Q1 2020 Earnings Call
Excuse me. This is the operator today's conference is scheduled to begin momentarily until that time your lines will again be placed and we took hold thank you for your patience.
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Good morning, and welcome to these Daybrook first quarter 2020 earnings Conference call. Please note that today's call is being recorded and is also being broadcast live over the Internet under Sabre corporate website. This broadcast is the property of sabre.
Any redistribution retransmission or rebroadcast of this call in any form without the expressed written consent of the company is strictly prohibited.
I'll now turn the call over to the Vice President of Investor Relations. Kevin Crissey. Please go ahead Sir.
Thank you wouldn't be and good morning, everyone. Thanks for joining us for first quarter 2020 earnings call.
This morning, we issued an earnings press release, which is available on our website investors don't Sabre dotcom.
Slide presentation, which accompanies today's prepared remarks is also available during this call on the Sabre Investor Relations Web page a replay of today's call will be available on our website later this morning.
We would like to advise you that our comments contain forward looking statements that represent or beliefs or expectations about future events, including the duration and effects of covert 19 in industry trends cost savings and liquidity among others.
All forward looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on todays conference call more information on these risks and uncertainties is contained in our earnings release issued this morning, and our SEC filings, including our form 8-K filed on April 13th 2020 and over time.
Many 19 form 10-K.
Throughout today's call, we will be presenting certain non-GAAP financial measures all references during today's call to EBITDA operating loss and S have been adjusted to exclude certain items. The most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the earnings release and other documents posted on our website at <unk>.
Testers that sabre dot com.
Participating with me are shown monkey, our president and Chief Executive Officer, and Doug Burnett Executive Vice President and Chief Financial Officer, Dave Shirk, Our executive Vice President and President of travel solutions will be available for Q and a after the prepared remarks.
Today's call will focus primarily on cobot 19.
Sean will provide perspectives on its impact on global travel trends and our business.
Doug will review the cost and liquidity actions. We've taken in response, we'll then open the call to your questions with that I'll turn the call over to Sean.
Thanks, Kevin Good morning, everyone and thank you for joining us today before I start I'd like to recognize that although today's call will focus on the financial implications of the covert 19 endemic on our business. This is a human health crisis severe impact of families and individuals around the world.
We're all experiencing dramatic changes to our daily lives and regular routines.
Nothing is more important to us than the health and safety of our employees customers and the communities, where we live and work.
I'd like to sincerely. Thank my favorite teammates who have made great sacrifice us in this incredibly challenging environment.
Our sabre offices around the globe have been close for a number of weeks now is weak practice social distancing.
Before Doug takes you through our financial results all big I'll begin by discussing the unprecedented impact of coven 19 on the global travel industry and provide detail on the decline in bookings and travel trends since its outbreak.
Next I will describe the actions we have taken in response to this challenge then I will describe the impact these actions will have on our technology investments.
Finally, I'll share why we believe sabre is resilient and well positioned for a post crisis environment.
The cobot 19 pandemic as we all know is an unprecedented challenge facing the entire travel industry.
Since its initial onset and late 2019, the outbreak has caused a sharp decline in industry bookings as we exited the quarter in March effectively zero, new bookings and the impact of cancellations resulted in a negative bookings environment on a net basis.
Total GDS industry Air bookings declined by 10, 25, and a 113% in January February and March on a net basis with the industry down 49% for the first quarter of 2020.
All regions were impacted on a similar level.
This is what was reported by the total global GDS industry and factors in no exclusions.
Savers, New air bookings declined by 817, and 70% in January February and March respectively on a net basis, including the impact of cancellations Sabres Air bookings declined by 923, and a 111% for the same months.
Based on the weekly industry trends, we've been monitoring since coping nineteens outbreak. It appears the decline in net air bookings peaked in late March across all regions.
Data through April suggest the industry bookings decline was still exacerbated by cancellations.
Drilling into daily trends cancellation activity peak towards late March as Cobot 19 restrictions went into place around the globe.
This was concurrent with a very sharp decline in new bookings made.
Since late March Savers, New air bookings have declined to less than 100000 daily or down by more than 90% versus a pre crisis 2019 average of roughly 1.5 million daily bookings.
As of mid April we believe we have seen a normalization in cancellation rates. We believe we have flushed out most of the cancellation activity with respect to previously made bookings.
Although new bookings remains severely depressed net booking activity improved in April versus the end of March.
In the first quarter of 2020 declines and passengers boarded and new hotel Central reservation system transactions did not happen as fast as the as the decline in new air bookings. However, the declines at all three of our metrics travel network air bookings airline solutions passengers boarded and hospitality.
These hospitality solutions Crs transactions conversion at the high Ninetys towards the end of March and remained at this level through April.
The future impact Nineteena still unknown and the travel environment remains highly uncertain.
Air carriers announced second quarter capacity plans indicate continued declines across all regions.
Based on data from O. AG global capacity in April declined approximately 70% year over year.
Looking to May North America total schedule capacity is currently down over 75% with American United and Delta Downs, 75% over 80%.
EMEA is down 75% with Lufthansa, I AG and air France, KLM, all down over 90%.
Latin America is down over 80% with obviously goal inland Tam all down over 90%.
And in Asia Pacific Airasia, Cathay Pacific and Quantus are all down over 90%.
The numbers I just reported our scheduled capacity levels operating capacity is even lower than marketing schedules filed.
We expect significant schedule reductions in June and beyond it is important to note. The many airlines around the world still selling and marketing scheduled that is in two different from last year, but the closer we get to the actual travel period, we see marketing and operating schedules being reduced.
This strategy allows airlines to sell and consolidate into fewer flights.
Because we are mission critical technology technology provider to the travel industry. Our top priority is to be there for our customers both now and when the business environment improves given the current uncertainty in the travel environment. Our current focus is on long term liquidity.
We have and will continue to take actions to align our cost structure to demand both near term and in 2021.
Importantly, our cash position and aggressive, but thoughtful management of the business affords us the flexibility to continue advancing technology capabilities to meet demands.
Let me summarize the cost actions, we have taken to date.
In early Q1, our immediate response to covert 19 was the implementation of a hiring freeze elimination of pay increases restriction of employee travel and reduction in consulting spend.
As the impact of the virus continued to spread globally and bookings fell dramatically in mid to late March we announced cost savings initiatives expected to result in 200 million savings in 2020.
This includes pay reductions for us salaried employees suspension of the four one k. match voluntary retirement voluntary separations and various pay reductions around the globe.
I'm very grateful and proud of my colleagues around the world. We have participated in these programs.
In mid April we announced plans to reduce 2020 caused by an additional 125 million, including the very difficult decision to furlough, one third of our global workforce.
To my teammates around the World currently on furlough I understand how difficult. This is for you and your families. We will continue to work with rigor and resiliency to ensure we are even stronger company in the future.
Because two thirds of our cost structure is variable. It provides protection. It also provides the ability to take further actions, although we hope they will not be needed.
Next let me summarize the actions we have taken to enhance our liquidity position.
In mid March we suspended our dividend and share repurchases effective after the March Thirtyth 2020 payment.
We also drew down on a revolver of $375 million.
On April 17th we raised 1.1 billion of incremental capital through upsize senior secured and exchangeable notes offerings.
Doug will share more detail, but with 1.1 billion capital raised 325 million cost savings initiatives and other actions. We believe our current liquidity is sufficient for more than a year and a half even in a zero booking no travel scenario.
In addition, effective may one 2020, Sabre and fair logics agreed to terminate the fair logics acquisition agreement.
One question. We are often asked is how the cost reductions we are making an impact the business, including our previously announced incremental technology investments.
Let me walk you through some of what we will and won't change as a result of our cost savings initiatives.
To be clear, we are still proceeding with our technology transformation and transition to Google cloud our technology transformation is expected to lower cost accelerate innovation and provide competitive differentiation.
We continue to expect approximately 100 million an annual cost savings by 2024, when we expect that technology transformation to be largely completed.
Our partnership with Google is also a great start and I couldn't be happier with the collaboration so far we're already executing on the innovation framework, we have in place with Google.
Today I'm pleased to announce we have entered into a new commercial agreement for sabre travel to provide availability data exercise for consumption by Googles flight search products.
We are delaying our billing systems upgrade and our full service property management system and participation with the core primarily due to a course furlough of 75% of their workforce.
We continue to advance NDC related projects with our current set of act actively engaged airline agency in corporate partners.
We have made progress and reach important milestones over the last several months.
However, certain incremental investments in NDC have been slow down as many of our customers redirect their focus on financial and operational priorities.
Each one of these projects is important to savers future and we expect to return to them. After we have a better insight on industry wide recovery.
The safety obvious we do not know when traveled to ban will recover or what the travel industry will look like on the other side of this crisis. We are fortunate than we have access to global data in a real time and on our monitoring this significant the significant inside this gives us for early indications of improvements throughout the world.
Previous industry downturns suggest travel demand is unlikely to return to 2019 levels for at least several years.
Customers need to feel comfortable in restaurants on trains in airports and on planes. The timing for this level of comforting crowded places may vary around the world, We're hoping for the best but as I've described planning for the worst.
We suspect leisure travel will return more quickly than corporate travel as companies carefully consider their duty of care to employees and as leisure travelers are tempted by lower fares and room rates.
Travelers may stay closer to their home market, where they better understand the health risk the North American market may remain the most stable given us relative precrisis strength, but even north American carriers are retrenching significantly.
Ultimately, we expect a smaller travel market for some time in our positioning saver for this new reality, we are confident the strength of our liquidity position flexible cost structure longstanding customer relationships and experienced management team will allow saver to endure this period for a period of prolonged uncertainty and with that I'd like to.
Handed over to Doug, Thanks, Sean and Hello, everyone.
Before I begin I'd like to acknowledge this is a difficult time, our thoughts are with those around the world impacted by the co with 19 pandemic.
We are in a time of unprecedented disruption to the travel industry as Sean mentioned the latest by add a projection is a 55% reduction and passenger revenue in 2020.
Approximately 15% of our revenue is not tied to travel volumes, which partially mitigates exposure, we have to cope with nineteens impact on travel.
However, our first quarter results were significantly impacted by the pandemic.
In the first quarter revenue was down 37%.
Travel network bookings were down 45% remember we report bookings on a net basis, which means net of cancellations in the quarter, New air bookings were down 32%, but there was significant cancellation activity as cobot 19 restrictions were put in place.
As of quarter end, we've recognized $105 million of revenue from bookings not yet departed and have a cancellation reserve of 44 million on our balance sheet.
We believe we had peak cancellation rates at the end of March and a flushed through most of the initial the initial incremental cobot 19 cancellation activity as of mid April.
Remember that about half of our cancellation risk is offset by reductions in incentive payments.
First quarter EBITDA was positive.
It was down significantly year over year.
Our cost savings initiatives were not announced until mid March. So we expect most of the savings will be recognized over the balance of the year.
After depreciation and amortization and interest expense, we had an operating loss and negative EPS in the quarter.
Finally, we generated positive free cash flow of $12 million during the quarter.
Our normal course earnings results slides are in the appendix of our earnings presentation, which is available on our IR web page.
Let me provide some clarity on our cost structure.
Third to our cost structure was variable, which provides protection and a downside scenario.
Based on 2019 results are variable costs are comprised of approximately 1.3 billion of travel network incentive expenses, which are variable and tied to bookings volumes.
Approximately 250 million in semi variable technology hosting costs, and approximately 500 million and head count related and other costs, including R&D labor. This is where our cost savings initiatives. This targeted.
Only one third our $1 billion based on 2019 results is fixed.
This includes critical headcount, including maintenance R&D labor and fix technology hosting costs are high proportion of variable costs affords us the ability to further actions if needed.
In response to Coven 19, we announced a 200 million dollar cost savings initiative in March.
In April we increased the scope and are now targeting 325 million in total cost savings in 2020.
Breaking down the 325 million.
200 million is related to one time or temporary headcount related savings.
One third of our staff is currently furloughed and we have also implemented pay reductions asus and suspended certain benefits.
50 million is related to permanent head count related cost savings.
This is the expected 2020 benefit not the annual run rate savings.
50 million is related to technology project delays as Sean described outside of our technology transformation and migration to Google Cloud, we have paused investment in the strategic initiatives discussed on our previous earnings call.
Finally, $25 million is related to third party and vendor spend savings.
The expected cost savings resulted from these activities have been included in the liquidity analysis, but I will discuss shortly.
These are tough actions.
But we have the ability to to further increase the scope if necessary I want to thank my sabre colleagues around the world for their support during this challenging time.
In addition to the cost reductions we have taken several liquidity actions and expect to have significant liquidity to withstand a prolonged downturn.
In addition to 325 million expected 2020 cost savings.
We suspended dividends and share repurchases in mid March.
In fact of after the March Thirtyth 2020 payment of $39 million.
For context, we spent $154 million on dividends and 78 million on share repurchases in 2019.
We drew down on our revolver and amount of 375 million.
We raised 1.1 billion from the issuance of senior secured and exchangeable notes.
Final pricing was nine and a quarter on 775 million and senior secured notes due in 2025 and 4% on 345 million exchangeable notes also due in 2025.
Although we were in compliance with our Q1 leverage ratio requirements as of March 30, Onest 2020, we believe that immaterial travel event disruption has occurred therefore, we expect our leverage ratio covenant under our amended and restated and restated credit agreement will be suspended.
Current carrier capacity forecast lead to our expectation that this suspension will remain for the balance of the year.
Effective may one 2020 sabre and for our largest agreed to terminate the acquisition agreement.
We recorded a termination fee of $46 million in the first quarter 25 million of which is related to advances already paid and 21 million in aggregate termination fees that have already been paid and the second quarter of 2020.
Taking a closer look at our liquidity position.
We ended the first quarter with a cash balance of $684 million.
We have a cash balance of approximately 1.7 billion pro forma for the following items $1.1 billion raise and our recent notes offerings last.
$30 million in refunds owed to airlines for Q1 cancellations.
$52 million incentive payments delayed from Q1 into Q2.
44 million in cancellation reserve and the $21 million and termination fees paid to Faro projects in Q2.
We estimate we have total liquidity of approximately 1.5 billion after taking into account minimum cash to operate the business of $150 million.
Well I mean, we estimate we have a monthly cash burn rate of approximately $80 million and these zero bookings environment.
This estimate is comprised of.
$50 million in revenue from the 15% of our revenue not tied to travel volumes.
$80 million in fixed costs from our 1 billion in previously described annual fixed costs $20 million in variable costs, reflecting a decline in travel network incentives and semi variable technology hosting costs as well as the impact of cost savings initiatives and.
$30 million and other cash expenditures, which is primarily interest debt repayment and capex.
This all results on our expectations for approximately 18 months of liquidity in a zero bookings no travel environment.
Given that we believe we have more than a year and a half of liquidity, we do not expect to participate in the cares Act loan program for the aviation industry.
As a reminder, we withdrew the guidance provided on our February earnings call and are not issuing guidance at this time.
With that I'd like to turn it back to Sean Thanks, Doug and thank you to our sabre teammates around the world for their dedication to serving our customers shareholders and each other during this difficult time with that operator, we'd be happy to take questions.
Ladies and gentlemen, if you have a question at this time. Please press the star and then the number one key on your Touchtone telephone given your question has been answered what do you wish to remove yourself from the Q. Please press the pound team.
Your first question was from the line of Ashish Sabadra.
So thanks for taking my question so.
A quick question on so what's your strategic your bookings Clark Bridge and international bookings, just as you're going to need to go wide any color because the concern is that booz might.
Even longer tricolor compared to the leisure bookings deliverables teams.
Can you repeat.
Your next question again, you're breaking up quite a bit.
Sorry about that can you.
Well.
Sorry, sorry about that I was just wondering what question do you feel bookings that coming from corporate as international bookings because the concern as those might be zones are critical when compared to the leisure bookings.
Yes, if you look at I mean, if you go back just historically.
The the balance the bookings we had for whore actually more on the.
What I would consider be the north American side international side, making up a smaller percentage of that.
If you look at the bookings themselves I mean, historically, we have a decent amount of the corporate bookings that are in place because of our penetration with pmcs.
Versus what I would consider to be more the OTI side of the equation as you look at bookings now as I mentioned, there really are no bookings so in measurement relative to what we're seeing right now ashish.
What I would share is and this is very.
Early on in what we're seeing take place we are seeing OTI eight bookings picking up a little bit faster than the corporate bookings side of the equation and I'm talking very very small numbers as we track really where the trough was and what we're seeing as it relates to last week's bookings and this is on a.
Year over year Workday adjusted basis that we're tracking that yes, you should take a look historically, 70% of our bookings come through the TMC, 30% comes from the OTA ins and outs that most of the taste tests going to be leisure and the majority of the TMC is going to be business related travel.
Okay. That's helpful.
Just a question on.
There are concerns about potentially bankruptcy risk for agencies are headlines just given the challenged travel environment.
Can you just talk about is that any potential just to see better because of any bankruptcies that agencies or airlines.
Yes, I'm not going to speculate we get the question a lot I mean, everybody is working through.
Liquidity, managing how do they get additional liquidity and what's out there Ashish it's very early on in what's taking place where I keep driving people back to the actions that we've taken because.
We were very aggressive mum, what we did early on one from a cost perspective, and then going for liquidity and in doing that I'm of the belief that there will be a travel ecosystem in the future I do think it's going to be smaller travel ecosystem for a period of time.
But we're positioning ourselves to be able to operate in that environment and Thats why duck has been very adamant of talking about a zero booking environment in the same power that we have.
That's helpful and maybe one final question if I can.
Squeezing onto Google commercial partnership so congrats on that I was wondering if you could provide any comment on that front, how should we think about their revenue opportunity Dan and his enerplus from deepwater footprint expansion.
Sure. Thanks, Yeah, I'll kick off and then I'll, let Dave that a little bit of this but as we talk about we felt that there were commercial opportunities.
That what I would consider to be low hanging fruit that we can begin to execute the one thing that we're doing.
It is really providing availability.
Data information to Google that in this is essentially reaching out to a number of airlines around the world that there will be able to use.
As it relates to cool Google flight search so it's one step in what we hope will continue to be a number of other opportunities that are out there and Dave I don't know if you'd add anything else to that yes, no I would just echo, which onset I mean, you've got to start somewhere we had a set of innovation projects that could have commercial benefit this will kick off.
Probably around the Q3 time period, it's small in size, but it's the first step of several that we're trying to work through with Google. So we're pretty happy about the about the progress with them in the early stages of the relationship.
Thanks and on the best.
Okay.
Your next question is from the line of Mark Moerdler.
Thank you very much.
Let me first start by saying I hope everyone.
On the close stays healthy in safe and also thank you for the detailed you've been supplying in today's earnings.
A couple of quick questions. If you don't mind Sabres GDS air bookings decline was a bit better than the overall industry is this us exposure is in some other factors.
It's primarily going to U.S. exposure.
Yes.
So why not participate in the cares Act.
Yes, so obviously we.
Realized that we needed some additional liquidity.
And the Mark quite honestly the markets opened up it was taken longer than expected to understand what the cares act was going to entail.
And how what the terms would be that you'd be able to lend under.
And quite honestly once we got the public raise done quite honest, we weren't even eligible then for the care Zack.
With that because they're primarily focused on trying to help people have liquidity through the balance of 2020, and obviously, we have we have liquid almost all way through 2021, yes, Mark as you would imagine we are working a number of different things.
And we were heavily engaged in conversations I was at the White house at the Treasury as well as congressional leaders as this is being drafted.
But you know in doing that we're looking at what that could potentially be for Sabre then as Doug had stated we're also looking at.
Other ways of generating liquidity based on how things were essentially progressing on the government side as you know there just numerous falls over in the air as they were working through it.
We were focused and I've learned this from my past as you work aggressively to focus on.
Your capital in your balance sheet and what you can do because you just don't know and we knew.
That essentially the government at the end of the day was a lender of last resource and we're gonna have to prove we were still going to have to prove that the markets were close to us so for us like I said.
In my comments is we were very focused on acting aggressively.
Right size the business putting.
Cash into on the balance sheet, and then being prepared to just managed to the situation as we see it right now.
Well done one last question if you don't mind, how large was the negative impact of cancellations on revenue in Q1.
Well, how how large was it yes.
Yes, I mean, you can tell obviously is.
Cost me 20 million bookings and almost $60 million.
60, Thank you 60 in the month of March.
Thank you appreciate and stay safe alright, Thanks, Mark take care.
Your next question is from the line of Josh Bear.
Hi, Thanks for taking my question.
When we think about the future. The industry is there anything you could share on on how to think about changes to contracts pricing GDS fees incentive fees just in light of the current crisis in.
Expecting a smaller travel market in the medium term.
Yes at this point in time, I'm not going to speculate.
But.
We're working with our customers. The one thing that you look at what takes place as it relates to the relationships. We have another their PV base passenger boarded based the booking volume so.
When you look at it specifically on the airline and even on the hospitality side its transaction oriented so theyre theres some forgiveness, that's taking place there.
On the agency side, it's the incentive piece of it I think we're just way too early to even speculate on something like that.
Got it and.
Well I appreciate all the detail on the cost structure and liquidity I think it's very very helpful unclear.
And obviously you just raised over billion in capital.
Wondering like one question on that net leverage covenant on realize you might have a pass for several quarters, given the you every or travel declines but.
Should investors think about that that.
Eventually, whether it's 369 months, you'll be able to amend or a place that loan or the credit agreement there like is it.
Is that a concern to you or should it be a concern to equity investors, yes, I think you'd probably asking a combination of two questions. One let me, let me address the leverage issue more and more likely than not with the kind of the capacity outlooks that Sean was alluding to the leverage suspend the leverage suspension will probably go all the way through 2021 more likely.
Not based on what we think is going to happen.
So I don't think between now and the end of 21, and maybe even going to 22 remember the maturities of those of of the term loan is July of 2022.
You know, obviously now with the raise behind us and the real good relationship we have with those lending institutions. Once we get into the fall and early begins of 2021 will turn our attention to refinancing the term loan a.
Very helpful. Thanks.
The final question is from the line of Jed Kelly.
Hey, great. Thanks for taking my question can you hear me Okay. Yes, we can get how are you.
Doing well how are you all line.
So.
Yes, just my first question has to do with as you sort of looking at realigning your cost structure over the next two to three years.
There are a path to we are medium term cash flow can get too.
Pre 90.
Night to 2019 levels.
Quicker on during a lower revenue base.
Yes.
Obviously the actions that we've taken now obviously will help us is moving the 2021.
It lot level depend on how but how fast that market returns you had to be honest with you because obviously, there's some of the variable costs will kick back in.
The incentive payments will kick back in some of the variable hosting costs will will come back, but I do but I do think that as we enter a kind of a quote normal recovery will we will be in a better cost position than we work come and ended 2019.
And then.
As everybody in travel seems to be guiding for a multiyear recovery.
Is that going to be more dependent on the vaccine science breakthrough or.
Do you see that hopefully coming relatively quickly, but it's just going to be more of an economic drag I mean, how do you kind of look at the pace of that the travel recovery, Yeah, I mean, I think everybody's going to different opinion on this Jed I, Here's what I tell my team. This when I talk to my family about telling when you're ready to go out to a restaurant company when you're ready to.
Go to a movie tell me when you're ready to go to a ballpark how many when you're ready to get on an airplane and I think you just got to be somewhat basic at this point in time.
Listen I think everybody believes that there is the vaccination that that would help but.
We're taking us one step at a time right now and I go back to the actions that we've taken.
That we put ourselves in what I consider to be an enviable position to manage through the crisis.
Our right.
And then.
Before this there was sort of.
Some of the Airlines I guess, we're being confrontational with trying to drive direct bookings.
It does this provides an opportunity for I guess more constructive partnerships going forward and how do you see partnering with airlines evolving in the next three years.
Yeah, well I'll, probably just look backwards and just talk about you know since I've really taken over the organization has been very focused on constructive relationship with airlines.
Making sure that as they think about modern day retailing and being able to do what they want to do that we continue to move forward and as I look into the future our strategy and focus and working with our airline customers our hotel customers as well as you know our agency customers has not changed at all.
Thank you and stay safe.
Take care, Jeff Jeff measure.
Again to ask a question press star one on your telephone.
You do have a follow up questions from the line of Josh.
Hi, just wanted to pop back in on the on the 15% of revenue not tied to travel volumes.
See in the prepared remarks that.
In the cash burn you assume 50 million in revenue from that bucket.
Which would be on a monthly basis, so thats 600 for the year and unlike looking at 19 now is about.
15% of revenue so as the assumption that that is.
Yes, very durable or could you I guess could you talk a little bit about the different types of of revenue. That's in that 50 15 percentage is any of that.
At risk, even though it's not tied to.
Yes, Yes, John who do we did we didn't take a look at that and we didn't really think much what was that risk you know, it's certain things that some of our customers are on a subscription basis. Some of its back office products that we provide agencies.
So with some of the work, we do a hospitality and the Dxi. So we really didn't think when we took a look at it we didnt slipped down a little bit I think the other thing I Wanna mention when we talk about the 50 million to does that give you sense of how conservative. It has been obviously in some of particularly in airline solutions contracts for our minimums, we've assumed in that 50 million that all minimums.
Wave.
So the airlines only enough to comply with a minimum requirement. So I think we've taken that a conservative approach that 50 million.
Got it great. Thanks.
I'm showing no further questions at this time I would now like to turn the conference back to Sean Meakim.
Great as always guys I light on the thank you for taking the time to hear the update on what's taking place here at Sabre.
Once again I want to thank my safer team members around the world for everything they're doing I really do appreciate it with that everybody. Please stay say thank you very much.
Ladies and gentlemen, you think this concludes today's conference. Thank you for your participation I have a wonderful day you may all disconnect.
Yes.
Yeah.
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