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With the September swoon in its airline ticket sales continuing into last month, struggling electronic-commerce venture Priceline.com has announced a series of restructuring moves that includes a 16 percent reduction in its workforce.

The company disclosed the layoffs while reporting its third-quarter financial results, which made it official that Priceline's discount-ticketing business headed south in the summer and is continuing to do so. Ticket sales last month were down about 20 percent from their already-weak September levels, the company says.

Demand for tickets "has stabilized over the last few weeks," says Daniel Schulman, Priceline's president and chief executive officer. But fourth-quarter revenue is expected to decline from the $341 million total that Priceline reported for the third quarter, he adds.

As a result, Priceline is laying off about 90 of its 535 employees. The company is also appointing a new chief operating officer, and its chief financial officer is resigning. In addition, Priceline plans to implement a new compensation program "designed to retain and motivate key employees," Schulman says.

Better Service Promised

Schulman also vows to improve Priceline's customer service capabilities. The company's development, customer service, and marketing groups "are working on enhancements to our Web site, product delivery and [other] processes to incorporate both consumer and third-party feedback," he says. "These teams are also looking at new ways to ensure that customer questions or issues are promptly and fairly addressed."

A Priceline affiliate that operated in 23 states, Priceline WebHouse Club, recently closed its doors, saying it was not profitable. The site was criticized by Massachusetts and Connecticut attorneys general for some of its sales and tax-collection procedures. The Priceline.com licensee Perfect YardSale, an auction site, also closed in October after one year of business. (See "Priceline.com Affiliates Close their Digital Doors" and "Priceline Shoppers Face Taxing Problem.")

For the third quarter, Priceline reported a net loss of $2 million. The decline in airline ticket sales has been the primary cause of the company's problems. Schulman says nonairline revenue grew $10 million in the third quarter, but airline sales, which are the lion's share of Priceline's business, dropped more than $20 million, he adds.

The site has recently gotten competition from an upstart, Hotwire, that focuses on discount airline ticket sales. (See "Hotwire Challenges Priceline for Online Deals.")

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