Expedia Group raised $3.2 billion in debt and equity, named a longtime board member as its new CEO, announced additional cutbacks including employee furloughs and executive salary reductions, and released preliminary financial results showing that gross bookings have fallen as much as 43% as COVID-19 torpedoes the travel market.
The complex series of moves attempts to position the Seattle-based online travel giant to weather a period of unprecedented turmoil following a management shakeup last winter and the rise of the global pandemic over the past two months.
“We have one mandate – to conserve cash, survive, and use this time to reconstruct a stronger enterprise to serve the future of travel,” said Barry Diller, the Expedia Group chairman, in a statement released by the company Thursday morning. “We are unable to make any predictions as to when travel will rebound but we emphatically believe that it will, for….’if there’s life, there’s travel.’ ”
Peter Kern, the company’s new CEO, was previously Tribune Media CEO. He has been on the Expedia board since 2005, and has been overseeing the company’s operations with Diller since the ouster of former CEO Mark Okerstrom and CFO Alan Pickerill in December. Expedia named 11-year company veteran Eric Hart as its new chief financial officer.
Expedia shares are up more than 7 percent on the news.
Investment funds managed by Apollo Global Management and Silver Lake are making a combined $1.2 billion equity investment in Expedia Group through a private placement of preferred stock. Leaders from each investment firm, David Sambur of Apollo and Greg Mondre of Silver Lake, will join Expedia’s board.
In preliminary financial results released Thursday, Expedia said revenue for the March quarter has fallen by a range of 13% to 18%, to between $2.27 billion and $2.14 billion. Gross bookings, the total retail value of transactions conducted through its platform, fell by a range of 38% to 43%, to between $18.5 billion and $17 billion.
Expedia Group had $4.1 billion in cash and equivalents as of the end of March, after boosting the balance by borrowing $1.9 billion earlier in the month by accessing a revolving credit facility.
Diller, Kern and board members will forgo cash compensation for the rest of the year, and salaries for the company’s senior leadership team will be cut by 25%, the company said.
Expedia also plans “furloughs and reduced work week programs for select volume-based teams with limited work right now.” The company did not disclose a specific number of employees to be impacted. Expedia previously cut 3,000 jobs, including 500 at its new Seattle headquarters, in a cost-cutting move in February.
The company, which moved into the new waterfront location at the end of last year, said it is deferring certain capital expenditures, “including temporarily halting construction on most real estate projects, including the company’s headquarters,” and will consider further “opportunities to defer other capital expenditures that are not critical to our operations.”
Expedia Group includes brands and sites such as Vrbo, Travelocity, Orbitz, HomeAway and many others, in addition to the flagship Expedia.com.
Diller, the former Paramount Pictures chairman, started the Fox television network and USA Broadcasting. He oversees a wide range of online brands as chairman of the IAC media and internet company. Diller?made his first investment in Expedia in 2001 and remains its chairman.