Expedia Announces CEO Peter Kern’s Departure Amid Challenges in Air Travel Market

Expedia Group disclosed on Thursday that CEO Peter Kern is stepping down amid a forecasted moderation in 2024 revenue due to declining airfare prices, with an internal successor poised to take the helm. This leadership change coincides with the company’s warning of a potential slow down in air travel bookings, contributing to a more than 12% drop in its shares during extended trading hours. This downturn also adversely affected the stock values of industry counterparts Booking Holdings and Airbnb.

Chief Financial Officer Julie Whalen highlighted on a post-earnings call that the revenue dip was largely due to decreased average ticket prices. Additionally, the recent grounding of Boeing’s 737 Max 9 fleet, following an incident where a panel detached mid-flight, has further impacted travel bookings.

Morningstar analyst Dan Wasiolek suggested that the market’s after-hours response might also stem from concerns over travel demand and the significant share price increase preceding the announcement. Despite this, the travel demand outlook remains cautiously optimistic, with expectations of a slowdown following a robust recovery period, as indicated by similar sentiments expressed by Hilton during its earnings update.

Expedia projects a modest growth in gross bookings for the first quarter, with expectations set for low- to mid-single digit increases, aligning with anticipated mid-single digit revenue growth. Kern, reflecting on the broader industry trends, anticipates sustained, albeit decelerating, travel demand globally.

Kern, who has led Expedia for four years, will transition to a vice chairman and board member role, supporting his successor, Ariane Gorin, in her new position. Gorin brings over a decade of experience within Expedia to her upcoming role as CEO, having most recently served as president of Expedia for Business. Her background includes a significant tenure at Microsoft prior to joining Expedia.

In addition to leadership changes, Expedia reported surpassing fourth-quarter profit and sales estimates, fueled by consistent travel demand within the United States. However, its gross bookings growth was tempered by geopolitical tensions in the Middle East at the quarter’s outset.

The company’s adjusted earnings per share of $1.72 exceeded analysts’ expectations of $1.68, with fourth-quarter sales increasing by 10% to $2.89 billion, slightly above the forecasted $2.88 billion.

Sources: AirGuide Business airguide.info, bing.com, reuters.com