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Thursday, February 1, 2001

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Cheap Tickets’
boss Hartley drops
CEO title

Founder Michael Hartley
gives up the post and Sam
Galeotos is elevated

By Russ Lynch

Sam E. Galeotos, who joined Cheap Tickets Inc. as president and chief operating officer in October 1999, today was named chief executive officer.

Michael Hartley, who founded the Honolulu-based discount travel seller in 1986, relinquished the CEO post and became executive chairman, a post he says will enable him to work closely with Galeotos on long-term strategy.

Hartley and his wife Sandra hold just under half the company's stock and Galeotos said Hartley will remain active with the company.

Galeotos, 42, an international airline computer reservations expert, said he wants to make the company North America's leading provider of discount leisure travel. To do that, he said, Cheap Tickets must broaden the product lines it sells and expand its marketing. He noted that the company has the money to do it.

"Currently, the company probably has over $140 million of cash resources and very little debt," Galeotos said.

"Historically, the company has primarily sold just airline tickets. What we've done over the past year is aggressively move to put systems in place, both in our call centers and on our Web site, to offer other travel services," such as rental cars and hotel bookings, he said.

Customers who buy plane tickets either at www.cheaptickets. com or at its call centers or retail offices across the country also need to book hotels and other services, he said. "They have to leave us and go make that purchase somewhere else," when they would just as soon book everything in one place, Galeotos said.

"Cheap Tickets, from my standpoint, is very much an emerging organization. Over the past few years, the company has launched itself into the top tier of travel providers in North America.

"What we intend to do now is expand our product line and ensure a position for the company in what is a very competitive marketplace," Galeotos said.

Analyst Carson Block, with WAB Capital in Los Angeles, said today that the move makes sense because Hartley has not been heavily involved in the day-to-day operations lately.

He said one reason Cheap Tickets' stock has not performed as well as its profits might suggest it should is that the company hasn't done a good job of forecasting its financial performance.

"Their biggest issue is one of credibility with the street," he said. "It's a tough business to forecast, but I think they didn't do a great job with the numbers before," he said.

He said Cheap Tickets now has the capital resources to move ahead, has greatly increased its product lines, and has been making management changes that should let it move solidly ahead.

Cheap Tickets, which trades on the Nasdaq exchange, was unchanged today at $11.50. The stock was battered last year, dropping about 29 percent. However, it recovered somewhat in January, gaining about 17 percent.

The company is scheduled to announced its fourth-quarter earnings Wednesday. Its profits have soared lately and for the third quarter of last year the company had a profit of $4.3 million, or 18 cents a share, up 66 percent from a net of $2.6 million, or 11 cents a share, in the year-earlier period. Third-quarter revenues were $121.4 million, up 1.3 percent from $110.2 million in the third quarter of 1999.

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