In His First Earnings Call, Menke Outlines Sabre’s Future Path

It always helps when your first company earnings call follows a solid performance for the previous year and the fourth quarter.

“I feel very fortunate,” Sean Menke, who has been chief executive officer of Sabre Corp. for 38 days, said in his opening remarks to analysts. “I have never been at a company as well positioned to win.”

Menke, however, warned that Sabre would not rest on its laurels, and he outlined a number of changes to come, both tangible and attitudinal.

As an alumnus of Air Canada, Frontier Airlines and Hawaiian Airlines, “I understand the importance of distribution,” Menke said. It’s more than just direct versus indirect. It’s about how products are created and sold.”

Sabre has to be the best distribution partner for everyone involved, he said, and “sometimes the GDS is falling short” of that goal.

“We are working to open new sources of revenue” for both airlines and agencies, he said.

A key element will be the sale of ancillary products and services, and the soon-to-be-rolled-out next iteration of the Sabre Red Workspace is “a huge leap forward.”

“It’s allowing agencies to absorb the content that airlines and hotels are trying to push out,” Menke said.

The issue of incentives is never far from any discussion of ancillary sales, and Menke noted a key difference in the mindsets of online agencies and brick-and-mortar operations.

“OTAs are interested in getting the transaction done,” he said. They are thinking about “how get their hooks into the customer.” Once they have reeled the customer in, they can start thinking about selling some extras.

Live agents, on the other hand, want to put their best product forward, complete with the personalized extras that will entice the customer. But that takes some extra effort, and the agent has to wonder, “What do I get for that?”

Menke believes that the way GDSs handle ancillary sales and other merchandising efforts will ultimately affect the broader issue of agency incentives. He wants agents to look at Sabre’s products and capabilities compared to the competition and “decide they are better off with our tools.”

Sabre reported net income for 2016 of $242.6 million, compared to $545.5 million in 2015. The decrease was due primarily to a decrease in income from discontinued operations. For the quarter, net income totaled $24.6 million, compared to $129.4 million in the fourth quarter of 2015.

Sabre Travel Network, the GDS business over which Menke presided for his first year and a half at the company, increased its worldwide market share of air bookings to 37.1% from 36.6%.

It increased revcnue 7.1% in the fourth quarter, to $569.1 million. Full-year Travel Network revenue increased 12.9%, to $2.375 billion, driven by global bookings growth of 14.2%. Excluding the Abacus acquisition, full-year global bookings increased 3.1%, driven by 5.7% growth in EMEA, 2.7% growth in North America and 0.8% growth in Latin America.