UK Travel Site Records Operating Profit, $5.5M Loss

London-based travel site Ebookers.com (Nasdaq: EBKR) said Monday it has recorded its first-ever operating profit, a milestone achieved six months ahead of schedule despite the slowdown in business following the September 11th terrorist attacks.

Ebookers said the first 10 days of September were "the strongest online in Ebookers' trading history." During the last three weeks of the month, however, sales fell to 75 percent of those levels.

The company added that the operating profit of about US$290,000 came two quarters earlier than previously predicted. With one-time charges included, the travel site lost about $5.5 million for the quarter ended September 30th.

Hard Times

Earlier this month, Ebookers announced it would cut up to 20 percent of its workforce and move customer service and back-office operations to India in order to save costs.

"We know how to manage costs and are prepared to take strong measures to do so," said chief executive officer Dinesh Dhamija, who said that members of Ebookers management had steered travel companies through earlier crises, including the 1990-91 Gulf War.

Profit Temporary

Ebookers said the profits will likely be replaced by a loss in the fourth quarter, as expenses rise to establish a back-office presence in India and bookings fall during a traditionally slow period for the company.

Travel sites have been among the first within e-commerce to achieve profitability as a group. Earlier this year, Travelocity (Nasdaq: TVLY) and Expedia (Nasdaq: EXPE) recorded pro forma profits within a few weeks of each other.

In the recent quarter, Travelocity reported its largest quarterly profit to date, US$4.9 million, despite a decline in revenue attributed to the September 11th attacks.

Travel Woes

Traffic to Internet travel firms has fluctuated noticably in the aftermath of the attacks.

Ebookers said online bookings had reached 89 percent of early September levels in early October, only to drop again with the start of U.S. military attacks on Afghanistan.

Activity rebounded within a week, Ebookers said, and again stands at 85 percent of normal levels.

"Though demand has shown a positive and encouraging trend in recent weeks, due to current uncertainty it would be difficult to give accurate forecasts," said chief financial officer Navneet Bali.

Cutting Out Web Firms

Last week, following the lead of other airlines, Continental Airlines said it would no longer pay commissions on U.S. airfares sold on several U.S.-based travel Web sites.

"Recent withdrawal of commission by Continental to Internet travel agents does not affect Ebookers," Dhamija said.