, general and administrative expenses increased $300 million from $217 million in 2004 to $517 million in 2005. As a percentage of net revenue, selling, general and administrative expenses represented 89% in 2004 as compared to 75% in 2005. Included in selling, general and administrative expenses was marketing expense of $86 million in 2004 and $224 million in 2005. The increase in selling, general and administrative expenses was primarily due to the full year of expenses from Orbitz and Flairview and a partial year of expenses from ebookers.

Depreciation and Amortization

 
  Year Ended December 31,
 
 
  2004
  2005
 
 
  (dollars in millions)

 
Depreciation and amortization   $ 32   $ 78  
% of net revenue     13 %   11 %

        Depreciation and amortization expense increased $46 million from $32 million in 2004 to $78 million in 2005. As a percentage of net revenue, depreciation and amortization expense represented 13% in 2004 as compared to 11% in 2005. The increase in depreciation and amortization expense was driven primarily by: $10 million of additional depreciation related to the revised useful lives of certain assets of CheapTickets following the integration of Orbitz and CheapTickets; $18 million of additional depreciation and amortization due to a full year of depreciation and amortization from Orbitz; $14 million of additional depreciation and amortization due to the acquisition of ebookers in February 2005; and $2 million of additional depreciation related to Flairview Travel. Amortization of customer, vendor and other relationship related intangible assets totaled $5 million and $13 million in 2004 and 2005, respectively.

62


Impairment of Goodwill and Intangible Assets

 
  Year Ended December 31,
 
 
  2004
  2005
 
 
  (dollars in millions)

 
Impairment of goodwill and intangible assets   $ 10   $ 400  
% of net revenue     4 %   58 %

        Impairment of goodwill and intangible assets increased $390 million from $10 million in 2004 to $400 million in 2005. This impairment is primarily a result of the decline of the fair value to the carrying value of ebookers, which performed poorly after the acquisition by Cendant due to various operational issues.

Interest Expense

 
  Year Ended December 31,
 
 
  2004
  2005
 
 
  (dollars in millions)

 
Interest expense   $ 2   $ 22  
% of net revenue     1 %   3 %

        Interest expense increased $20 million from $2 million in 2004 to $22 million in 2005. This increase was primarily a result of imputed interest on the tax sharing liability related to the Orbitz acquisition.

Provision (Benefit) for Income Taxes

 
  Year Ended December 31,
 
 
  2004
  2005
 
 
  (dollars in millions)

 
Provision (benefit) for income taxes   $ 3   $ (42 )
% of net revenue     1 %   (6 %)

        We recorded a tax provision of $3 million in 2004 as compared to a benefit of $42 million in 2005. In 2004, our tax provision was due to losses for which we recorded no tax benefit. In 2005, our tax benefit was due primarily to the loss incurred, partially offset by the impairment of goodwill and intangible assets as well as losses from operations for which we recorded no tax benefit.

Critical Accounting Policies

        In presenting the financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions required relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change to current conditions, it could result in a material adverse impact to the combined results of operations, financial position and liquidity. We believe that the estimates and assumptions used when preparing the financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results. Although we believe these policies to be the most critical, other accounting policies also have a significant effect on our financial statements and certain of these policies also require the use of estimates and assumptions. Note 2 to the combined consolidated financial statements discusses each of our significant accounting policies.

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Revenue Recognition

        Our products and services are offered on a standalone and packaged basis, primarily through two types of contractual arrangements with our vendors, referred to as the "retail" and "merchant" models.

        Under the retail model, we pass reservations booked by our consumers to the travel provider for a commission. In this model, we do not take on credit risk with travelers, are not the primary obligor with the customer, have no latitude in determining pricing; take no inventory risk on our services; have no ability to determine changes to the products or services delivered, and have no discretion in the selection of the service supplier. We recognize net revenue from retail commissions or fees generally when the reservation is made, secured by a customer with a credit card, and when there are no further obligations. We record retail net revenue on hotel reservations and car rental reservations on an accrual basis for payments from a commission clearinghouse. We record an allowance for cancellations and no-shows on this net revenue based on historical experience.

        Under the merchant model, we negotiate with suppliers to make suppliers travel content available to us at negotiated net rates. We facilitate the booking of those travel products by consumers, either on a standalone basis or as part of a dynamically packaged combination of products, at a price that includes an amount sufficient to pay the travel supplier the net rate along with an estimate of the amount of any occupancy and other local taxes that may become due, plus an additional amount we charge for service fees. Consumers pay for merchant transactions prior to departing on their trip, generally when the reservation is booked, and such amounts are included in accrued travel supplier payments and deferred net revenue until the reservation is utilized, and the net revenue is earned. In this model, we have some pricing flexibility; we are not responsible for the actual delivery of the flight, hotel room, or car rental; we take no inventory risk on our services; have no ability to determine or change the product or services delivered, and have no discretion in the selection of the service supplier.

        We record revenue earned net of all amounts paid to our suppliers under both our retail and merchant models, in accordance with the criteria established in Emerging Issues Task Force, or EITF No. 99-19, "Reporting Revenue Gross as a Principal versus net as an Agent." Certain of our contracts contain multiple deliverables, where we provide distribution of a vendor's travel products for a commission and the Company also provides advertising services. In accordance with EITF 00-21, "Accounting for Revenue Arrangements with Multiple Elements," we are able to attribute net revenue to each separate element, as each of the components are independently purchased, priced separately, have value to the customer on a standalone basis, and there is objective and reliable evidence of fair value of the undelivered product or service. Net revenue from each component is then recognized as it is earned, under the appropriate revenue recognition basis.

        For merchant model net revenue, we accrue for costs of merchant net revenue based on the expected amount to be invoiced to us by our suppliers. If we do not receive an invoice within a certain period of time, typically within six to twelve months, or the invoice is less than the accrued amount, we may reverse a portion of the accrued cost, thus, increasing net revenue. We determine the amounts to be reversed into net revenue based on estimates of billings that suppliers will send us within six to twelve months following the travel date, our analysis of reasons underlying the unbilled amounts, and the trending of unbilled amounts. If our judgments regarding these factors were inaccurate, actual net revenue could differ from the amount we recognize, directly impacting our results of operations.

Accounting for Internal Use Software

        We develop various software applications for internal use. We account for those costs in accordance with the provisions of Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use" and EITF Issue No. 00-2, "Accounting for Website Development Costs." These pronouncements require computer software costs associated with internal use software and website development to be expensed as incurred until certain capitalization criteria are met. These

64



pronouncements also define which types of costs should be capitalized and which should be expensed. These capitalized costs are then amortized over their estimated useful lives which range from three to ten years. Capitalization begins when the preliminary project stage of the application has been completed and it is probable that the project will be completed and used to perform the function intended. Amortization begins when the software is placed in service. Software development costs that are capitalized are evaluated for impairment in accordance with SFAS No. 144.

        The determination of which types of costs are capitalizable is subject to management judgment and can produce variability in the types and amounts of costs capitalized. It may be necessary for us to write-off amounts associated with the development of internal use software if the project cannot be completed as intended. Our expansion into new technology-based service offerings requires the development of internal use software that will be susceptible to rapid and significant changes in technology. We may be required to write-off unamortized costs if an internal use software program is replaced with an alternative tool prior to the end of the software's estimated useful life. General uncertainties related to expansion into the online travel industry, including the timing of introduction and market acceptance of our services, may adversely impact our estimates of useful life and the recoverability of these assets. We capitalized approximately $13 million, $38 million and $12 million of costs for internal use software in the year ended December 31, 2005, combined year ended December 31, 2006 and three months ended March 31, 2007, respectively. The large increase in capitalized costs in 2006 is as a result of the development of our new global technology platform, which continued into 2007.

Business Combinations and the Recoverability of Goodwill and Indefinite and Definite Long-Lived Intangible Assets

        A component of our growth strategy has been to acquire and integrate businesses that complement the existing operations. We account for business combinations in accordance with SFAS No. 141, "Business Combinations" and related literature. Accordingly, the purchase price of acquired companies is allocated to the tangible and intangible assets acquired and liabilities assumed based upon their estimated fair value at the date of purchase. The difference between the purchase price and the fair value of the net assets acquired is recorded as goodwill.

        In determining the fair value of assets acquired and liabilities assumed in a business combination, we use various recognized valuation methods including present value modeling and referenced market values (where available). Further, we make certain assumptions within present value modeling valuation techniques including risk-adjusted discount rates, future price levels, rates of increase in operating expenses, weighted average cost of capital, rates of long-term growth, working capital effects, and effective income tax rates. The market valuation approach indicates the fair value of the business based on a comparison of the company to comparable firms in similar lines of business that are publicly traded. Our significant estimates in the market approach model include identifying similar companies with comparable business factors such as size, growth, profitability, risk and return on investment and assessing comparable revenue and operating income multiples in estimating the fair value of the reporting units. Valuations are performed by management or independent valuation specialists under management's supervision, where appropriate. We believe that the estimated fair value assigned to the assets acquired and liabilities assumed are based on reasonable assumptions that marketplace participants would use. However, such assumptions are inherently uncertain and actual results could differ from those estimates.

        We believe the use of present value modeling and referenced market values (where available) is the best methods for determining the fair value of our reporting units because such models:

    exclude the impact of short-term volatility;

    include all information available to management, which is generally more than what is available to the external capital markets;

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    are the most common valuation methodologies used within the travel industry; and

    compensate for the inherent risks associated with each model if used on a standalone basis.

        The assumptions used in our valuation models are interrelated. The continuing degree of interrelationship of these assumptions is, in and of itself a significant assumption. Because of the interrelationships among the assumptions, we do not believe it would be meaningful to provide a sensitivity analysis on any of the individual assumptions. However, one key assumption in our valuation model is the weighted average cost of capital. If the weighted average cost of capital, which is used to discount the projected cash flows, were lower, the measure of the fair value of our assets would increase. Conversely, if the weighted average cost of capital were higher, the measure of the fair value of our assets would decrease.

        For the years ended December 31, 2004 and December 31, 2005 and the period January 1, 2006 through August 22, 2006, impairment on intangible assets was $10 million, $400 million and $122 million, respectively. There were no impairments in the three months ended March 31, 2006 and March 31, 2007. The impairment is primarily a result of the comparison of the fair value to the carrying value of ebookers, which performed poorly after the acquisition by Cendant due to various operational issues. The cash flow forecasts at the time of the acquisition were used to support the valuation prepared by Cendant. These write-offs were recorded by the predecessor.

        In conjunction with the Blackstone Acquisition, Travelport assigned $1.3 billion of the overall purchase price to our combined group of companies, based on the current assessment of the fair value at the time of the Blackstone Acquisition, including the assumptions listed above. Future changes in our assumptions or the interrelationship of those assumptions may negatively impact future valuations. In future measurements of fair value, adverse changes in discounted cash flow assumptions could result in an impairment of goodwill or intangible assets that would require a non-cash charge to the combined consolidated statements of operations and may have a material effect on our financial condition and operating results.

Income Taxes

        We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the tax bases of assets and liabilities. We regularly review deferred tax assets to assess their potential realization and establish a valuation allowance for portions of such assets that we believe will not be ultimately realized. In performing this review, we make estimates and assumptions regarding projected future taxable income, the expected timing of the reversals of existing temporary differences and the implementation of tax planning strategies. A change in these assumptions could cause an increase or decrease to the valuation allowance resulting in an increase or decrease in the effective tax rate, which could materially impact the results of operations.

Occupancy Tax

        Some states and localities impose a transient occupancy or accommodation tax, or a form of sales tax, on the use or occupancy of hotel accommodations. We understand that hotels charge taxes based on the room rate paid to the hotels and that hotels remit these taxes to the various tax authorities as appropriate. When a customer books a room through one of our travel services, we obtain a tax recovery charge from the customer based on the amount of estimated tax that may be remitted by hotels. We do not collect or remit occupancy taxes, nor do we pay occupancy taxes to the hotel operator on the portion of the customer payment we retain. Some jurisdictions have questioned our practice in this regard. While the applicable tax provisions vary among the jurisdictions, we believe that we are not required to collect and remit such occupancy taxes. We are engaged in discussions with tax authorities in various jurisdictions to resolve this issue. Some tax authorities have brought lawsuits asserting that we are required to collect and remit occupancy tax. The ultimate resolution in all jurisdictions cannot be determined at this time.

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        We note that there are more than 7,000 taxing jurisdictions in the U.S., and it is not feasible to analyze the statutes, regulations and judicial and administrative rulings in every jurisdiction. Rather, we have obtained the advice of state and local tax experts with respect to tax laws of certain states and local jurisdictions that represent a large portion of our hotel revenue. Many of the fundamental statutes and regulations that impose these taxes were established before the growth of the Internet and e-commerce. It is possible that some jurisdictions may introduce new legislation regarding the imposition of occupancy taxes on businesses that arrange the booking of hotel accommodations. We continue to work with the relevant tax authorities and legislators to clarify our obligations under new and emerging laws and regulations. We will continue to monitor the issue closely and provide additional disclosure, including regarding reserves, as developments warrant. Additionally, certain of our businesses are involved in occupancy tax related litigation. For additional information, see the section of this prospectus entitled "Business—Legal Proceedings."

Tax Sharing Liability

        The tax sharing liability relates to an agreement between Orbitz and its former owners or their affiliates, who we refer to as the Founding Airlines, governing the allocation of up to approximately $308 million of tax benefits resulting from a taxable exchange that took place in connection with the Orbitz initial public offering, or Orbitz IPO, in December 2003. As a result of this taxable exchange, we are entitled to additional deductions for depreciation and amortization, which may reduce the amount of taxes that we are required to pay. For each tax period during the term of the tax agreement, we are obligated to pay the Founding Airlines a significant percentage of the amount of such tax benefits that we actually realize attributable to that taxable exchange. The tax agreement commenced upon consummation of the Orbitz IPO and will continue until all tax benefits have been utilized. The remaining payments that may be due under this agreement are approximately $277 million, which we expect to pay principally over the next 15 years. Based upon our current assumptions, we estimate the net present value of our obligation to pay tax benefits to the Founding Airlines as of December 31, 2006 and March 31, 2007 to be $135 million and $138 million, respectively, including $9 million and $10 million, respectively, as a component of accrued expenses and other current liabilities, and $126 million and $128 million, respectively, as a non-current liability. The net present value is based upon our assumptions regarding the realization of the tax benefits, the applicable tax rate, period to payment and a discount rate of 10%, all of which we believe are reasonable. Such assumptions are inherently uncertain, however, and actual results could differ from those estimates. As a result of recording the liability at its net present value, the predecessor accreted interest expense related to the tax sharing liability of $16 million for the year ended December 31, 2005 and $13 million for the period January 1, 2006 through August 22, 2006. We accreted interest expense related to this liability of approximately $5 million for the period August 23, 2006 through December 31, 2006. The predecessor accreted interest expense related to this liability of approximately $5 million for the three months ended March 31, 2006 and we accreted interest of $3 million for the three months ended March 31, 2007. During the period January 1, 2006 through August 22, 2006 the predecessor cash settled $31 million of this liability and the liability was reduced by an additional $9 million as a result of fair value adjustments related to the Blackstone Acquisition.

Unfavorable Contracts

        Orbitz utilizes a GDS to access certain airline schedule and fare information and process most bookings. Orbitz has a contract with Worldspan which purports to make Worldspan the exclusive GDS for air and car reservations for Orbitz. The Worldspan contract was signed in 2001 while Orbitz and Worldspan had common owners, and purportedly expires on October 31, 2011. However, Orbitz is currently in litigation with Worldspan and one of Orbitz's claims is that various contractual provisions, including the term of the contract and the exclusivity provision, are void and unenforceable.

        The Worldspan contract is structured such that we receive an inducement fee for each air travel segment and car rental segment that is processed through Worldspan based on the volume of segments. The Worldspan contract also requires that Orbitz process 16 million combined air and car segments each

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year through Worldspan's system. Failure to do so would result in a shortfall payment for each segment below 16 million.

        We believe that the Worldspan contract contains unfavorable rates and thus represents an unfavorable contract when compared to market rates at the time of the acquisition by Cendant in November 2004 and the Blackstone Acquisition in August 2006. As a result, an unfavorable contract liability was recorded at its fair value at each acquisition date. As of December 31, 2005, December 31, 2006 and March 31, 2007, this unfavorable contract amounted to a liability of $51 million, $32 million and $30 million, respectively. The net present value of the unfavorable contract liability is being amortized on a straight-line basis over the remaining contractual term and is classified as revenue in our combined consolidated statement of operations. Net revenue recognized under this unfavorable contract amounted to $1 million, $9 million, $6 million, $2 million and $2 million for the years ended December 31, 2004 and December 31, 2005 and for the periods January 1, 2006 through August 22, 2006, August 23, 2006 through December 31, 2006 and the three months ended March 31, 2007, respectively. If our judgment as to the unfavorable nature of this contract was inaccurate, our pre-tax operating income would be reduced by up to $1 million, $9 million, $6 million, $2 million and $2 million for the years ended December 31, 2004 and December 31, 2005 and the periods January 1, 2006 through August 22, 2006, August 23, 2006 through December 31, 2006 and the three months ended March 31, 2007, respectively.

        Orbitz also entered into charter associate agreements with the original Founding Airlines and other airline suppliers in May 2000 which agreements were replaced in December 2003. At each time, Orbitz was owned by the Founding Airlines. The charter associate agreements provide Orbitz with minimum guaranteed transaction fees on published fares and set forth the terms under which Orbitz can offer these suppliers' products to consumers. These agreements also provide Orbitz with schedule, fare and seat availability, and marketing support. As part of the charter associate agreements, we are also required to rebate part of the inducement fee that we receive from the GDS, currently Worldspan, back to the charter associates. The rebate payments are made in part for in-kind marketing and promotional support received, although a portion of the payments are deemed to be unfavorable, as we receive no benefit for such payments. The charter associates agreements expire at various terms with the majority expiring in 2013.

        We believe the rebate structure is unique to Orbitz in the travel services industry and thus represents an unfavorable contract at the time of the acquisition by Cendant in November 2004 and the Blackstone Acquisition in August 2006. As a result, a net unfavorable contract liability for the charter associates agreements was recorded at its fair value at each acquisition date. The fair value of the unfavorable contract liability was determined using discounted cash flows of the expected rebates, net of the expected fair value of in-kind marketing support. Management has estimated the rebate, net of expected in-kind marketing support, to range from $3 million to $5 million each year from 2007 through 2013.

        As of December 31, 2005, December 31, 2006 and March 31, 2007, this unfavorable contract liability amounted to $18 million, $23 million and $22 million, respectively. The net present value of the unfavorable contract liability is being amortized on a straight-line basis over the remaining contractual term. The revenue recognized for the amortization of the charter associates agreements amounted to almost nil, $2 million, $1 million, $1 million and $1 million for the years ended December 31, 2004 and December 31, 2005 and the periods January 1, 2006 through August 22, 2006, August 23, 2006 through December 31, 2006 and for the three months ended March 31, 2007, respectively. If our judgment as to the unfavorable nature of this contract was inaccurate, our pre-tax operating income would be reduced by up to almost nil, $2 million, $1 million, $1 million and $1 million for the years December 31, 2004 and December 31, 2005 and the periods January 1, 2006 through August 22, 2006 and August 23, 2006 through December 31, 2006 and for the three months ended March 31, 2007, respectively.

Other Contracts

        At the time of the Orbitz acquisition, there were two additional contracts with terms that were unfavorable to the predecessor. These contracts related to Orbitz booking cruises, vacation packages and hotel transactions for a fixed commission at below market rates. The unfavorable contract liability

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amounted to $1 million at December 31, 2005. The amortization of these unfavorable contracts was recognized as revenue in the combined consolidated statements of operations and amounted to $1 million, $5 million and $1 million for the years ended December 31, 2004 and December 31, 2005 and the period January 1, 2006 through August 22, 2006, respectively. These contracts have expired or been terminated as of December 31, 2006.

Seasonality

        Some of our businesses experience seasonal fluctuations, reflecting seasonal trends for the products and services we offer. These trends cause our revenue to be generally higher in the second and third calendar quarters of the year as travelers plan and purchase their spring and summer travel, and then to flatten in the fourth and first calendar quarters of the year. Our results may also be affected by seasonal fluctuations in the inventory made available to us by our travel suppliers.

Liquidity and Capital Resources

        Our principal source of liquidity is cash flow generated from operations, including working capital. The principal uses of cash are to fund planned operating expenditures and capital expenditures, including investments in products and technology offerings. As of December 31, 2006, our financing needs were supported by our parent company, Travelport.

Cash Flows

        Our net cash flows from operating, investing and financing activities for the periods indicated in the tables below were as follows:

 
  Predecessor
   
  Successor
  Combined
  Predecessor
   
  Successor
 
 
  Year Ended
December 31,
2005

  January 1, 2006
through
August 22,
2006

 





  August 23,
2006 through
December 31,
2006

  Twelve Months
Ended
December 31,
2006

  Three Months
Ended
March 31,
2006

 

  Three Months
Ended
March 31,
2007

 
 
  (in millions)

 
Cash provided by (used in):                                              
  Operating activities   $ 59   $ 126       $ 39   $ 165   $ 90       $ 147  
  Investing activities     (474 )   (54 )       (29 )   (83 )   (12 )       (14 )
  Financing activities     433     (70 )       (7 )   (77 )   (58 )       (113 )
Effect of changes in exchange rates on cash and cash equivalents     (9 )   1         (11 )   (10 )   (2 )        
   
 
     
 
 
     
 
Net increase (decrease) in cash and cash equivalents   $ 9   $ 3       $ (8 ) $ (5 ) $ 18       $ 20  
 
  Predecessor
 
 
  Year Ended December 31,
 
 
  2004
  2005
  Change
 
 
  (in millions)

 
Cash provided by (used in):                    
  Operating activities   $ (22 ) $ 59   $ 81  
  Investing activities     (1,096 )   (474 )   622  
  Financing activities     1,140     433     (707 )
Effect of changes in exchange rates on cash and cash equivalents         (9 )   (9 )
   
 
 
 
Net increase (decrease) in cash and cash equivalents   $ 22   $ 9   $ (13 )

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Operating Activities

        Cash from operating activities consists of the results from the statements of operations adjusted for non-cash items such as depreciation, amortization, impairment of goodwill and intangible assets, non-cash compensation and changes in various working capital items, principally accrued merchant payables, deferred income and accounts payable.

    March 31, 2006 Compared to March 31, 2007

        Our net cash provided by operations increased $57 million from $90 million for the three months ended March 31, 2006, to $147 million for the three months ended March 31, 2007. The increase in the working capital deficit was primarily a result of additional accrued travel supplier payments, deferred revenue and customer advances which related primarily to the merchant model transactions.

    2005 Compared to 2006

        Our net cash provided by operations increased $106 million from $59 million for the year ended December 31, 2005 to $165 million for the combined twelve months ended December 31, 2006. Such an increase is primarily the result of cash generated from earnings and to changes in our working capital accounts. The increase in the working capital deficit was primarily the result of the timing of collections of our accounts receivable and additional accrued travel supplier payments, deferred revenue and customer advances which relate primarily to merchant model transactions.

    2004 Compared to 2005

        Our net cash provided by (used in) operations increased $81 million from $(22) million for the year ended December 31, 2004, to $59 million for the year ended December 31, 2005. The increase primarily represented higher operating results, including amounts generated from the acquisitions of Orbitz, Flairview and ebookers as well as the change in our working capital accounts. The increase in the working capital deficit was primarily the result of the timing of collections of our accounts receivable and additional accrued travel supplier payments, deferred revenue and customer advances which relate primarily to merchant model transactions.

Investing Activities

    March 31, 2006 Compared to March 31, 2007

        Cash flow used in investing activities increased $2 million from $12 million for the three months ended March 31, 2006, to $14 million for the three months ended March 31, 2007. A majority of the change is due to capital expenditures related to strategic initiatives and the development of our new global technology platform.

    2005 Compared to 2006

        Cash flow used in investing activities decreased $391 million from $474 million for the year ended December 31, 2005 to $83 million for the combined twelve months ended December 31, 2006. A majority of the change is due to the use of $432 million in cash for acquisitions in 2005, primarily for ebookers. Capital expenditures were $83 million in the combined twelve months ended December 31, 2006, an increase of $20 million as compared to the year ended December 31, 2005. The increase was due in part to strategic initiatives, including $27 million for the development of our new global technology platform.

    2004 Compared to 2005

        Cash flow used in investing activities for the year ended December 31, 2004 was $1,096 million compared to $474 million for the year ended December 31, 2005, a decrease of $622 million. The large cash out-flow in 2004 related to net assets of businesses acquired and was due to the acquisition of Orbitz and Flairview. The cash outflow of $432 million in 2005 was primarily related to the purchase of ebookers. In 2004, the $57 million cash inflow related to the liquidation of marketable securities that were obtained as part of the acquisition of Orbitz.

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Financing Activities

    March 31, 2006 Compared to March 31, 2007

        Cash flow used in financing activities for the three months ended March 31, 2006 was $58 million compared to cash flow used in financing activities of $113 million for the three months ended March 31, 2007. The change in cash used for financing activities is related to the timing of cash sweeping activities with our parent.

    2005 Compared to 2006

        Cash flow provided from financing activities for the year ended December 31, 2005 was $433 million compared to cash flow used in financing activities of $77 million for the combined twelve months ended December 31, 2006. The 2005 amount related to capital contributions from Cendant of $504 million to fund the acquisitions of ebookers. Capital contributions were partially offset by $31 million used to pay down long term debt primarily for debt assumed in the ebookers acquisition. In addition, the 2006 amount includes $31 million of payments to settle a portion of the tax sharing liability which may have become due in future periods.

    2004 Compared to 2005

        Cash flow provided from financing activities was $1,140 million for the year ended December 31, 2004 compared to $433 million for the year ended December 31, 2005, a decrease of $707 million. Such change principally reflects the $1,338 million in capital contributions from Cendant received in 2004, primarily to fund the acquisitions of Orbitz and Flairview.

        We have historically incurred net losses on a GAAP basis, primarily due to significant non-cash expense from the impairment of goodwill and intangible assets. We do not anticipate further impairment of goodwill and intangible assets. In addition, we believe that continued improvements in operating efficiencies, such as the completion of our new global technology platform, will help drive significant cost savings, as well as our expected strong growth potential in our under-penetrated travel categories and geographies, will allow us to achieve GAAP net income on an annual, run-rate basis during 2008.

        Although we have experienced net losses, primarily due to significant non-cash expense from the impairment of goodwill and intangible assets, we generated positive cash flow from operations in 2005 through the first quarter of 2007, primarily from working capital generated from merchant bookings. Annual cash flow from operations is expected to continue to be positive, as merchant bookings are anticipated to continue to trend favorably, with second and third quarter working capital generally benefiting the most from merchant bookings.

        We expect continued investment in the development and expansion of our operations, including the development of the new technology platform. For the twelve month period ended March 31, 2008, we expect our uses of cash for capital expenditures to be between $55 million and $65 million. This range is reflective of our capital expenditures on an absolute basis for the foreseeable future, and we believe it will decrease as a percent of total sales as our business continues to grow.

        We believe that the cash flow generated from operations, cash on hand and cash that would be available under our senior secured credit agreement will be sufficient to fund our operating activities, capital expenditures and other obligations for the foreseeable future. However, if we are not successful in generating sufficient cash flow from operations, we may need to raise additional funds through bank credit arrangements or public or private equity or debt. In the event additional funding is required, we may be unable to raise third party debt due to the fact that we are a restricted subsidiary under Travelport's indentures and will be subject to the covenants and restrictions of such agreements. For additional information, see the sections of this prospectus entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Travelport's Indenture Limitations Affecting Orbitz Worldwide". We may raise additional funds through the issuance of equity securities, resulting in potential dilution of our stockholders' equity.

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        We anticipate continued investment in the development and expansion of our operations. These investments include, but are not limited to, improvements to infrastructure, including $37 million in 2007 for the continued development and rollout of our new global technology platform.

Financing Arrangements

        On January 26, 2007 and January 30, 2007, we became the obligor on two intercompany notes payable to subsidiaries of Travelport, Galileo International, Inc. and Travelport LLC, in the aggregate principal amounts of approximately $25 million and $835 million, respectively, and recorded a $835 million reduction to net invested equity. In connection with our internal reorganization, we expect to become an obligor on additional notes payable to affiliates of Travelport. The unpaid principal of these notes accrues interest at a fixed annual rate of 10.25% until the earlier of payment in full or the maturity date of February 19, 2014. These notes may be paid in whole or in part at any time at our option without penalty.

        As a wholly owned subsidiary of Cendant and then Travelport, each of Cendant and Travelport provided guarantees, letters of credit, surety bonds and other performance guarantees on our behalf under our commercial agreements and leases and for the benefit of certain regulatory agencies. Letters of credit on our behalf are issued under Travelport's senior secured credit facility. The outstanding amount of guarantees, letters of credit and surety bonds was $1 million in 2004, $81 million in 2005 and $113 million in 2006. On the closing date of this offering, approximately $65 million in letters of credit will remain outstanding under Travelport's credit facility under an arrangement we have with them. Under the separation agreement, other than as described below, we will seek to have Travelport released from the remaining guarantees and surety bonds by contacting and negotiating with the beneficiaries thereunder. If we are unable to release Travelport from these obligations, Travelport will continue to perform under such obligations and we will indemnify them for any related loss. Travelport will no longer provide performance guarantees in connection with commercial agreements or leases entered into or replaced after completion of this offering.

        Concurrently with the consummation of this offering, we intend to enter into a new senior secured credit agreement with a syndicate of financial institutions, including affiliates of certain of the underwriters of this offering, consisting of a seven-year $600 million senior secured term loan and a six-year senior secured revolving credit facility that will provide for borrowings of up to $85 million. The term loan and the revolving credit facility will bear interest at floating rates tied to LIBOR. We expect to use approximately $530 million of the net proceeds from the term loan to repay a portion of the indebtedness we owe to Travelport and to pay a dividend to Travelport. On the closing date of this offering, approximately $65 million in letters of credit will remain outstanding under Travelport's credit facility under an arrangement we have with them to maintain these letters for us. The new credit agreement will contain restrictions on our operating flexibility.

        Our new senior secured term loan and revolving credit facility will be secured by all of our and our subsidiaries' tangible and intangible assets, including a pledge of 100% of the outstanding capital stock of substantially all of our direct and indirect domestic subsidiaries and, in the case of foreign subsidiaries, 65% of the shares or equity interests of such foreign subsidiaries, subject to certain exceptions.

        Our new senior secured credit agreement will contain various customary restrictive covenants that will limit our and our subsidiaries' ability to, among other things:

    incur more indebtedness or make guarantees;

    enter into sales or leasebacks;

    make investments, loans or acquisitions;

    grant or incur liens on our assets;

    sell our assets;

    engage in mergers, consolidations, liquidations or dissolutions;

    engage in transactions with affiliates;

    make restricted payments and;

    sell or transfer all or substantially all of our assets.

        In addition, our new senior secured credit agreement will require us to maintain a maximum total leverage ratio and a minimum fixed charge coverage ratio.

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Financial Obligations

Commitments and Contingencies

        Orbitz is subject to claims brought by Worldspan alleging breach of contract and other alleged violations. Worldspan seeks damages in excess of $109 million and injunctive relief. The case has been stayed by agreement of the parties. We believe that we have meritorious defenses and we are vigorously defending against these claims. For additional information, see the section of this prospectus entitled "Business—Legal Proceedings."

        We and certain of our affiliates are parties to cases brought by consumers and municipalities and other governmental entities involving hotel occupancy taxes. We believe that we have meritorious defenses and we are vigorously defending against these claims. For additional information, see the section of this prospectus entitled "Business—Legal Proceedings."

        Litigation is inherently unpredictable and, although we believe that our accruals are adequate and/or that we have valid defenses in these matters based upon advice of counsel, unfavorable resolutions could occur. As such, an adverse outcome from such unresolved proceedings for which claims are awarded could be material to us with respect to earnings or cash flows in any given reporting period. However, we do not believe that the impact of such unresolved litigation would result in a material liability to us in relation to our combined financial position or liquidity.

Contractual Obligations

        The following table summarizes our future contractual obligations as of December 31, 2006:

 
  2007
  2008
  2009
  2010
  2011
  Thereafter
  Total
 
  (in millions)

Worldspan contract(1)   $ 28   $ 28   $ 28   $ 28   $ 23   $   $ 135
Operating leases(2)     8     9     9     7     7     43     83
   
 
 
 
 
 
 
Total(3)   $ 36   $ 37   $ 37   $ 35   $ 30   $ 43   $ 218
   
 
 
 
 
 
 

(1)
The Worldspan contract requires a minimum of 16 million combined air and car segments each year. Failure to reach the minimum would result in us having to pay $1.78 for each segment below 16 million. We have met this minimum each year and as a result have never paid a penalty.

(2)
The operating leases are for facilities and equipment and are non-cancelable. Certain leases contain periodic rent escalation adjustments and renewal options. Operating lease obligations expire at various dates with the latest maturity in 2023.

(3)
The total does not include:

$860 million aggregate principal amount of intercompany notes entered into in January 2007 (For additional information, see the section of this prospectus entitled "Financing Arrangements");

$205 million in connection with intercompany amounts payable on the balance sheet as of December 31, 2006 incurred in the ordinary course of business. This balance fluctuates due primarily to normal trade activity, and as of March 31, 2007 was $108 million. We expect to settle the intercompany trade balances on or prior to the consummation of this offering and settle amounts in a timely manner on an ongoing basis; and

Approximately $277 million in connection with the tax sharing liability for which we are unable to predict the timing of such payments (For additional information, see the section of this prospectus entitled "Critical Accounting Policies").

Other Commercial Commitments and Off-Balance Sheet Arrangements

Standard Guarantees/Indemnifications

        In the ordinary course of business, we enter into numerous agreements that contain standard guarantees and indemnities whereby we indemnify another party for breaches of representations and warranties. In addition, many of these parties are also indemnified against any third-party claim resulting from the transaction that is contemplated in the underlying agreement. Such guarantees and indemnifications are granted under various agreements, including, but not limited to, those governing

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(i) purchases, sales or outsourcing of assets or businesses, (ii) leases of real estate, (iii) licensing of trademarks or other intellectual property, (iv) access to credit facilities and use of derivatives and (v) issuances of debt securities and (vi) issuances of surety bonds. The guarantees and indemnifications issued are for the benefit of the (i) buyers in sale agreements and sellers in purchase agreements, (ii) landlords in lease contracts, (iii) financial institutions in credit facility arrangements and derivative contracts and (iv) underwriters in debt security issuances and (v) surety companies in surety bond arrangements. While some of these guarantees and indemnifications extend only for the duration of the underlying agreement, many survive the expiration of the term of the agreement or extend into perpetuity (unless subject to a legal statute of limitations). There are no specific limitations on the maximum potential amount of future payments that we could be required to make under these guarantees and indemnifications, nor are we able to develop an estimate of the maximum potential amount of future payments to be made under these guarantees and indemnifications as the triggering events are not subject to predictability. With respect to certain of the aforementioned guarantees and indemnifications, such as indemnifications of landlords against third-party claims for the use of real estate property leased by us, insurance coverage is maintained that mitigates any potential payments to be made. As of December 31, 2006, there were $2 million of surety bonds outstanding which were covered under indemnity agreements. Following this offering, we will use reasonable efforts to release Travelport from such indemnity agreements.

Recently Issued Accounting Policies

        In September 2006, the SEC released Staff Accounting Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements." SAB 108 provides guidance on the SEC's views regarding quantifying the materiality of financial statement misstatements, including misstatements that were not material to prior years' financial statements. SAB 108 is effective for our fiscal year ended after November 15, 2006. The application of SAB 108 required us to quantify the impact of correcting all misstatements, including both the carryover and reversing effects of prior year misstatements, on the current year financial statements. The initial adoption of SAB 108 had no impact on our combined financial statements.

        In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes", which is an interpretation of SFAS No. 109, "Accounting for Income Taxes." FIN No. 48 provides measurement and recognition guidance related to accounting for uncertainty in income taxes. FIN No. 48 also requires increased disclosure with respect to the uncertainty in income taxes. We adopted the provisions of FIN No. 48 on January 1, 2007 and recorded an additional income tax liability of approximately $2 million at March 31, 2007. As the liability existed as of the date of the Blackstone Acquisition, the $2 million was recorded in purchase accounting, resulting in an additional $2 million of goodwill. We have been indemnified by Cendant for taxes related to periods prior to the Blackstone Acquisition.

        In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" which defines fair value, establishes a framework for measuring fair value and expands disclosure about fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. We will adopt SFAS No. 157 on January 1, 2008, as required, and we are currently evaluating the impact of such adoption on our financial statements.

        In February 2007, the FASB issued SFAS No. 159 "The Fair Value Option for Financial Assets and Financial Liabilities", providing companies with an option to report selected financial assets and liabilities at fair value. SFAS No. 159's objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. Generally accepted accounting principles have required different measurement attributes for different assets and liabilities that can create artificial volatility in earnings. SFAS 159 helps to mitigate this type of accounting-induced volatility by enabling companies to report related assets and liabilities at fair value, which would likely reduce the need for companies to comply with detailed rules for hedge accounting. SFAS 159 also

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establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. The standard requires companies to provide additional information that will help investors and other users of financial statements to more easily understand the effect of our choice to use fair value on our earnings. It also requires us to display the fair value of those assets and liabilities for which we have chosen to use fair value on the face of the balance sheet. SFAS 159 is effective for us on January 1, 2008. We are currently evaluating the impact of the adoption of this statement on our financial statements.

Quarterly Results of Operations

        The following table sets forth unaudited selected quarterly operating results for each quarter during the period January 1, 2005 through March 31, 2007. We believe that the following selected quarterly information includes all adjustments that consist only of normal, recurring adjustments that we consider necessary to present this information fairly. This financial information should be read in conjunction with our financial statements and related notes appearing in this prospectus. Our results of operations have fluctuated in the past and are likely to continue to fluctuate significantly from quarter to quarter in the future. Therefore, these results of operations for any previous periods are not necessarily indicative of results of operations to be recorded in the future.

 
  Predecessor
   
  Successor
 
 
  Three Months Ended
  July 1,
2006
through
August 22,
2006

   
 
August 23,
2006 through
September 30,
2006

  Three Months Ended
 
 
 

 
 
  March 31,
2005

  June 30,
2005

  September 30,
2005

  December 31,
2005

  March 31,
2006

  June 30,
2006

 



  December 31,
2006

  March 31,
2007

 
 
  (in millions)

 

  (in millions)

 
Net revenue   $ 156   $ 195   $ 180   $ 155   $ 182   $ 207   $ 121       $ 63   $ 179   $ 212  
Costs and expenses     180     190     171     555     190     316     107         79     178     203  
Operating income/
(loss)
    (24 )   5     9     (400 )   (8 )   (109 )   14  
    (16 )   1     9  
Income/(loss)
before income
taxes
    (25 )   (2 )   3     (406 )   (15 )   (117 )   12  

    (20 )   (4 )   (10 )
Net (loss)/income     (27 )   (3 )   2     (360 )   (16 )   (116 )   11         (20 )   (5 )   (10 )
 
  Predecessor
   
  Successor
 
  Three Months Ended
  Jul. 1,
2006
through
Aug. 22,
2006

   
  Aug. 23,
2006
through
Sept. 30,
2006

  Three
Months
Ended
Dec. 31,
2006

  Three
Months
Ended
Mar. 31,
2007

 
 





 
  Mar. 31,
2005

  June 30,
2005

  Sept. 30,
2005

  Dec. 31,
2005

  Mar. 31,
2006

  June 30,
2006

 
  (in millions)

 

  (in millions)

Other Data:                                                                
Gross bookings   $ 1,739   $ 1,950   $ 1,913   $ 1,833   $ 2,432   $ 2,736   $ 1,664       $ 766   $ 2,427   $ 2,941
  Air gross bookings     1,213     1,398     1,390     1,391     1,800     2,050     1,196         569     1,828     2,151
  Non-air and other
gross bookings
    526     552     523     442     632     686     468         197     599     790
  Domestic gross
bookings
    1,575     1,607     1,579     1,573     2,129     2,415     1,442         649     2,113     2,530
  International gross
bookings
    164     343     334     260     303     321     222         117     314     411

Net revenue

 

 

156

 

 

195

 

 

180

 

 

155

 

 

182

 

 

207

 

 

121

 

 

 

 

63

 

 

179

 

 

212
  Air net revenue     77     86     78     82     89     96     50         35     85     99
  Non-air and other net
revenue
    79     109     102     73     93     111     71         28     94     113
  Domestic net revenue     136     151     138     117     147     167     97         54     146     166
  International net
revenue
    20     44     42     38     35     40     24         9     33     46

        For the three months ended June 30, 2006, we experienced gross bookings growth of approximately 40% versus the comparable period in 2005. Trends that contributed to this relatively high growth rate

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include strong air business, including higher air fares, a successful marketing campaign, new strategic distribution relationships and favorable online travel industry dynamics. For the three months ended June 30, 2007, we expect gross bookings growth of approximately 9% versus the comparable period in 2006 as a result of continued industry growth and increased expansion in our international business.

Quantitative and Qualitative Disclosures About Market Risk

        Approximately 19% of our consolidated net revenue during fiscal year 2006 is associated with operations outside of the U.S. The U.S. dollar balance sheets and statements of operations for these businesses are subject to currency fluctuations. We are most vulnerable to fluctuations in the British Pound Sterling, the Euro and the Australian dollar against the U.S. dollar. Prior to transitioning to the predecessor's global treasury function in 2005 after being acquired by Cendant, Flairview directly entered into foreign currency forward contracts to manage changes in the Euro, Hong Kong dollar, Norwegian Krone and Japanese Yen associated with currency received from customers located in those regions. We were exclusively an end user of these instruments, which are commonly referred to as derivatives. We do not engage in trading, market making or other speculative activities in the derivatives markets. For detailed information about the historic use of foreign currency forwards, refer to note 11 to the combined consolidated financial statements. There were no outstanding derivative financial instruments to mitigate currency fluctuations risks or to engage in trading, market making or other speculative activities in the derivatives markets subsequent to the Blackstone Acquisition. We may use derivative financial instruments in the future if we deem it useful in mitigating an exposure to foreign currency exchange rates.

        We assess our market risk based on changes in foreign currency exchange rates utilizing a sensitivity analysis that measures the potential impact in earnings, fair values and cash flows based on a hypothetical 10% change (increase and decrease) in currency rates. We use a current market pricing model to assess the changes in the value of the U.S. dollar on foreign currency denominated monetary assets and liabilities. The primary assumption used in these models is a hypothetical 10% weakening or strengthening of the U.S. dollar against all our currency exposures as of December 31, 2006.

        Our total market risk is influenced by a wide variety of factors including the volatility present within the markets and the liquidity of the markets. There are certain limitations inherent in the sensitivity analyses presented. While probably the most meaningful analysis, these "shock tests" are constrained by several factors, including the necessity to conduct the analysis based on a single point in time and the inability to include the complex market reactions that normally would arise from the market shifts modeled.

        We used December 31, 2006 market rates on outstanding foreign currency denominated monetary assets and liabilities to perform the sensitivity analyses separately for each of our currency exposures. The estimates are based on the market risk sensitive portfolios described in the preceding paragraphs and assume instantaneous, parallel shifts in exchange rates. As of December 31, 2006 our working capital (defined as current assets less current liabilities) subject to foreign currency translation risk were $81 million. The potential decrease in net current assets from a hypothetical 10% adverse change in quoted foreign currency exchange rates would be $8 million.

Travelport's Indenture Limitations Affecting Orbitz Worldwide

        We will be required by our certificate of incorporation to obtain Travelport's consent to take certain actions including the incurrence of indebtedness and issuance of equity. Even if Travelport consents to such actions, because of our status as a "restricted subsidiary" of Travelport, the covenants contained in Travelport's bond indentures limit its ability to permit us to take such actions. These covenants are summarized below. We can cease to be a "restricted subsidiary" of Travelport if:

    Travelport no longer owns more than 50% of our total voting power or we are no longer consolidated with Travelport under U.S. generally accepted accounting principles; or

    we are designated as an "unrestricted subsidiary."

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        We and our subsidiaries will still be restricted subsidiaries of Travelport after completion of this offering.

        In order to designate us as an unrestricted subsidiary and therefore not subject to the covenants, Travelport must be able to make a "restricted payment" in an amount equal to the fair market value of our net assets, whether pursuant to the points below or under certain specified exceptions to the restricted payments covenant or pursuant to the definition of "Permitted Investments" in the Indentures. Travelport may make a restricted payment if:

    it is not in default under its indentures;

    immediately after giving effect to the restricted payment it could incur an additional indebtedness under the fixed charge covenant ratio test, on a pro forma basis for the redesignation; and

    the aggregate amount of restricted payments made since July 1, 2006 does not exceed the sum of 50% of Travelport's consolidated net income (as defined in the indentures) since July 1, 2006 and 100% of new equity in Travelport.

        Various exceptions exist to this covenant that also can be aggregated when calculating the amount available for the "restricted payment" described in the first sentence of the previous paragraph. Travelport will not be able to designate us as an unrestricted subsidiary upon consummation of this offering, and if and when it is able to, it may not choose to do so since, among other things, it would reduce its ability to pay dividends to its shareholders or make other investments or restricted payments.

        Assuming we remain a restricted subsidiary of Travelport following this offering, the following covenants, among others, will apply to us.

Limitation on Indebtedness, Disqualified Preferred Stock and Preferred Stock

        Restricted subsidiaries may not incur indebtedness nor issue disqualified preferred stock or preferred stock unless on a pro forma basis after giving effect to such incurrence and the application of proceeds, the fixed charge coverage ratio for Travelport and all its restricted subsidiaries on a consolidated basis for the prior four fiscal quarters would equal or exceed 2 to 1. Importantly, the limit of ratio debt for all restricted subsidiaries that are not guarantors under the indentures, including Orbitz Worldwide, is $100,000,000.

        In addition to ratio debt, the following indebtedness may be incurred by restricted subsidiaries:

    indebtedness under credit facilities provided that the amount that may be borrowed by Travelport and all its restricted subsidiaries under this provision may not exceed $3.1 billion (which amount will be reduced by the amount of asset sale proceeds used to repay such credit facilities);

    indebtedness, disqualified preferred stock and preferred stock issued to finance the purchase, lease or improvement of real property in an aggregate amount with Travelport and all restricted subsidiaries not to exceed 4% of Travelport's consolidated total assets; and

    indebtedness, disqualified preferred stock or preferred stock in an aggregate of up to $100,000,000 by all non-guarantor restricted subsidiaries.

In addition, the acquisition of another entity with indebtedness on its balance sheet will be considered the incurrence of that indebtedness and must fit within the above baskets.

Asset Sales

        An asset sale includes the sale or other disposition of assets of Travelport and the issuance or sale of equity interests of a restricted subsidiary (other than permitted issuances of preferred stock in accordance with the debt incurrence covenant) other than, among other exceptions, (i) sales of assets or stock with a fair market value of less than $15 million) or (ii) sales of equity interests in unrestricted subsidiaries. Therefore, sales and issuances of our common stock, including in this offering, will be subject to the asset sales covenant as long as we are a restricted subsidiary.

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        Asset sales may be made if 75% of the consideration, with specified adjustments, consists of cash or cash equivalents. Non-cash consideration may be designated as cash, provided that all such non-cash designated assets for Travelport and its restricted subsidiaries may not exceed 2.5% of consolidated total assets of Travelport. In addition, assets may be swapped for assets used or useful in a similar business, though if the swap is for securities of another entity, it must become thereby a restricted subsidiary.

        Proceeds from asset sales must be used to repay Travelport's senior credit facilities, obligations under other senior secured indebtedness, obligations under unsecured senior indebtedness pro rata with the senior notes under the indenture or indebtedness of a restricted subsidiary that is not a guarantor (including Orbitz Worldwide). Alternatively, proceeds can be used to acquire capital stock of an entity that becomes a restricted subsidiary, for capital expenditures, or acquisitions of other assets used or useful in a similar business.

Limit on Payment Restrictions Affecting Restricted Subsidiaries

        Non-guarantor restricted subsidiaries may not have in place restrictions on their ability to pay dividends to Travelport or other restricted subsidiaries or to make loans to Travelport or its restricted subsidiaries or sell, lease or transfer properties to Travelport or its restricted subsidiaries. The only meaningful exception is that it will not apply to restrictions in new acquisitions as long as those restrictions do not extend beyond the acquired entity. Since third party senior lenders typically include provisions limiting a borrower's ability to pay dividends to its shareholders, this covenant may make the incurrence of third party debt by us difficult or more expensive.

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BUSINESS

Overview

        We are a leading global online travel company that uses innovative technology to enable leisure and business travelers to research, plan and book a broad range of travel products. We own and operate a strong portfolio of consumer brands that includes: Orbitz, CheapTickets, ebookers, HotelClub, RatesToGo and the Away Network and corporate travel brands, Orbitz for Business and Travelport for Business. We provide customers with access to a comprehensive set of travel products, including air, hotels, vacation packages, car rentals, cruises, travel insurance and destination services, such as ground transportation, event tickets and tours, from over 80,000 suppliers worldwide through an efficient, customized and user-friendly system.

        The strength of our brands, quality of our products and efficacy of our marketing programs have enabled us to become the second largest online travel company in the U.S. and one of the largest in the world, based on gross bookings. We provide compelling value propositions for both our customers and suppliers. For our customers, we offer access to comprehensive travel inventory from a broad base of suppliers. We employ customer-friendly features and innovative technologies, such as our proactive OrbitzTLC care offering and the industry's first Matrix display, to provide differentiated user experiences. In addition, we provide relevant travel-related content for our customers to research, plan and book travel, such as third-party reviews and user generated content. For our suppliers, we represent a cost-effective distribution channel that reaches millions of potential customers who come to our sites with a travel booking in mind. Our U.S. brands have a base of nearly 48 million registered users and more than 25 million unique visitors each month.

        We are a leader in air travel, the largest online travel segment. This offers us a significant opportunity to drive growth in non-air categories, specifically hotels and dynamic vacation packages. These categories offer significant growth potential and attractive revenue per transaction and are areas in which we are currently under-penetrated relative to our major online competitors. There are also substantial growth opportunities outside of the U.S. for our strong international brands: ebookers, HotelClub and RatesToGo. The European and Asia Pacific regions experienced strong online travel growth of 41% and 34%, respectively, in 2006, based on gross bookings according to PhoCusWright. Finally, we believe that we have a significant opportunity to improve our financial performance by continuing to realize operating efficiencies from the global integration of our global operations (similar to the success we achieved with the integration of Orbitz and CheapTickets in 2005), by sharing best practices across our operations and by launching our common, scaleable global technology platform. We believe the organic growth opportunities inherent to us and to the overall marketplace, coupled with expected tangible operating improvements, position us well for strong profit growth.

        With less than 30% of travel bookings in the North American, European and Asia Pacific regions made online today, the online travel industry is well positioned for significant, long-term growth. In 2006, the online travel industry in these regions generated approximately $196 billion in gross bookings and represented the single largest e-commerce category. We believe the online travel industry is under-penetrated and will continue to grow significantly faster than the overall travel industry. According to PhoCusWright, the percentage of travel booked online in these regions is expected to reach 40% by 2008. This increase in penetration is expected to drive growth in online travel bookings, resulting in a 24% CAGR from 2006 to 2008. Key drivers of this rapid growth include increased Internet usage, broader availability of high speed Internet access, greater willingness of customers to research and book travel online and improved breadth of travel products offered online.

        We believe we are well positioned to capture a large share of the growth in online travel as we continue to execute on our five key internal operating objectives including:

    offering more high growth and high margin products, such as hotels and dynamic packages;

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    pursuing international growth opportunities;

    reinforcing our position as a low cost provider via our common technology platform and globally-integrated operations;

    continuing to build our portfolio of leading differentiated brands; and

    cultivating new strategic distribution channels.

Industry Background

        The worldwide travel industry is a large and dynamic market. We believe that aggregate gross bookings in the global airline, hotel, vacation package, car rental and cruise industry were approximately $900 billion in 2005. Approximately 75% of global travel gross bookings are currently made in the U.S., Europe and the Asia Pacific region. The World Travel and Tourism Council expects total travel and tourism dollars spent in the Asia Pacific region, the U.S. and Europe to grow annually 10%, 6% and 6%, respectively, for the five year period between 2005 and 2010. This anticipated growth is attributable to, among other things:

    increased consumer discretionary spending on travel and recreation;

    greater frequency of business travel resulting from the growth in the global economy; and

    favorable global macro-economic trends, including income growth in emerging markets such as the Asia Pacific region and the Middle East.

        Online travel is the fastest growing segment of the travel industry. The emergence of the Internet as the most efficient way to book travel has revolutionized the way millions of people research and purchase travel and has led to the growth of online travel companies. In 2006, the online travel industry in the North American, European and Asia Pacific regions grew by 30% to approximately $196 billion in gross bookings and represented the single largest e-commerce category.

        With less than 30% of travel bookings in these regions made online today, we believe the online travel industry is well positioned for significant, long-term growth. Widespread proliferation of the Internet, increased Internet usage and availability of high speed Internet access, greater convenience and ease of use of booking travel online and increased breadth of travel products offered online are expected to drive underlying online travel growth. More bookings should also migrate online from traditional offline travel agencies as Internet travel offerings expand to include more sophisticated content, such as dynamic packaging, personalized customer care and user-generated travel reviews with photos and videos.

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        The table below indicates the size, growth and penetration of online travel by region and in total for 2005 through 2008, according to PhoCusWright Inc., and includes leisure and business travel:

 
  2005
  2006
  2007E
  2008E
Online Travel Gross Bookings (dollars in millions)                        
U.S.   $ 93,806   $ 116,262   $ 139,359   $ 163,315
Europe     40,208     56,564     76,002     97,975
Asia Pacific region     17,100     22,900     30,300     39,900
   
 
 
 
Total     151,114     195,726     245,661     301,190

Online Travel Growth

 

 

 

 

 

 

 

 

 

 

 

 
U.S.     27%     24%     20%     17%
Europe     47%     41%     34%     29%
Asia Pacific region     35%     34%     32%     32%
   
 
 
 
Total     32%     30%     26%     23%

Online Penetration(1)

 

 

 

 

 

 

 

 

 

 

 

 
U.S.     41%     47%     54%     59%
Europe and the Asia Pacific region     13%     17%     23%     29%
   
 
 
 
Total     22%     28%     34%     40%

(1)
Online penetration represents the percentage of travel bookings made online.

        The U.S. is the largest online travel marketplace, totaling $116 billion in gross bookings in 2006 and PhoCusWright projects expected to grow at a CAGR of approximately 19% from 2006 to 2008. Growth in the U.S. will continue to be driven by increasing online travel penetration, which PhoCusWright projects will grow from 47% in 2006 to 59% in 2008. PhoCusWright expects online bookings of leisure air travel to grow at a 17% CAGR from 2006 to 2008. In the U.S., the fastest-growing and most profitable online travel categories include vacation packages and hotels. PhoCusWright projects vacation packages (including dynamic packaging) and hotel bookings will both grow at a 20% CAGR from 2006 through 2008.

        Outside of the U.S., growth in online travel is expected to be even stronger. In 2006, according to PhoCusWright, Europe and the Asia Pacific region experienced online travel growth of 41% and 34% to reach $57 billion and $23 billion in gross bookings, respectively. Growth in these regions will continue to be driven by the percentage of bookings made online, which PhoCusWright projects will grow from 17% in 2006 to 29% in 2008. PhoCusWright projects this increase in online penetration will result in overall gross bookings growth in excess of 30% for these two regions from 2006 through 2008. In both Europe and the Asia Pacific region, the hotel markets are served by thousands of independent hotels, making it more difficult for suppliers and travelers alike to identify and transact with each other. The fragmented nature of these markets provides a greater opportunity for online aggregation. Additionally, Europe's vacation-friendly employment policies provide for longer and more frequent vacations than in the U.S., driving higher overall demand for leisure travel inventory. Collectively, these market characteristics give rise to a significant growth opportunity for online travel companies.

Company Strengths

        We believe our success in becoming one of the world's leading online travel companies has been driven by the following competitive strengths:

        Strong global brands with industry-leading positions.    Our portfolio of widely-recognized online travel brands serves a broad range of travelers worldwide, including leisure and business travelers. Our leading brands include Orbitz, CheapTickets, ebookers, Orbitz for Business, Travelport for Business, HotelClub, RatesToGo, and the Away Network. Each brand has been positioned to target a defined customer

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segment, and collectively, our U.S. brands have a base of nearly 48 million registered users and more than 25 million unique visitors each month.

        Our brands are among the leaders in their respective regions. We are the second largest online travel company in the U.S. and in 2006 we were one of the largest online travel companies in the world, based on gross bookings. CheapTickets is a leading website for value-conscious travelers and Orbitz for Business offers full service corporate booking solutions. In 2006, we were the fastest growing major online travel company in the U.S., based on gross bookings. Internationally, ebookers, HotelClub and RatesToGo hold strong positions in the fast-growing European and Asia Pacific regions. ebookers has an online presence in 13 countries in Europe and is one of the leading pan-European online travel companies. HotelClub and RatesToGo provide a meaningful presence in the Asia Pacific region with a profitable hotel-focused model. With our global footprint of leading brands, we are well positioned to take advantage of global growth in the online travel industry.

        Technology leadership.    We have a strong track record in pioneering online travel technologies and innovations to provide superior customer experiences. Our easy-to-use, intuitive websites incorporate technology-enabled user-friendly tools, such as the Orbitz Matrix display, that simplify and improve a customer's ability to book the right trip at the right price or create a dynamic package efficiently. Our air search capabilities employ scalable search technologies that we believe return more comprehensive results. This allows us to provide more flight options to consumers without sacrificing search response times or putting added stress on suppliers' operating or cost infrastructure. These search capabilities have also allowed us to introduce consumer-friendly and innovative products such as Flex Search and Deal Detector. Flex Search allows customers to incorporate travel flexibility, such as alternate travel dates, times and airports, into their searches to find lower fares while Deal Detector lets customers indicate the price they are willing to pay for a flight and will alert them when such a fare is available. Other popular tools such as the "last seat" availability feature help customers make informed and time-sensitive booking decisions. We have also developed technology-enabled customer service tools to deliver differentiated customer care. Our OrbitzTLC proactive customer care platform sends permission-based travel alerts to a customer's email address or cell phone to notify him or her of situations that could affect travel plans or cause delays. We sent over 25 million care alerts to travelers in each of the last two years and 6 out of every 10 travelers who book air travel with us opt-in to this program. Launched in 2006, OrbitzTLC Mobile Access allows registered users to check flight status and hotel availability via mobile device in any of the top 20 cities in the U.S. and to reach an OrbitzTLC service agent. We believe our innovative tools and services have created significant value for our customers, serve as a source of competitive differentiation, and provide us with a leadership position in the industry. By pioneering online travel technologies, we have significantly enhanced customer experiences across our brands.

        Marketing and e-commerce expertise.    We employ innovative marketing techniques to differentiate and strengthen our brands. We believe our online and offline marketing techniques increase brand awareness, drive qualified traffic to our websites and improve the rate at which visitors become customers, while managing customer acquisition costs to deliver profitable growth. We believe we have a core competency in e-marketing. We design our online marketing strategies to be cost-effective by using efficient performance-based programs. Our marketing tactics employ our expertise in paid search advertising, cost-per-click placements, affiliate marketing, behavioral targeting campaigns and "pop under" advertising. We also believe we are cost-effective and efficient in our offline advertising campaigns where we use broadcast advertising, such as television, radio and print, to highlight brand differentiation and emphasize to consumers our compelling product features. According to a Hall and Partners survey commissioned by us, the consideration of our flagship Orbitz brand by consumers increased from 36% in the beginning of 2005 to 53% at the end of 2006, which we believe represents the greatest annual increase for any major online travel company in that period. We believe this increase was a result of our well integrated online and offline marketing campaigns. In addition, we have built core competencies in retail and promotional marketing and are enhancing our capabilities in onsite merchandising to optimize

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demand. We believe our marketing efforts have been effective and contribute to an increase in our gross bookings.

        Breadth and diversity of our offering.    We provide our customers with access to a vast array of travel inventory and travel-related content to deliver a complete travel experience. We strive to continually grow and diversify our travel offering. Our U.S. websites provide access to products and services from hundreds of airlines, over 80,000 hotels, most major car rental brands, and 70 cruise lines around the world. Our full service offering includes access to vacation packages, destination services and travel insurance. We also have valuable travel information integrated into our websites, such as user-generated travel reviews and Frommer's content, to help customers make travel decisions. To differentiate and personalize customer experiences, we designed and implemented a comprehensive customer care program, OrbitzTLC, that provides travel alerts and mobile access to flight status and hotel availability information 24 hours a day, 7 days a week.

        Strong growth potential.    We believe we are well positioned to capture significant growth by focusing on opportunities in our under-penetrated travel categories and geographies.

            Hotels and Dynamic Packaging: Hotel and dynamic package bookings generate higher revenue per transaction than air bookings and are expected to outgrow other travel categories. Due to our historical focus on air travel, we are under-penetrated in these non-air categories relative to our peers. We believe we are well positioned to grow our hotel and dynamic packaging businesses given our leadership in air travel, strong brand recognition, opportunity to cross-sell non-air products, strength in hotel and dynamic packaging technologies, significant customer base, and broad hotel and travel supplier relationships. We believe that as we grow our share in hotel and dynamic package offerings, our business will experience significant growth in revenue and improved financial performance.

            International: We recently entered the international market with our acquisition of Flairview Travel in April 2004 and ebookers in February 2005. As a result, we are currently under-penetrated in Europe and the Asia Pacific region relative to our peers. However, we believe we are well positioned to grow our international brands and capture a share of the 32% annual growth that these regions are projected to deliver through 2008. Among the primary contributors to our growth will be our existing presence in these regions through our strong brands including ebookers, HotelClub and RatesToGo; our new global technology platform; and our ability to share best practices between our U.S. and international operations.

        Continued improvements in operating efficiencies.    In all aspects of our global business, we focus on cost efficiencies and continuously seek to improve our low cost operating model. From inception, we built our operating infrastructure to minimize the cost associated with each travel booking. The integration of Orbitz and CheapTickets has streamlined our U.S. operations and allowed marketing, finance and technology resources to be shared. This integration, coupled with the use of common infrastructure, has allowed us to save tens of millions of dollars annually. Further, we have reduced support and fulfillment costs by automating certain tasks and moving various functions to low cost regions. We expect to continue to improve upon our low cost model and to achieve significant cost savings as we migrate websites on to our global technology platform.

        We are in the process of completing our global technology platform and expect to begin migrating the ebookers websites onto this platform in mid-2007. This global platform is expected to drive significant cost savings as it will allow us to generate multiple websites using a shared set of technologies and resources, thereby enabling us to reduce development costs, streamline back office operations and efficiently deploy innovative features across multiple global websites. This platform is designed to combine the best practices across our websites, white label platforms, and other technology and business operations into a highly efficient and scalable technology infrastructure. The platform will also enable significant improvements in operating efficiency because teams will be able to centrally manage business functions such as revenue

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management, accounting, finance, and other functions on a global scale using a common toolset, business process and infrastructure.

        Together, our history of an efficient operating structure at Orbitz, our experience in achieving cost savings across our operations through integrating acquisitions such as Orbitz and CheapTickets, and the future deployment of our global technology platform provide us with continued opportunities for improvements in operating efficiencies and, consequently, financial performance.

        Highly experienced management team.    Our senior management team is comprised of industry executives with significant experience in the Internet and travel sectors. Our senior leadership team, including Steve Barnhart, President and Chief Executive Officer, and Mike Nelson, Chief Operating Officer, has extensive experience with us or our predecessor companies. Other members of our management team include: Marsha Williams, Chief Financial Officer, who was previously CFO of Equity Office Properties and has had senior level experience at Crate and Barrel and Amoco Corporation, Bahman Koohestani, Chief Information Officer, who was one of the early executives at Netscape Communications, and Randy Wagner, Chief Marketing Officer, who joined Orbitz Worldwide from McDonald's, where she was a senior member of the marketing team. Our Chairman, Jeff Clarke, who is President and Chief Executive Officer of Travelport, has 21 years of experience in the technology industry serving in a variety of senior management positions, including Chief Operating Officer at CA, Inc. (formerly Computer Associates Inc.), Executive Vice President, Global Operations at Hewlett-Packard Company and Chief Financial Officer of Compaq Computer Corporation.

Company Strategy

        Our objective is to improve our financial performance while continuing to build our leadership position in the global online travel industry. The key elements of our strategy include:

        Capture global growth opportunities in non-air travel.    Our leadership in air travel provides us with a significant opportunity for continued growth in non-air travel categories, which can generate up to ten times higher revenue per transaction than air-only transactions. We have increased our penetration of the fast-growing hotel and dynamic packaging categories, and expect to continue to increase our non-air revenue mix by:

    encouraging consumers to book additional travel products while booking air travel;

    marketing non-air products directly to customers after they have booked air travel with us;

    promoting vacations and dynamic packages through targeted advertising;

    providing customers with relevant content, such as expert and user reviews, to encourage hotel and vacation bookings;

    expanding our telesales capacity to improve our ability to service and book complex travel itineraries;

    continuing to develop new functionality for our hotel and dynamic packaging technology; and

    improving and expanding our relationships with hotels and destination services providers, such as providers of ground transportation, event tickets and tours, to offer the best available inventory and increase revenue per transaction.

        We believe these initiatives will allow us to further penetrate the fast-growing non-air travel categories, where we believe we are under-penetrated relative to our peers, and will also serve to increase our average revenue per transaction.

        Grow our business internationally.    Through our international brands, ebookers, HotelClub and RatesToGo, we believe we are well positioned for international growth. In 2006, our international

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businesses contributed 19% of our net revenue. Our geographic mix combined with strong international growth in the online travel industry represents a sizeable growth opportunity for us. As past of this growth plan, we are prioritizing ebookers as the first of our brands to migrate onto our new global technology platform. We expect the new platform will provide better user experiences, lead to continued strong growth in these regions and result in cost savings to us. We will continue to share best operating practices such as supplier relationship strategies, marketing techniques and technology between our U.S. and international businesses. For example, in 2006, when we moved certain senior executives from our U.S. operations to ebookers to deploy our best practices, we experienced improved performance and increased growth in our European operations.

        Differentiate our brands through continued customer-centered innovation.    Since inception, we have focused on being a pioneer of proactive, technology-enabled customer care. We believe our customer care innovations have created significant value for, and loyalty among, our customers while strengthening and differentiating our brands. We are actively branding these customer care innovations as OrbitzTLC. We will continue to innovate and launch leading customer-focused initiatives, such as OrbitzTLC Mobile Access which was introduced in 2006, and additional tools in 2007. We plan to differentiate CheapTickets by improving functionality to enhance the overall experience for value-conscious travelers. Our new global technology platform will facilitate our ability to drive customer-centered innovation and to rapidly bring to market new solutions to keep pace with constantly evolving traveler needs.

        Invest in targeted content and community.    With the growth in online content, communities and social networks, we believe consumers are looking for broader experiences than simply booking travel online and will use the Internet increasingly to research travel, share experiences and interact with others. We are selectively investing, and will continue to selectively invest, in tools, products and partnerships to address these emerging needs, with strategic tactics that we believe will attract new customers, by engaging them early in their travel decision-making processes and help to retain existing customers by providing them with a forum to share their travel experiences. We believe this will reduce customer acquisition and retention costs over time. Examples of our tactics for engaging customers when in non-travel mode include Away.com's daily escape emails, where daily aspirational travel postcards are sent to our opt-in base of recipients, and OrbitzGames.com, which was launched in 2005 and which is an online community that has attracted over 500,000 registered members and almost 30 million visitors.

        We also offer specialty travel content to help travelers with their trip planning processes. Through Away.com and GORP.com, we offer destination travel guides and travel expert advice to inspire travelers and serve a broad range of enthusiasts with specialized travel interests. To satisfy the rising demand for user-generated content and reviews, we introduced authenticated hotel reviews from Orbitz travelers along with third party reviews, such as targeted family travel reviews. We expect to continue to expand our travel offering and use targeted microsites, such as Gay, Family, Eco-Tourism, Adventure Travel and Volunteer Vacations, to appeal to very specific customer categories and increase the number of repeat customers. Collectively, we believe these tools and communities improve the user experience, increase retention of customers and reduce customer acquisition costs.

        We believe that our large base of consumers with attractive demographics, along with the significant time they spend on our site, provide additional advertising revenue potential for our business. Today, advertising revenue represents a relatively small percentage of our overall revenue. We expect our continued focus on building specialty travel content and community websites will provide us with additional targeted advertising opportunities for our existing and future partners.

        Cultivate new strategic distribution channels and pursue targeted acquisitions.    In addition to growing our portfolio of existing brands, we will seek to gain access to new, fast-growing strategic distribution channels. We plan to continue to establish new white label booking relationships similar to our existing white label relationships under which we power websites, such as United Escapes for United Air Lines and the vacation package offerings of Yahoo! Inc. and Intercontinental Hotel Group. We are targeting

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partnerships with third parties to open new channels through which to generate bookings, like our distribution partnerships with metasearch companies and other distribution partners such as ESPN.com. We also plan to continue to build and invest in our corporate travel offering to capture the strong online growth in corporate travel bookings. Our corporate travel business is showing strong performance with online adoption among employees of our corporate customers of over 80%.

        We also may pursue targeted acquisitions to continue to enhance our business. Acquisition candidates will be evaluated based on their ability to complement our product offerings, provide access to new distribution channels, drive higher customer retention, strengthen our presence in high growth regions, such as Europe and the Asia Pacific region, and enhance our financial prospects. We believe our global technology platform will enable us to successfully and cost-effectively integrate companies and brands we acquire into our network of online travel businesses and potentially commercialize certain components of our technology.

Our Consumer Brands

        We own and operate several industry-leading websites that offer leisure and business travelers the ability to search for and book a broad range of travel products and services, including airline tickets, hotel rooms, car rentals, vacation packages, cruises and destination services, such as ground transportation, tours and event tickets.

        We offer our services primarily through Orbitz, CheapTickets, ebookers and our online hotel websites, HotelClub.com and RatesToGo.com. As a full service online travel company, we generate revenue through multiple sources. Similar to traditional travel agencies, through our retail business, we earn fees and commissions from travel suppliers for airline tickets, hotel rooms, car rentals and other travel products and services booked by consumers on our websites, and we charge consumers a service fee for booking airline tickets and certain other travel products. We also receive incentive payments from global distribution systems, or GDSs, and other distribution channels, including Galileo, Apollo and Worldspan, when we use their systems to book airline tickets, hotel rooms and car rentals. Our merchant business generates higher revenue per transaction than our retail business. Our merchant fees are based on the difference between the total amount the customer pays and the negotiated net rate the supplier charges for the travel product. Other revenue is derived primarily from technology licensing and advertising.

    Orbitz

        Orbitz, our largest full service online travel brand, is one of the leading domestic online travel websites. Orbitz is a full service travel company that offers travelers a wide variety of travel options and has historically introduced many innovations in online booking technology, including the industry's first Matrix display, Flex Search, and Deal Detector. Our flexible dynamic packaging matrix enables consumers to simultaneously optimize air and hotel bookings from a range of travel suppliers. In 2006, we re-branded and expanded our innovative proactive customer care platform as OrbitzTLC. We offer these value-added services at no extra charge to our customers. We believe OrbitzTLC has created significant value for our customers.

        Orbitz enables travelers to search for and book a broad array of travel products and services, including airline tickets, hotel rooms, car rentals, vacation packages, cruises, travel insurance and destination services. Orbitz provides a comprehensive display of fares and rates in a single location. Search results are presented in our easy-to-use Matrix display that provides one of the broadest selections of travel options available to travelers, enabling them to select the price and supplier that best meet their individual travel needs. Our search process enables travelers to book airline tickets, rent cars, reserve hotel rooms and book cruises and vacation packages 24 hours a day, 7 days a week. Key features of Orbitz are described below.

        Air travel.    We provide travelers with access to a broad selection of flights worldwide. The major domestic airlines allow us to offer fares that match those offered by airlines on their own direct websites as

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well as other online travel websites. Our technology and Matrix display enable customers to quickly and easily evaluate a broad range of potential fare and supplier combinations through an intuitive design. Our Matrix display enables travelers to search based on their preferred travel dates, destinations, times, number of passengers, class of service and number of stops, and then displays fare and flight offerings matching those specifications according to price and other specified criteria. Travelers can also prioritize the categories according to their specific preferences. Our Matrix display provides comprehensive information to travelers in an unbiased manner. Once a consumer selects a flight, our booking process makes it easy for travelers to reserve their tickets. By selecting our "anytime" and Flex Search features, travelers with flexible travel schedules can expand their flight options. Flex Search is a powerful search tool that allows travelers to find lower fares by incorporating alternate travel dates, times and airports into their searches, a task that would require dozens of searches on competitive websites.

        Hotels.    We enable travelers to search, compare and make reservations at tens of thousands of independent and chain hotel properties. Customers can research and book hotel rooms with suppliers using both a net rate model (sometimes referred to as a "merchant model") and a retail model. In addition to information on destination, dates and number of guests, travelers can select a specific hotel chain, location and budget preference. Travelers can also indicate amenity preferences such as restaurants, swimming pools, room service, health club facilities, handicapped facilities, business centers and meeting rooms. Our "Neighborhood Matrix" offers travelers the unique ability to compare hotel search results on a detailed and user-friendly map that highlights each hotel's location, neighborhood description, price and star rating together on one screen. Travelers can also read authenticated hotel reviews from other Orbitz travelers and utilize interactive neighborhood maps, which point out shopping websites, museums, historic landmarks and entertainment facilities, allowing customers to select the perfect location for their trip. The majority of our hotel transactions are completed using the merchant model, which allows us to market rooms to travelers at a rate that includes fees for the services we provide, resulting in higher net revenue than we achieve on bookings via the retail model.

        Car rentals.    We enable travelers to search and book car rentals online with most major companies and certain regional independent companies. In addition to specifying date and location preferences, travelers can select a specific car company and request specific features when renting a car. We display our car rental options using our Matrix display.

        Vacation packages.    We introduced our own internally-developed dynamic packaging engine in 2004 and have since experienced significant growth in travel package bookings. Our packaging technology uses our Matrix display to enable travelers to view multiple combinations of airlines and hotels to assemble a vacation package. Our dynamic packaging capabilities allow customers to customize their vacations by combining two or more travel products and selecting their desired air, hotel car rental and other travel supplier, frequently for less than booking the individual components separately.

        Cruises.    Our cruise product allows travelers to book cruise travel on over 70 cruise lines. At present, we partner with a third party provider to book cruises.

        OrbitzTLC Alerts.    Customers who book with Orbitz receive a wide range of OrbitzTLC Alerts that proactively update travelers on real-time events that could affect their travel plans before they leave or while they are traveling. Key features of OrbitzTLC Alerts include:

    Flight departure and arrival delays—even if the delay occurs after the flight has departed;

    Flight cancellations;

    Airport conditions and closures;

    Gate changes and baggage claim information;

    Severe weather and potential delays;

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    Hotel, pool and fitness center closures;

    Hotel construction or maintenance; and

    Emergency updates including notification of transit strikes, geopolitical events and street closures for major events in the traveler's destination city.

        Our proactive technology-enabled OrbitzTLC alerts originate from our OrbitzTLC Command Center, which is comprised of an in-house team of former military air traffic controllers, weather analysts, travel agents, a full-time travel journalist and airport, passenger and security specialists who actively monitor nationwide travel conditions 24 hours a day, 7 days a week. This team interprets and gathers Federal Aviation Administration, National Weather Service and other data to provide travelers with real-time information regarding developments such as flight delays, airport closures and transportation strikes so they are aware of any changes or problems that may affect their travel plans. We sent over 25 million care alerts to travelers in each of the last two years and six out of every ten travelers who book travel with us opt into this program.

CheapTickets

        CheapTickets is a leading U.S. travel website focused on value-conscious, leisure travelers and was the fastest growing major travel website in the U.S. in 2006. CheapTickets has certain features designed for bargain hunters, such as price alerts to inform travelers when a certain price is available for a desired trip, and "Cheap of the Week" notices for exceptional fares. Founded in 1986 as an outlet for deeply discounted airfares, CheapTickets is well regarded by value-conscious travelers and has consistently been the #1 non-paid result for "cheap" in both Google and Yahoo!. In July 2005, we successfully combined the management and operations of CheapTickets with Orbitz, allowing us to reduce costs and share best practices, as well as marketing and technology resources, to provide travelers with enhanced inventory and features and functionality to find travel fares worldwide. In addition, CheapTickets possesses many of the same features as Orbitz, including:

    providing travelers with a large selection of low air fares and the ability to search fares based on preferred travel dates, destinations, times, number of passengers, class of service and number of stops;

    enabling travelers to search, compare and make reservations at numerous independent and chain hotel properties;

    enabling travelers to search and book car rentals online with most major companies and certain regional independent companies;

    enabling travelers to customize their own dynamic vacation packages; and

    allowing travelers to book cruise travel on over 70 cruise lines.

ebookers

        ebookers is one of the leading full service travel websites in Europe. ebookers offers customers a wide range of travel services through its online business, ebookers.com, and telephone call centers. ebookers currently operates 13 country specific websites in Austria, Belgium, Denmark, Finland, France, Germany, Ireland, the Netherlands, Norway, Spain, Sweden, Switzerland and the United Kingdom. Millions of unique potential customers visit ebookers' websites each month, while other ebookers customers may also book travel through our call centers. The key features of ebookers are described below.

        Air travel.    ebookers enables customers to book air travel on over 200 airlines available through our GDS providers and an additional 26 low cost carriers who do not participate in a GDS. In addition, we have negotiated fares with many airlines, which allow us to offer discounted airfares, both online and

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offline, to customers in each of the European countries in which ebookers operates. The majority of bookings are based on long-haul trips, involving travel outside of Europe, and therefore have a higher commission rate as well as a higher revenue yield due to the inclusion of other non-air travel products such as hotels, car rentals and destination services.

        Hotels.    ebookers provides customers with numerous hotel selections, all of which are currently sourced through Travelport's wholesale travel business, GTA. This relationship allows us to use the negotiating power of GTA to offer our customers discounted hotel rates in approximately 120 countries around the world. As we build our internal hotel supply team, we anticipate more direct relationships with hotel suppliers. Our technology allows customers to specify desired room types and hotel amenities and to preview the property by viewing hotel pictures and interactive maps before completing the reservation online.

        Car rentals.    ebookers has developed its own car rental reservation system to offer customers discounted car rental rates at over 10,000 car rental locations worldwide. We offer our car rental product on an "opaque" basis, where the customer does not know the name of the car provider until after the reservation is completed. This system has allowed us to negotiate unique, reduced net rates with our car rental suppliers. Car rentals are offered on ebookers as part of an air travel booking or on a standalone basis, as well as on an affiliate site, carbookers.com, which won the TravelMole "Best Car Rental Website 2005" award.

        Vacation packages.    In 2006, ebookers introduced vacation packages, combining discounted airfares and discounted hotel rooms into a single transaction at an inclusive price. This new functionality was developed for ebookers' websites in the United Kingdom and Switzerland and has since been rolled out to other ebookers' websites.

        Insurance.    ebookers has agreements with Europe's leading insurance companies, and we offer travel insurance through the ebookers websites throughout Europe, our call centers and a standalone website, insurancebookers.com.

HotelClub and RatesToGo

        Flairview Travel operates two global hotel booking websites, HotelClub.com and RatesToGo.com. These websites offer discounted hotel rates for more than 23,000 hotels in approximately 100 countries worldwide. To accommodate their broad client base, HotelClub and RatesToGo offer certain services in multiple languages, including Chinese, English, French, German, Italian, Japanese, Spanish, and fourteen currencies. This has resulted in a very diverse sales mix with meaningful contribution from Europe, the Asia Pacific region and the U.S. Flairview also operates two different models for selling hotels: prepaid and commission/retail. The HotelClub prepaid model is characterized by higher margins and strong working capital characteristics. HotelClub sources much of its hotel inventory from GTA. RatesToGo offers last-minute hotel reservations (rooms bookable within 21 days of the planned hotel stay) at over 12,000 hotels worldwide. The RatesToGo retail model is sometimes preferred by suppliers as it provides more pricing control and faster cash conversion. Both models have certain advantages and we believe Flairview is one of the few hotel distributors that has a significant portion of its business in both.

Corporate Travel Solutions

        We offer corporate travel fulfillment solutions to a broad array of enterprises, ranging from small businesses to Fortune 500 companies with sophisticated travel policies and global travel management requirements through our Orbitz for Business and Travelport for Business brands.

        Our corporate travel solutions group is a full-service online travel management program that provides, depending on the level of service requested, online bookings, reservation and service support 24 hours a day, seven days a week, as well as premier travel services. We seek to minimize transaction costs and ticket

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price, while providing a high degree of price transparency, access to a wide selection of low fares, and superior, automation enhanced service to our customers. Our corporate travel solutions group capitalizes on our strong customer reputation and traveler-related services. Major customers include Ariba, Inc., Cervantes Capital LLC (Quiznos Corp.), Dunkin' Brands, Inc., Manufacturer's Life Insurance Company and Wyndham Worldwide Corporation.

        We generate revenue through transaction fees paid by corporate customers. We also collect transaction fees from corporate customers for fulfillment of customer care services offered as part of our end-to-end corporate travel solution, as well as GDS fees and fees from supplier agreements that we have negotiated for the benefit of all of our customers.

Other Businesses: Away Network, White Label and Hosting Solutions

        Away Network.    The Away Network specializes in providing travel content for travelers seeking unique experiences and activities. Its network of content websites includes Away.com and GORP.com. The Away Network also hosts, maintains and develops OutsideOnline.com, pursuant to an agreement with Mariah Media, Inc., the publishers of Outside magazine. This network of websites provides a resource to passionate travelers who want to "experience something different." Supported by advertising sales and sponsorships, Away provides a blend of professionally-edited and consumer-driven reviews, articles, features and microsites. Away provides this resource to millions of travelers each month seeking advice on thematic and experiential travel, such as active and adventure trips, family trips, romance trips and more. With its new content technology platform, Away.com is also enhancing its visibility on search websites, such as Google and Yahoo!.

        White Label and Hosting Solutions.    In addition to powering our well-known consumer and corporate brands, our technology also powers many other partners with our white label and hosting solutions. With our white label solutions we provide technology to third-parties which enables them to operate websites under their own brands. Our air technology powers portions of American Airlines' and Northwest Airlines' websites. Our dynamic packaging platform powers websites such as United Escapes for United Air Lines and the vacation package offerings of Yahoo! Inc. and Intercontinental Hotel Group. Our hotel technology powers hundreds of affiliate partners. We earn revenue through our white label solutions based on fixed payments from our partners and we earn revenue from our hosting solutions based on revenue-sharing arrangements.

        Following implementation of our new white label capability on the new technology platform, we expect to grow gross bookings and earnings from our white label business more rapidly as the new platform will offer significantly more flexibility and options for configuration for our partners and will allow us to bring new partners onto our platform more rapidly than our current technology allows.

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Our Websites

        The primary websites that we own and operate are listed in the table below:

Websites*

  URL

orbitz.com   http://orbitz.com
cheaptickets.com   http://cheaptickets.com
ebookers.com^   http://ebookers.com
hotelclub.com^   http://hotelclub.com
ratestogo.com   http://ratestogo.com
flairview.com   http://flairview.com
orbitzforbusiness.com   http://orbitzforbusiness.com
travelportcorporatesolutions.com   http://travelportcorporatesolutions.com
away.com   http://away.com
GORP.com   http://GORP.com
trip.com   http://trip.com
outsideonline.com   http://outsideonline.com
carbookers.com^   http://carbookers.com
insurancebookers.com^   http://insurancebookers.com
hotelbookers.com^   http://hotelbookers.com
mrjet.com   http://mrjet.com

*
Information contained on our websites does not constitute a part of this prospectus.

^
We own and operate websites under this name in a number of countries each with a different URL.

Marketing

        Our sales and marketing efforts are focused on driving visitors to our websites, increasing brand awareness and creating differentiated brands by demonstrating clear value propositions for our distinct customer segments. While some of our competitors spend more on traditional media, our key strategy is alignment and integration across marketing disciplines to increase the efficiency and effectiveness of our marketing budget. Domestically, we employ a combination of traditional offline and online marketing strategies to persuade customers to book their travel online with Orbitz and CheapTickets. Internationally, we rely primarily on e-marketing. Each of our major brands has a core marketing campaign that focuses on distinct consumer messaging for distinct consumer segments. We also use a variety of marketing tactics to encourage the booking of more complex travel, particularly dynamic travel packages, which we believe offer value to our customers while also generating more revenue per transaction.

        The major components of our marketing strategy are brand marketing, online marketing and partner marketing.

        Brand Marketing.    We use traditional broadcast advertising such as television, radio and print that focuses on brand differentiation and emphasizes certain features of our businesses that we believe are valuable to our customers, such as OrbitzTLC services and dynamic packaging. In all of our marketing strategies, we are focusing on promotional marketing to emphasize attractive deals for our customers and encourage the booking of certain types of travel. We also continuously test and optimize the components of our offline marketing program to maximize efficacy.

        Online Marketing.    We use various forms of online marketing to drive traffic to our websites. Representative online marketing strategies include search engine marketing on Google, Yahoo! and MSN, advertising placements on travel research and content websites such as Trip Advisor and Travelzoo, interactive pop under advertising, affiliate marketing and search engine optimization. We also generate traffic and transactions from certain metasearch travel websites. Email marketing is an important

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component of our marketing strategy, and we are currently focused on improving our ability to target customers with specific offers that correspond to their particular interests.

        Partner Marketing.    Through our partner marketing programs, our attractive and large customer base allows us to create unique marketing relationships with travel partners, convention and visitor bureaus, credit card partners, media, packaged goods and other non-travel advertisers. With a combination of display advertising programs, performance-based advertising and other marketing programs, we provide our partners with direct access to our valuable customer base, which research shows is more ready and willing to spend money both online and offline on products like travel, electronics and automobiles than the average Internet population.

        Our corporate travel team benefits from the brand awareness and marketing expertise of our consumer marketing team and they primarily focus their marketing activities on generating leads and building relationships with corporate travel managers. With a team that includes experienced corporate travel managers, our sales team is well-qualified to assist corporations in choosing between our two flexible and scalable corporate booking products. Orbitz for Business provides small businesses with an easy to implement and use corporate travel booking solution. Travelport for Business provides a more complex solution to larger corporations with complex travel requirements and a need for more in-depth reporting tools to manage significant annual travel budgets.

Technology

General

        Our systems handle millions of searches a day for available travel options across airlines, hotels, car rentals, vacation packages and destination services. We benefit from using cost-effective hardware that has proven to be highly scalable and resilient in the event of a system failure, handling high transaction volumes across our multiple branded websites on shared infrastructure. Real-time monitoring provides comprehensive business and operational insight into the functionality and use of our system.

        We have core technology advantages in multiple areas, including:

    extensive experience in supporting and scaling low fare searches in our business using cost-effective hardware rather than more expensive mainframes, resulting in an increasingly high performance and low cost flight search capability;

    dynamic packaging capability, which enables travelers to see multiple combinations of airlines and hotels to assemble a vacation package resulting in trips that are, on average, less expensive and more flexible for the traveler;

    real-time business event monitoring, which provides comprehensive business and operational insight, giving us the ability to manage the business in real-time;

    a globally-sourced technology organization, resulting in a flexible and scalable organization with global productivity;

    Matrix display technology for simultaneous display of multiple online travel options; and

    the ability to connect and book on multiple supplier host systems, creating inherent technology flexibility and a powerful consumer experience.

        We are committed to protecting the security of our customers' information. We maintain an information security team that is responsible for implementing and maintaining controls to limit the ability of unauthorized users to enter our system. These controls include the implementation of information security policies and procedures, security monitoring software, encryption policies, access policies, password policies, physical access limitations, and detection and monitoring of fraud from internal staff. We use a combination of off-the-shelf and proprietary authentication technology to protect the integrity of

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our data. Our information security team also coordinates internal and external audits. Security audits are conducted semi-annually. In addition, we maintain a comprehensive information systems security policy that provides guidelines for protecting customers' data and information, safeguarding our proprietary information, reporting security incidents, and policies for administrative controls of end user access to computing resources.

Global Technology Platform

        As part of our strategy to reduce overall development costs, improve the reliability and scalability of each of our consumer-branded websites around the world and increase the speed to market for new website features on a global basis, we have undertaken a significant travel technology platform development project. The platform is designed to combine the best practices from across our consumer websites, white label platforms and other technology and business operations into a new, efficient and scalable travel technology infrastructure capable of supporting myriad consumer, corporate and white-label branded travel websites in numerous points of sale, currencies and language configurations. Ultimately, this common global technology platform will power not only our consumer brands, including Orbitz, CheapTickets and ebookers, but will also be used to power our corporate travel solutions and our white label partnerships with numerous third party travel suppliers, media partners and others.

        Our new platform will offer new capabilities to allow our developers to more efficiently manage our systems and more quickly develop new features.

        We expect our new global technology platform will:

    enable us to broaden the global pool of development talent from which we can draw resources, reducing development costs and the time it takes to launch innovative new features;

    enable us to support significantly more brand differentiation across each of our consumer websites at a much lower cost than today, as well as providing more options to our white label partners to tailor their site experience to match their customer base and brand identity;

    enable significant gains in operating efficiency as teams will be able to centrally manage business functions like e-marketing, revenue management, accounting, finance, and customer service on a global scale using a common toolset, business process and infrastructure; and

    offer our supplier partners a highly efficient way to access our numerous distribution channels via a single connection to our platform and give them the controls they desire in distributing inventory via the channels they choose.

        Ultimately, while the platform is predominantly a technology project, the initiative is also transforming many of our business functions, enabling them to be more efficient, streamlined and scaleable. We expect that this project will generate cost savings and revenue growth and will be at the core of our business going forward.

Operations

        Our customer experience and operations group supports our brands from offices located on four continents. We have internal operations located in Chicago, Sydney, Paris, Geneva, Madrid, Bonn, Stockholm, New Delhi, London, Tel Aviv and Dublin, while smaller regional offices for sales and service exist across Europe, the Middle East and Asia Pacific. In addition, to maximize savings and ensure service redundancy, we utilize a variety of third party vendors to manage call centers and back office fulfillment operations across the globe.

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        Our operations team also manages the staff that provides OrbitzTLC proactive customer care services for our travelers. This team tracks flights and contacts customers via automation or in person to advise them of any schedule changes. Data synthesized by a team of experts and air traffic controllers in our Chicago and Denver internal operational locations helps ensure we manage every aspect of a customer's trip. As we look to consolidate our platforms and gain synergies with our multi-functional service desktop applications and interactive voice response support systems, we will have the capability to migrate this technology to other brands, on a domestic and international basis.

        We use third party providers to service operational functions including call center support for customer service, telesales, email communication support, and a variety of back office fulfillment and rate loading support across all businesses. Over 1,500 external agents help support our customers. New agents are required to complete 6-8 weeks of training in order to provide superior Orbitz TLC services to our customers. Knowledge of various systems and suppliers is required. Escalation desks provide additional services to customers who have unique travel issues. Most support functions for our consumer businesses are available 24 hours a day, 7 days a week.

        We have dedicated technology operations teams who ensure that our websites are operating efficiently. These teams monitor our websites 24 hours a day, 7 days a week from our Service Operations Center (SOC). Our SOC is staffed with multiple shifts of experienced technology administrators who monitor our websites, implementing changes and leading problem-solving efforts if necessary. These teams also monitor the performance and availability of our third party service providers; coordinate major releases of new functionality on our websites; and implement best practices across our operations. Finally, we have an internal service desk team that provides end-user support to our employees.

        We also have an internally-developed fraud system that has enabled us to reduce our fraud rates while reducing costs associated with fraud detection and prosecution since we implemented it in 2003. The system has automated many of the manual functions of a fraud prevention agent while prioritizing suspicious transactions for review. Our fraud system is flexible and can be integrated into companies outside Orbitz Worldwide. Several companies have approached us about using our fraud prevention engine and we have considered commercializing this product.

Supplier Relationships

        Our air, car rental and cruise supplier relationship teams negotiate agreements with suppliers for access to travel inventory and financial consideration for our services. Our supplier relationship teams cover air, hotel, car rental and cruise suppliers. They are focused on relationship management, supplier-sponsored promotions and contract negotiation covering our retail, packaging and corporate businesses.

        The global hotel supply team is responsible for negotiating agreements with independent hotels, chains and hotel management companies for listing on our websites. The team is led by area directors in the Americas, Europe and Asia Pacific, with the U.S. being the largest region. The primary responsibilities of our team include negotiating and securing competitive rates, promotions and access to inventory for their assigned region and for our hotel and packaging businesses. The team is responsible for managing supplier relationships that span over tens of thousands of properties. Over the next 12 months, we intend to grow this team, primarily outside the U.S., to improve direct access to additional hotel inventory.

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        The table below outlines certain of our major suppliers in the airline, hotel and car rental industries in 2006 based on gross bookings:

Airlines
  Hotels
  Car Rentals

Air Canada

 

Accor

 

Advantage Rent A Car

Air France

 

Best Western

 

Alamo

Air Tran

 

Carlson

 

Avis

Alaska Airlines

 

Choice

 

Budget

Alitalia

 

Hilton

 

Dollar Rent A Car

American Airlines

 

Hyatt

 

Europcar

America West Airlines

 

Intercontinental

 

EZ Rent

British Airways

 

La Quinta

 

Fox Rent

Continental Airlines

 

Marriott International

 

Hertz

Delta Air Lines

 

Preferred Hotel Group

 

National Car Rental

Frontier Airlines

 

Starwood

 

Sixt

Northwest Airlines

 

Wyndham Hotel Group

 

Thrifty Car Rental

United Air Lines

 

 

 

 

US Airways

 

 

 

 

Competition

        The market for travel products and services is competitive. We currently compete with online travel companies, airlines, hotels and car rental companies, many of which have their own branded websites and toll-free numbers through which they drive business, and offline leisure travel agencies. Among online travel companies, our major competitors include Expedia, Hotels.com and Hotwire, which are owned by Expedia, Inc., Travelocity and lastminute.com, which are owned by Sabre Holdings Corporation, and Priceline.com, including its international hotel business. We compete internationally with smaller regional operators. In addition, we compete with the websites of travel suppliers, such as airlines, hotel and rental car companies. They have been steadily focusing on increasing online demand on their own websites in lieu of third-party distributors like us. For instance, many low cost airlines, which are having increasing success in the marketplace, distribute their online inventory exclusively through their own websites. Suppliers who sell on their own websites typically do not charge a processing fee, and, in some instances, offer advantages such as their own bonus miles or loyalty points, which could make their offerings more attractive to consumers than offerings like ours. In the offline travel company category, our competitors include, among others, Liberty Travel, Inc. and American Express Travel Related Services Company, Inc.

        Travelport operates in the same highly competitive industry as we do and could compete with us. Upon consummation of this offering, Travelport will be in a unique position to influence and control the operation of our business and the management of our affairs since it will indirectly own approximately 60% of our common stock. As a result, Travelport will effectively control us and may be able to restrict us from taking certain actions, such as raising additional capital, which may compromise our ability to compete effectively. Prior to this offering, we will grant Travelport and its affiliates, including future affiliates perpetual licenses to use certain of our intellectual property. Travelport and its affiliates will be prohibited from sublicensing our intellectual property (other than our supplier link airline direct connect technology) to any third party for competitive use, unless Travelport incorporates or uses our intellectual property with

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Travelport products or services to enhance or improve Travelport products or services (but not to provide our intellectual property to third parties on a stand-alone basis). Travelport and its affiliates will be able to use such intellectual property to compete directly with us.

        We also potentially face competition from a number of large Internet companies, such as Google, AOL and Yahoo!, and metasearch companies, such as Kayak.com, Side Step, Inc. and Yahoo!Farechase. Factors affecting our competitive success include price, availability of travel inventory, brand recognition, customer service and customer care, the fees charged to travelers, ease of use, accessibility and reliability.

Material Agreements

Airline Charter Associate Agreements

        The original investors and founders of Orbitz were Continental Airlines, Delta Air Lines, Northwest Airlines and United Air Lines. Subsequently, American Airlines joined as an investor. We refer to these five investors collectively as the Founding Airlines. In December 2003, Orbitz entered into second amended and restated airline charter associate agreements, or charter associate agreements, with the Founding Airlines that govern each airline's participation in our website. Orbitz also has a charter associate agreement with US Airways. The term of each agreement is ten years, although in certain cases the airline may terminate its agreement upon 30 days notice to us.

        Under each agreement, the airline has agreed to provide Orbitz with information regarding its flight schedules, published air fares and seat availability at no charge and with the same frequency and at the same time as this information is provided to the airline's own website, to a website branded and operated by the airline and any of its alliance partners or to the airline's internal reservation system. In addition, the airline has agreed to provide Orbitz with nondiscriminatory access to seat availability for published fares for passengers yielding comparable net revenue values in comparable fare classes in the airline's internal reservation system, the airline's own website, or websites operated by its alliance partners. Published fares means all fares other than fares filed in a private area to which there is limited access, fares offered through an opaque pricing system, and fares not generally available for purchase by the general public. Each airline has also agreed that to the extent it offers published fares, flight schedules, seat availability, service enhancements, frequent flyer program account information, frequent flyer promotions, functionality or processing of frequent flyer transactions or the purchase, sale or redemption of frequent flyer miles to other online travel websites that are non-opaque in connection with the sale of airline tickets for travel within, between, among or from the U.S., Canada and Mexico, subject to certain limitations, it will offer the same to Orbitz on commercial terms and conditions not less favorable than the most favorable terms and conditions offered by the airline to such other online travel websites. We are required to present the information received from the airline on the Orbitz website in an integrated display that, except in response to a customer request, operates in an unbiased manner based upon service criteria that do not reflect the carrier's identity and that are consistently applied to all carriers and to all markets. The relationship between the airline and Orbitz is not exclusive and the charter associate may participate in other Internet websites similar to Orbitz.com. Under the airline charter associate agreements, Orbitz also required, at the request of the airline and subject to technical and financial constraints, to use reasonable business efforts to connect directly to the airline's internal reservation system for published fares, schedules and seat availability information so as to eliminate the need for a GDS link for such data.

        In return for the ticket distribution and customer service and support services that Orbitz provides to the airline, the airline has agreed to pay Orbitz an amount equal to certain agreed upon transaction fees, which decreased each year, with the last decrease taking effect in June 2006. In addition, the airline has agreed to provide certain in-kind marketing support to Orbitz in a manner to be agreed upon between the parties, such as references to Orbitz in printed promotional materials and in suppliers' fare sale advertising, free tickets for promotional use and access to discounted web-only fares. The timing and value of the support provided is equal to an amount based on the airline's gross bookings on the Orbitz website, up to a specified maximum amount. In exchange, Orbitz offers our airline charter members lower costs of

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distribution by agreeing to pay the airlines a portion of the GDS incentive fees Orbitz receives from its GDSs. Each type of marketing support is assigned a contractual value, and we track monthly the amounts provided by each airline based on those specified contractual values. See the section of this prospectus entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations—Unfavorable Contracts."

Supplier Link Agreements

        Orbitz has entered into supplier link agreements with various airlines. These agreements establish a direct link between Orbitz.com and the airlines' internal reservation systems. Orbitz entered into supplier link agreements in January 2004 with Northwest Airlines, in February 2004 with American Airlines, Continental Airlines, Delta Air Lines and United Air Lines, in May 2004 with Alaska Airlines, in February 2005 with US Airways and in January 2006 with Midwest Airlines.

        Under these agreements, Orbitz must book eligible airline tickets directly with the airline so as to eliminate the need for a GDS. Orbitz provides pricing, availability, reservation placement and settlement services to users who book supplier link eligible tickets through Orbitz.com. In return, the airline pays Orbitz a per ticket fee for tickets issued by that airline and booked on Orbitz.com, and Orbitz provides certain parity rights to the airline if Orbitz enters into a similar agreement on more favorable terms and conditions. Orbitz also provides services to implement the interface between the airlines' reservation system and Orbitz.com. The term of these agreements is ten years, provided the airline may terminate the agreement at any time after the second anniversary of the agreement. In addition, these agreements may be terminated upon, among other things, a material breach of, or either party ceasing to be in good standing under, the charter associate agreement between the two parties. Further, the airline shall have the option to extend the term beyond the 10-year anniversary to a date coterminus with any charter associate or replacement agreement between the two parties.

        Under Orbitz's agreement with Worldspan, described below, our business interests may be adversely affected if we do not meet quarterly volume guarantees totaling 16 million segments on an annual basis for air, hotels and car transactions processed through Worldspan and if Orbitz does not meet similar air-related thresholds that entitle Orbitz to receive the highest level of inducement payments from Worldspan. As a result, the supplier link agreements allow Orbitz to reduce the number of supplier link transactions to all participating carriers on a proportional basis as necessary to ensure the delivery to Worldspan of Orbitz's segment obligations. Orbitz has agreed to make compensatory payments up to a maximum of $5 million per year in the aggregate to all airlines with which Orbitz has supplier link agreements, to the extent they would have processed tickets through the supplier link connection, but are unable to do so because of the imposition of this minimum commitment to Worldspan.

GDS Agreements

        Agreement with Travelport.    Prior to this offering, we will enter into an agreement with Travelport under which we will be obliged to use, and Travelport will be obliged to provide, GDS services from Galileo and, effective upon completion of the Worldspan acquisition, Worldspan, subject to certain exceptions described below. This agreement will replace our existing agreements with Galileo and Worldspan; provided, however, that if the Worldspan acquisition is not completed, Orbitz will continue to operate under its existing Worldspan relationship, and our obligations in this agreement will not apply to Orbitz until expiration or other termination of Orbitz's Worldspan agreement.

        Under this agreement, Travelport will agree to provide content and GDS services of a Travelport GDS (Galileo or, if acquired, Worldspan). Subject to the exceptions described below, we will agree to use a Travelport GDS exclusively for air and car segments for all of our current and future online travel agency sites in North America, and we will use commercially reasonable efforts to use a Travelport GDS for hotel segments that we book through a GDS. Travelport will pay us an inducement fee for each segment that we

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book through a Travelport GDS which we believe to be on market terms. In certain cases, we may pay a content access fee to Travelport to book a segment on a specific airline.

        In addition, we will be obligated to provide annual segment volume guarantees for the North American websites. If we fail to meet our annual obligation, we will have to pay a shortfall payment in certain cases, except where we have achieved at least 95% of our annual obligation or have put all eligible segments through a Travelport GDS but have still failed to meet the minimum. In certain circumstances, shortfall payments will not apply if the Travelport GDSs lose existing Travelport GDS content.

        We have agreed to use a Travelport GDS exclusively for segments booked through a GDS on European country websites where we currently use Galileo. On European country websites where we do not currently use Galileo, we will use the Travelport GDSs exclusively under certain circumstances.

        Our obligations to use the Travelport GDSs will be subject to exceptions:

    for our existing supplier link obligations;

    where the Travelport GDSs do not have material content, subject to our obligation to cooperate and assist in Travelport's efforts to obtain a supplier's content;

    where, with respect to a specific supplier, a material economic difference in the net compensation per segment to be received by us exists between a Travelport GDS and establishing a direct connection to a supplier; and

    for Orbitz's existing Worldspan agreement, for so long as such agreement is in effect.

        Where an exception applies, we may use the content of a direct connect alternative provided that the Travelport GDS will have the right of first refusal to provide us with GDS services on substantially similar terms and conditions as offered by the particular supplier for the direct connection.

        For non-North American and non-European agencies, a Travelport GDS will be the exclusive provider of GDS services for all current and future online travel agencies, to the extent that Travelport can provide these services on terms and conditions commercially reasonable in that region. To the extent that we cannot agree with Travelport on commercially reasonable terms for a non-North American, non-European website and we desire to use a non-Travelport GDS, Travelport will have a right of first refusal to provide us with GDS services on substantially similar terms and conditions as those offered by the non-Travelport GDS.

        Travelport will provide the GDS services on commercial terms and conditions not less favorable overall than the overall terms and conditions offered by Travelport to any other online travel agency delivering equivalent or lesser booking volumes. In determining the relative favorability of the overall terms and conditions, Travelport may also consider geographic and business (corporate vs. leisure) mix.

        The incentive payments that we receive from Travelport may decrease if the amount payable to Travelport by its suppliers decreases by 10% or more. These amounts, and the corresponding reductions in our incentive payments, would apply country by country.

        This agreement will expire on December 31, 2014. Effective upon the acquisition of Worldspan by Travelport, we and Travelport have agreed to dismiss all claims pending in the legal proceedings described in the section of this prospectus entitled "Business—Legal Proceedings—Worldspan Litigation."

        In addition, if we are unable to reach agreement with ITA on an extension of our agreement with them to use their search algorithm technology, we anticipate we will enter into an agreement to use Worldspan's search technology provided it is compatible with our system.

        Agreement with Worldspan.    In December 2002, Orbitz amended its computer reservations system and related services agreement with Worldspan, a GDS. Worldspan was previously owned by Delta Air Lines, Northwest Airlines and American Airlines or their respective affiliates. On July 1, 2003, Delta Air Lines, Northwest Airlines and American Airlines sold their interests in Worldspan to Travel Transaction Processing Corporation. Under Orbitz's agreement with Worldspan, Worldspan provides Orbitz with access to its system which processes and distributes travel information, such as schedules, fares, availability

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and pricing, and provides booking capability for air, car rental and hotel reservations. Under this agreement, Orbitz agrees to process all of the airline and car GDS bookings made through its Orbitz.com website through Worldspan, with the exception of bookings made using direct connect technology. Worldspan has agreed to specified service level commitments with respect to its system availability, and Orbitz has the right to terminate the agreement if these commitments are not met. Orbitz's agreement with Worldspan expressly permits Orbitz to utilize our supplier link technology as an alternative to GDS bookings, and Orbitz's obligations to direct bookings through Worldspan do not apply to segments that are processed using supplier link or any direct connect technology. Under this agreement, Worldspan pays Orbitz an inducement fee for each net segment that Orbitz books through the Worldspan system. These per segment inducement fees increase as the volume of segments increases. In addition to directing all non-supplier link air and car bookings through Worldspan, Orbitz is obligated to provide quarterly volume guarantees totaling 16 million segments on an annual basis for air and car transactions for any year in which Orbitz is using supplier link technology for either of those travel products. Orbitz must meet specific quarterly thresholds, or pay Worldspan a segment fee of $1.78 for each segment by which Orbitz falls short. If Orbitz implemented supplier link for car transactions, Orbitz would have to meet a separate specific quarterly threshold, or pay a per segment fee for each car segment by which Orbitz fell short. Orbitz does not currently use supplier link technology for car bookings, and therefore the Worldspan volume minimums related to car transactions are not applicable to Orbitz. This agreement expires in October 2011. See the section of this prospectus entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations—Unfavorable Contracts."

        Agreements with Galileo.    CheapTickets entered into a subscriber services agreement with Galileo, a GDS and a subsidiary of Travelport, which commenced on July 1, 2004. This agreement also governs the relationship between Galileo and the Neat Group. Under this agreement, Galileo provides CheapTickets and the Neat Group with access to its system which processes and distributes travel information, such as schedules, fares, availability and pricing, and provides booking capability for air, car rental, hotel, cruise and tour reservations. Galileo pays us a fee for each booking made through its system. Galileo may offset payments to us by amounts due to them for certain charges that we have incurred. In addition, we have agreed to use best efforts to negotiate an amendment to the subscriber services agreement with Galileo in the event that a participation fee change occurs with respect to the participation fees that Galileo receives from suppliers who participate in the Galileo GDS. The subscriber services agreement expires June 30, 2007.

        Certain of our subsidiaries in the ebookers group entered into subscriber services agreements and a productivity incentives agreement with Galileo, which, as amended, commenced on May 1, 2005. Under the subscriber services agreements, Galileo provides the ebookers websites in certain European countries with access to its system which processes and distributes travel information, such as schedules, fares, availability and pricing, and provides booking capability for air and hotel reservations. The subscriber agreements terminate three years after the effective date. Under the productivity incentives agreement, Galileo pays us a fee for each segment regardless of which country made the booking. We must meet certain annual targets or pay Galileo a shortfall payment. Galileo may offset payments to us by amounts due to them for certain charges that we have incurred. We have agreed to a 90-day period to negotiate appropriate modification in this agreement if there is a change to the fee paid to Galileo by its airline vendors that would decrease Galileo's annualized average booking fee revenue by 10% or more. The productivity incentives agreement expires June 13, 2008. In addition, Travelport for Business, one of our corporate solutions subsidiaries, has an incentive arrangement with Galileo. As part of this arrangement, Galileo provides an incentive for each booking made via the Travelport for Business corporate online booking tool or through Galileo's computerized reservation system.

        Agreement with Amadeus.    On January 1, 2004, ebookers entered into a global access agreement with Amadeus IT Group, S.A. Under this agreement, as amended on September 1, 2006, Amadeus provides ebookers websites with access to its system which processes and distributes travel information, such as schedules, fares, availability and pricing, and provides booking capability for air, hotel and cruise

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reservations. Amadeus pays us a fee based on our achievement of certain net segment targets as well as a bonus payment. In the event the annual segment target is not achieved, we are required to repay a pro rata amount of the bonus payment to Amadeus. However, shortfalls in a year may be made up in certain cases. This agreement expires December 31, 2009.

Pegasus Agreement

        On August 8, 2005, we entered into a master services agreement with Pegasus Solutions, Inc. Under this agreement Pegasus provides us access to its hotel reservation system and processes commissions paid to us by participants for hotel distribution services. Pegasus also provides us electronic reconciliation and tracking services. We pay Pegasus a fee based on the total commission paid by participants to us for commission processing and additional fees for electronic reconciliation and tracking services. The agreement expires when the terms of all services schedules, including extensions, have expired. The commission processing and electronic reconciliation and tracking services schedule expires on August 8, 2007, but automatically renews for successive three month terms until terminated by either party 90-days prior to the expiration. The reservation system services schedule expires August 8, 2007, but automatically renews for successive one year terms until terminated by either party 90-days prior to the expiration.

ITA Agreement

        On May 15, 2002, Orbitz entered into an amended and restated software license agreement with ITA Software, Inc. which was further amended on January 24, 2003 and June 19, 2003. Our booking engine uses ITA's search algorithm technology to search for low fares. We have developed our own proprietary support services and software architecture that enables us to use ITA's technology in connection with our booking engine. ITA's technology has been licensed to us on a non-exclusive basis under the agreement, which expires in 2007. Under this agreement and a related service level agreement, we pay ITA an annual license fee and in some circumstances additional fees, professional fees and service costs. In addition, ITA has agreed to provide us with most favored customer status, with certain exceptions.

Galileo ITA Agreement

        On October 3, 2002, Galileo International, L.L.C., a subsidiary of Travelport, entered into a software license agreement and maintenance, data and operations service level agreement with ITA Software, Inc. which was further amended on June 2, 2004 and October 14, 2005. Galileo's booking engine uses ITA's search algorithm technology to search for low fares. Under the agreement, certain Orbitz entities (including CheapTickets) as affiliates of Galileo are granted a license to use and operate ITA's technology on Galileo's behalf. ITA's technology has been licensed to Galileo on a non-exclusive basis under the agreement, which expires on December 31, 2007 unless automatically extended in accordance with the agreement. Under this agreement and the related service level agreement, Galileo pays ITA monthly license fees.

Tax Agreement

        In December 2003, Orbitz completed an initial public offering of its Class A common stock. In connection with and to facilitate that initial public offering, Orbitz engaged in a series of restructuring transactions with the Founding Airlines or their affiliates. These transactions were consummated shortly prior to the initial public offering. Specifically, under an exchange agreement among Orbitz and the Founding Airlines or their affiliates, the Founding Airlines or their affiliates contributed all their membership interests in Orbitz, LLC to Orbitz in exchange for Class A common stock, Class B common stock and Series A non-voting convertible preferred stock. We refer to this transaction as the IPO Exchange. In that initial public offering, the Founding Airlines or their affiliates sold all of the Class A common stock obtained by them in the IPO Exchange.

        On November 25, 2003, Orbitz entered into a tax agreement with the Founding Airlines or their affiliates governing the allocation of certain tax benefits that are attributable to the taxable IPO Exchange. For each tax period during the term of the tax agreement, we have agreed to pay to the Founding Airlines

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or their affiliates a significant percent of any tax benefit we actually realize as a result of the additional deductions. The term of the tax agreement commenced upon consummation of the IPO Exchange and continues until all tax benefits of the IPO Exchange have been utilized or expired, which we expect will be at least 15 years.

        With respect to each applicable tax period, the tax benefit payment is payable to the Founding Airlines or their affiliates when we receive the tax benefit, and we will forward these payments to each Founding Airline or its affiliate in proportion to its ownership of our common stock immediately following the IPO Exchange. These tax benefit payments are not conditioned upon a Founding Airline's or its affiliate's continued ownership interest in us. If we receive a notice or assessment from a taxing authority with respect to the tax treatment of the IPO Exchange, we will set the tax benefit payments aside in an interest-bearing escrow account until there is a final determination by the applicable tax authority. If any Founding Airline or its affiliate files for bankruptcy or is otherwise deemed insolvent, such person must provide a letter of credit or other security to us in order to continue receiving tax benefit payments during its bankruptcy or insolvency.

        For purposes of the tax agreement, the tax benefits will be computed by comparing our actual income taxes to the taxes that we would have been required to pay had the taxable IPO Exchange been effected as a non-taxable exchange. We currently anticipate that our aggregate payments of those tax benefits to the Founding Airlines or their affiliates could exceed $250 million over the term of the tax agreement. The tax agreement provides that, upon a merger, asset sale or other form of business combination which results in a change of control, our obligations would continue under the tax agreement or our successor would be required to assume our obligations under the tax agreement.

        Under the tax agreement, we have the sole responsibility to prepare, file and make decisions with respect to our tax returns following the IPO Exchange. We have agreed to provide the Founding Airlines or their affiliates copies of our tax returns during the term of the tax agreement, and to allow them to review draft copies of our tax returns that relate to the IPO Exchange for four years after the IPO Exchange. We have also agreed to respond to all reasonable questions raised by the Founding Airlines or their affiliates with respect to these tax returns prior to filing. For tax periods ending after the fourth anniversary of the IPO Exchange, we have agreed to file our tax returns in a manner consistent with our prior tax returns to the extent our tax returns relate to the tax treatment of the IPO Exchange.

        Subject to the participation rights of the Founding Airlines or their affiliates described below, we have the exclusive right to control all tax audits, litigation or appeals relating to the tax treatment of the IPO Exchange. The Founding Airlines or their affiliates have the right at their expense to designate one or more representatives to participate in contesting and defending these proceedings. We have agreed not to settle, enter settlement negotiations, provide written submissions or extend or waive the statute of limitations in any tax proceeding with respect to the IPO Exchange without the written consent of the Founding Airlines or their affiliates representing a majority of the Founding Airlines' or their affiliates' ownership interests in Orbitz immediately following the IPO Exchange. Additionally, we have agreed to use our reasonable best efforts to accelerate the resolution of any of these proceedings so as to achieve a final determination by the applicable tax authority as quickly as possible.

        The tax agreement provides for the recalculation of tax benefits in the event of subsequent changes in the tax treatment of our tax items, including the filing of amended tax returns, the filing of refund claims, or a final determination from an applicable tax authority that we were not entitled to the tax benefits we have claimed and have paid out to the Founding Airlines or their affiliates in tax benefit payments. In such cases, each Founding Airline or its affiliate has agreed to repay to us all the excess tax benefit payments it has received. Each Founding Airline or its affiliate has also agreed to indemnify us for its proportionate share of all interest and penalties we may incur related to the tax treatment of the IPO Exchange. Each Founding Airline or its affiliate has severally (and not jointly) agreed to indemnify us for any breach of the tax agreement by such Founding Airline or its affiliate, or any failure by such Founding Airline or its affiliate to make payments to us as required under the tax agreement, in an amount not to exceed, in any event, the total tax benefit payments received by such Founding Airline or its affiliate and its proportionate share of the interest and penalties described above, if any.

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Intellectual Property

        We regard our technology and other intellectual property, including our brands, as a critical component of our business. We protect our intellectual property rights through a combination of copyright, trademark and patent laws, trade secret and confidentiality procedures. We have a number of trademarks, service marks and trade names that are registered or for which we have pending registration applications or common law rights, including Orbitz, Orbitz Matrix, Flex Search, OrbitzTLC, OrbitzTLC Mobile Access, the Orbitz design and the stylized "O." We have one issued U.S. patent directed to a system and method for receiving and loading fare and schedule data. The patented technology relates to loading, managing and synchronizing air fare data, allowing us to search for fares and book air segments. This patent is scheduled to expire on November 10, 2024. In addition, we have 14 pending United States patent applications. Through these patent applications, we are seeking patent rights in several areas of our online travel services technology. These areas include technology related to our process for receiving and loading flight and schedule information, our process for synchronizing passenger name and record data, our travel update messaging system, our matrix display system, our supplier link and related booking technology, our system for searching for itineraries based on flexible travel dates, our Deal Detector functionality, and our process for providing an exit window on the user's computer. Further, all of our employees have signed confidential information and invention assignment agreements, and we generally enter into nondisclosure agreements with third parties. Despite these efforts and precautions, there can be no assurances that any of these patent applications will result in issued patents, or that any trademarks and issued patents will provide any effective protection from competition. It may be possible for a third-party to copy or otherwise obtain and use our trade secrets or our intellectual property without authorization and legal remedies may not adequately compensate us for the damages caused by unauthorized use. Further, others may independently and lawfully develop substantially similar properties.

        From time to time, we may be subject to legal proceedings and claims in the ordinary course of our business, including claims of alleged infringement by us of the trademarks, copyrights, patents and other intellectual property rights of third-parties. In addition, litigation may be necessary in the future to enforce our intellectual property rights, protect our trade secrets or to determine the validity and scope of proprietary rights claimed by others. Any such litigation, regardless of outcome or merit, could result in substantial costs and diversion of resources and management attention, the invalidation, or other impairment, of intellectual property we assert against others, or the imposition on us of significant damages, onerous license terms and restrictions or outright prohibitions on our ability to use intellectual property or business processes, any of which could materially harm our business.

        Prior to this offering, we will enter into a master license agreement with Travelport to document our rights to use certain of Travelport's intellectual property on a going forward basis, and Travelport's rights to use certain of our intellectual property on a going forward basis. This agreement will include a license to use certain of our intellectual property assets, including ebookers' booking, search and dynamic packaging technologies; the "look and feel" of the Orbitz website; one of our corporate online booking tools; portions of the Neat Group's dynamic packaging technology; our supplier link technology; and certain of the technology being developed as part of our common, global technology platform, including back end supplier connectivity functionality and a corporate travel agency reseller product. The licenses generally include the right to create derivative works and other improvements, and certain of the licenses obligate us to provide ongoing maintenance and support obligations in connection with Travelport's use of these technologies. In certain circumstances, Travelport has the right to obtain the source code of these technologies. Travelport is prohibited from sublicensing these technologies (other than our supplier link airline direct connect technology) to any third party for competitive use, unless Travelport incorporates or uses our intellectual property with Travelport products or services to enhance or improve Travelport products or services (but not to provide our intellectual property to third parties on a stand-alone basis). Travelport and its affiliates are not restricted from using the technologies to compete directly with us which

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could have an adverse effect on us. For additional information, see the section of this prospectus entitled "Arrangements Between Our Company and Related Parties—Master License Agreement."

Government Regulation

        We are subject to or affected by international, federal, state and local laws, regulations and policies, which are constantly subject to change. The descriptions of the laws, regulations and policies that follow are summaries and should be read in conjunction with the texts of the laws and regulations described below. The descriptions do not purport to describe all present and proposed laws, regulations and policies that affect our businesses.

        We believe that we are in material compliance with these laws, regulations and policies. Although we cannot predict the effect of changes to the existing laws, regulations and policies or of the proposed laws, regulations and policies that are described below, we are not aware of proposed changes or proposed new laws, regulations and policies that will have a material adverse affect on our business.

Privacy and Data Collection Regulation

        Privacy regulations continue to evolve and on occasion may be inconsistent from one jurisdiction to another. Many states have introduced legislation or enacted laws and regulations that require strict compliance with standards for data collection and protection of privacy and provide for penalties for failure to notify customers when such standards are breached, even by third parties.

        As an online business, customers provide us with personally identifiable information, or PII, that has been specifically and voluntarily given. PII includes information that can identify a customer as a specific individual, such as name, phone number, or e-mail address. We share customer PII with our authorized travel service providers, with third party service providers as necessary to fulfill and service transactions, to perform marketing research and analysis, to provide (ourselves or through third parties) products or services that customers indicate may be of interest to them, or as required by law. Customers are provided the opportunity to specifically choose the promotional marketing communications they wish to receive from our company. If they choose to opt-out of the promotional communication services that we provide, then we will only send communications that relate to a specific travel booking made by the customer.

        Some states grant constitutional "rights of privacy," while others have enacted more specific legislation to protect consumers personal information. In particular, there are a handful of states (including Arkansas, California, Rhode Island, and Texas), that require companies that hold (typically sensitive) PII about consumers to take reasonable steps to protect that information. These states' laws also go on to require that when the company determines it no longer needs consumers' information, the company delete the information in a secure manner. Some other states also require secure deletion of consumer information, including Colorado, Georgia, Nevada, and North Carolina. It is possible that other states may pass similar laws in the future. For example, we are aware that Michigan has a similar law that will go into effect in July 2007.

        The primary international privacy regulations to which our international operations are subject include Canada's Personal Information and Protection of Electronic Documents Act and the European Union Data Protection Directive.

        Canada.    The Personal Information and Protection of Electronic Documents Act, or PIPEDA, provides Canadian residents with privacy protections in regard to transactions with businesses and organizations in the private sector. PIPEDA recognizes the individual's right to privacy of their personal information. Additionally, it recognizes the need of organizations to collect, use and share personal information and establishes rules for handling personal information. On January 1, 2004, PIPEDA was extended to the collection, use, or disclosure of personal information in the course of any commercial

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activity within a province without substantially similar private sector privacy laws. British Columbia, Alberta and Quebec have such laws in place.

        Europe.    Individual countries within the EU have specific regulations related to the transborder dataflow of personal information (i.e., sending personal information from one country to another). The EU Data Protection Directive is the source of many of these individual regulations and requires companies doing business in EU member states to comply with its standards. It provides for specific regulations requiring all non-EU countries doing business with EU member states to provide adequate data privacy protection when receiving personal data from any of the EU member states. Effective July 25, 2000, the EU member states adopted a safe-harbor arrangement that provides that U.S. organizations can adopt procedures that comply with European privacy regulations and can certify their compliance through notice to the U.S. Department of Commerce. Participation in the safe harbor is voluntary and indicates that the organization provides an adequate level of privacy protection and qualifies the company to receive data from EU member states. A company does not have to join the safe harbor to be in compliance with the EU Data Protection Directive. It may choose instead to seek approval for the data transfers from the specific individual or otherwise qualify for an exception. U.S. companies that avail themselves of the safe harbor arrangement are subject to oversight and possible enforcement actions by the Federal Trade Commission or the Department of Transportation (which has authority over "ticket agents") if they violate the provisions of their certification. Such violations may be found to be unfair and deceptive practices. Additionally, the European Commission has approved a set of standard form clauses for the transfer of personal data. These allow companies to put in place a contractual chain in order to transfer data outside of Europe. We are in the process of putting in place such standard form clauses.

Marketing Operations

        The products and services offered by our various businesses rely heavily on online distribution channels. These channels are regulated on the international, state and federal levels, and we believe that our marketing operations will increasingly be subject to such regulation. Such regulation, including anti-fraud laws, consumer protection laws, and privacy laws may limit our ability to solicit new customers or to market additional products or services to existing customers. We are also aware of, and are actively monitoring the status of, certain proposed state legislation related to privacy that may be enacted in the future. It is unclear at this point what effect, if any, such state legislation may have on our businesses. We cannot predict whether these laws will affect our practices with respect to customer information and inhibit our ability to market our products and services nor can we predict whether other states will enact similar laws.

Internet Regulation

        We must also comply with laws and regulations applicable to businesses engaged in online commerce. An increasing number of laws and regulations apply directly to the Internet and commercial online services. For example, e-mail activities are subject to the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, or the CAN-SPAM Act. The CAN-SPAM Act regulates the sending of unsolicited, commercial electronic mail by requiring the sender to:

    include an identifier that the message is an advertisement or solicitation if the recipient did not expressly agree to receive electronic mail messages from the sender;

    provide the recipient with an online opportunity to decline to receive further commercial electronic mail messages from the sender; and

    list a valid physical postal address of the sender.

        The CAN-SPAM Act also prohibits predatory and abusive electronic mail practices and electronic mail with deceptive headings or subject lines. Moreover, there is currently great uncertainty whether or

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how existing laws governing issues such as property ownership, sales and other taxes, libel and personal privacy apply to the Internet and commercial online services. It is possible that laws and regulations may be adopted to address these and other issues. Further, the growth and development of the market for online commerce may prompt calls for more stringent customer protection laws.

        New laws or different applications of existing laws would likely impose additional burdens on companies conducting business online and may decrease the growth of the Internet or commercial online services. In turn, this could decrease the demand for our products or increase our cost of doing business.

        Federal legislation imposing limitations on the ability of states to impose taxes on Internet-based sales was enacted in 1998. The Internet Tax Freedom Act, which was extended by the Internet Nondiscrimination Act, exempted certain types of sales transactions conducted over the Internet from multiple or discriminatory state and local taxation through November 1, 2007. The majority of products and services we offer are already taxed. Hotel rooms and car rentals are taxed at the local level and air transportation at the federal level with state taxation preempted. In Europe, there are laws and regulations governing e-commerce and distance-selling. These regulations require our businesses to act fairly towards customers, for example, by giving customers a cooling-off period during which they can cancel transactions without penalty. There are various exceptions for the leisure and travel industry.

Travel Agency Regulation

        The products and services we provide are subject to various international, federal, state and local regulations. We must comply with laws and regulations relating to our sales and marketing activities, including those prohibiting unfair and deceptive advertising or practices. Our travel services are subject to regulation and laws governing the offer and/or sale of travel products and services, including laws requiring us to register as a "seller of travel" in various states and to comply with certain disclosure requirements. As a seller of air transportation products in the U.S., we are subject to regulation by the Department of Transportation (DOT), which has jurisdiction over economic issues affecting the sale of air travel, including consumer protection issues and competitive practices. The DOT has authority to enforce economic regulations, and may assess civil penalties or challenge our operating authority. In addition, many of our travel suppliers and trade customers are heavily regulated by the U.S. and other governments and we are indirectly affected by such regulation.

        Where we sell travel products and services in Europe directly to travelers as part of a "package," the Package Travel, Package Holidays and Package Tours Regulations Directive regulates us, as implemented by EU member states into country-specific regulations, or Package Travel Regulations. Where the Package Travel Regulations apply, they impose primary liability on us for all elements of a trip sold through us, whether or not we own or control those services or whether we sub-contract them to independent suppliers. The Package Travel Regulations principally affect the business of ebookers, as well as other online brands where the sale is made in the EU.

        Additionally, certain jurisdictions abroad may require that we hold a local travel agencies' license in order to sell travel product to travelers.

        Our businesses are also subject to regulations affecting issues such as telecommunications and exports of technology.

Insurance Regulation

        Insurancebookers Limited sells standalone travel insurance online and off-line to consumers. It is authorized by the UK Financial Services Authority, or FSA, and trades as an Appointed Representative of Landmark Insurance Company, part of the AIG Group.

        The FSA regulates the financial services industry through statutory powers under the Financial Services and Markets Act (2000). It imposes minimum standards of fitness and propriety on both

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companies and certain individuals (notably company directors and controllers) that fall within its remit. These minimum standards are embodied in the FSA's Threshold Conditions and Principles for Business. If one of the Threshold Conditions or Principles is breached (e.g. ceases to maintain a minimum level of financial resources), the FSA can remove permission to trade. We are required to deal with the FSA in an open and cooperative manner and to inform them of matters in a timely fashion.

Properties and Facilities

        Our primary facilities are as follows:

        Corporate Headquarters.    Our corporate headquarters and domestic operations are located in Chicago, Illinois under a long-term sublease which expires in February 2023.

        ebookers.    ebookers conducts its main operations in leased offices in London, United Kingdom under a long term lease expiring in October 2015. ebookers also leases facilities in 9 other countries for use as call centers or fulfillment or sales offices.

        Flairview.    HotelClub and RatesToGo conduct their main operations in leased offices in Sydney, Australia under a long term lease expiring in December 2012. These businesses also lease facilities in 7 countries for use as call centers or fulfillment or sales offices.

        The table below provides a summary of our key facilities, all of which are leased, as of May 1, 2007:

Location

  Purpose
  Employees
Chicago, IL   Orbitz Worldwide corporate and domestic headquarters   766
London, UK   ebookers main office   139
Sydney, Australia   HotelClub and RatesToGo main office   158

Legal Proceedings

        We and our subsidiaries are parties to various legal proceedings, including contract disputes, consumer claims, tax litigation, disputes regarding the alleged infringement of third party intellectual property rights, and other claims. The costs of defense and amounts that may be recovered in such matters may be covered by insurance. The following list identifies all litigation matters that we believe are potentially material to our financial position or operations, as well as other matters that may be of particular interest to our stockholders.

Worldspan Litigation

        Three interrelated legal proceedings arising from certain disputes between Orbitz and its Computer Reservation System, or CRS, services provider, Worldspan, L.P., are pending in state and federal courts in Chicago, Illinois. Each proceeding, described below, has been stayed pending approval of the proposed acquisition of Worldspan by Travelport. In addition, in March 2007, Worldspan claimed approximately $6 million and increased to $14 million in May 2007 from Orbitz under the CRS Agreement as payment for Orbitz's access to certain data from the Worldspan System. The parties have mediated the dispute without resolution. To date, this claim has not yet been asserted in the parties' existing litigation. Effective upon the acquisition of Worldspan by Travelport, we and Travelport have agreed to dismiss all claims pending in the legal proceedings between us and Worldspan described below.

        Orbitz, LLC v. Worldspan, L.P.    On September 16, 2005, Orbitz filed suit against Worldspan in the Circuit Court of Cook County, Illinois alleging fraudulent inducement under the Illinois Consumer Fraud Act and equitable estoppel, and later amended its complaint to add claims for director conflict, fraud, breach of contract, and declaratory relief. Orbitz is seeking rescission of certain amendments to the parties' contract for CRS access, or CRS Agreement, unspecified monetary damages, a declaration of Orbitz's contract rights, and costs. Orbitz's rescission claims are based on Worldspan's alleged unfair and deceptive conduct; and alleged conflicts of interest among the companies' overlapping board members at the time of the contested amendments. Orbitz's breach of contract claims are based on allegations regarding the absence of, and additional charges for, certain airline content on the Worldspan system This matter is consolidated with Worldspan, L.P. v. Orbitz, LLC, Circuit Court of Cook County (described below).

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        Worldspan, L.P. v. Orbitz, LLC.    On September 19, 2005, Worldspan filed suit against Orbitz in the U.S. District Court for the Northern District of Illinois, alleging breaches of contract and violation of the federal Computer Fraud and Abuse Act. Worldspan alleged that Orbitz violated the parties' CRS Agreement by using certain Worldspan data to support Orbitz's Supplier Link product, and by using the services of non-Worldspan CRSs. Worldspan's Computer Fraud and Abuse Act claim related to Orbitz's purported misuse of Worldspan data to support Supplier Link bookings. The complaint sought damages in excess of $50 million. On April 19, 2006, the District Court dismissed Worldspan's federal complaint in its entirety. Worldspan filed an appeal with the U.S. Court of Appeals for the Seventh Circuit. Worldspan, L.P. v. Orbitz, LLC. On April 24, 2006, Worldspan filed suit against Orbitz in the Circuit Court of Cook County, Illinois, alleging the same contract claims set forth in its dismissed federal suit. Worldspan twice amended its complaint, with the first amendment adding a claim under the Georgia Computer System Protection Act and contract claims for alleged violations of the implied covenant of good faith and fair dealing and failure to engage in mediation under the CRS Agreement and the second amendment adding new factual allegations. The Second Amended Complaint seeks damages in excess of $109 million and an injunction prohibiting Orbitz from using ITA Software, Galileo, and from accessing Worldspan's seat maps for Direct Connect segments. This matter is consolidated with Orbitz, LLC v. Worldspan, L.P., Circuit Court of Cook County (described above).

        By agreement of Orbitz and Worldspan, the courts have stayed each of the above cases pending approval of the proposed acquisition of Worldspan by Travelport.

Consumer Class Actions

        In re Orbitz Taxes and Fees Litigation.    On May 24, 2005, a consolidated class action complaint was filed in the Circuit Court of Cook County, Illinois against Orbitz, LLC, Orbitz, Inc. and Cendant Corporation. This case purports to be a national class action brought by persons who paid a fee in connection with paying for a hotel room through the Orbitz website from March 19, 2003 to the present. The putative plaintiff also seeks actual damages, attorneys' fees, costs, interest and penalties on behalf of the purported class. On May 31, 2006, the Court again dismissed Cendant from this case, and dismissed all of the claims except for the plaintiff's Consumer Fraud and Deceptive Procedures Act claim. On May 30, 2007, the plaintiff filed a motion for leave to file a Third Consolidated Amended Class Action Complaint. This most recent complaint only asserts a claim for Unfair and Deceptive Conduct under Illinois Consumer Fraud and Deceptive Business Practices Act and names only one class representative, an Illinois resident. Plaintiff alleges that Orbitz failed to provide proper disclosures to consumers relating to fees charged by Orbitz when the consumer