ITEM 1A.    RISK FACTORS

         You should carefully consider each of the following risks and all of the other information set forth in this Annual Report on Form 10-K. Based on the information currently known to us, we believe that the following information identifies the most significant risk factors affecting our company in each of these categories of risk. However, the risks and uncertainties our company faces are not limited to those described below. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. Past financial performance may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.

Risks Related to Our Business

Our revenue is derived from the travel industry and a prolonged or substantial decrease in travel volume, particularly air travel, as well as other industry trends, could adversely affect us.

        Our revenue is derived from the global travel industry. As a result, our revenue is directly related to the overall level of travel activity, particularly air travel volume, and is therefore significantly

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impacted by declines in, or disruptions to, travel in any region due to factors entirely outside of our control. Such factors include:

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global security issues, political instability, acts or threats of terrorism, hostilities or war and other political issues that could adversely affect air travel volume in our key regions;



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epidemics or pandemics, such as avian flu and Severe Acute Respiratory Syndrome ("SARS");



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natural disasters, such as hurricanes and earthquakes;



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general economic conditions, particularly to the extent that adverse conditions may cause a decline in travel volume, such as the current crisis in the global credit and financial markets which has caused significantly diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability;



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the financial condition of travel suppliers, including airlines and hotels, and the impact of any changes such as airline bankruptcies or consolidations on the cost and availability of air travel and hotel rooms;



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changes to laws and regulations governing the airline and travel industry and the adoption of new laws and regulations detrimental to operations, including environmental and tax laws and regulations;



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fuel price escalation;



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work stoppages or labor unrest at any of the major airlines or airports;



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increased airport security that could reduce the convenience of air travel;



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travelers' perception of the occurrence of travel related accidents, or of the scope, severity and timing of the other factors described above; and



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changes in occupancy and room rates achieved by hotels.

        If there is a prolonged substantial decrease in travel volume, particularly air travel volume, for these or any other reason, it would have an adverse impact on our business, financial condition and results of operations.

        We may also be adversely affected by shifting trends in the travel industry. For example, a significant portion of the revenue of our GTA business is attributable to the distribution of travel packages that combine accommodation, destination services and transportation through traditional wholesale and tour operators that serve both group and individual travelers. In certain markets, an increasing proportion of travel is shifting away from that method of organizing and booking travel towards more independent, unpackaged travel, where travelers book the individual components of their travel separately. To the extent our GTA business or other components of our business are unable to adapt to such shifting trends, our results of operations may be adversely affected.

The travel industry is highly competitive and we are subject to risks relating to competition that may adversely affect our performance.

        Our businesses operate in highly competitive industries. If we cannot compete effectively, we may lose share to our competitors, which may adversely affect our financial performance. Our continued success depends, to a large extent, upon our ability to compete effectively in industries that contain numerous competitors, some of which may have significantly greater financial, marketing, personnel and other resources than we have.

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GDS business

        GDSs have two different categories of customers, travel suppliers and travel agencies. We are, therefore, subject to the interrelated network effects arising out of the interaction between these customer groups. We need to offer competitive terms to travel suppliers to obtain sufficient travel content to allow us to provide a competitive offering to travel agencies to gain and maintain travel agency customers. If we are not able to attract large numbers of travel agency customers, our ability to obtain content from travel suppliers will be adversely affected.

        Our GDSs compete with other traditional GDSs such as Amadeus and Sabre, and regional participants such as Abacus, as well as with alternative intermediate distribution technologies. We also compete with direct distribution by travel suppliers, such as airlines, hotels and car rental companies, many of which distribute all or part of their inventory directly through their own supplier.com websites. Our GDSs also compete with new companies in the travel distribution industry that are developing distribution systems without the large technology investment and network costs of a traditional GDS.

        The IT services sector of the travel industry is highly fragmented. We compete with airlines that run applications in-house and multiple providers of IT services. Competition within the IT services industry is segmented by the type of service offering. For example, internal reservation and other system services competitors include Amadeus, Electronic Data Systems, Navitaire, Sabre and Unisys/SITA, as well as airlines that provide the services and support for their own internal reservation system services and also host external airlines.

GTA business

        The wholesale travel industry is highly fragmented, and GTA competes with regional and local wholesalers of accommodation, transportation, sightseeing and other travel-related products and services, global wholesalers of travel-related products and services such as Miki Travel Limited, Kuoni Group and Tourico Holidays, Inc., regional or specialist wholesalers of travel-related products and services, and global, regional and local on-line hotel retailers in EMEA, the Americas and APAC.

        Some of our competitors may be able to secure services and products from travel suppliers on more favorable terms than we can. In addition, the introduction of new technologies and the expansion of existing technologies may increase competitive pressures. The enhanced presence of on-line travel agencies, for example, is placing pressure on GTA's ability to secure allocations of hotel rooms. Increased competition may result in reduced operating margins, as well as loss of market share and brand recognition. We may not be able to compete successfully against current and future competitors and competitive pressures we face could have a material adverse effect on our business, financial condition or results of operations.

We may not be able to successfully integrate our operations with Worldspan, or attain the expected benefits of the acquisition of Worldspan.

        We acquired Worldspan in August 2007 and believe that this acquisition will enhance our future financial performance by capitalizing on natural operational synergies as well as complementary technology and geographic attributes. However, travel distribution industry is highly regulated and regulatory hurdles may deprive us of the anticipated financial benefits of the Worldspan acquisition.

        Moreover, the Worldspan acquisition presents challenges to management, including the integration of our administrative operations, systems and personnel with those of Worldspan. The Worldspan acquisition also poses other risks commonly associated with similar transactions, including unanticipated liabilities, unexpected costs and the diversion of management's attention to the integration of the operations of the combined companies. As part of the integration process, we recently completed the consolidation of our systems infrastructure and web and database servers for our GDS operations in Atlanta, which was a significant undertaking. Any level of integration that is not successfully achieved

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could have an adverse effect on our revenue, level of expenses and results of operations. We may also experience operational interruptions, the loss or corruption of data and the loss of key employees, suppliers and customers. As a result, notwithstanding our expectations, we may not realize the anticipated benefits or cost savings of the Worldspan acquisition.

We may not be able to achieve all of our expected cost savings from the Worldspan acquisition and our re-engineering efforts.

        We are benefiting, and expect to continue to benefit, from cost savings to be achieved as a result of the comprehensive reengineering program that commenced at the time of the Acquisition and from synergies to be achieved as a result of the Worldspan acquisition under the Worldspan integration program. In connection with the Worldspan acquisition, we have identified in excess of $150 million of potential annualized synergies from the Worldspan integration program. We also believe that certain other cost saving opportunities exist in connection with our re-engineering efforts. However, we may not be able to achieve our expected cost savings or identify any other cost savings opportunities, and any identified cost savings may not be achieved in a timely manner or unexpected costs may offset or outweigh any savings we do achieve. A variety of factors could cause us to fail to achieve the expected cost savings, including:

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delays or higher than expected costs in integrating our data center operations, products and applications;



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higher than expected severance costs related to staff reductions;



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higher than expected retention costs for employees that will be retained;



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delays in the anticipated timing of activities related to our cost savings plan;



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any negative impacts of integration on our business operations; and



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other unexpected costs associated with operating Worldspan.

        Because some of the measures will take time to implement, any cost savings we achieve will not immediately affect our financial results in the amounts presented. Our failure to achieve these expected annual cost savings could have a material adverse effect on our financial condition and results of operations.

We may not realize anticipated benefits from past and future acquisitions or have the ability to complete future acquisitions.

        We have pursued an active acquisition strategy as a means of strengthening our businesses and have sought to integrate acquisitions into our operations to achieve economies of scale. In August 2007, we completed the Worldspan acquisition, in August 2006, we completed the acquisition of the Travelport companies of Cendant and, in April 2005, the Travelport businesses of Cendant completed the acquisition of GTA. We have derived a significant portion of our recent growth in revenue and operating income from acquired businesses. The success of any future acquisition strategy, including joint ventures, will continue to depend upon our ability to find suitable opportunities on favorable terms and to finance and complete these transactions. In addition, upon completion of an acquisition, we may encounter difficulties related to the integration of the acquired business into our operations, departure of a significant number of employees, loss in value of acquired intangibles and diversion of management's attention as well as unanticipated problems or liabilities. If we cannot overcome these difficulties, our ability to realize anticipated cost savings and revenue growth from our acquisitions may be adversely affected.

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        In addition, acquisitions may not be accretive to our earnings, to the extent expected or at all, and may negatively impact our results of operations through, among other things, the incurrence of debt to finance an acquisition, non-cash write-offs of goodwill or intangibles or increased amortization expenses in connection with intangible assets. For example, for the period from January 1, 2006 to August 22, 2006, we recorded a $2,364 million pre-tax non-cash impairment charge, primarily relating to the difference between the price at which Travelport was sold to Blackstone and the historical carrying value of Travelport's net assets.

We rely upon information technology to operate our businesses and maintain our competitiveness, and any failure to adapt to technological developments or industry trends could harm our businesses.

        We depend upon the use of sophisticated information technologies and systems, including technologies and systems utilized for reservation systems, communications, procurement and administrative systems. As our operations grow in both size and scope, we continuously need to improve and upgrade our systems and infrastructure to offer an increasing number of customers and travel suppliers enhanced products, services, features and functionality, while maintaining the reliability and integrity of our systems and infrastructure. Our future success also depends on our ability to adapt to rapidly changing technologies in our industry, particularly the increasing use of Internet-based products and services, to change our services and infrastructure so they address evolving industry standards, and to improve the performance, features and reliability of our services in response to competitive service and product offerings and the evolving demands of the marketplace. For example, we believe that OctopusTravel is currently being outperformed in the market for a number of reasons, such as the lack of user-friendly features on the OctopusTravel website found on other competitors' sites and the lack of flexible pricing options, options which are available on competitor sites.

        It is possible that, if we are not able to maintain existing systems, obtain new technologies and systems, or replace or introduce new technologies and systems as quickly as our competitors or in a cost-effective manner, our business and operations could be materially adversely affected. Also, we may not achieve the benefits anticipated or required from any new technology or system, or be able to devote financial resources to new technologies and systems in the future.

System interruptions and slowdowns may cause us to lose customers or business opportunities or to incur liabilities.

        Our inability to maintain and improve our information technology systems and infrastructure may result in system interruptions and slowdowns. We have experienced system interruptions in the past. System interruptions and slow delivery times, unreliable service levels, prolonged or frequent service outages, or insufficient capacity may prevent us from efficiently providing services to our customers, which could result in us losing customers and revenue, or incurring liabilities. In addition to the risks from inadequate maintenance or upgrading, our information technologies and systems are vulnerable to damage or interruption from various causes, including:

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power losses, computer systems failure, Internet and telecommunications or data network failures, operator error, losses and corruption of data, and similar events;



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computer viruses, penetration by individuals seeking to disrupt operations or misappropriate information and other physical or electronic breaches of security;



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the failure of third party software, systems or services upon which we rely to maintain our own operations; and



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natural disasters, wars and acts of terrorism.

        We do not have backup systems for certain critical aspects of our operations, some systems are not fully redundant and our disaster recovery plan is limited and may not be sufficient in the event of a

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disaster. In addition, we may have inadequate insurance coverage or insurance limits to compensate for losses from a major interruption, and remediation may be costly and have a material adverse effect on our operating results and financial condition. Any extended interruption or degradation in our technologies or systems, or any substantial loss of data, could significantly curtail our ability to conduct our businesses and generate revenue.

Our GDS business primarily relies on a single data center to conduct its business.

        Our GDS business relies on computer infrastructure primarily housed in our data center near Atlanta, Georgia to conduct its business. In the event the operations of this data center suffer any significant interruptions or the GDS data center becomes significantly inoperable, such event would have a material adverse impact on our business and reputation and could result in a loss of customers. Although we have taken steps to strengthen physical security and add redundancy to this facility, our GDS data center could be exposed to damage or interruption from fire, natural disaster, power loss, war, acts of terrorism, plane crashes, telecommunications failure, computer malfunctions, unauthorized entry and computer viruses. The steps we have taken and currently are taking to prevent system failure may not be successful. Our selected use of disaster recovery systems may not allow us to fully recover from a system failure, and our property and business insurance may not be adequate to compensate us for all losses that may occur.

We are dependent upon software, equipment and services provided by third parties.

        In the operation of our business, we are dependent upon software, equipment and services provided to us or managed on our behalf by third parties. In the event that the performance of such software, equipment or services deteriorates or our arrangements with any of these third parties related to the provision or management of software, equipment or services are terminated, we may not be able to find alternative services, equipment or software on a timely basis or on commercially reasonable terms or be able to do so without significant cost. In such event, our businesses and our relationships with our customers may be adversely impacted. For example, during 2007, we experienced system outages arising from services that were provided by one of our key third party providers. In addition, certain agreements with vendors of our core GDS technology are subject to renewal within the next year, and there is no guarantee that we will be able to obtain renewals or new agreements on commercially reasonable terms or at all. The failure to obtain these arrangements may have a material adverse effect on our business, financial condition and/or results of operations.

We rely on third party national distribution companies to market our GDS services in certain regions.

        Our GDSs utilize third party, independently owned and managed national distribution companies ("NDCs") to market GDS products and distribute and provide GDS services in certain countries, including Austria, Greece, India, Jordan, Kuwait, Lebanon, Pakistan, Syria, Turkey and Yemen, as well as many other countries in Africa. In Asia, where many national carriers own one of our competitors, we often use local companies to act as our GDS distributor. In the Middle East, prior to the termination of our NDC agreement on December 31, 2008, we entered into new NDC relationships with third parties and established our own sales and marketing organizations in the United Arab Emirates, Saudi Arabia and Egypt.

        We rely on our NDCs and the manner in which they operate their business to develop and promote our global GDS business. Our top ten NDCs generated approximately $366 million, or approximately 17% of our revenue, for the year ended December 31, 2008. We pay each of our NDCs a commission relative to the number of segments booked in its region. The NDCs are independent business operators, are not our employees, and we do not exercise control over their day-to-day operations. We provide training and support to the NDCs, but the success of their marketing efforts and the quality of the services they provide is beyond our control. If they do not meet our standards

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for distribution, our image and reputation may suffer materially and sales in those regions could decline significantly. In addition, any interruption in these third party services or deterioration in their performance could have a material adverse effect on our business, financial condition or results of operations.

Trends in pricing and other terms of agreements among airlines and travel agencies have reduced, and could further reduce in the future, our revenue and margins.

        A significant portion of our revenue is derived from fees paid by airlines for bookings made through our GDSs. Airlines have sought to reduce or eliminate these fees in an effort to reduce distribution costs. One manner in which they have done so is to differentiate the content, in this case, the fares and inventory, that they provide to us and to our GDS competitors from the content that they distribute directly themselves. In these cases, airlines provide some of their content to GDSs, while withholding other content, such as lower cost "web" fares, for distribution via their own supplier.com websites unless the GDSs agree to participate in a cost reduction program. Certain airlines have also threatened to withdraw content, in whole or in part, from individual GDSs as a means of obtaining lower booking fees, or, alternatively, to charge GDSs to access their lower cost web fares.

        We have entered into full content agreements with most major carriers in Europe, the United States and APAC, which provide us with access to the full scope of fares and inventory which the carriers make available through direct channels, such as their own supplier.com websites, with terms generally ranging from three to seven years. We may not be able to renew these agreements on a commercially reasonable basis or at all. If we are unable to renew these agreements, we may be disadvantaged compared to our competitors and our financial results could be adversely impacted. The full content agreements have required us to make significant price concessions to the participating airlines. If we are required to make additional concessions to renew or extend the agreements, it could have a material adverse effect on our business, financial condition and results of operations. Moreover, as existing full content agreements come up for renewal, there is no guarantee that the participating airlines will continue to provide their content to us to the same extent or on the same terms as they do now. A substantial reduction in the amount of content received from the participating airlines or changes in pricing options could also negatively affect our revenue and financial condition.

        In addition, certain GDSs, including Galileo and Worldspan, as well as Sabre and Amadeus, have implemented an alternative business and financial model for GDSs, generally referred to as the "opt-in" model, for travel agencies. Under the "opt-in" model, travel agencies are offered the opportunity of paying a fee to the GDS or agreeing to a reduction in the financial incentives to be paid to them by the GDS to be assured of having access to full content from participating airlines or to avoid an airline-imposed surcharge on GDS-based bookings. The "opt-in" model has been introduced in many countries, and the rate of adoption by travel agencies has been very high. If the "opt-in" model spreads beyond these countries on a global basis and becomes widely adopted, GDSs, including Galileo and Worldspan, could receive lower fees from the airlines. These lower fees would be only partially offset by new fees paid by travel agencies and/or reduced inducement payments to travel agencies which would adversely affect our results of operations.

We depend on our supplier relationships and adverse changes in these relationships or our inability to enter into new relationships could negatively affect our access to travel offerings and reduce our revenue.

        We rely significantly on our relationships with airlines, hotels and other travel suppliers. Our top ten travel suppliers for our GDS business, all of which are airlines, combined accounted for approximately 34% of our revenue for the year ended December 31, 2008. Adverse changes in any of our relationships with travel suppliers or the inability to enter into new relationships with travel suppliers could reduce the amount of inventory that we are able to offer through our GDSs, and could negatively impact the availability and competitiveness of travel products offered on our websites. We

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depend on travel suppliers to enable us to offer our customers comprehensive access to travel services and products. Our arrangements with travel suppliers may not remain in effect on current or similar terms and the net impact of future pricing options may adversely impact revenue. Travel suppliers are increasingly focused on driving on-line demand to their own supplier.com websites and may cease to supply us with the same level of access to travel inventory in the future.

        We are in continuous dialogue with our major hotel suppliers about the nature and extent of their participation in our GDS business and our wholesale accommodation business. If hotel occupancy rates improve to the point that our hotel suppliers no longer place the same value on our distribution systems, such suppliers may reduce the amount of inventory they make available through our distribution channels or the amount we are able to earn in connection with hotel transactions. A significant reduction on the part of any of our major suppliers of their participation in our GDS business or our wholesale accommodation business for a sustained period of time or a supplier's complete withdrawal could have a material adverse effect on our business, financial condition and results of operations.

        Moreover, the airline industry has experienced a shift in industry share from full-service carriers to low-cost carriers that focus primarily on discount fares to leisure destinations and we expect this trend to continue. Some low-cost carriers, such as Ryanair, have not historically distributed their tickets through us or other third party intermediaries.

        Further, GTA also receives access to inventory directly from hotels at negotiated rates and then distributes the rooms for a fee to travel agencies and tour operators who then make such inventory available to travelers. Many hotels use these types of arrangements with businesses such as GTA to dispose of excess hotel room inventory or to increase their inventory distribution. If hotels experience increased demand for rooms, they might reduce the amount of room inventory they make available through these negotiated rate arrangements. Moreover, hotels might seek to increase the cost of negotiated rate offerings, which may also adversely affect our business, financial condition and results of operations. In addition, several international hotel chains no longer allow distributors, including GTA, to distribute rooms on-line that they have purchased or gained access to at a lower, "net" rate that GTA and other distributors could then mark up, instead requiring that they distribute rooms in a manner that gives the hotel greater ability to set prices on a more real-time basis. As a result, more of our bookings may be completed under a flexible rate model where reservations are passed through to the supplier rather than a static net rate model, which may adversely affect our revenue. In addition, GTA currently bears limited inventory risk as it only pre-pays for a very limited number of rooms which it is allocated, and bears no risk of loss for the vast majority of rooms which are allocated to it. However, if a significant number of hotels were no longer willing to allocate rooms to GTA without additional pre-payment, then our costs would be substantially increased if we were unable to sell these pre-paid rooms. To the extent that other hotel chains or hotels change the terms on which they provide inventory to us, our ability to maintain or raise the current level of margins on hotel bookings, or our ability to adjust pricing in light of market trends and other factors, may be adversely affected. Such pressures may also adversely affect our business, financial condition and results of operations.

We provide IT services to travel suppliers, primarily airlines, and any adverse changes in these relationships could adversely affect our business.

        Through our IT services and software business, we provide hosting solutions and IT subscription services to airlines and the technology companies that support them. We host and manage the reservations systems of 13 airlines worldwide, including Delta, Northwest and United, and provide IT subscription services for mission critical applications in fares, pricing and e-ticketing, directly and indirectly, to approximately 215 airlines. Adverse changes in our relationships with our IT and hosting customers or our inability to enter into new relationships with other customers could affect our

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business, financial condition and results of operations. In addition, our arrangements with our customers may not remain in effect on current or similar terms and this may impact revenue.

        We host and manage the reservations systems of United, among others, and provide related services pursuant to an agreement that expires in 2013. United has announced its intention to transition its reservations systems from us to another service provider, which could adversely impact our hosting business. Under the terms of the agreement with United, the earliest United can terminate their agreement with us is January 1, 2010. We recognized approximately $46 million of revenue from United pursuant to this agreement in 2008.

        In addition, Delta, one of our largest IT services customers, has completed its acquisition of Northwest, another of our largest IT services customers. As part of their integration, Delta and Northwest are migrating to a common IT platform and may terminate one of their two agreements with us. Each of Delta and Northwest may terminate its IT services agreement by providing us twelve months' notice.

Travel suppliers are seeking alternative distribution models, including those involving direct access to travelers, which may adversely affect our results of operations.

        Travel suppliers are seeking to decrease their reliance on third party distributors, including GDSs, for distribution of their content. For example, some travel suppliers have created or expanded commercial relationships with on-line and traditional travel agencies that book travel with those suppliers directly, rather than through a GDS. Many airlines, hotels, car rental companies and cruise operators have also established or improved their own supplier.com websites, and may offer advantages such as bonus miles or loyalty points, lower or no transaction or processing fees, priority waitlist clearance, e-ticketing or discounted prices for sales through these channels. In addition, metasearch websites facilitate access to supplier.com websites by aggregating the content of those websites. Due to the combined impact of direct bookings with the airlines, supplier.com websites and other non-GDS distribution channels, a growing number of bookings are being made without the use of a GDS at any stage in the chain between suppliers and end-customers. In the United States, bookings made directly with the airlines accounted for approximately 54.5% of total air bookings in 2005. In Europe, in 2004, estimated direct bookings with the airlines constituted 52% of total air bookings, while in 2005, estimated direct bookings with the airlines constituted 55.9% of total air bookings. Conversely, the airlines have made some of these offerings unavailable to unrelated distributors, or made them available only in exchange for lower distribution fees. Some LCCs distribute exclusively through direct channels, bypassing GDSs and other third party distributors completely, and as a result some LCCs have been enhancing their share within the travel industry. In addition, several travel suppliers have formed joint ventures or alliances that offer multi-supplier travel distribution websites. Finally, some airlines are exploring alternative global distribution methods recently developed by new entrants to the global distribution marketplace. Such new entrants propose technology that is purported to be less complex than traditional GDSs, and that enables the distribution of airline tickets in a manner that is more cost-effective to the airline suppliers because no or lower inducement payments are paid to travel agencies. If these trends lead to lower participation by airlines and other travel suppliers in our GDSs, then our business, financial condition or results of operations could be materially adversely affected.

        In addition, given the diverse and growing number of alternative travel distribution channels, such as supplier.com websites and direct connects between airlines and travel agencies, as well as new technologies that allow travel agencies and consumers to bypass a GDS, increases in travel volumes, particularly air, may not translate in the same proportion to increases in volumes passing through our GDSs.

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Consolidation in the travel industry may result in increased expenses, lost bookings and reduced revenue.

        Consolidation among travel suppliers, including airline mergers and alliances may increase competition from distribution channels related to those travel suppliers and place more negotiating leverage in the hands of those travel suppliers to attempt to further lower booking fees and lower commissions. Changes in ownership of travel agencies may also cause them to direct less business towards us. If we are unable to compete effectively, competitors could divert travel suppliers and travel agencies away from our travel distribution channels which could adversely affect our results of operations.

        Consolidation among travel agencies and competition for travel agency customers may also adversely affect our results of operations, since we compete to attract and retain travel agency customers. Reductions in commissions paid by some travel suppliers, such as airlines, to travel agencies contribute to travel agencies having a greater dependency on traveler-paid service fees and GDS-paid inducements and may contribute to travel agencies consolidating. Consolidation of travel agencies increases competition for these travel agency customers and increases the ability of those travel agencies to negotiate higher GDS paid inducements. In addition, a decision by airlines to surcharge the channel represented by travel agencies, for example by surcharging fares booked through travel agencies or passing on charges to travel agencies, could have an adverse impact on our business, particularly in regions in which our GDSs are a significant source of bookings for an airline choosing to impose such surcharges. To compete effectively, we may need to increase inducements, pre-pay inducements or increase spending on marketing or product development.

Our businesses are highly regulated and any failure to comply with such regulations or any changes in such regulations could adversely affect us.

        We operate in a highly regulated industry. Our businesses, financial condition and results of operations could be adversely affected by unfavorable changes in or the enactment of new laws, rules and/or regulations applicable to us, which could decrease demand for products and services, increase costs or subject us to additional liabilities. Moreover, regulatory authorities have relatively broad discretion to grant, renew and revoke licenses and approvals and to implement regulations. Accordingly, such regulatory authorities could prevent or temporarily suspend us from carrying on some or all of our activities or otherwise penalize us if our practices were found not to comply with the then current regulatory or licensing requirements or any interpretation of such requirements by the regulatory authority. Our failure to comply with any of these requirements or interpretations could have a material adverse effect on our operations.

        Our consumer and retail distribution channels are subject to laws and regulations relating to sales and marketing activities, including those prohibiting unfair and deceptive advertising or practices. Our travel services are subject to regulation and laws governing the offer and/or sale of travel products and services, including laws requiring us to be licensed or bonded in various jurisdictions and to comply with certain disclosure requirements. As a seller of air transportation products in the United States, we are also subject to regulation by the DOT, which has authority to enforce economic regulations and may assess civil penalties.

        In addition, the new CRS Regulations will enter into force on March 29, 2009. These new regulations or interpretations of them increase our cost of doing business or lower our revenues, limit our ability to sell marketing data, establish relationships with travel agencies, airlines, or others, impair the enforceability of existing agreements with travel agencies and other users of our system, prohibit or limit us from offering services or products, or limit our ability to establish or change fees. Although regulations governing GDSs have been lifted in the United States, continued regulation of GDSs in the European Union and elsewhere could also create the operational challenge of supporting different products, services and business practices to conform to the different regulatory regimes.

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        Our failure to comply with these laws and regulations may subject us to fines, penalties and potential criminal violations. Any changes to these laws or regulations or any new laws or regulations may make it more difficult for us to operate our businesses and may have a material adverse effect on our operations. We do not currently maintain a central database of regulatory requirements affecting our worldwide operations and, as a result, the risk of non-compliance with the laws and regulations described above is heightened.

Our processing, storage, use and disclosure of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements, differing views of personal privacy rights or security breaches.

        In the processing of our travel transactions, we receive and store a large volume of personally identifiable information ("PII"). This information is increasingly subject to legislation and regulations in numerous jurisdictions around the world, typically intended to protect the privacy and security of personal information, including credit card information that is collected, processed and transmitted in or from the governing jurisdiction.

        We could be adversely affected if legislation or regulations are expanded to require changes in our business practices or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our business. For example, government agencies in the United States have implemented initiatives to enhance national and aviation security in the United States, including the Transportation Security Administration's Secure Flight program and the Advance Passenger Information System of US Customs and Border Protection. These initiatives primarily affect airlines. However, to the extent that the airlines determine the need to define and implement standards for data that is either not structured in a format we use or is not currently supplied by our businesses, we could be adversely affected. In addition, the European Union and other governments are considering the adoption of passenger screening and advance passenger systems similar to the US programs. This may result in conflicting legal requirements with respect to data handling and, in turn, affect the types and format of data currently supplied by our businesses.

        As privacy and data protection have become more sensitive issues, we may also become exposed to potential liabilities in relation to our handling, use and disclosure of travel related data, as it pertains to the individual, as a result of differing views on the privacy of such data. These and other privacy concerns, including security breaches, could adversely impact our business, financial condition and results of operations.

We are exposed to risks associated with on-line commerce security and credit card fraud.

        The secure transmission of confidential information over the Internet is essential in maintaining travel supplier and customer confidence in our services. Substantial or ongoing security breaches, whether instigated internally or externally on our system or other Internet-based systems, could significantly harm our business. We rely on licensed encryption and authentication technology to effect secure transmission of confidential end customer information, including credit card numbers. It is possible that advances in computer capabilities, new discoveries or other developments could result in a compromise or breach of the technology that we use to protect customer transaction data.

        We incur substantial expense to protect against and remedy security breaches and their consequences. However, our security measures may not prevent security breaches. We may be unsuccessful in implementing remediation plans to address potential exposures. A party (whether internal, external, an affiliate or unrelated third party) that is able to circumvent our security systems could also obtain proprietary information or cause significant interruptions in our operations. Security breaches could also damage our reputation and expose us to a risk of loss or litigation and possible

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liability. Security breaches could also cause our current and potential travel suppliers to lose confidence in our security, which would have a negative effect on the demand for our products and services.

        Moreover, public perception concerning security and privacy on the Internet could adversely affect customers' willingness to use websites for travel services. A publicized breach of security, even if it only affects other companies conducting business over the Internet, could inhibit the use of on-line payments and, therefore, our services as a means of conducting commercial transactions.

Our sponsors control us and may have conflicts of interest with us or the holders of our bonds in the future.

        Investment funds associated with or designated by affiliates of Blackstone, TCV and OEP, or our Sponsors, beneficially own substantially all of the outstanding voting shares of our ultimate parent company. As a result of this ownership, the Sponsors are entitled to elect all of our directors, to appoint new management and to approve actions requiring the approval of the holders of our outstanding voting shares as a single class, including adopting most amendments to our articles of incorporation and approving or rejecting proposed mergers or sales of all or substantially all of our assets, regardless of whether noteholders believe that any such transactions are in their own best interests. Through control of us, the Sponsors control us and all of our subsidiaries.

        The interests of the Sponsors may differ from holders of our bonds in material respects. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of the Sponsors and their affiliates, as equity holders, might conflict with the interests of our noteholders. The Sponsors and their affiliates may also have an interest in pursuing acquisitions, divestitures, financings (including financings that are senior to the senior subordinated notes) or other transactions that, in their judgment, could enhance their equity investments, even though such transactions might involve risks to holders of our bonds. Additionally, the indentures governing the notes permit us to pay advisory fees, dividends or make other restricted payments under certain circumstances, and the Sponsors may have an interest in our doing so. For example, borrowings under our revolving credit facility and a portion of the proceeds from asset sales may be used for such purposes.

        The Sponsors and their affiliates are in the business of making investments in companies, and may from time to time in the future, acquire interests in businesses that directly or indirectly compete with certain portions of our business or are suppliers or customers of ours. The Sponsors may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us. So long as investment funds associated with or designated by the Sponsors continue to indirectly own a significant amount of the outstanding shares of our common stock, even if such amount is less than 50%, the Sponsors will continue to be able to strongly influence or effectively control our decisions.

We are subject to additional risks as a result of having global operations.

        We operate in approximately 160 countries. The principal risks to which we are subject as a result of having global operations are:

•

delays in the development of the Internet as a broadcast, advertising and commerce medium in certain countries;



•

difficulties in staffing and managing operations due to distance, time zones, language and cultural differences, including issues associated with establishing management systems infrastructure in various countries;



•

differences and unexpected changes in regulatory requirements and exposure to local economic conditions;

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•

increased risk of piracy and limits on our ability to enforce our intellectual property rights;



•

restrictions on the withdrawal of non-US investment and earnings, including potentially substantial tax liabilities if we repatriate any of the cash generated by our non-US operations to the United States;



•

diminished ability to enforce our contractual rights;



•

currency risks; and



•

withholding and other taxes on remittances and other payments by subsidiaries.

Government regulation could impose taxes or other burdens on us, which could increase our costs or decrease demand for our products.

        We rely upon generally available interpretations of tax laws and regulations in the countries in which we operate and for which we provide travel inventory. We cannot be certain that these interpretations are accurate or that the responsible taxing authority is in agreement with our views. The imposition of additional taxes could cause us to have to pay taxes that we currently do not collect or pay or increase the costs of our products or services to track and collect such taxes which would increase our costs of operations.

We may not be able to protect our technology effectively, which would allow competitors to duplicate our products and services. This could make it more difficult for us to compete with them.

        Our success and ability to compete depend, in part, upon our technology and other intellectual property, including our brands. Among our significant assets are our software and other proprietary information and intellectual property rights. We rely on a combination of copyright, trademark and patent laws, trade secrets, confidentiality procedures and contractual provisions to protect these assets. Our software and related documentation are protected principally under trade secret and copyright laws, which afford only limited protection. Unauthorized use and misuse of our intellectual property could have a material adverse effect on our business, financial condition and results of operations, and there can be no assurance that our legal remedies would adequately compensate us for the damage caused by unauthorized use.

        Intellectual property challenges have been increasingly brought against members of the travel industry. We have in the past and may in the future need to take legal actions to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Any future legal action might result in substantial costs and diversion of resources and management attention.

Third parties may claim that we have infringed their intellectual property rights, which could expose us to substantial damages and restrict our operations.

        We have faced and in the future could face claims that we have infringed the patents, copyrights, trademarks or other intellectual property rights of others. In addition, we may be required to indemnify travel suppliers for claims made against them. Any claims against us or them could require us to spend significant time and money in litigation or pay damages. Such claims could also delay or prohibit the use of existing, or the release of new, products, services or processes, and the development of new intellectual property. We could be required to obtain licenses to the intellectual property that is the subject of the infringement claims and resolution of these matters may not be available on acceptable terms or at all. Intellectual property claims against us could have a material adverse effect on our business, financial condition and results of operations, and such claims may result in a loss of intellectual property protections that relate to certain parts of our business.

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We may become involved in legal proceedings and may experience unfavorable outcomes, which could harm us.

        We may become subject to material legal proceedings in the course of our business, including, but not limited to, actions relating to contract disputes, business practices, intellectual property and other commercial and tax matters. Such legal proceedings could involve claims for substantial amounts of money or for other relief or might necessitate changes to our business or operations and the defense of such actions may be both time consuming and expensive. Further, if any such proceedings were to result in an unfavorable outcome, it could have a material adverse effect on our business, financial position and results of operations.

Our ability to attract, train and retain senior management and other qualified employees is crucial to our results of operations and future growth.

        We depend significantly on the continued service and performance of our senior management and skilled personnel, particularly our professionals with experience in our business and operations, including our information technology and systems and the GDS industry. Any of these individuals may choose to terminate their employment with us at any time, subject to any notice periods. The specialized skills we require are difficult and time-consuming to acquire and, as a result, such skills are and are expected to remain in limited supply. It requires a long time to hire and train replacement personnel. An inability to hire, train and retain a sufficient number of qualified employees could materially hinder our business by, for example, delaying our ability to bring new products and services to market or impairing the success of our operations. Even if we are able to maintain our employee base, the resources needed to attract and retain such employees may adversely affect our profits, growth and operating margins.

Fluctuations in the exchange rate of the US dollar and other currencies may adversely impact our results of operations.

        Our results of operations are reported in US dollars. While most of our revenue is denominated in US dollars, a portion of our revenue and costs, including interest obligations on a portion of our senior secured credit facilities and on our senior euro-denominated notes and senior subordinated euro-denominated notes, is denominated in other currencies, such as pounds sterling, the euro and the Australian dollar. As a result, we face exposure to adverse movements in currency exchange rates. The results of our operations and our operating expenses are exposed to foreign exchange rate fluctuations as the financial results of those operations are translated from local currency into US dollars upon consolidation. If the US dollar weakens against the local currency, the translation of these foreign currency based local operations will result in increased net assets, net revenue, operating expenses, and net income or loss. Similarly, our local currency based net assets, net revenue, operating expenses, and net income or loss will decrease if the US dollar strengthens against local currency. Additionally, transactions denominated in currencies other than the functional currency may result in gains and losses that may adversely impact our results of operations.

We have a limited operating history as an independent group and our historical and pro forma financial information is not necessarily representative of the results we would have achieved as an independent group and may not be a reliable indicator of our future results.

        The historical financial information prior to August 22, 2006 included in this Annual Report on Form 10-K does not necessarily reflect the financial condition, results of operations or cash flows that we would have achieved as an independent group during the periods presented or those that we will achieve in the future. Until August 2006, our businesses were operated by Cendant (now known as Avis Budget Group, Inc.) as part of its broader corporate organization, rather than as an independent group. Cendant or one of its affiliates historically performed various corporate functions for us,

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including, but not limited to, tax administration, certain governance functions (including compliance with the Sarbanes-Oxley Act of 2002 and internal audit) and external reporting. Our historical and pro forma financial results reflect allocations of corporate expenses from Cendant for these and similar functions. These allocations are less than the comparable expenses we believe we would have incurred had we operated as an independent group.

We are contractually obliged to indemnify Avis Budget for certain taxes relating to our separation from Avis Budget.

        Our separation from Avis Budget involved a restructuring of our business whereby certain of our non-US subsidiaries were separated independently of our separation from Avis Budget. It is possible that the independent separation of these non-US subsidiaries could give rise to an increased tax liability for Avis Budget that would not have existed had these non-US subsidiaries been separated with us. In order to induce Avis Budget to approve the separation structure, we agreed to indemnify Avis Budget for any increase in Avis Budget's tax liability resulting from the structure. We made a payment to Avis Budget of approximately $6 million under the indemnity during the fourth quarter of 2007. In addition, we have issued a $30 million letter of credit for the benefit of Avis Budget in connection with any such potential liability. We are not able to predict the amount of any future additional tax liability that we may be required to pay. Pursuant to a tax sharing agreement entered into with respect to its initial public offering, Orbitz Worldwide is required to indemnify us for 29% of any such tax-related liability. To the extent that our obligation to indemnify Avis Budget subjects us to additional costs, such costs would be treated as an adjustment to the purchase price that we paid to Avis Budget, increasing tax-deductible goodwill, and could significantly and negatively affect our financial condition.

Risks Related to Our Relationship with Orbitz Worldwide

We may be required to record a significant charge to earnings if our investment in the equity of Orbitz Worldwide becomes impaired.

        We own approximately 48% of the outstanding equity of Orbitz Worldwide. We are required under generally accepted accounting principles to review our investments in equity interests for impairment when events or changes in circumstance indicate the carrying value may not be recoverable. We have an equity investment in Orbitz Worldwide that we evaluate quarterly for impairment. This analysis is focused on the market value of Orbitz Worldwide shares as compared to the book value of such shares. Factors that could lead to impairment of our investment in the equity of Orbitz Worldwide include, but are not limited to, a prolonged period of decline in the price of Orbitz Worldwide stock or a decline in the operating performance of, or an announcement of adverse changes or events by, Orbitz Worldwide. We may be required in the future to record a charge to earnings if our investment in equity of Orbitz Worldwide becomes impaired. Any such charge would adversely impact our results of operations.

Orbitz Worldwide is an important customer of our GDS business.

        Orbitz Worldwide is an important customer of our GDS business pursuant to a long-term subscriber services agreement. In the event Orbitz Worldwide's business is materially impacted as a result of any of the risk factors set forth in the Risk Factors section of Orbitz Worldwide's Annual Report on Form 10-K for the year ended December 31, 2008, and, as a result, Orbitz Worldwide loses, or fails to generate, a substantial amount of bookings that would otherwise be processed through our GDSs, our revenue and earnings would be adversely impacted, unless such bookings were replaced through an alternative agency.

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Risks Related to Our Indebtedness

We have a substantial level of indebtedness which may have an adverse impact on us.

        We are highly leveraged. As of December 31, 2008, our total indebtedness was approximately $3.8 billion. We have $5 million available for borrowing under our revolving credit facility. In addition, we maintain a $150 million synthetic letter of credit facility under our senior secured credit facilities and the option to raise incremental senior secured credit facilities of up to $500 million. As of December 31, 2008, we had issued approximately $147 million in letters of credit under our synthetic letter of credit facility. Pursuant to our Separation Agreement with Orbitz Worldwide, we maintain letters of credit under our synthetic letter of credit facility on behalf of Orbitz Worldwide. As of December 31, 2008, we had commitments of approximately $67 million in letters of credit outstanding on behalf of Orbitz Worldwide.

        Our substantial level of indebtedness could have important consequences for us, including:

•

requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flow to fund our operations, capital expenditure and future business opportunities;



•

exposing us to the risk of increased interest rates because certain of our borrowings, including borrowings under our senior secured credit facilities and our senior notes, are at variable rates of interest;



•

restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;



•

limiting our ability to obtain additional financing for working capital, capital expenditure, product development, debt service requirements, acquisitions and general corporate or other purposes;



•

limiting our ability to adjust to changing market conditions and placing us at a competitive disadvantage compared to our less highly leveraged competitors; and



•

making us more vulnerable to general economic downturns and adverse developments in our businesses.

        Despite our substantial level of indebtedness, our debt agreements allow us to incur significant additional indebtedness in the future in certain circumstances if we meet certain conditions. If we incur additional indebtedness, the related risks that we now face would increase.

Our debt agreements contain restrictions that limit our flexibility in operating our business.

        Our senior secured credit agreement and the indentures governing our notes contain various covenants that limit our ability to engage in specified types of transactions. These covenants limit our and our subsidiaries' ability to, among other things:

•

incur additional indebtedness or issue certain preferred shares;



•

pay dividends on, repurchase or make distributions in respect of their capital stock or make other restricted payments;



•

make certain investments;



•

sell certain assets;



•

create liens on certain assets to secure debt;



•

consolidate, merge, sell or otherwise dispose of all or substantially all of our or their assets;



•

enter into certain transactions with affiliates; and



•

designate subsidiaries as unrestricted subsidiaries.

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        In addition, under the senior secured credit agreement, we are required to satisfy and maintain a maximum total leverage ratio. Our ability to meet that financial ratio can be affected by events beyond our control, and we may not be able to meet that ratio. A breach of any of these covenants could result in a default under the senior secured credit agreement and the indentures governing our notes. Upon the occurrence of an event of default under the senior secured credit agreement, the lenders could elect to declare all amounts outstanding under the senior secured credit agreement to be immediately due and payable and terminate all commitments to extend further credit. If we were unable to repay those amounts, the lenders under the senior secured credit agreement could proceed against the collateral granted to them to secure that indebtedness. We pledged a significant portion of our assets as collateral under our senior secured credit agreement. If the lenders under the senior secured credit agreement accelerate the repayment of borrowings, we cannot assure that we will have sufficient assets to repay the senior secured credit agreement as well as our unsecured indebtedness, including our notes.

Despite our high indebtedness level, we and our subsidiaries may still be able to incur significant additional amounts of debt, which could further exacerbate the risks associated with our substantial indebtedness.

        We and our subsidiaries may be able to incur substantial additional indebtedness in the future. The terms of the indentures do not fully prohibit us or our subsidiaries from doing so. In addition to the $5 million available for borrowing under the revolving credit facility and the $3 million available for additional letter of credit issuances under our $150 million synthetic letter of credit facility under our senior secured credit facilities, both as of December 31, 2008, we have the right to add incremental term loan facilities or to increase commitments under the revolving credit facility up to an aggregate amount of $500 million. All of those borrowings and any other secured indebtedness permitted under the senior credit agreement and the indentures are effectively senior to our notes and the subsidiary guarantees. If new debt is added to our and our subsidiaries' existing debt levels, the related risks that we now face would increase. In addition, the indentures governing the notes do not prevent us from incurring obligations that do not constitute indebtedness.