ROSEMONT, Ill.—Galileo International, Inc. (NYSE: GLC - news), today reported that third quarter economic earnings per share grew 4.4 percent to $0.72 per diluted share, compared to economic earnings of $0.69 per diluted share for the same quarter last year.(A) Reported earnings in the third quarter were $38.8 million, or $0.43 per diluted share, compared to $54.2 million, or $0.58 per diluted share last year. Total revenue grew 5.5 percent to $405.9 million for the quarter. Galileo’s operating margin remained strong at 20.7 percent for the quarter. Operating income declined 13.0 percent to $84.0 million, largely due to the incremental intangible amortization expense resulting from the TRIP.com acquisition earlier this year. These results are before a special charge taken in the quarter ($1.7 million, pre-tax) related to the integration of Galileo’s distribution company in the United Kingdom (Galileo UK), which was also recently acquired.

“Our continued focus on cost control and business efficiency has enabled us to deliver another quarter of growth in economic earnings per share,” said Cheryl Ballenger, executive vice president and chief financial officer. “We continue to be the most efficiently run CRS in the industry and these results are a testament to our commitment to delivering value to our shareholders.”

Global Distribution Revenues Increase
For the quarter ended September 30, 2000, total revenues were $405.9 million, a 5.5 percent increase year over year. Electronic global distribution services (EGDS) revenues increased 5.0 percent to $384.9 million from $366.5 million in the same period last year. EGDS revenue growth was driven mainly by price increases and other yield improvements, as well as revenue from TRIP.com and Galileo UK. Information services revenues grew 15.3 percent to $21.0 million for the quarter, reflecting an increase in revenue from providing fare quotation services to airlines and additional revenue from hosting, network and development services to a large airline customer.
Overall, global booking volumes fell 3.3 percent to 84.7 million compared to third quarter 1999, driven primarily by weak bookings in the U.S. Worldwide airline booking volumes were down 3.5 percent in the third quarter, while car, hotel and leisure bookings were 1.9 percent lower than the prior year.

International bookings grew 1.5 percent in the third quarter. This lower than expected growth is attributable to a change in airline behavior that resulted in an increased number of cancellations of waitlist and other non-ticketed bookings, primarily in Europe and the Middle East, which reduced the net billable segments in the quarter. The company intends to address the revenue impact of these actions with its 2001 pricing.* Bookings were also lower due to the impact of a threatened pilot strike in Canada and a reduction in capacity resulting from the Air Canada and Canadian Airlines merger.

The company continues to enjoy a strong market position outside the U.S., and experienced air bookings growth of nearly 10 percent in the Asia Pacific region, with double-digit growth in India, Japan, China and several other markets.

In the U.S. market, bookings declined 9.8 percent during the third quarter, primarily due to the increasing impact of a shift in bookings to Internet travel sites, the loss of the Preview Travel account, the impact of a slowdown in traffic at a major airline customer and the slight market share loss attributable to the transition to a new sales force in 1999. Galileo continued to strengthen its position in the traditional travel agency channel during the third quarter, as the company’s U.S. sales force renewed, expanded and won several distribution contracts.

“While we have won U.S. contracts representing over four million incremental annualized segments so far this year, the full impact of these wins has not yet been reflected in our results,” said Ballenger. “We expect to benefit from these additional bookings in 2001. In addition, we will continue to aggressively pursue travel agency conversions to Galileo’s Apollo® computer reservation system, and have significant opportunities in the pipeline.”*

The company also took a major step toward strengthening its position in the important Internet distribution channel by registering nearly 400 new travel agencies on its TravelGalileo.com agency portal, and by introducing an innovative and efficient marketing program designed to help agencies drive traffic to the TravelGalileo.com site. The company believes this unique site, which brings the experience and support of professional travel agents together with the convenience and flexibility of the Internet, offers a tremendous opportunity to greatly expand its Internet presence.*
——-