• by Paul Gough , November 30, 2003

As Google ponders its future as a publicly traded company, Orbitz is putting the finishing touches on its initial public offering.

An initial public offering is a company's first sale of stock to the public. It's not only the everyday investor's first crack at owning a stake in a company that was previously privately held--an IPO is also a way for a company to raise capital and for existing private shareholders, in this case the airlines that founded it, to raise money.

Orbitz said last week that there would be 11.67 million shares of class A common stock available--4 million offered by the online travel company and the rest by current stockholders. Each share would go for between $22 and $24 per share on the Nasdaq exchange.

In a filing last week with the Securities and Exchange Commission, Orbitz said it estimated the IPO would raise up to $303.6 million, although much of this sum will not be net proceeds for the company. It expects to use its proceeds for working capital. The filing does not disclose when the IPO would begin.

It's the third largest online travel site, after Interactive's Expedia and Sabre Holdings Corp.'s Travelocity, with comScore Media Metrix estimating more than 12 million unique visitors in October. There have been 22 million travel transactions since the company began in 2000, and in the most recent quarter, Orbitz logged $883 million in gross travel bookings. Revenues were $175.5 million in 2002 and $172.1 million for the first nine months of 2003.

Orbitz is partially owned by Continental Airlines, Delta Air Lines, Northwest Airlines, United Airlines, and American Airlines. But that doesn't mean that its success is guaranteed, as 17 pages of "risk factors" can attest. In just under four years of operation, Orbitz has lost significant amounts of money--$42.9 million in 2000, $18.9 million in 2002, and $2 million during the first nine months of 2003.