UK Travel Site Ebookers Cuts Staff

UK online travel company Ebookers.com (Nasdaq: EBKR) said Wednesday it will cut between 10 and 20 percent of its 700-person workforce in order to cut costs and deal with reduced demand for travel services following the September 11th terrorist attacks on the United States .

The news comes a day after U.S. travel e-tailer Priceline.com (Nasdaq: PCLN) said its quarterly results would be hurt less than initially thought by the attacks. Priceline said revenue should come in at the high end of itsinitially lowered range, as business appeared to be picking up.

Priceline and its rivals Expedia (Nasdaq: EXPE) and Travelocity (Nasdaq: TVLY) all lowered their outlooks for quarterly revenue after the tragedy, though they said they did expect demand to improve from immediate post-attack levels.

European Focus

Unlike those companies, Ebookers sells its products only to European consumers, and deals mainly with leisure travelers. On September 19th, the company issued a statement saying it had 650 cancellations, mainly involving travel to the United States, in the week following the attacks.

On Thursday, Ebookers said it is “reviewing every aspect of its cost structure,” including supplier contracts and fixed costs, to ensure that it “remains competitive and flexible in the current travel environment.” The company, which operates in 11 countries, did not say where the job cuts would fall.

Smaller Loss

While the attacks are having a “substantial short-term impact” on sales, Ebookers said its loss for the third quarter ending September 30th will be “much lower” than the 5.68 million pounds (US$8.08 million) seen in the second quarter, and should be the best since the company went public in 1999.

Ebookers, which previously said it expects to reach cash-flow profitability in the fourth quarter of this year or the first quarter of 2002, plans to report results on October 29th.

Remaining Flexible

“There are strong indications within our business that consumer interest is gradually returning towards normal levels,” said Ebookers chief executive officer Dinesh Dhamija. “However, we are taking decisive measures to ensurethat we have the cost structure suitable for slower growth of demand, andyet the flexibility to take advantage of both the complete return of demandand other market opportunities that this environment presents.”

Before September 11th, online travel was one of the fastest growing markets in the e-commerce sector. According to Jupiter Media Metrix, the number of Europeans turning to the Web for travel information and reservations rose byalmost 4 million between November andApril.

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