Sabre, Yahoo expand travel alliance Web

SOUTHLAKE: Computerized reservations company Sabre Holdings Corp. said on

Tuesday that its Travelocity.com unit reached a deal to remain the exclusive

air, car and hotel booking engine on Yahoo Inc.'s travel Web site.

The new deal expands marketing agreements with Yahoo and will slightly

decrease Sabre's earnings in the second half of the year, but Sabre expects to

meet previous earnings forecasts for the full year, the company said.

Travelocity and Yahoo will share transaction revenue from air, car and hotel

bookings generated on the site, the companies said in a joint statement. Sabre

bought the part of Travelocity it did not already own in April. "The deal

near-term is additive to Yahoo and slightly dilutive to Sabre," Legg Mason

analyst Thomas Underwood said. "Long-term, however, the deal probably helps

Sabre significantly by assuring the company of large distribution platforms

between AOL and Yahoo."

Terms were not disclosed on the multiyear agreement, only that it is more

extensive than the last one, Underwood said.

The agreement also highlights consolidation bids within the online travel

sector that included Sabre's Travelocity interest and USA Interactive Inc.'s

$4.5 billion offer on Monday to buy publicly traded subsidiaries Expedia Inc.,

Ticketmaster and Hotels.com.

Yahoo has redesigned its travel front page to make it easier to use and added

new colors. Travelocity and Yahoo also plan to develop a joint marketing

program. Sabre said it plans to work with another Yahoo division to develop

broadcast and business communications tools to support employees and travel

agents connected to the Sabre system. Those systems would be announced later,

Sabre said.

Sabre said it expects 2002 earnings-per-share of $1.93 to $2.03 before

special items. According to Thomson First Call, analysts expect Sabre to earn $2

per share, with estimates ranging from $1.94 to $2.07, based on a survey of

eight firms.

The expectation for slightly lower second-half earnings stems from

earlier-than-expected renewal of the Yahoo contract, Sabre said in a regulatory

filing with the US Securities and Exchange Commission. However, the multiyear

deal is expected to add to Sabre earnings overall.