Sabre Corporation

Sabre Corporation is a technology company for the tourism and travel industry. Organized in 1959. Hundreds of airlines and thousands of hotels use Sabre software, databases, mobile technology and distribution solutions for processes such as air travel booking and hotel accommodation, revenue management, flight schedules, network development and crew resources.

Sabre also acts as a trading platform connecting travel service providers with end consumers. The company is headquartered in Southlake (Texas, USA). Sabre provides services to customers in over 160 countries worldwide.

Performance indicators

2022: Sabre calculated revenue losses due to import substitution in Russia and the termination of the agreement with Aeroflot

In 2023, compared to 2022, the American Sabre expects to receive less revenue of about $100 million from its IT solutions business, mainly due to changes in Russian legislation. This was reported in mid-February by Sabre CFO Mike Randolfi during a conference call with top managers and analysts on the results of the 4th quarter of 2022^[1].

According to Sabre's annual 10-K report, in 2022, the IT business generated revenue of about $688.7 million. And the total annual turnover of the company amounted to more than $2.5 billion^[2].

In 2022, the Russian market brought about 15% of all revenue from the business of Sabre IT solutions

Mike Randolfi during a conference call explained that Sabre managed to earn about $100 million in Russia in 2022, before new changes in the law came into force in the country. The annual report explains that direct revenue from customers in Russia for the reporting period amounted to about $85 million and another $24 million from a distribution agreement with one of the Russian companies.

Sabre had a distribution agreement, in particular, with Aeroflot. In March 2022, against the background of the Russian-Ukrainian conflict, the company announced its termination and removal of information about Aeroflot flights from its global distribution system (GDS), a trading platform used by travel agencies, travel sites and corporations around the world for shopping, booking and servicing air tickets^[3].

The changes in the Russian law that affected the financial results of Sabre mean the decree of the government of the Russian Federation No. 955, which began to operate in October 2022. It was released back in the summer of 2019 in order to protect the personal data of passengers and ensure technological independence. The decree obliged carriers to localize booking systems in Russia by the end of October 2021. But due to the coronavirus , the Ministry of Transport postponed the requirements for one year - until the end of October 2022.

These requirements have limited our ability to provide services in Russia, which has negatively affected and is expected to continue to negatively affect our revenue and results, Sabre said in its annual 10-K report.

In early November 2022^[4] Ministry of Transport reported that 53 Russian airlines had completely switched to domestic automated air transportation systems^[5].

Earlier, large carriers expected foreign providers to move their servers to Russia. The localization plans were announced, including Sabre. To do this, in 2019 she created a joint venture "Seibr Intergroup" with the system integrator Integro Technologies. But after February 24, 2022, this became irrelevant.

At the same time, unlike many other vendors, Sabre did not announce plans to completely curtail its business in Russia after February 2022. Moreover, in March, the company announced that it would retain a joint venture with Integro Technologies^[6].

Business in Russia

2022: Software developer for the sale and booking of air tickets Sabre terminated the distribution agreement with Aeroflot

The American system for booking and selling air tickets Sabre announced the termination of the distribution agreement with Aeroflot, the company said on March 3, 2022.

Sabre is taking immediate steps to remove Aeroflot flight information from its global distribution system (GDS), a marketplace used by travel agencies, travel sites and corporations around the world to shop, book and service flights, Sabre said.

This step is related to the Russian military operation in Ukraine. Sabre notes that their company acted and will act in accordance with the sanctions against Russia.

Aeroflot and Sabre have been cooperating since 2005

Sabre will continue to monitor the current situation and assess the feasibility of additional action, taking into account legal considerations and any response that may be taken.

Sabre also donated $1 million to the Polish Red Cross. In Poland, there is a significant part of refugees from Ukraine.

2018: Plans to create a joint venture and transfer servers to Russia

Sabre is ready to transfer servers to Russia within the framework of the requirements of the Russian government on the storage of personal data of Russians in the Russian Federation. This was announced in November 2018 by Aeroflot Deputy General Director for Information Technology Kirill Bogdanov^[7].

In 2019, to transfer servers, Sabre plans to create a joint venture with a Russian participant who will own control in the joint venture. Aeroflot told TAdviser that the joint venture with Sabre is not affiliated with their airline. At the time of publication, Sabre was unable to answer TAdviser's questions about the planned participant.

The management of Sabre with understanding reacted to the draft government decree on the approval of requirements for an automated information system for booking air transportation, the company's specialists developed a roadmap to ensure the fulfillment of these requirements, - said Bogdanov.

Aeroflot is one of the largest users of Sabre airlines systems "(photo - amakoexpo.eu)"

According to Aeroflot's deputy general director for IT, after the establishment of the joint venture, in 2019-2020. it is planned to create data processing centers on the territory of the Russian Federation for the transfer of personal data of airline passengers, and in 2021 - the transfer of all personal data and servers that ensure their processing to the territory of the Russian Federation.

According to Bogdanov, the cost of creating and transferring servers and databases is borne by Sabre^[8]

Kirill Bogdanov also noted that Russian systems of similar purpose are inferior in functionality, "cannot meet the needs of the airline at the global level" and are suitable only for carriers of the "second tier" (5-7 million passengers per year)^[9].

Aeroflot CEO Vitaly Savelyev, at a meeting with Prime Minister Dmitry Medvedev, later noted that the Sabre platform was chosen in 2005, and that the company "also understands the situation in which they are."

According to Sabre's financial results reports, Aeroflot is for it the second largest client in the direction of systems for airlines.

As of November, the Ministry of Transport is preparing amendments to the July draft resolution obliging all companies providing air carriers with online booking and purchase services from January 1, 2020 to post personal data in storage facilities in Russia and process them on local servers. After "consultations with airlines," the deadline for fulfilling the requirements has been postponed until October 31, 2021.

History

2021

Kurt Eckert's appointment to the presidency

On December 20, 2021, Sabre Corporation announced the appointment of Kurt Ekert as president of Sabre. Thus, the company shares the roles of CEO and corporation president as part of a strategy to form a leadership team for the future of Sabre. The appointment decision comes into force on January 3, 2022. Read more here.

Sale of Flight Control Software Business Sabre AirCentre for $392.5 Million

On October 28, 2021, Sabre announced the sale of the flight control software development division Sabre AirCentre to CAE for $392.5 million. The perimeter of the transaction includes the Sabre AirCentre product portfolio, related technologies and intellectual property, as well as the AirCentre team of specialists. Completion of the transaction is expected in the first quarter of 2022 and depends on the fulfillment of normal conditions and regulatory approval. Read more here.

2019

Consolidated revenue growth 2.8% to $3.975

On March 10, 2020, Sabre Corporation announced its financial results for the fourth quarter and calendar year ended December 31, 2019.

According to the company, in 2019, Sabre's consolidated revenue grew to $3.975 billion, which is 2.8% more than in 2018 ($3.867 billion).

Operating profit amounted to $363.4 million in 2019 against $562 million in the same period a year earlier. The decrease was primarily due to technology costs, as well as an increase in incentive awards (incentives) in the Travel Network division and financing of business acquisition transactions. This was partially offset by steady revenue growth and a return of $31.8 million in a legal dispute with US Airways. In the reporting period, technology costs increased by $206.2 million. This was mainly due to a change in the structure of capital expenditures on technology and a corresponding decrease in investment, which did not affect the total amount of expenses on technology and free cash flow. These changes were related to the implementation of the company's previously announced technology strategy, which includes migration to the cloud infrastructure, abandonment of mainframes and the use of agile development methods, which increased the expenditure part of the total investment in technology.

Net income distributed to common stockholders was $158.6 million versus $337.5 million in 2018. Diluted net income payable to ordinary paper holders (EPS) decreased from $1.22 in 2018 to $0.57 in the reporting period. This decrease is due to the factors described above that affected operating income, as well as rising tax rates.

Consolidated Adjusted EBITDA excluding software capital expenditure, which reflects capital investment and technology expenditure, was $857.2 million, down 1.3% year-on-year ($868.8 million). The decline was driven by a moderate increase in overall technology costs and incentive awards (incentives) at the Travel Network division, which was partially offset by robust growth in the company's revenue.

The adjusted indicator of consolidated operating profit decreased by 26.8% to $513.4 million (against $701.4 million in 2018). This is driven by an increase in incentives (incentives) in the Travel Network division and increased technology costs, which were partially offset by robust revenue growth.

In 2019, adjusted earnings per share decreased to $1.01 from $1.54 in 2018.

2019 cash flow indicators (compared to 2018):

• Operating cash flow amounted to $581.3 million (versus $724.8 million);
• The volume of invested funds reached $243.0 million (against $275.3 million);
• The amount of funds used in financing increased to $409.7 million (against $306.5 million);
• Free cash flow reached $466.1 million (versus $440.9 million).

We ended 2019 with a substantial increase in GDS 'share of the Travel Network division, a sustained increase in revenue at the Airline Solutions division, and continued intensive revenue growth at Hospitality Solutions. We also made significant advances in the technology transformation of the business and generated free cash flow that outpaced our forecasts. The tourism ecosystem is transforming as the needs of our customers - airlines, hotels and agencies - change. In order to help them increase revenues and increase the loyalty of travelers, we must continue to develop technologies for retail, distribution and travel. We are developing ways to apply data analytics, artificial intelligence, machine learning, and cloud services to everyone in the ecosystem. Our strategic initiatives are aimed at creating and distributing personalized offers, including according to the NDC protocol, introducing innovations and developing the business of low-cost air carriers, creating a fully functional hotel management system and completing our technological transformation. We have already taken the first steps in implementing these initiatives, namely, we acquired Radixx, intend to complete the deal to buy Farelogix and announced plans to cooperate with Accor. In addition, we have entered into a strategic partnership with Google to accelerate our technological transformation and open up other opportunities for future revenue growth. 5 billion people fly around the world annually. Receiving only one additional dollar per passenger can bring the tourism industry another $5 billion in revenue. In 2020, we plan to spend $150 million on technology investments to create an advanced trading platform that will help expand the boundaries of our target market and reduce costs. The 2020 financial outlook already includes these additional costs. We also set a goal of ensuring long-term growth in the profitability of the business. Since the beginning of 2020, the global health crisis caused by the coronavirus (COVID-19) has been affecting travel bookings, but more importantly, the lives of people around the world. For March 2020, the situation continues to develop, and although we hope that it will be short-term, the consequence of the coronavirus will affect our financial results in 2020. For March 2020, we have not yet adjusted the forecast indicators for this factor. narrated by Sean Menke, President and CEO of Sabre

In 2019, the company paid $231.1 million to shareholders, of which $153.5 million as part of programs to pay quarterly dividends and buy back 3.7 million shares for a total of $77.6 million.

Main events:

• Acquisition of Radixx and investment in low-cost airline solutions aimed at developing Sabre's business in this rapidly growing market segment;
• Announcing plans to create a fully functional hotel management system in partnership with Accor Hotel Group;
• Partnering with Google Cloud to leverage technology in data analytics, artificial intelligence, machine learning and cloud services;
• In 2020, the company plans to allocate $150 million to support strategic initiatives aimed at switching the Sabre marketplace from a traditional mainframe architecture to a cloud client-centric platform by 2024.

Key Financial Indicators:

• Revenue in the fourth quarter of 2019 was $941.4 million, and for the full year of 2019 - $3.975 billion;
• Net income paid to common stockholders reached $10.1 million in the fourth quarter and $158.6 million at the end of 2019;
• Diluted net income per share (EPS) paid to common stockholders was $0.04 in the fourth quarter and $0.57 in the full year 2019 results;
• Adjusted earnings per share (EPS) was $0.16 for the fourth quarter and $1.01 for the full year 2019.

Acquisition of Radixx

On October 21, 2019, TAdviser learned that Sabre Corporation, a technology provider to the global tourism and travel industry, announced the acquisition of Radixx, an aviation retail software provider that has a strong position in the low-cost transportation segment. Read more here.

Opening an innovative lab in Boston

On August 29, 2019, Sabre Corporation announced that it had opened a laboratory in Boston. The opening ceremony on August 21, 2019 was attended by Boston Mayor Marty Walsh, Sabre CEO Sean Menke and Sabre Labs President Sandar Narasimhan, a native of Google.

According to the company, the laboratory will become the headquarters of Sabre Labs, Sabre's global R&D division. It is exploring ways to use big data, machine learning, artificial intelligence and other promising technologies that shape the future of the travel industry. Sabre has strategically selected Boston's popular Seaport District and plans to leverage the city's innovative environment built through world-renowned research institutes and a community of leading technology companies.

Boston has become an obvious choice for our center. This city is developing an active technology community and has access to talent from the country's leading technical universities. In this lab, our team of software engineers will work hand in hand with Sabre's product development teams and clients to accelerate the creation of next-generation solutions that transform the travel business. narrated by Sandar Narasimhan, President of Sabre Labs and Product Development Strategy

In 2018, Sabre technologies brought in a total revenue of $3.9 billion, which confirms the company's many years of expertise in the field tourism and technology. Sabre operates a tourist trade site with operations of more than $120 billion per year. Hundreds of airlines, more than 42,000 hotels, thousands of agencies and numerous other players in the travel industry, including rental cars companies and cruise operators, use SaaS Sabre's portfolio of solutions - from luggage tracking products to intelligent solutions. to retail

The lab occupies a workspace of about 1,000 sq m (10.635 sq ft) that will create 60 additional jobs in Boston. With its launch, Sabre will expand its global workforce, which is about 9,000 as of August 2019, as well as its presence in Massachusetts, where the city of Watertown is also home to the Sabre Hospitality Solutions office.

Relocation of the development center in Krakow and appointment of its head

Sabre announced the transfer of the development center in Krakow,, Poland to another site. According to the company, it will be located "in one of the most progressive office buildings in the city," which will provide conditions for the development of the company's development capabilities. The head of the center was appointed (Sebastian Drzhevetsky Sebastian Drzewiecki), an expert with many years of experience in the field of technology.

One of Drzhevetsky's first tasks was to form a world-class corporate campus culture and improve operational efficiency. He will manage the relocation of the development center to the "green" building "Tischnera." Construction is scheduled to be completed in August and Sabre intends to begin operating it by the end of 2019. The office is expected to not only increase its workforce, but also provide an enabling environment for rapid innovation. The team will have more than 15,000 sq. m and four green terraces with a total area of ​ ​ 1400 sq. m.

Getting IATA ONE Order Certificate

On April 2, 2019, it became known that Sabre Corporation, a technology provider for the global tourism and travel industry, received an official certificate of compliance with the IATA ONE Order standard for dealing with air ticket transactions as an order management system (Order Management System) and document management provider.

ONE Order is an important part of Sabre's order management concept, which the company implements in the Sabre Commercial Platform solution. The IATA standard will ensure that passengers are provided with all services included in the airline's personalized offer.

Sabre is committed to improving the process of providing travel services with effective technologies, "said Rodrigo Celis, Sabre Senior Vice President of Commercial Solutions. - Our order management concept is beyond the ONE Order standard. It involves real-time data transfer, decision support and maintaining the integrity of the offer in non-standard situations on the airline side. This is the next step in our development strategy. In the future, we also plan to obtain ONE Order certification for air transportation and additional services.

2018: 7.5% increase in consolidated revenue to $3.867 billion

Sabre Corporation, a technology provider to the global tourism and travel industry, announced its financial results for the twelve months of 2018 ended December 31, 2018 on February 21, 2019.

In 2018, Sabre's consolidated revenue grew to $3.867 billion, which is 7.5% more than in 2017 ($3.598 billion).

Operating profit reached $562 million against $493.4 million a year earlier. At the same time, the effect of sustainable income growth and the program for optimizing the expenditure part and business processes, initiated in August 2017, was significantly offset by an increase in the share of incentives for the Travel Network division, increased technology costs and depreciation indicators.

Net income distributed among ordinary shareholders reached $337.5 million against $242.5 million a year earlier (+ 39.2%). Diluted net profit payable to ordinary holders increased from $0.87 to $1.22 (+ 40.2%). The increase in indicators is associated with the points indicated above, as well as with a decrease in the tax rate USA in and payments made by the company in previous reporting periods.

The adjusted indicator of consolidated operating profit decreased by 0.7% to $701.4 million (against $706.1 million in 2017). This is due to the growth in incentives of the Travel Network division, increased technology costs and depreciation indicators, which were partially offset by revenue growth and a program to optimize expenses and business processes, launched in August 2017, the company explained.

In 2018, adjusted earnings per share rose 10% to $1.54 from $1.40 a year earlier.

Cash flow indicators for 2018 (compared to 2017):

• Operating cash flow rose to $724.8 million (vs. $678.0 million)
• The volume of invested funds reached $275.3 million (against $317.5 million)
• The amount of funds used in financing decreased to $306.5 million (against $356.8 million)
• Free cash flow reached $440.9 million (vs. $361.6 million)

In 2018, Sabre paid $180.4 million to shareholders, of which $154.1 million as part of programs to pay quarterly dividends and buy back 1.1 million shares for a total of $26.3 million.

2017: 6.7% increase in consolidated revenue to $3.598 billion

In 2017, Sabre's consolidated revenue grew to $3.598 billion, which is 6.7% more than in 2016 ($3.373 billion).

Consolidated net income distributed to common shareholders reached $242.5 million versus $242.6 million a year earlier. Diluted net profit payable to ordinary holders increased from $0.86 to $0.87 (+ 1.2%).

Adjusted EBITDA rose 3.1% to $1.078.6 million ($1.046.6 million in 2016). This was made possible by the increase in EBITDA in the Airline Solutions, Hotels (Hospitality Solutions) and Travel Agencies (Travel Network), which occurred in part due to the increase in the cost of corporate products and technologies.

In 2017, adjusted earnings per share rose 6.9% to $1.40 from $1.31 a year earlier.

Cash flow indicators for 2017 (compared to 2016):

• Operating cash flow was $678.0 million (vs. $699.4 million)
• The volume of invested funds reached $317.5 million (against $445.8 million)
• Funding increased to $356.8 million (vs. $190.0 million)
• Free cash flow for 2017 reached $361.6 million (versus $371.8 million)

Indicators of capital investments in 2017 (compared to 2016):

• Capital expenditures decreased to $316.4 million (from $327.6 million)
• Adjusted CAPEX, including implementation cost, was $377.2 million (vs $411.1 million).

Personalization of the service

"Personalization" is increasingly used by companies from different industries. Usually this concept is associated with retail and tourism, since it is in these industries that a colossal amount of data accumulates. The promise to create individual offers for consumers in real time, indeed, most often comes from retailers who, in conditions of fierce competition, are the most difficult to keep the attention of a potential client. In the tourism and travel industry, this process looks even more complex. You need not only to encourage a visitor to the site to buy, but also to make the entire process of searching and choosing services as personalized as possible so that the potential client can find exactly what he needs in the shortest possible time. At the same time, booking a trip is only the first stage of the trip, so speaking of personalization in tourism, you need to take into account a lot of other opportunities.

In the tourism and travel industry, personalization implies that customer profiles must be constantly updated as a traveler contacts each time. To do this, companies need to use effective solutions for processing personal information in order to obtain correct data that will be used in the formation of customized proposals. In other words, this is a constant process of working with data, which should be based on a reliable technological platform with advanced intelligent functionality.

Personalisation has always been one of the foundations of the hospitality industry - welcoming a guest by name or remembering which products they are allergic to. The mobile revolution has brought "big data" to every decision-making process, challenging the industry new and driving it to modernize its approach to customer service. Now calling a guest by name three times is no longer personalization in the modern sense. But if technology can solve the task of processing and quickly analyzing client data, the tourism industry should not forget its basics - warmth, kindness and hospitality, which form a bright and unforgettable experience of travel. This is also important, as is the invisible client profile.

Notes