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Priceline links with airline
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July 19, 1999: 2:05 p.m. ET
Taking 3Q charge for Continental ticket deal, posts less-than-forecast 2Q loss
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NEW YORK (CNNfn) - Priceline.com, the name-your-price Internet sales service, Monday announced a pact with Continental Airlines that will boost domestic airline ticket offerings by about 20 percent -- and posted a second-quarter loss that wasn't as large as forecast.
Under the deal, Continental (CAL) will receive warrants to buy 1 million shares of Priceline stock, representing 0.5 percent of the outstanding shares.
Priceline (PCLN) will take a one-time, non-cash charge of about $90 million in the third quarter in connection with the deal.
"Continental will enable us to add seats to existing routes, expand to offer new routes, and fill more of our growing ticket demand," CEO Richard S. Braddock said, noting that the company now sells about 40,000 tickets a week.
Priceline had a net loss of $14.3 million, or 10 cents per diluted share, in the second quarter, compared with a net loss of $14 million, or 17 cents per share, in the 1998 period. There were nearly twice as many shares outstanding in the 1999 period.
Analysts polled by the research firm First Call Corp. had anticipated a loss of 12 cents per share for the quarter.
Revenue totaled $111.6 million, nearly 16 times the $7 million of a year earlier.
For the first six months of 1999, the Stamford, Conn.-based company lost $31.4 million, or 29 cents per diluted share, compared with a loss of $18.7 million, or 27 cents, in the year-earlier period. Revenue totaled $161 million, a 23-fold increase from a year earlier.
Separately, the company said it intends to file a registration statement later this week covering the sale of $250 million of convertible subordinated notes and 6 million shares of common stock.
Priceline plans to use the proceeds of the offerings to invest in further growth of its product offerings.
Besides airline tickets, Priceline sells hotel rooms on a name-your-price basis. The company also runs an online personal finance service offering home mortgages, refinancing and home equity loans. It has been in operation for only 15 months.
Shares of Priceline.com rose 3-11/32 to 100-3/4 in recent trading. Continental climbed 2-7/16 to 41.
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Priceline.com
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