Sabre Revs Up for Further Growth in 2016

Sabre travel agents can expect the “next big release” of the Sabre Red Workspace this summer, chief executive officer Tom Klein said today. 

During a conference call with investment analysts to discuss the company’s fourth quarter and full year earnings, Klein said the upgraded desktop will include graphical merchandising capabilities that support increased ancillary and branded fare sales, and enhance hotel capabilities. 

It also will include agency revenue-optimization tools and “a beautifully designed user interface that will maximize agent productivity,” he said. 

Klein said Sabre has seen little change in booking patterns since the imposition of Lufthansa’s “Distribution Cost Charge,” a surcharge on GDS bookings imposed in September. 

“We haven’t seen any big shift,” he said. He suggested Sabre might be picking up those bookings by using Lufthansa’s code-share partners.  

“It’s a little muddy from a strategy perspective,” he said, noting that the move could increase costs and decrease traffic. But, he added, “the business model has to change, and we are having discussions with Lufthansa on how they can use our technology to deepen relationships with their customers.” 

An analyst asked about the effect of Sabre’s new connection with American Airlines to facilitate the sale of paid seats in the GDS. The connection is compliant with IATA’s New Distribution Capability standard. 

Klein was almost dismissive in his response. “IATA standards don’t drive innovation,” he said. “They never have and they never will.  

“NDC is an idea, and technology providers like us are going to have to make that idea real and bring it to light for customers, and be able to sell real technology that can provide new capability. There has been a lot of puffery around the concept of NDC, but NDC is a white paper, and companies like ours need to bring real technologies to market,” Klein said. “That’s what we did with American Airlines.” 

Klein said he expects other standards to evolve and “do a better job than what’s been mapped out by IATA. The onus is on us and some of our competitors to make that stuff happen.” 

Sabre Corp. “hit its stride” in 2015 and is “well-positioned” to maintain its momentum this year, Klein said.  

The company reported net income of $130.4 million for the fourth quarter, up from $46.9 million in fourth-quarter 2014, and $548.9 million for the full year, up from $71.9 million in 2014. 

Total revenue for 2015 was up 12.5%, to $2.96 billion. 

Sabre Travel Network, the company’s GDS business, increased revenue by 13.4%, to $2.1 billion. Bookings were up 17.7%, to 442.7 million, boosting Sabre’s worldwide market share by a full point, to 36.6%. 

The increases were largely due to Sabre’s acquisition of Abacus International, the Asian GDS company, at the end of June. 

The Airline and Hospitality Solutions business also had a good year, with revenue up 10.9%, to $872.1 million. 

Sabre expects revenue growth of 14.5% to 15.8% this year, and net income growth of 28.2% to 34.7%. 

Klein noted several achievements in 2015: a nearly glitch-free migration of US Airways to American Airlines’ Sabre passenger services system; the introduction of more than 30 new IT solutions, and the acquisition of the “very well-managed” Trust International, a provider of reservations and distribution solutions for hotels.  

In addition, Sabre Travel Network did well in the EMEA region, outperforming the market, he said.

Pic: FHKE