Priceline.com, the name-your-price service pioneer, announced today that it has dramatically increased its access to the U.S. air travel ticket inventory with the addition of United Airlines, American Airlines and US Airways to its list of partners.
The three major airlines are joining current partners Delta, Continental, Northwest, TWA and America West, giving the Stamford, Connecticut-based priceline access to nearly 90 percent of the U.S. market.
The agreements add immediate value to the company’s most lucrative price-matching sector. Priceline sells some 50,000 airline tickets a week, and claims to now be able to double that number.
“We view this addition of three major domestic airlines as an extremely strong endorsement of the value of priceline.com’s system to our airline partners, both as incremental revenue producer and a long-term strategic equity asset,” said priceline CEO Richard Braddock. “The Internet will continue to be the travel industry’s most competitive sector, but priceline.com has clearly carved out a unique franchise for itself.”
Match This Prognosis
Braddock is not the only priceline.com executive who is waving the company’s banner for all to see. President Richard Schulman said Tuesday that he expects the company to reach break even by 2001 and has expressed confidence that priceline will deliver revenues of $750 to $800 million (US$) for 2000. Last month, the company announced third-quarter revenues of $152 million and a net loss of $11.9 million.
Today’s agreement caps a hectic week for priceline.com. Last week, the company announced a deal with AT&T to offer long distance phone service, and days later announced that it was teaming up with the Ford Motor Co. to offer price-matching for the auto giant’s cars on its Web site.
The company offers price matching on airline tickets, hotel rooms, new cars, mortgages and has a licensing agreement to offer the service for groceries in the New York/Philadelphia metropolitan area. Priceline also intends to offer car rental service soon, and Schulman said the company is considering insurance products and credit cards.
Priceline also said that it will take a $1.1 billion charge for the fourth quarter to accommodate the addition of the airlines. The company said it has restructured its warrant agreements with its partner airlines to give all of them an equity stake that more closely reflects their market share.
Delta Airlines agreed to restructure its equity position, the company said, selling $125 million in shares to Braddock and priceline.com founder and Chairman Jay Walker.
The airline also agreed to exchange six million shares of common stock for six million shares of newly-issued convertible preferred stock. The arrangement will give Delta some 8.5 million shares of priceline.com common stock.