Sabre Files for Long-Awaited IPO

Sabre filed an S-1 registration statement with the Securities and Exchange Commission for its long-anticipated initial public offering.

Sabre has not determined the number of shares to be issued or the timing of the IPO, but it expects to raise up to $100 million.

In the statement, Sabre disclosed that it recorded a net loss of $127 million on revenues of $2.3 billion for the first nine months of 2013.

During that period, Sabre Travel Network contributed 57% of the company’s revenues. Airline and Hospitality Solutions contributed 22%, and Travelocity contributed 21%.

‘Strong value proposition’
In the filing, Sabre said its “strong value proposition is demonstrated by our ability to retain customers in a highly competitive marketplace.”

For 2010 to 2012, Sabre Travel Network’s customer retention rate was 99%.

But Sabre cited pricing pressure from travel suppliers as a risk factor.

“Travel suppliers continue to look for ways to decrease their costs and to increase their control over distribution,” it said.

Airlines & the economy
“For example, the consolidation in the airline industry and the recent economic downturn, among other factors, have driven some airlines to negotiate for lower fees during contract renegotiations, thereby exerting increased pricing pressure on our Travel Network business, which, in turn, negatively affects our revenues and margins.

“In addition, travel suppliers’ use of alternative distribution channels, such as direct distribution through supplier-operated websites, may also adversely affect our contract renegotiations with these suppliers and negatively impact our transaction fee revenue.”

Travel agency business
On the travel agency side of the business, Sabre said no single company accounts for more than 10% of its booking revenue. However, bookings made by the five largest travel buyers represent more than one- third of its Travel Network revenue.

Sabre noted that Expedia shifted a significant portion of its business from Sabre Travel Network to “a competitor GDS” in late 2012, resulting in a year-over-year decline in transaction volumes in 2013.

That competitor was Amadeus, which received a significant boost in U.S. booking volume from Expedia’s switch.

58% market share
Sabre said it is the leading GDS provider in North America, with a 58% share of GDS-processed air bookings in 2012.

It also claimed leadership in the “higher growth markets” of Latin America (58%) and Asia Pacific (40%).

Sabre has been privately held since 2007, when it was acquired by TPG Funds and Silver Lake Funds.