Sabre weathers the third-quarter storms, aided by growth in EMEA, APAC
By cameron in Uncategorized
Despite the thrashing dealt out by two major hurricanes in Sabre Corp.’s strongest region, the company emerged from the third quarter with a 7% increase in revenue and a 15.3% hike in adjusted net income, to $91 million.
Sabre Travel Network, the company’s GDS business, lost 1.3 million bookings to Irma and Maria in Texas and the Southeastern U.S., but bookings growth of 16% in the EMEA region and 10.8% in Asia-Pacific went a long way toward offsetting the loss.
Momentum in the Asia-Pacific region is expected to continue as the full benefit of a major agency win, Australia-based Flight Centre, is realized.
Revenue for Travel Network increased 8.6%, to $632 million. Total bookings increased 3.2%, to 129.8 million.
In a conference call with investment analysts to discuss the results, Sabre chief executive Sean Menke continued to claim the role of flag-bearer for the industry’s transition to NDC.
“We were the first to support NDC with an early partnership with American Airlines,” Menke said.
“We are already on the path of evolution.”
But the airlines are grappling with some thorny issues along that path. “Each airline is looking at this a little differently,” he said.
Airlines must consider what forms of distribution are driving higher revenues, he said.
In particular, airlines must look at revenue management in a new light: It’s very different when they are dealing with the type of dynamic pricing that NDC envisions, he said.
Menke noted that the vast majority of the world’s airlines aren’t in a position to make a quick switch to an NDC environment.
In recent renewal discussions with airlines, he said, none brought up the issue of NDC and the investment it might require.
As for Sabre’s travel agency customers, the question they always ask is, What form of investments will they have to make? The concern is that the added revenue derived from the new form of distribution will not cover the cost of the investment, Menke said.
Sabre also reported a 4.8% increase in revenue, to $632.3 million, for its Airline and Hospitality Solutions division.
The airline side took a hit with the migration of long-time customer Southwest Airlines to the Amadeus Altéa passenger services system, resulting in a 9.4% drop in passengers boarded.