Sabre continues to diversify its business by adding technology products, a good investment as the travel industry slowly but surely changes over the years.
Despite uneven demand in 2022, Sabre expects continued overall recovery leading to positive free cash flow for the company by the end of this year.
Uneven demand — though higher overall — was driven by a resurgence in Covid-19 cases, airline and airport operational constraints, airline capacity limits, and regional travel restrictions, Sabre executives described during an earnings call on Wednesday.
The Texas-based company provides operational software and distribution services to travel agencies, airlines, and hotels.
The number of bookings in the fourth quarter took a hit, primarily in corporate travel and the Asia Pacific region, but those numbers seem to be returning to the recovery trajectory and getting stronger each week. Another hit: Sabre expects a headwind this year of about $100 million in IT solution revenue, primarily because of a new Russian law that forced the company to end those operations there.
Overall, any setbacks seem to have been one-time or temporary, said Kurt Ekert, president of Sabre. The company has calculated those into its projections and is continuing to move forward with other investments, ready for any other unexpected events over the next year.
“As we look at the balance of 2023, we are optimistic on overall demand and recovery levels moving forward, but prepared for the possibility of further unevenness in 2023,” Ekert said.
“Accordingly, we will be responsive to changes in volume growth and control cost as needed to focus on achieving positive free cash flow this year. And while we will adjust as needed to external market conditions, we remain focused on the key long-term strategic opportunities for our business.”
Sabre counted 637 million passengers boarded in 2022, an increase of 30 percent from the previous year.
The company expects to complete this year with revenue between $2.8 billion and $3 billion. That number was $2.5 billion in 2022, an increase of 50 percent from 2021. Operating loss in 2022 was $261 million, versus $665 million in 2021.
Continued Tech Investment
Sabre is continuing its transition to Google Cloud, with a nearly full transition expected by the beginning of 2025. The company ended 2022 with approximately 66 percent of its total compute capacity in Google Cloud, expected to reach 90 percent by the end of this year.
The company exited all four of the datacenters it managed in Texas.
Development work for offloading the primary customer reservations database has been completed, and customer data migrations are on track to be completed this year. That work is in addition to the transfer work the company announced in November, including the full migration of SynXis software systems.
By the time the migration is complete, Sabre expects to have saved $150 million in computing costs.
“We continue to expect that by significantly reducing the complexity and increasing the agility of our technology architecture, we can better serve our customers at a significantly lower overall cost,” Ekert said.
Sabre expects the migration will enable it to expand product offerings, like airline retailing and merchandising, as well as the hospitality central reservation system and new products that came with the acquisition of Nuvola.
Ekert expects to see investments in those product offerings pay off in the years ahead.
Sabre on Tuesday announced a multi-year renewal of JetBlue’s contract to use Sabre’s passenger service system and global distribution system.
“Should their proposed merger [with Spirit Airlines] be approved, we believe we are very well positioned to help JetBlue expand,” Ekert said.
In November, the company announced a partnership with Mastercard to accelerate the use of virtual cards for business-to-business travel payments.
“This announcement builds upon our acquisition of Conferma, which we acquired in August 2022, and furthers our strategy to create an open and independent travel payment ecosystem,” Ekert said.
The company is also continuing to build on recent partnerships made with BCD Travel, American Express Global Business Travel, and Hopper.
“Our new agreements, and joint technology partnerships with GBT and BCD, are providing incremental bookings to Sabre’s network and are expected to continue to drive additional growth as migration continues, while also yielding opportunities to improve our customers’ overall experience,” Ekert said.
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Photo credit: Sabre believes it can help JetBlue grow if it merges with Spirit Airlines as planned. Eric Salard / Wikimedia Commons