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22
Redefining Travel Commerce Deutsche Bank Leveraged Finance Conference, September 2016
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Page 1: Redefining Travel Commercefilecache.investorroom.com/mr5ir_travelport/352/Deutsche... · 2016-09-28 · Related to Forward-Looking Statements ertain items in this presentation and

Redefining Travel CommerceDeutsche Bank Leveraged Finance Conference, September 2016

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Related to Forward-Looking StatementsCertain items in this presentation and in today’s discussion, including matters relating to revenue, net income (loss), and percentages or calculations using these measures, capital structure, future business opportunities, plans, prospects or growth rates and other financial measurements and non-financial statements in future periods, constitute forward-looking statements. These forward-looking statements are based on management’s current views with respect to future results and are subject to risks and uncertainties. These statements are not guarantees of future performance. Actual results may differ materially from those contemplated by forward-looking statements. Travelport Worldwide Limited (the ‘Company’ or ‘Travelport’) refers you to our periodic reports and filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on February 18, 2016 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 5, 2016, for the quarter June 30, 2016, filed with the SEC on August 4, 2016, for additional discussion of these risks and uncertainties, as well as a cautionary statement regarding forward-looking statements. Forward-looking statements made during this presentation speak only as of today’s date. Travelport expressly disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Related to Non-GAAP Financial InformationTravelport analyzes its performance using Adjusted EBITDA, Adjusted Net Income/(Loss), Adjusted Income/(Loss) per Share, Adjusted Operating Income/(Loss), Capital Expenditures, Net Debt, and Adjusted Free Cash Flow, which are non-GAAP financial measures. Such measures may not be comparable to similarly named measures used by other companies. The Company believes these measures provide management with a more complete understanding of underlying results, trends and the liquidity of the core operating business, along with the Company’s ability to meet its current and future financing and investing needs. Adjusted EBITDA is the primary metric, used to evaluate and understand our underlying operations and business trends, forecasting and determining future capital investment allocations. Adjusted EBITDA, Adjusted Net Income/(Loss), Adjusted Income/(Loss) per Share and Adjusted Operating Income/(Loss) are also used by the Board of Directors to determine incentive compensation for future periods. Capital Expenditures, which impact depreciation and amortization, interest expense and income tax expense, are reviewed separately by management. These measures are disclosed so that investors have the same tools as those available to management when evaluating the results of Travelport. These non-GAAP measures are defined in the ‘Definitions’ appendix of this presentation and discussed and reconciled to GAAP measures in our quarterly and annual filings with the SEC.

Disclaimers

2

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3

Creating long-term shareholder value

Strong core Differentiated focus

Leading technology

Truly global Focused on the markets that need us

Compelling financials

Disciplined capital

allocation

Core business model is resilient, recurring

and transaction-based with strong competitive advantages

Significantly upgraded technology platform and industry-leading

product suite

Broad international presence to leverage international focus of

our customers

Strong focus on corporate and service-

premium travel

Entering clear growth phase with multiple, compelling drivers

Capital-light model with strong free cash flow generation and clear and disciplined approach to capital

allocation

Differentiated “platform” approach to address evolving

travel commerce ecosystem – in airline

merchandising, hospitality, mobile

commerce and payments

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Industry leader with global, differentiated platform

4

Travelport has transformed through investments to lead the global travel distribution industry.

Our platform is differentiated in 5 key areas and is fully focused on value creation for our customers.

GD

SG

DS

Global travel distribution industry’s

clear leader in…

Airline Merchandising

LCC Distribution

Hospitality andDigital Media

Mobile Commerce

B2B Payments

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5

Airline hosting is critical for back-end IT systems but does not drive value creation at the front-end

Top 10 Global Airlines1

in 2015 (in millions)201

179140

117 109 101 94 90 79 70

American Delta United Southwest ChinaSouthern

Ryanair ChinaEastern

Air China Lufthansa easyJet

1. Top 10 global airlines measured by passengers boarded represent around a third of global passengers boarded; Source: CAPA

2. Southwest uses Amadeus Altea for international flights, being a small proportion of Southwest’s business

Hosted by Sabre Sonic

Hosted by Travelport,

development by Delta

Not Hosted on Amadeus Altea or

Sabre Sonic Product

(2) Not Hosted on Amadeus Altea or

Sabre Sonic Product

Not Hosted on Amadeus Altea or

Sabre Sonic Product

Hosted on Navitaire, recently

purchased by Amadeus

Not Hosted on Amadeus Altea or

Sabre Sonic Product

Not Hosted on Amadeus Altea or

Sabre Sonic Product

Hosted on Amadeus Altea

Product

Not Hosted on Amadeus Altea or

Sabre Sonic Product

Majority of world’s largest airlines do not use Amadeus or Sabre PSS

But six of ten utilize IT solutions provided by Travelport

By definition travel intermediaries book all carriers regardless of host

Hosting decisions do not drive distribution decisions

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HospitalityHotelsRental car and ground transportB2B travel industry digital media

Mobile commerce

MTTLocomote

Airline merchandisingAncillaries and branded faresTailored offerings Aggregated shopping

Payments

eNett

Fron

t-End

Payments

eNett

HospitalityHotelsRental car and ground transportB2B travel industry digital mediaGDSGDS

Airlinecontent

Network carriers

Low cost carriers

Hotels

~650,000 chain & independent hotel properties

Car rental

~36,000 car rentallocations

Otherdistribution

~60 cruise lines

13 major rail networks

Co

nte

nt

GDSIT Solutions

DistributionTravel Commerce Platform

Back-end:IT solutions

Travelport is focused on differentiated value creationat the front-end

Travelport remains essentially a transaction fee based business

6

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Mobile commerce Payments

Airline distribution and merchandising Hospitality attachment

MTT continues to perform well adding global airlines and TMCs to its client roster, across multiple regions

38

40

41

43

47

FY 11

FY 12

FY 13

FY 14

FY 15

Hospitality segments per 100 airline tickets issued

$2m

$19m

$45m

$67m

$92m

FY 11

FY 12

FY 13

FY 14

FY 15

Etihad Airways mobile app launched in the App Store on April 11, 2016

7

The key proof points of our industry-leading platform

1 As of September 5, 2016

65% of Air segment revenue in FY 15 from ‘away’ bookings(FY 11: 58%)

airlines1 live with merchandising, including fares families, branded fares, ancillaries and tailored offers

177

eNett revenue

1H 2016 revenue up +81% YoY to $71m

1H 2016 48

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After: Travelport SmartpointBefore: Legacy Desktops

8

Our model – selling the way the airlines want to sell

Changing the distribution paradigm with a supplier-centric focus on presenting product to the customer

Traditional GDS screen used to present airline products for well over 30 years

Screens reduce airline’s product offerings to a line of alphanumeric text

Much less intuitive user interface for agents

Travelport’s proprietary point-of-sale application is fully deployed for travel agencies and management companies

Integrates ‘Rich Content and Branding’ merchandising capabilities

Enables sale of ancillary services and promotion of entire product value and brand propositions

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Travelport - Airline merchandising today within our award-winning Smartpoint point-of-sale

Etihad.com -‘Business Class with Etihad is not business as usual’

9

Airlines signed up to ‘Rich Content and Branding’ represent ~60% of our air segment volumes

1 Represents percentage of air segment volumes (for the twelve months to June 30, 2016) derived from airlines signed to Rich Content and Branding as of September 5, 2016

Our high value-adding merchandising solutions, including ‘Rich Content and Branding’, continue their rapid momentum

Now at a critical mass of participation;>200 airlines signed to date represent ~60%1

of our air segment volumes

Travelport has 177 airlines implemented and >200 signed (fare families & ancillaries) Amadeus has 30 implemented and 39 signed for fare families, and Sabre…???

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Tailored offerings include negotiated deals between corporates and airlines; available through self-booking tools and to travel agencies

‘Tailored merchandising’ made real today within our award-winning Smartpoint point-of-sale

‘Tailored merchandising’ available through our universal API (uAPI) technology

Travelport has further expanded its productset to include tailored offerings

10

Travelport's tailored offerings –another unique differentiator

No other GDS has this unique and cutting edge capability

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• Signed new long-term agreement in 2014 to run Delta host reservation and key operating system (AIR4)

• Recently upgraded to zTPF

• Provide Rapid Reprice, EMD and other technology

• Extending to other Delta investment carriers (Virgin Atlantic)

• Emirates ‘Inspire Me’ - exclusive live-search solution: proprietary mapping and search technology infuses real-time availability and pricing into the search process

• Emirates Fare Branding and Upsell - choose the right fare brand based on value, not just the lowest price, and easily upgrade to the next branded fare

• MTT focuses on delivering world-class mobile solutions to leading airlines, hotels and travel agencies

• Designs and runs mobile apps for easyJet, BCD Travel, LATAM, Etihad, Saudia, Capita Travel and Singapore Airlines

• Multi-award winning service

• Cloud-based data and analytics for route planning, fares, revenue management and sales effectiveness

• Global scale and used by multiple airlines

Delta Hosting Solutions Branded Fares Mobile Commerce Data Analytics

11

We offer leading airline technology to our partners

Delta Hosting

Travelport provides a broad range of innovative technology solutions and services to our customers to enhance their direct selling and customer experience capabilities

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12

Case study: Value-add solutions for Emirates’direct selling channels

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International regions(~70% of total GDS market) tend to yield higher RevPas and margins than the US

InternationalGDS segments4% CAGRbetween Q2 12 and Q2 16; faster than US segments

Travelport International air share is stable

13

International (excl. US) air market share is stable

0%

10%

20%

30%

40%

50%

60%

Q112

Q212

Q312

Q412

Q113

Q213

Q313

Q413

Q114

Q214

Q314

Q414

Q115

Q215

Q315

Q415

Q116

Q216

Travelport Amadeus Sabre & Abacus

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• ~36,000 car rental locations bookable

• ~60 cruise lines & tour operators and 13 major rail networks

• B2B payments by travel agencies to travel providers (eNett)

• The only GDS with this attached

• Growing at a rate which is 10x higher than WEX in travel

• Mobile platform and apps for the travel industry (MTT)

• Corporate self-booking tools (Locomote and Hotelzon)

• Digital media B2B advertising (~3,500 advertisers)

Hotel Distribution• ~650,000 hotel properties bookable

• Retail rates for independent hotels from leading aggregators (Travelport Rooms and More)

• Corporate rates for independent hotels (Hotelzon)

Car, Tours and Other Distribution

Digital and Mobile Solutions

Payments14

Differentiated focus on travel commerce Beyond Air

BEYOND AIR2015 revenue: $492m (+16%)

23% of Travel Commerce Platform Revenues(21% in FY 2014)

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Travelport Hotelzon – enhancing content, efficiency and choice in the corporate hotel booking market

Travelport Smartpoint includes significantfurther enhancements to hotel booking

Travelport has significant advantages through the depth and breadthof hotel content all bookable in real-time

Latest version of Hotelzon OnlineTravelport Smartpoint version 7.1, launched July 2016

15

Powering hotel distribution to corporate and retail

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16

Focus on mobile commerce providesdifferentiation and value

Travelport Mobile

Focused on delivering world-class mobile solutions to leading airlines, hotels and travel agencies

Airline customers use a variety of IT solutions providers

~200 employees specialized in mobile travel commerce

22 million downloads to date of apps developed by Travelport for customers; top-rated travel app in 78 different countries

Key adjacency that significantly enhances Travelport’s Beyond Air value proposition, with mobile fast becoming the key travel commerce channelKey customers include:

Example Locomote apps:

Locomote CorporateTravel Platform

Strengthens offering to both Corporates and TMCs, combining mobile technology with leading travel content

Corporate travel management apps, focused on providing solutions for all corporate travel management needs, incorporating artificial intelligence and actionable data analytics

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$92m reported revenue in FY 2015 for Travelport1H 2016 growth +81%

Strong barriers to entry

Driving security, efficiency and value for travel agencies and travel providers

Unique value proposition

Rebates paid on every transaction

Reduced FX costs

Fraud protection

Protection against supplier insolvencies

100% data match between booking and payment - avoids time-consuming, manual reconciliation processes

17

Fast-growing eNett is redefining B2B payments…

Uniquely positioned for accelerating growth within the >$800bn addressable market

Pre-funded model developed in partnership withOptal payment experts

Unique banking relationships established

Deep, strategic partnership with MasterCard

Fully integrated into travel agency workflows and GDS-agnostic

First mover advantage and proven business model

Competitive advantage over commercial banksand our traditional GDS competitors

Deployed in >70 countries

Agencies

Travel providers

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Moved to double-digit EBITDA margin % in Q2 2016 and scale realized

eNett reported revenue (in $ millions)

18

…with revenue rapidly accelerating

$2

$19

$45

$67

$92

$71

2011 2012 2013 2014 2015 1H 2016

4-Year CAGR

160%

First mover advantage in a nascent industry

Reliable solution with broad acceptance

Generating EBITDA,net income and free cash flow since 2013

More than 3/4 of FY

2015 revenue

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Continued strong Beyond Air Revenue growth$ millions; CAGR FY 2012 – FY 2015

+11%YoYYoY

19

Investments in Beyond Air delivering strong,sustainable growth

Hotel room nights sold

FY 2015+3% YoY

Car rental days sold

FY 2015+8% YoY

Hospitality attachment 1

FY 2015+11% YoY

eNett Revenue

FY 2015+36% YoY

CAGR15%

326 371424

492

FY 2012 FY 2013 FY 2014 FY 2015

Beyond Air continues its strong growth+16% in FY 2015; +22% in Q2 2016

eNett revenueup 36% with strong pipeline into 2016 (+81% in 1H 2016)

Hospitality attachment rate1 reached 47% in 2015; 48% - 1H 2016

Mobile performing well with recent major business wins including Etihad Airways, AMEX GBT and Aeroméxico

1 Hospitality segments per 100 airline tickets issued

+14%

+14%

+16%

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Continuing to build a track record of balanced and disciplined approach to capital allocation

Simplified and improved capital structure

20

Our capital structure & capital allocation strategy

Debt repriced June 2016 – reduced interest by 0.75% to L + 4.00% (L = 1.00% floor)

Continued investment

Mergers and acquisitions

Returns to debt holders

Returns to equity holders

Significant reduction in total debt, from $3.8bn in 2011 to $2.4bn today

Current debt is single tranche,raised publicly in the capital markets

Covenant-light, fully pre-payable without any penalties and no significant maturities until 2021

Strong free cash flow conversion,even after debt servicing

Target to reduce net leverage to around 3 times Adjusted EBITDA by 2018

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The information presented here represent forward-looking statements and reflect our expectations as of August 4, 2016. We assume no obligation to update these statements. Results may be materially different and are affected by many factors detailed inthis presentation and in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on February 18, 2016 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 5, 2016,quarter ended June 30, 2016, filed with the SEC on August 4, 2016..

(in $ millions, except per share amounts)FY 2016

Guidance*Growth

Net revenue 2,350 – 2,400 6% - 8%

Adjusted EBITDA 565 – 580 6% - 8%

Adjusted Net Income 145 – 155 19% - 27%

Adjusted Income per Share – diluted** 1.16 – 1.24 16% - 24%

Adjusted Free Cash Flow 150 – 170 12% - 27%

Long Term Goals

21

Outlook – 2016 and beyond

* Guidance assumes spot foreign exchange rates as of July 28, 2016

** Based on expected FY fully diluted shares outstanding of 125m

By 2020, achieve:

$3bn Travel Commerce Platform revenue,with >1/3 in Beyond Air

> $250mAdjusted Free Cash Flow

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Redefining Travel CommercedbAccess European TMT Conference, September 2016


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