Sabre, the largest travel technology provider in North America, said on Wednesday it had acquired Radixx, a seller of passenger service systems to small and budget airlines such as FlyDubai, for about $110 million in cash, including payments to debtholders.
Sabre expects Radixx will generate about $20 million of revenue in 2019.
Radixx’s flagship product is a passenger service system. This technology helps an airline take bookings on their websites, helps its agents board passengers, and helps it handle other operational tasks.
The market for passenger service systems has consolidated in the past decade. Radixx primarily served low-cost carriers and other small airlines.
“By combining Radixx technology and expansive LCC (low-cost carrier) customer base with Sabre’s expertise, scale and global service capabilities, this acquisition will result in a better alternative for low cost carriers that might have otherwise felt their PSS (passenger services systems) and other technology options were limited,” said Sabre CEO Sean Menke. “This acquisition also allows Sabre to quickly expand its footprint both geographically and in terms of scope of service with an important and rapidly growing segment of the airline industry.”
In 2015, Amadeus bought Radixx’s larger and faster-growing rival, Navitaire, for $830 million. Amadeus added Navitaire as an alternative for airlines to its Altéa passenger service system, which serves more than 100 network carriers. Amadeus has since owned a majority of the world’s roughly $5 billion airline information technology market.
Sabre has long had a premium product, SabreSonic. The acquisition of Radixx will mimic Amadeus’s acquisition of Navitaire — albeit on a smaller scale — by adding more budget airline customers. The low-cost carriers didn’t like the functionality or cost of SabreSonic.
Smaller players include IBS Software (used by TruJet and others) and AeroCRS (used by AirKenya and others).
Sabre and Amadeus together account for roughly three-quarters of last year’s $5 billion in airline information technology sales. Amadeus led significantly, boarding about 1.85 billion passengers via its systems last year.
Smaller players include the airline-owned SITA (Société Internationale de Télécommunications Aéronautiques), which attempted to build an updated passenger service system over the past decade. But only a couple dozens small carriers have adopted SITA’s Horizon passenger management and distribution product.
Emirates has built a passenger service system, but it has few outside takers.
Delta built its AIR4 system, which only Virgin Atlantic has adopted. HP used to provide the core systems for a significant number of airlines. But it has pulled back, given its more significant troubles.
TravelSky, a tech company backed by the Chinese state, has built a passenger service system used in China and some parts of Asia.
Radixx’s other core product is an internet booking engine that helps airlines take bookings on their websites. Sabre plans to operate Radixx as a standalone subsidiary through its Airline Solutions business. Robert W. Baird & Co. acted as financial advisor to Radixx in the transaction.
Sabre is continuing to pursue a $360 million acquisition of Farelogix, an airline tech vendor that helps airlines with distribution, but it is still jumping some legal hurdles.