Big tech companies everywhere have been dropping staff, and now it's Sabre's turn. This may also be a result of a permanently changed travel industry post-pandemic and Sabre's effort to keep up.
Sabre is cutting 15 percent of its workforce, part of an effort to save $200 million annually.
Sabre previously reported that it had employed nearly 7,500 people at the end of 2022.
The announcement came during an earnings call Thursday morning, the first for Kurt Ekert since he was named CEO in March.
“As a new CEO, it pains me to take these steps, especially so early in my time in the role,” Ekert said during the call. “I do not take this decision lightly, especially given the immense respect that I have for all of my Sabre colleagues around the world. However, I am confident that these actions will better position us for the future and put us on a direct path to achieving our financial and strategic targets.”
The majority of the job cuts will take place before the end of the second quarter, the result of an effort to streamline the layers of the company’s management and employee base, according to Mike Randolfi, chief financial officer for Sabre.
The company expects to save $100 million in the second half of this year and save $200 million annually beginning in 2024.
The Texas-based company provides operational software and distribution services to travel agencies, airlines, and hotels.
The job cuts are part of an overall move to increase operational efficiencies, which will also include an evaluation of the company’s real estate footprint, though executives did not share more about what may happen on that front. The company previously reported that it had 59 offices worldwide at the end of 2022.
Sabre expects to achieve positive cash flow this year for the first time post-pandemic, with a target of reaching more than $500 million in cash flow in 2025. That number was negative $91 million last quarter, versus negative $156 million in the first quarter of 2022.
“Generating positive free cash flow and de-levering the balance sheet are our most important financial objectives,” Ekert said.
At the same time, Sabre is prioritizing investment in its strategic growth initiatives, which includes continued focus on tech investment and plans to grow into other market segments and geographies. That includes expanding airline tech offerings to existing and new customers. And with the recent acquisition of Conferma Pay and partnership with Mastercard, the company has big plans to expand payments services.
Sabre expects to reach double digit annual growth in revenue for its hospitality tech products by the end of 2024.
While analysts were skeptical about Sabre’s big goals because of uncertainty in the travel industry and some inaccurate predictions in the past, executives said the restructuring and goals they’re setting are all part of an effort to weather a slow and unsteady recovery and come out stronger in the future.
“Even under a conservative industry volume scenario, we believe we have a durable path to achieve our financial targets that is almost exclusively driven by factors under our own control,” Ekert said. “If the industry demonstrates a stronger rate of growth than what we have seen in the most recent quarters — as we believe is very possible — given the operating leverage we are building, we believe we will have meaningful upside to the 2023 and 2025 targets we are outlining here today.”
First quarter revenue for Sabre totaled $743 million, up 27 percent from the first quarter 2022. The company expects to reach between $2.8 billion and $3 billion in revenue for all of 2023.
Net loss attributable to stockholders last quarter was $104.3 million, compared to a net income of $42 million in the first quarter of 2022.
Sabre stock was trading at $3.68 midday Thursday, down 40.3 percent year to date.
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Photo credit: Air India recently signed a deal to list fares through Sabre. (Source: https://www.flickr.com/photos/128856399@N02/52330111291/in/photolist-2nJeuW8-2kdEfkC-2kszj2W-2iVu76X-2mjwLq7-2nAnUU1-2mEciFt-YryEHo-2hP1sS9-2iUzFFy-2jCJTsK-2nu6w3D-2jZYhUF-2kCGjVK-2kdaWSC-2ev5HZx-PyqPcB-2nTm8Ki-2mEyFPT-YQ4myN-2j8fpYb-2kpaxbt-LEA5Kh-XE7F1r-2iL8gza-2kFqXQf-2hme4B2-SFsCwK-2m4ws9V-26nsoq4-2ju8HHN-QrHhji-2kDDBmG-NSGbEX-2h6VgNM-2ixHPWb-yXbLsQ-2gBJWnX-2kWVW4X-2hEHhaR-2iDYiSq-2mZFs4J-2iwwt3j-2kBy4FR-2jcspmL-VWEhf4-WY67cH-2hicfz8-2iLaw1H-2mvzats) Mark Harris / Flickr