InsideTrack - 1999-09-06 - Business Travel News

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InsideTrack - 1999-09-06

September 06, 1999 - 12:00 AM ET



Sabre Stock Takes A Tumble On Durham Departure

Sabre Holdings Corp. president and CEO Michael J. Durham this month ended a 20-year career with Sabre and its AMR sister company, American Airlines, with an abrupt and unexpected resignation. Sabre offered only a printed comment quoting Durham as saying, "it's simply the right time to do something different" and declined all comment; vice president of corporate communications Barbara Kieker told BTN only that she "thinks he left for personal reasons."

Sabre stock slipped $10, to under $40, on the news. Said one insider, "Investors are discounting Sabre by over $1.5 billion for the 'surprise' that AMR could seemingly act so arbitrarily and continue to explain it so poorly. At an investment seminar in New York, Sabre's Jeffrey Jackson was pilloried by shareholders for refusing to shed light on the event, other than to come closer to acknowledging that the termination was initiated by AMR's (CEO Don) Carty," with whom Durham continually butted heads over issues in which Sabre's best interests and those of AA did not coincide.

Still, said one Sabre investor, "It's a good buying opportunity, because there is excellent management depth at TSG, fine people at all levels, great products, good markets and even the potential for some contract wins, near-term. So, I am a buyer on this price weakness." The executive search firm of Heidrick and Struggles International is looking for a replacement for Durham, and Carty is acting as interim CEO.

AA, State Dept. Act On Y2K

American Airlines last week said it and its American Eagle unit will cut its normal flight schedule during the rollover to Jan. 1, 2000. About 20 percent of all flights on Dec. 31 and 5 percent on Jan. 1 will be shelved. The carrier said the decision resulted from light demand and that "the lack of bookings is not directly related to customer concerns about Y2K." American said it will spend a total of $220 million to ensure Y2K compliance and that some New Year's Eve flights will operate, "when it makes economic sense." Other airlines have said that schedule reductions could be in order, while Lot Polish Airlines and Virgin Atlantic have completely suspended service during the millennium rollover.

Meanwhile, the State Department released the first wave of country-specific advisories relating to the Y2K rollover, identifying Brazil, China, Indonesia and Russia as potential problem areas, with medical and emergency services, heat, telecommunications and water cited as concerns.

Singapore Eliminates Agency Rebates

In a move that Rosenbluth International said "marks the first step toward zero commissions for travel agencies by Oct. 2001," Singapore Airlines and the National Association of Travel Agents in Singapore have agreed on a plan that will offer rebates to corporate clients directly through the airline. In a statement, SIA said that under the current system, agencies compete with one another to pass on some or all of the rebate, resulting in uncertainty as to who can offer the lowest fare. The new system will provide agencies with service fees in place of rebates. SIA said the plan received overwhelming support in the local agency community and will apply only to the 630 travel agencies in Singapore.

However, Rosenbluth is advising corporate clients to use alternative carriers "whenever possible." A senior Rosenbluth official said the move will impact hundreds of clients in Singapore and essentially eliminate rebates. "Instead, they will offer net-net deals that would be reviewed every three months along with fare changes, and at the end of the day the corporation is paying more," he said.

Puttin' on the Baldrige again?

The Ritz-Carlton is about to follow up its new Battery Park property with a second hotel in New York, president Horst Schulze told a group of the company's largest buyers at a reception atop Rockefeller Plaza last week. And with equal chutzpah, the luxury hotel company has put its name in the running for a second time for the Malcolm Baldrige Award for quality. The only travel company ever to be recognized for its continuous improvement process in this way, in 1992, still can find things to learn by "constantly looking in the mirror and asking how we can do things even better," Schulze said. Ritz has qualified in the first of three rounds in this year's competition.

A Pioneer's Passing

Edmund Rathke Jr., a founder of the National Business Travel Association and the travel department manager at Aetna Life Insurance Co. of Hartford, Conn., died on Aug. 25. NBTA executive director Norman Sherlock said Rathke's contributions helped "set the course for the future development of our industry and provided a framework to bring travel managers together with the other components of the industry.
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