Sabre Holdings today reported total company revenue of $700 million, up 29 percent, for the third quarter, which chairman and CEO Sam Gilliland described as "excellent." In a call with analysts and investors, Sabre executives also touched on continuing efforts to cut costs.
"On the off-line agency incentive per booking front, year-over-year growth is in the mid-single digits, about half 2004's run rate," said CFO Jeff Jackson. "Incentives are important in how this marketplace works. It is important that relationships continue, but we also need to take a disciplined approach to managing that cost line." Sabre in the past has reported slower agency incentive growth, though not actual reductions in total payments to travel agency customers.
"On data processing, we are realizing savings on a per-transaction basis as a result of moving 100 percent of North American agency customers to lower-cost open systems," Jackson added.
Meanwhile, Gilliland said Sabre recently "implemented new policies to stop those who use other technologies from tapping into our services without paying for them." He was referring to the use of passive segments, a topic that has drawn much interest from global distribution system operators as new-entrant distribution systems attempt to penetrate the corporate market.
Sabre also reported productive conversations with airlines regarding the next wave of distribution agreements. "Regardless of what you might hear otherwise, these airlines have made it clear to us that the GDS channel is an important part of their distribution plans going forward," Gilliland said. "We continue to be patient because we want to reach agreements that will deliver excellent and unique value to all of our customers."
That stance differs slightly from earlier statements suggesting early-adopting airlines would benefit from more favorable contract terms
(BTN, June 20).
Jackson added that the recent agreement with AirTran Airways
(BTNonline, Oct. 28) is "a good example of how we can leverage our broad Sabre assets to strike deals with airlines." He also said that Sabre's goal is to keep neutral any earnings impact from new multi-year airline distribution deals, "which are all very different, with different structures."
Meanwhile, the Sabre Travel Network increased quarterly revenue by 4 percent. STN's total global transactions similarly were up 4 percent to 86 million. Specifically, international transaction growth of 8.3 percent again outpaced domestic transaction growth of 1.8 percent, while non-air transactions grew more quickly than air transactions. Also, consumer online transaction growth of 10.2 percent was far ahead of traditional agency growth of 3.3 percent.
Sabre Travelocity president and CEO Michele Peluso noted "encouraging trends" in the corporate travel space, including "several important wins during the quarter" for Travelocity Business. She also said GetThere renewed with several corporate clients "accounting for $320 million in aggregate air spending," and signed the U.S. Department of Education as the 15th government agency to use the GetThere system. In Europe, GetThere corporate bookings were up 65 percent in the quarter, year-over-year.
Overall, Sabre also reported strong performance for Travelocity as global gross travel booked grew 76 percent to $2.1 billion and global revenue grew 98 percent to $276 million. Totals include recently acquired Lastminute.com. Air transaction revenue grew 40 percent while non-air transaction revenue grew 137 percent. In particular, hotel room nights sold across the Travelocity network jumped 94 percent to 4.6 million.
On a companywide basis, third-quarter net earnings, excluding adjusted items, were $65 million, up from $56 million one year ago. On a GAAP basis, third quarter net earnings were $58 million, down from $67 million a year earlier.