GLG News by Transportation Software Experts

Chicke FitzgeraldChief Executive OfficerSOLUTIONZ HOLDINGS

Is the travel pie still growing? Where are the GDS companies in non-air travel planning?

October 12, 2007

Analysis of:LeisureLogix Takes Back the Road with Its Personalized Road Trip Planning and Booking Tool | www.forbes.com

The GDS industry, which earns its money primarily from the travel agency community (both online and offline) booking airline tickets, has been said to be totally commoditized and destined for decline.  In 2005 (the last year that all reported their earlings publicly), globally the GDSs processed 1.3b bookings and earned $8.7b in Gross Revenues and yielded $774.1m in EBITDA collectively. The interesting statistic behind all of this is that out of the total US Travel market, which in the same year yielded 1.4b trips, of those trips, less than 10% of them were by air.  The balance of travel was by car, motorcycle, RV, train or bus.  Yet, the GDS companies do not have a product that addresses the drive market. For 2007 the Travel Industry Association reports that US spending on travel was $733.9b.  Of that, just 35% was sold electronically (which includes travel agencies and online agents). 

John CoatesPresident and Chief Executive OfficerThe Fennimore Group

Ship Order Secrecy Shifts Forecasting from Capacity to Performance

October 8, 2007

Analysis of:Ship order secrecy could tip supply and demand balance, says analyst | www.compairdata.com

Facing increased barriers to accessing new vessel building data, perhaps the maritime industry has awakened to the reality of their own achilles heal: why deliberately contribute to the ease of collecting data on global TEU operating capacity? Historically, new capacity implied reduced operating costs for the carrier, which strengthened the shippers' argument for flat or falling rates during contract negotiations. With more of the new capacities revealed closer to maiden voyage, advance planning in rate negotiations will have a bit smaller universe of factors to consider, something that could begin a potential shift away from traditional negotiation strategies on both sides of the table.

John CoatesPresident and Chief Executive OfficerThe Fennimore Group

GM Tackles Strategy in Wake of Souring Commodities

October 8, 2007

Analysis of:GM looks to substitute materials to reduce costs: Purchasing VP calls price increases "scary" and outlines upcoming plans | www.purchasing.com

To say that GM sees the next horizon of cost savings within commodity substitution only paints a narrow view of the larger issue facing GM, Ford and Chrysler. North American automobile marketplace success dictates the need for innovative products with styling and performance demanded by its customers. Forward reaching innovation of established and new components / composites, engineered for safety and reliability, are just one step needed for these 3 to survive, and is good for the global industry at large.

John CoatesPresident and Chief Executive OfficerThe Fennimore Group

Innovation vs. Rationalization: What Keeps Automotive Companies Rolling

October 4, 2007

Analysis of:Mazda develops catalyst to slash precious metal use | uk.reuters.com

Japan's Mazda Motor Corp announcement of reducing the use of palladium and platinum by 70-90% in their new single-nanotechnology automobile catalyst is proof that with rising prices comes innovation, that embracing change is good for the company and good for the consumer, and that Mazda may, in fact, have a better idea, something that has Ford and the rest of the automotive industry thinking. 

Chicke FitzgeraldChief Executive OfficerSOLUTIONZ HOLDINGS

What is the real value of mapping and content aggregation players?

October 1, 2007

Analysis of:Nokia to buy Navteq for $8.1b, Take on TomTom | www.bloomberg.com

In July of this year TomTom acquired TeleAtlas for $29.39 per share or $2.7b USD (28x EBITDA).  Today, Nokia paid $78 USD per share or $8.1b for Navteq (35.7x EBITDA). What value can they both now extract?   With mapping services like GoogleMaps, Mapquest, Yahoo!Maps and even AAA's TripTik available via web enabled phones of all brands, what kind of differentiation is possible for Nokia in making this move.  Who is the real competition and what is the size of the pie that they are all after. Like any acquisition, the proof will be in the integration post transaction and the plans to make their tools ubiquitous.   The other challenge is to tap into the 88% of all Americans (and untold international users of Nokia's platforms) that use a car for the $1 trillion in leisure travel spending annually.  Less than $100b of this spending in the US is currently done by traditional online travel sites, such as Orbitz, Expedia and Travelocity. 

Chicke FitzgeraldChief Executive OfficerSOLUTIONZ HOLDINGS

Is content king, or is it relevant content that matters?

October 1, 2007

Analysis of:BBC Acquires Lonely Planet | www.bbc.co.uk

BBC Worldwide bought Lonely Planet in a deal that insiders value at over $203m.  The question is whether content alone is enough to propel BBC Worldwide into the forefront of the $2.8 trillion global leisure travel market? Founders, Maureen and Tony Wheeler, will keep a 25% stake and presumably have been given a reason to stay around long enough to help BBC Worldwide figure out how to integrate it into their media empire.   Their take from the sale is reportedly  $143m.  This is the BBCs first major foray into the travel industry, but interestingly enough, they see themselves as just being in the content business, which could sell them short on monetizing the investment.  The deal will help the BBC become "one of the world's leading content businesses," BBC Worldwide Chief Executive John Smith said. The broadcaster also aims to grow online brands and to increase its operations in Australia and North America, Smith said.

John CoatesPresident and Chief Executive OfficerThe Fennimore Group

What's NOT to expect within the 2007 Heavy Duty Truck Market

May 29, 2007

Analysis of:More Layoffs at N.C. Freightliner Plant | biz.yahoo.com

The impact of clean air initiatives has landed in the laps of its participants. The old adage of "no pain, no gain" is an unfortunate reminder that any change intended for a greater good will generate short term consequences. In this case, 2006 Class 8 purchases reflected more of advance buys normally aggregated over several years versus scheduled replacements, resulting in record sales for less environmentally friendly engines with purportedly better fuel mileage than the cleaner burning 2007 models mandated by federal law. The results: look to '07 Class 8 new truck sales to number in the 160,000 unit range compared to last years nearly 290,000 units. This doesn't bode well for production numbers for DC's Freightliner; Paccar's Kenworth, Peterbilt, and Western Star; Navistar's International; or Volvo's Mack and Renault badges. But to offset this real "pain" is the promise of improved fuel economy, lighter truck cab and frame designs, and the prospect of breathing a bit easier.

Chicke FitzgeraldChief Executive OfficerSOLUTIONZ HOLDINGS

Iberia offer by TPG - Back door to Amadeus???

April 13, 2007

Analysis of:Iberia board to study TPG Capital offer | www.breakingtravelnews.com

Iberia is one of the owners of Amadeus, currently the #1 Global Distribution System in the world.  TPG most recently purchased Sabre, the #1 Global Distribution System in the largest GDS market in the world, the US.

TPG also has an interest, through its venture arm, in G2Switchworks, one of the early GDS New Entrants (otherwise known as GNEs). 

So could this be a back door move to buy a share in Amadeus, in order to merge Amadeus, G2 and Sabre?d

Time will tell.

Chicke FitzgeraldChief Executive OfficerSOLUTIONZ HOLDINGS

Private Equity now dominates ownership of Global Travel Distribution companies

March 30, 2007

Analysis of:Silver Lake and TPGN Complete Acquisition of Sabre Holdings | news.morningstar.com

All four GDS companies are now operating on a similar playing field, all owned by private equity companies.

Cost cutting and surfacing operating efficiencies is generally the order of the day for the companies purchased by private equity firms. 

The industry is watching with a careful eye to see the impact of TPG and Silver Lake's purchase of the Sabre Group.

Chicke FitzgeraldChief Executive OfficerSOLUTIONZ HOLDINGS

GDS - and then there were three.......Travelport and Worldspan to merge

December 7, 2006

Analysis of:Travelport Ltd. and Worldspan, L.P. to Merge to Create Leading Travel Solutions Company | www.prnewswire.com

On the B2B side, this will make the combined entity the #1 player in the global GDS space, based on both revenues and billable bookings, the traditional measure of success in the GDS world.  Once the merger is approved by regulatory authorities, the combined entity will have 63,000 travel agency locations and will service over 750 travel suppliers.

When the merger is final, it will put Sabre in the #2 spot in the US for the first time in its nearly 30 year company history and will knock Amadeus out of its #1 global spot.

Travelport also owns Gullivers Travel, Orbitz, eBookers, Trust/Wizcom, aiRes and Cheaptickets and provides IT services to United Airlines.  Worldspan powers Expedia, Priceline and Orbitz and provides airline IT services to Northwest and Delta.

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