Commitments and Contingencies

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

10. Commitments and Contingencies

Purchase Commitments

In the ordinary course of business, the Company makes various commitments to purchase goods and services from specific suppliers, including those related to capital expenditures. As of September 30, 2012, the Company had approximately $90 million of outstanding purchase commitments, primarily relating to service contracts for information technology, of which $42 million relates to the twelve months ending September 30, 2013. These purchase obligations extend through 2015.

Other Commitments

As part of a restructuring (the “Restructuring”) of the Company’s direct parent holding company, Travelport Holdings Limited (“Holdings”), senior unsecured payment-in kind (“PIK”) term loans, the Company intends to invest $135 million of Second Priority Secured Notes, plus accrued interest, into an unrestricted subsidiary subject to a favorable declaratory judgment ruling. The unrestricted subsidiary will then deliver these Second Priority Secured Notes, plus accrued interest, in satisfaction of the existing $135 million of Holdings’ senior unsecured PIK term loans.

Company Litigation

The Company is involved in various claims, legal proceedings and governmental inquiries related to contract disputes, business practices, intellectual property and other commercial, employment and tax matters. The Company believes it has adequately accrued for such matters as appropriate or, for matters not requiring accrual, believes they will not have a material adverse effect on its results of operations, financial position or cash flows based on information currently available. However, litigation is inherently unpredictable and although the Company believes its accruals are adequate and/or that it has valid defenses in these matters, unfavorable resolutions could occur, which could have a material effect on the Company’s results of operations or cash flows in a particular reporting period.

On April 12, 2011, American Airlines filed a suit against Travelport and Orbitz Worldwide in the United States District Court for the Northern District of Texas. On November 21, 2011, the Court dismissed all but one claim against the Company, but American Airlines amended its complaint again on December 5, 2011, asserting three new claims and reasserting one previously dismissed claim against the Company. On February 28, 2012, the Court granted American Airlines leave to reassert a more limited version of one additional claim that was previously dismissed. Travelport again moved to dismiss American Airlines’ new and reasserted claims, but on August 7, 2012, the Court ruled that American Airlines could proceed with its claims. American Airlines is alleging violations of US federal antitrust laws based on the ways in which the Company operates its GDS and the terms of its contracts with suppliers and subscribers, including Orbitz Worldwide. American Airlines also alleges that Travelport conspired with other GDSs and travel agencies to exclude American Airlines’ Direct Connect from competition for travel agencies. The suit seeks injunctive relief and damages in an unspecified amount. Although the Company believes American Airlines will allege damages that would be material to the Company if there was an adverse ruling, the Company believes American Airlines’ claims are without merit, and the Company intends to defend the claims vigorously. While no assurance can be provided, Travelport does not believe the outcome of this dispute will have a material adverse effect on the Company’s results of operations or liquidity condition. On December 22, 2011, Travelport filed counterclaims against American Airlines, alleging violations of US federal antitrust laws based on actions American Airlines has taken against the Company and other industry participants. On August 16, 2012, the Court dismissed Travelport’s counterclaims on standing grounds. On September 6, 2012, the Court stayed the case until December 21, 2012 to allow for mediation. If mediation is unsuccessful, Travelport will have an opportunity to seek leave to amend the counterclaims after the stay is lifted.

In September 2011, the Company received letters from Dewey & LeBoeuf LLP as counsel to certain holders of its outstanding Senior and Senior Subordinated Notes (the “Notes”) making certain assertions alleging potential events of default under the Indentures relating to the Restructuring. The Company disagrees with the assertions in the letters and the Company believes it is in full compliance with the provisions of the Indentures for the Notes. On October 28, 2011, pursuant to the terms of the Restructuring, the Company filed a complaint for declaratory judgment against The Bank of Nova Scotia Trust Company of New York, as initial trustee under the Indentures governing its outstanding Senior Notes, in the United States District Court for the Southern District of New York (the “Court”), and the Company filed an amended complaint on November 3, 2011. In this declaratory judgment action, the Company is seeking a ruling from the Court that the investment of $135 million in an unrestricted subsidiary is permissible under the terms of the Indentures and is, therefore, not an event of default under the Indentures as alleged in the letters referenced above. In the event the Company does not receive a declaratory judgment ruling that the investment in the unrestricted subsidiary is permitted, the investment will not be made. On February 24, 2012, Computershare Trust Company, N.A. (the successor trustee under the Indentures governing such Notes) (the “Trustee”) filed an answer and counterclaim in response to the Company’s amended complaint. The answer adds Travelport Holdings Limited as a party and seeks a ruling from the Court that the investment of $135 million described above would violate the terms of the Indentures and would constitute an event of default under the Indentures if it was made. Further, the counterclaim seeks (i) to receive a determination as to the occurrence of certain alleged fraudulent conveyances in the context of the Restructuring and to recover assets alleged to be fraudulently conveyed by Travelport LLC to the Company, and by the Company to, or for the benefit of, Travelport Holdings Limited, (ii) to annul and set aside obligations alleged to be fraudulently incurred by Travelport LLC, and (iii) to obtain a judicial determination that Travelport LLC has violated its contractual obligations to debt holders. On April 18, 2012, the Trustee filed an amended answer and counterclaims. The Company believes these claims are without merit although no assurance can be given due to the uncertainty inherent in litigation.

Standard Guarantees/Indemnifications

In the ordinary course of business, the Company enters into numerous agreements that contain standard guarantees and indemnities whereby the Company indemnifies 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 or indemnifications are granted under various agreements, including those governing (i) purchases, sales or outsourcing of assets or businesses, (ii) leases of real estate, (iii) licensing of trademarks, (iv) use of derivatives and (v) issuances of debt securities. The guarantees or indemnifications issued are for the benefit of the (i) buyers in sale agreements and sellers in purchase agreements, (ii) landlords in lease contracts, (iii) licensees of the Company’s trademarks, (iv) financial institutions in derivative contracts and (v) underwriters in debt security issuances. While some of these guarantees 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 the Company could be required to make under these guarantees, nor is the Company able to develop an estimate of the maximum potential amount of future payments to be made under these guarantees, as the triggering events are not subject to predictability and there is little or no history of claims against the Company under such arrangements. With respect to certain of the aforementioned guarantees, such as indemnifications of landlords against third-party claims for the use of real estate property leased by the Company, the Company maintains insurance coverage that mitigates any potential payments to be made.