Thread regarding Sabre Holdings layoffs

Sabre is going down, just like customer is run away. If Sabre keep like this, AA may follow his alliance, goint to Amadeus !!! Wake up people !

Oh boy, Another round of BS spewed from the e team.

It’s weird how little people understand finance. No surprises many thought ‘we did well’. To the one who thinks that the 6% increase in revenue will simply translate into FCF, needs to read the financial statement. Sabre’s cost of revenue i.e. agency incentives, cost of tech, selling, general and admin is 98% of revenue. If revenue and volumes go up so would CoR. If inflation goes up so would salary and benefits. And all this is before interest payments! Additionally, the volume growth is too optimistic. GDS business is in decline and it has been even before covid..

Let’s not miss the operating leverage here.
$2.9bn in sales grown conservatively at say 6% a year (3% volume + 3% price inflation) for 3.5 years gets you roughly to $3.55bn by mid 2027. That’s c.$600m in additional annual free cash flow by the time you’re at the next significant maturity.

Then what do you add for annual tech and staff cost savings? Call it $250m? Company says more but let’s say we don’t believe all of it.

Then you have the hospitality part which is c.$300m in sales today and growing at 20% a year. Let’s say that grows by only 10% a year. That’s an addition say €100m in yearly free cash flow by mid 2027.

The above assumptions get you to c.$900m in incremental yearly free cash flow by mid 2027. I mean you really don’t need to believe very much to see a path to sustainability…

To the commenter talking about the maturities: I think it’s important to understand when looking at debt maturities that the expectation is not that the company will repay all the debt from its own cash.

What usually happens (Sabre or not) is that a new loan is taken out and is used to substantially repay the previous one. So Sabre does not have to come up with $2.9bn in cash by 2027 from their operations alone. They only need to generate sufficient annual EBITDA to ensure the net debt (net of cash on hand - which is likely to increase by say $500m-750m in the next 3.5 years) is not at a completely unacceptable multiple of income.

And unless the business is fundamentally broken (which it isn’t - this is actually a pretty great business dominating a steadily growing market), an existing lender will always have a bias towards extending and continuing to charge interest rather than enforcing. Converting debt to equity effectively would mean taking the firm private and having to sell it off on the private side (at a deep discount to opportunistic PE firms as there is no strategic buyer here that would be approved by the regulator - and in a context where leveraged finance markets are nearly frozen), or re-IPOing it with all the associated costs, and most likely anchored by initial investors looking to make a significant day-1 bump. No lender wants to deal with that if they don’t need to.

So if business prospects are good, it’s likely new debt can be found, or existing lenders will find it easier and more profitable to be patient.

Sabre is a great company with the best talent. They managed to deploy in the cloud after 10 years of work.....

$545mn is due in 2025, and then $2.4bn in 2027 followed by $2bn in 2028. What makes u think that Sabre will generate that kind of FCF in 4years from $0 right now, and with GDS business in secular decline?

Hey, thanks for the insights Kurt! Drink up!

You can't eat EBITDA. The "EB "means earnings before, The "I" means interest.

I agree. I think Sabre is in a good place. With stock price where it is... now is the time to buy.