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Cheap Tickets’
profits decline
33.8 percent

Increased bookings and
revenues couldn't offset more
ad spending and other expenses

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By Russ Lynch
Star-Bulletin

Cheap Tickets Inc. today reported a profit of $534,000, or 2 cents a share, for the fourth quarter, down 33.8 percent from a profit of $807,000, or 3 cents a share, in the same period of 1999.

The Honolulu-based seller of discount travel said its gross bookings and revenues were up for the quarter, but it increased its spending on advertising and other expenses rose as it improved its technology and expanded its work force.

Fourth-quarter revenues of $18.4 million were up 16 percent from $15.8 million in the 1999 quarter. Cheap Tickets said it has changed the way it counts its revenues, a voluntary shift in line with a recent change in accounting standards for online companies.

Instead of reporting all the money it receives from the tickets it sells at nonpublished air fares, the company now reports only the part it keeps after paying for the seats. It also reports only commissions it receives on tickets for published fares, not the gross amount of the retail value.

Revenues for 1999 were restated to reflect the change. It cut its reported revenues by about 75 percent, the company said.

Before the company reported its earnings late this morning, Cheap Tickets' stock closed today at $11.52, down 3 cents from yesterday. The stock is down about 36 percent from a year ago. In a separate announcement, Cheap Tickets said it has appointed Samuel D. Horgan as chief financial officer, to replace Dale K. Jorgensen, who retires this month. Horgan was a partner at Tatum CFO Partners in Atlanta, providing management support for public and private companies.

Horgan is also a veteran of Worldspan Ltd. in Atalanta, a global computer-reservations system. That is where Sam E. Galeotos, Cheap Tickets president and chief executive officer, worked before joining the company in late 1999.

For all of 2000, Cheap Tickets earned a record $12 million, up 57.9 percent from $7.6 million in 1999 and equal to 51 cents a share compared with 31 cents a share in 1999. Full-year revenues of $98.4 million were up 33 percent from $74 million in 1999, also reported according to the new standard.

Founded in 1986, Cheap Tickets has arrangements with dozens of airlines to sell seats at "nonpublished" fares, low prices that the airlines are willing to accept to sell seats still unsold as flight times near.

It also acts as a normal travel agent, selling published fares and receiving commissions, and has recently expanded into booking cruises, hotel rooms, rental cars and other travel services.

Cheap Tickets does more than half of its sales through its Web site, www.cheaptickets.com, but also books travel through telephone call centers and ticket offices across the country.