EXHIBIT 99.1
CHEAP TICKETS ANNOUNCES PRELIMINARY SECOND QUARTER RESULTS
Lowers Previous Guidance, Citing Technology, Call Center and Market Factors
HONOLULU (June 25, 2001) - Cheap Tickets, Inc. (Nasdaq: CTIX) today announced
that it expects to report revenue and earnings per share for the second quarter,
ending June 30, 2001, below current expectations due to a variety of factors
which have adversely affected the company's estimated operating results.
Cheap Tickets expects total gross bookings for the second quarter will be
in the range of $235 million to $240 million, which is approximately 25 percent
higher than the second quarter of 2000. The company currently expects revenue
in the second quarter 2001 will be between $27.5 million and $29 million, and
net income for the quarter will be between $1.1 million and $1.3 million, or
$.04 to $.05 per share, compared to consensus estimates of between $0.21 and
$0.22.
Although quarterly gross bookings increased in line with projections, total
revenue did not grow at the same rate due primarily to a lower-than-expected
percentage of non-published ticket sales, which typically contribute more to the
bottom line than published fares, due primarily to technology-related problems
and competitive published-fare sales during the quarter.
Operating expenses for the second quarter of 2001 are expected to be in
line with expectations, between $25 million and $26 million.
"Our marketing initiatives have been successful in generating consumer
interest in Cheap Tickets; however, a number of factors both within and beyond
our control have affected our ability to convert these added inquiries to
sales," said Sam E. Galeotos, president and CEO of Cheap Tickets, Inc. "Despite
lower-than-expected performance, the second quarter will be our tenth profitable
consecutive quarter and we're working diligently to address the sales conversion
issues to harness the company's growth potential during the third quarter and
balance of the year."
The company attributes a significant portion of the shortfall in estimated
results to technology-related problems, which were responsible for excessive
booking-engine errors and also prevented a significant number of competitive
non-published fares from being displayed to
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customers, contributing to the reduction in non-published fare bookings during
the quarter. The company believes these technical problems, the effects of which
became apparent late in the quarter, reduced the number of completed online
transactions despite a substantial increase in Web site traffic. The company
believes these problems were caused by technical interface failures between its
current booking engine and reservation system, both of which are owned and
managed by an outside vendor. Cheap Tickets management is actively working with
its third-party booking vendor to correct the problem.
Cheap Tickets also attributes part of its second quarter shortfall to the
delayed launch of its upgraded Web site, which was expected to improve sales
conversion during the quarter with the introduction of e-ticketing, enhanced
price-finding capabilities and improved customer-usability features. The
company now expects the new site will launch in the third quarter of this year.
Cheap Tickets also experienced increased customer call volume to its 24/7
call centers during the quarter, which exceeded its capacity due primarily to
higher-than-expected staff attrition in May, affecting call-handling ability
through June. Although call-center gross bookings increased over the year-ago
quarter, the capacity constraints resulted in a higher level of abandoned calls,
which resulted in missed sales opportunities. To help accommodate the increased
call volume, the company has added staff at its four existing call centers, and
expects the July opening of its newest call center in Tampa to immediately
improve its call-handling and booking abilities.
"We're encouraged with the added interest in Cheap Tickets, and remain
focused on correcting the issues within our control to more effectively convert
inquiries into sales," said Galeotos. "This is particularly important as
increased competition in the online travel space has encouraged value-minded
consumers to shop around for the best deals as they consider travel plans.
"For 15 years, we've been committed to making leisure travel affordable,
and will continue to be a leading provider of discount leisure travel as we
implement many strategic initiatives in the coming quarter, including the
addition of the Tampa call center, launch of the new Web site, continued
execution of our successful marketing campaign, development of new and existing
supplier relationships - such as the strategic alliance with Delta Air Lines we
announced last month - and continued efforts to manage costs."
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# # #
Corporate Conference Call
Cheap Tickets will host a conference call on June 25, 2001 at 5:30 pm
Eastern time to discuss the contents of this press release. While the question-
and-answer session of the call will be limited to institutional analysts [and
investors], retail brokers, individual investors, and members of the press are
invited to listen to the conference call. The conference call can be accessed
by dialing 800-774-8574 approximately 10 minutes prior to start time. A live
webcast of the call can also be accessed at http://www.Cheap Tickets.com in the
Investor Relations section and at http://www.mkr-group.com. In addition, a
replay of the call will be available following the conference call and can be
accessed through the company's Investor Relations Web site, or by calling 800-
633-8284, reservation number 19236463.
About Cheap Tickets
Cheap Tickets, Inc. (Nasdaq: CTIX), founded in 1986, is a leading seller of
discounted leisure travel products. In addition to offering a full range of
regular published airfares, Cheap Tickets gives consumers access to its
exclusive collection of more than one million unpublished airfares on more than
50 major airlines - one of the largest collections of discounted airfares in the
industry. Cheap Tickets' family of discounted travel products also includes
cruises, rental cars, and hotel accommodations. Consumers can conveniently book
travel through Cheap Tickets' web site at www.cheaptickets.com, 24/7 call
centers at 1-800-OKCHEAP, or retail travel stores. Cheap Tickets sells an
average of one ticket every 15 seconds.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995:
Statements in this press release regarding the business of Cheap Tickets,
Inc. which are not historical in fact are "forward-looking statements" that
involve risks and uncertainties. These forward-looking statements include
estimates of our operating results for the full quarter ending June 30, 2001 and
information about our new initiatives, namely the expected launch of our new Web
site and opening of our Tampa call center. Although Cheap Tickets believes that
the expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
Actual results may differ materially due to factors including, but not limited
to: our ability to estimate operating results for the full quarter ending June
30, 2001, which may be different than anticipated; our ability to complete the
necessary software and technical upgrades to enable us to launch our new Web
site in the third quarter; and our ability to open our Tampa call center in July
2001 and successfully integrate the new call center and personnel into our call
center operations. Should one or more of these risks or uncertainties
materialize, or should any of the underlying assumptions prove incorrect, actual
results of current or future operations may vary materially from those
anticipated, estimated, or projected. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of their
dates. For a discussion of other factors which could cause actual results to
differ materially from those contained in the forward-looking statements, see
information contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 2000 and other reports the Company files from time to time
with the Securities and Exchange Commission.
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