The Rise of the Emerging Market Traveler Sponsored This content is created collaboratively with one of our sponsors.
Despite stalled growth in China, Brazil and Russia, a wave of newly middle-class travelers from the BRICs and beyond will start visiting international destinations in the coming decades — dwarfing the numbers we’ve seen thus far.
Neither American Airlines nor Sabre got exactly what they wanted in their protracted lawsuits, but Sabre was clearly the loser. American didn’t obtain an edict that the global distribution industry is an anticompetitive monopoly, but it forced Sabre to cease its hostile acts and picked up a $200 million settlement in the bargain.
When American Airlines and Sabre finally settled their mudslinging, take-no-prisoners federal and state antitrust and breach of contract lawsuits in October 2012, the two adversaries were sworn to secrecy.
It appeared at the time that Sabre had come out on the short end of things, but its IPO registration statement filed today reveals to what extent — and you can follow the money.
Sabre had to make some large payments to American Airlines.
Sabre took a settlement charge of $222 million, net of tax, and says it made a $100 million payment to American Airlines in December 2012, and sent off another $100 million cheek to American Airlines last month.
Why They Were Fighting
The latest battle in the ongoing wars between the two partners reached a critical point in January 2011 as American Airlines’ pursued a months-long effort to get travel agencies to establish direct technology ties with the airline to get flight inventory and fares instead of have them go through Sabre for connectivity and services.
Sabre responded by biasing the display of American’s flights in the system that Sabre’s travel agency customers use, making those flights difficult to find, and Sabre began charging American exorbitant fees.
More Sabre IPO Coverage:
- Expedia Is Now Selling Travelocity’s Hotels Under 8-Year Agreement
- Sabre Files For IPO, Reveals Years of Financial Losses
- Travelocity Gives In, Sites To Be Powered by Expedia
American sought more than $1 billion in damages for what it considered to be Sabre’s anticompetitive practices.
Under the agreement, in addition to the $200 million in payments that Sabre had to make to American, the two parties renewed their distribution agreement, and another one between Travelocity and American was also renewed.
Neither party admitted any wrongdoing.
In its IPO papers, Sabre stated that its airline and hospitality IT unit is currently negotiating “additional/new agreements” to supply the airline with an internal reservations system. Sabre currently supplies American with its airline reservations system, and US Airways would presumably be transitioned to that system, as well.