Sabre swings to $326 million first-quarter loss

Currency concept. Business get down

Sabre Corporation has mirrored rival travel tech player Amadeus in posting some very dour financial results for the first quarter of 2020.

After posting a US$57 million ($87.4 million) profit in Q1 of 2019, Sabre swung to a US$212.7 million ($326.1 million) loss in the first three months of this year.

The company blamed its big change in fortunes to significant reductions in air, hotel and other travel bookings driven by the COVID-19 pandemic, along with a $46 million ($70.5 million) charge in connection with the termination of its takeover deal with Farelogix.

Sabre’s consolidated first-quarter revenue totalled $659 million ($1 billion), down 37.2 per cent compared to the US$1 billion ($1.6 billion) worth of revenue in the prior corresponding period.

Revenue for Sabre’s travel network division fell 44.7 per cent to US$427.7 million ($655.8 million). The company’s airline solutions revenue dropped 15.5 per cent to US$179.9 million, and its hospitality solutions revenue slid by 18.7 per cent to US$59.2 million ($90.8 million).

According to chief financial officer Doug Barnett, approximately 15 per cent of Sabre’s revenue is not tied to travel volumes, which “partially mitigates” the company’s exposure to COVID-19’s impact on travel.

“However, new bookings made in March declined 70 per cent year over year, and net bookings were negative due to a significant amount of cancellations,” he said.

“This trend continued in April, with the drop-off of new bookings exacerbated by cancellations.

“As of quarter-end, we have recognised US$105 million ($161 million) in revenue from bookings that have not yet departed and have a cancellation reserve of US$44 million ($67.5 million) on our balance sheet.”

Barnett noted that roughly two-thirds of Sabre’s cost structure is variable or adjustable, “which provides protection in a downside scenario”.

Sabre’s CFO added that the company has significant liquidity to withstand a prolonged travel downturn and has no expected significant near-term liquidity needs.

“Based on our estimated cash burn rate of approximately $80 million ($122.7 million) per month, we believe we have more than a year and a half of liquidity even in a zero bookings environment,” Barnett said.

In March, Sabre announced over US$200 million ($338 million) in cost-saving actions to minimise the impact of COVID-19.

The company has since increased the scope of its initiatives and is now targeting total cost savings of approximately US$325 million ($498.3 million) in 2020.

Featured image: iStock/sorbetto

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