Sabre Holdings Corporation announced diluted earnings per share of $0.39, excluding special items, for the third quarter, a 31.6 percent decline from the year-ago quarter.
This decline is a direct result of the airline industry shutdown and slow travel industry recovery following the terrorist attacks in the United States on Sept. 11.
Before Sept. 11, Sabre was on course to meet its third quarter projections, as well as full-year financial guidance of 20 percent earnings growth and revenue growth in the high teens. The company reassessed its near-term financial projections on Sept. 19, as a result of the impact from Sept. 11.
“The terrorist attacks of September 11 dramatically affected the travel industry, and our business was no exception,” said William J. Hannigan, Sabre chairman and CEO. “We continue to take the appropriate actions to ensure Sabre`s financial strength. The company is well positioned for the industry`s recovery during 2002.”
Over the last 12 months, the company`s cost reduction initiatives have resulted in savings from several areas, such as managing headcount and gaining additional IT savings and efficiencies from the EDS transaction. As a result of the company`s transaction with EDS, including the sale of Sabre`s airline infrastructure outsourcing business, selected financial results shown in this release are reported on a continuing operations and total company basis.
To see financial results for the third quarter go to www.sabre.com
RESPONDING TO CUSTOMERS
To assist its customers dealing with the severe financial impact of the attacks on Sept. 11, the company implemented several initiatives to help the industry move forward toward the eventual recovery. Sabre publicly announced support for government assistance to the airlines, and provided credits to its airline customers for reservations canceled by subscribers on the day of departure as a result of the FAA grounding all U.S. flights between Sept. 11- 14. Sabre also waived the premium for airlines` connection to the highest connectivity level in the Sabre system through the end of the year. For travel agents, measures included waiving the short fall levels through the end of the year, and creating Travel Bulletin Central, a travel advisory portal offering travelers the latest travel and security information. Sabre estimates that it will provide approximately $10 million to $15 million to support these customer initiatives through the end of the year.
THIRD QUARTER HIGHLIGHTS
—Sabre renewed its contract to manage Southwest Airlines` customized reservation system. The company also signed agreements to implement three flight-scheduling solutions for Israel`s El Al Airlines, and to provide consulting services for Italy`s principal airline, Alitalia.
—Sabre announced plans to migrate selected mainframe applications to Compaq Computer Corporation`s NonStop Himalaya server and database environment to create the next-generation travel technology platform. The open system is expected to allow airlines and travel consolidators to update their fares in the Sabre system faster and with greater frequency and reliability than with any other e-commerce system in the industry.
—In August, Sabre made a public offering of $400 million of 10-year senior, unsecured notes. Proceeds from the offering were used to repay bridge loans and for general corporate purposes.
—Sabre(R) Connected(TM) agents in the United Kingdom gained the ability to issue e-tickets on Air France, British Airways, American Airlines, Lufthansa, United Airlines and US Airways. Electronic ticketing is fully interactive, allowing agents to issue, refund, exchange, void and display on-line.
—GetThere announced that its DirectCorporate product is now the preferred online technology for Rosenbluth International`s corporate customers. Rosenbluth is one of the nation`s top travel management services providers with more than 2,000 corporate clients.
—Sabre nationally released Sabre(R) Merchant Pay, an integrated, end-to-end merchant payment processing product and service for travel agencies. Sabre Merchant Pay enables financial institutions and their customers to securely authenticate, authorize and process payments through the Sabre system.
—Sabre announced the successful implementation of a Sabre eMergo(TM) Web-enabled and dedicated network solution for Sun Country Airlines. The eMergo solution is part of Sabre`s previously announced plan to broaden its airline product strategy to target the small- to medium- sized airline market.
—Travelocity.com took actions to build its position in Europe, announcing a joint venture with marketing leader Otto, called Travelocity Europe, to sell travel products and services in the growing European online and offline market; as well as acquiring Air Tickets Direct, a UK-based travel company.
—Utilizing its database expertise and its alliance with Yahoo!, Travelocity launched the industry`s first One-Day Sale on the Internet, promoting special fares on American Airlines. The two One-Day Sale events, which attracted record numbers of visitors to Travelocity.com, set a new standard for online travel marketing.
Due to the current economic, political and travel industry dynamics, it remains difficult for the company to forecast results for the fourth quarter. In this environment, the company is providing a scenario to help analysts gauge fourth quarter financials: If worldwide travel bookings for the fourth quarter of 2001 were to be 20 percent to 30 percent below year ago levels, then Sabre`s revenues for the quarter would be in the $380 million to $430 million range, and earnings per share would be between $0.05 and ($0.15).
Sabre will continue its cost management program in the fourth quarter, keeping expenses in line as uncertainty remains in the global travel marketplace.
“Sabre`s balance sheet is strong, and we remain focused on our strategy,” said Hannigan. “As the leader in all travel distribution channels, we are well positioned for the eventual travel industry recovery. We remain active in delivering new technology solutions and pursuing strategic opportunities.”