Even if you already have the world's largest computerized airline reservation system, it doesn't hurt to extend your reach further into Europe. In an effort to become the dominant travel reservation destination on the Web, SabreHoldings (NYSE:TSG) made a bid for British rival lastminute.com.

Travel leaders Sabre, IAC/Interactive (NASDAQ:IACI), and Cendant (NYSE:CD) fear that new players in the global distribution system, like privately held G2 SwitchWorks, will take a chunk of their market share. Seven airlines have already signed onto G2's alternative system. To beat back forays like this, Sabre needs to improve its position. Travelocity is turning around, reporting a 75% increase in earnings per share in 2004 and travel bookings of $4.9 billion. Just last week, the company reported an additional 42% increase in earnings on a 7.8% increase in revenues, with gross bookings up 27% for the quarter.

The lastminute.com acquisition -- valued at $1.08 billion -- will give Sabre Europe's leading travel company, with some 2,000 employees who sell Internet flight and vacation packages in 13 countries. Sabre, Cendant, and IAC's Expedia compete ferociously for online bookings of airfare and hotel rooms, a segment that is growing quickly. Jupiter Media anticipates that as many as one-third of all reservations will be placed via the Internet by 2009, up from 6% in 2000. Forrester Research predicts leisure travel services in the U.S. alone will reach $110 billion by then.

While the deal gives Travelocity an expanded presence in Europe, it still faces competition from the ailing airlines, which are increasingly selling fares through their own Web sites. The acquisition will help to increase Sabre's leverage, enabling it to offer better prices to customers and remain competitive with the airlines own sites.

It's possible that one of Sabre's rivals could offer a competing bid before the deal is completed. At an offer price of $3.08 per share, Sabre's bid represents a 57% premium to lastminute.com's share price at the close on the day the deal was announced. Or it could snatch up another company. Travelzoo (NASDAQ:TZOO) got a lift from the acquisition news, rising almost 10% amid speculation that it might become a takeover candidate as well.

If Sabre Holdings ultimately prevails in its bid, watch for the competition to start sharpening their own sabers, looking for some acquisitions of their own.

For more high-flying Foolishness:

Cendant is a Motley Fool Inside Value recommendation; Priceline.com was recommended in Motley Fool Stock Advisor .

Fool contributor Rich Duprey does not own any of the stocks mentioned in the article.