Sabre’s Cash Flow Swings Positive After Cost Cuts

Sabre said it had positive cash flow in the third quarter for the first time since 2019 – $39 million, a reversal from negative $123 million a year ago. Revenue jumped 12%, driven primarily by an increase in air and hotel bookings. 

Sabre’s primary business is its global distribution system, operating as an intermediary between airlines and travel sellers like online travel agencies. 

During an earning call Thursday, Kurt Ekert, president and CEO of Sabre, also pointed to lower operating costs. The company’s ongoing shift to Google Cloud helped, as did a restructuring this year that included roughly 1,100 layoffs.

At the same time, Sabre faced increased expenses to travel management companies and online travel agencies, which receive incentives for making bookings through Sabre’s global distribution system. The company has said that increasing incentives are having a negative impact on the business. 

Though adjusted EBITDA and free cash flow have been growing, it may not reach the targets Sabre has outlined for 2025 because they assume a consistent growth of air travel bookings each quarter until that time. “In recent quarters, we have seen industry air volume growth come in below these levels,” Ekert said.

Sabre stock jumped 18% Thursday, but is down 33% this year and 82% from February 2020. 

Sabre’s Growing Hotel Software Business

Sabre’s software system for the hotel industry makes up about 10% of the company’s revenue, but that number is growing. That division of the business increased revenue 16% in the third quarter. That does not include the partnership with Hyatt that was announced earlier this year. 

Hyatt plans to implement Sabre’s central reservation system in the first half of next year, and Sabre should receive its fully contracted revenue from that deal by the end of 2025.  

“Hospitality solutions continues to drive better financial results faster than we had anticipated earlier this year, and is now on track to produce an approximate $40 million improvement in adjusted EBITDA this year versus last year,” Ekert said.