We knew it was coming, it wasn’t "if" but "when". Priceline announced yesterday that although sales were good, the future looks rough. High fuel costs, a slowing economy, low occupancy, and general airline douchebaggery will lead to a challenging year ahead. Here’s what CEO Jeffrey Boyd actually said
"Economic uncertainty and high fuel prices are affecting the broad travel market, and significant airline capacity reductions in the fall will also have a negative impact," he said in a statement.
Priceline has been issuing press releases all year saying how strong the foreign travel business has been but neglected to mention in any of the releases how miserable the domestic travel business is. Unfortunately for Priceline the foreign travel business is showing signs of slowing as well, although they told us that the sales were "artificially soft" due to the European Cup distracting travelers and Easter falling earlier. They did admit is may also be because of a weak economic environment. Early Easter, weak economy, what’s the difference? The hardest hit division was the rental car business. With everyone downsizing their fleet the rental car business seems dead in the water. On the positive side, Priceline truly does seem to be capturing a sold market share in the European and Asian market, markets that have tremendous growth ability. Despite the slower than expected growth, it was still 80% growth, not too shabby. The market reacted harshly to the news and sent the stock down $18 or roughly 15% in the after hours market.