Sabre Stays Profitable After Layoffs as the Company Vows to Become Nimbler
Skift Take
Investors liked Sabre's third quarter revenue and profit report. But the verdict is still out on whether the company is relying on cheap fixes like layoffs to hit its targets or if it is laying the groundwork for sustainable growth.
Has Sabre's executive team embarked on a brilliant pivot that returns the company to its former reliable status as a cash cow? Or, during a transitional period, does the company have underlying cracks in technology and talent investment that have undermined its foundations?
In releasing third quarter earnings Tuesday, Sabre reported that it expects to meet the revenue, profit, and cash-flow targets for 2017, but is it now heading on a path toward sustainable growth?
The Southlake, Texas-based company beat analysts' consensus estimates for the third quarter, and investors bid up the price of the company's stock.
That seems to be an expression of confidence in new chief executive Sean Menke. Menke has been selling investors on a narrative that his new leadership team understands how to lead the the company in retaining its profitable middleman status as an airline and hospitality technology vendor and distributor.
All this, though, comes despite suppliers talking about using new technologies to drive more direct sales.
But can Menke make the hard choices to drive long-term growth?
In the third quarter, Sabre saw its revenue rise to $900 million, up 7.3 percent from the same period a year earlier. This revenue gain came despite the hurricanes reducing passengers boarded by 1.3 million during the quarter. Sabre's profit rose $91 million, a 122 percent increase over the same period a year earlier.
Lowered Expectations
But a significant chunk of the profit came from the
