Ebookers.com surges on AOL Europe deal

Ebookers.com (Nasdaq: EBKR) rose 25 percent Tuesday after it inked a multi-year, multi-million dollar deal with AOL Europe, under which it will pay the company $24 million over two years.

Shares in ebookers.com were up 5 5/16 to 26 7/8. The company is the technology and travel spin-off from Flightbookers plc, a London-based travel agency, and competes with other online travel companies such as Priceline (Nasdaq: PCLN), Cheap Tickets (Nasdaq: CTIX) and Expedia (Nasdaq: EXPE), which has been successfully spun off from Microsoft (Nasdaq: MSFT). Expedia has already acquired TravelScape.com and VacationSpot.com since going public.

AOL Europe is a joint venture between America Online (NYSE: AOL) and Bertelsmann AG. Preview Travel (Nasdaq: PTVL), which merged recently with Sabre Holding's Travelocity, has a web site which serves as the primary travel service on America Online.

The exclusive two-year agreement makes ebookers.com a preferred travel partner across the AOL and CompuServe services in the UK, Germany, France, Switzerland, the Netherlands, Belgium, Luxembourg, Austria and Sweden. The agreement also includes the provision of similar promotions for AOL Europe's web-based brands, including Netscape Online in the UK.

Under the terms of the agreement, ebookers.com will pay a total of $24 million in scaled payments across a two-year period. The payments are based upon the delivery of pre-agreed and guaranteed levels of advertising and promotion. The two companies will engage in regular online promotions during the year, and ebookers.com's flight booking service will also be integrated into each service's Flight Centre.

The European on-line travel market is expected to grow at over 100 percent per annum through to 2003 -- twice the rate of the growth expected in the US, according to data from Jupiter Communications and Forrester Research.