Travel tech giant Sabre is taking significant measures to strengthen its financial position in response to current industry conditions impacted by the COVID-19 pandemic.
Sean Menke, president and CEO of Sabre, said that while the global travel industry is facing challenges beyond what it has experienced before, he believes the company is well-positioned to navigate its way through the turbulent environment.
“We are fortunate that significant aspects of our cost structure are variable and are taking steps to help align our other costs with the current demand environment,” he said.
“We have identified and are in the process of removing over US$200 million ($338 million) in cash costs from the business in 2020.
“Given the magnitude of travel decline and the unknown duration of the COVID-19 impact, we will continue to monitor travel activity and take additional steps should we determine they are necessary.”
As part of these cost reductions, Sabre has begun implementing several immediate actions with regard to its workforce and other costs during this difficult business climate.
These actions include a temporary reduction in base compensation pay for its US-based salaried workforce, including a 25 per cent reduction for its CEO, and Sabre will work with international employees on a country-by-country basis.
Additionally, there will be reduction in the cash retainer for members of its board, and Sabre’s 401(k) match program will be temporarily suspended for US-based employees who contribute to this.
On a global basis, Sabre is offering voluntary unpaid time off, voluntary severance and a voluntary early retirement program for staff. The company is also reducing third-party contracting, vendor costs and other discretionary spending.
Sabre noted the decline in global travel driven by the COVID-19 outbreak is expected to result in a proportional decline in Sabre Travel Network’s incentive expense, and a reduction in Sabre’s approximately $250 million semi-variable technology hosting costs.
In addition to the cost reductions, Sabre’s board of directors voted to suspend the payment of quarterly cash dividends on the company’s common stock, effective with respect to the dividends occurring after the March 30 payment.
Sabre has also suspended its share repurchase program and withdrawn its FY20 earnings guidance provided in February.