Sabre Announces Cost Reduction Initiatives and Workforce Layoffs
Sabre president and CEO Kurt Ekert said he is “optimistic” about long-term travel volume growth trends despite an uneven recovery path.
“Over the past year, we have seen a range of growth rates in the [global distribution system] marketplace,” Ekert, who ascended to the CEO position last month, said in Sabre’s quarterly earnings call on Thursday. “Some quarters have experienced sequential quarterly improvements in the double-digits, while others, including the most recent couple of quarters, saw growth only in the low single digits.”
Even so, the industry Is now seeing “historically high airfares, elevated load factors and significant efforts by carriers to add capacity,” he said.
For the first quarter, Sabre reported total bookings were up 49 percent year over year, with air bookings up 47 percent and lodging, ground and sea bookings up 66 percent. Domestic leisure travel remains the most recovered segment, while corporate travel is at about 80 percent of where it was in 2019, Ekert said, and international long haul remains below that recovery line.
Corporate travel for the past few quarters has been growing in the 1 percent to 2 percent range quarter over quarter, and that accelerated a bit in January but then leveled off, Ekert. In the long term, Ekert said he is “bullish” on corporate travel recovery with meetings and events “back to normal,” internal travel on the rise and employment actually higher in the tech sector compared with 2019 even considering recent layoffs.
“We’re not going to prognosticate whether the rate of growth is going to continue to be 1 percent to 2 percent or accelerate to be 4 percent per quarter,” Ekert said. “But, we believe there’s a lot of growth upside in corporate travel for the long term.”
Sabre, however, is positioning itself to meet financial goals even if recovery lands on the side of the more conservative estimates, and that includes cost reductions of $100 million this year and annualized $200 million in 2024, Ekert said.
That plan includes a workforce reduction of about 15 percent that should happen by the end of the second quarter, Sabre CFO Mike Randolfi said.
For the full company, Sabre reported revenue of $742.7 million in the first quarter, up 27 percent year over year. The company reported a net loss of $104 million for the quarter, compared with net income of $42 million in the first quarter of 2022, which included a $121 million gain from the sale of Sabre’s AirCentre airline operations portfolio.
Michael B. Baker www.businesstravelnews.com