Q3 2020 Sabre Corp Earnings Call
[music].
Good morning, and welcome to the Sabre third quarter 2020 earnings Conference call. My name is Vic there and that will be your operator as a reminder, please note today's call is being recorded.
I will now turn the call over to the Vice President of Investor Relations. Kevin Crissey. Please go ahead Sir.
Thanks, Victor and good morning, everyone. Thanks for joining us for our third quarter 2020 earnings call.
This morning, we issued an earnings press release, which is available on our website at investors that sabre dot com.
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 our beliefs or expectations about future events, including the duration and effects of COVID-19 industry trends expected advancements cost savings and liquidity among others offer.
All forward looking statements involve risks and uncertainties that may cause actual results to differ materially from those statements made on today's 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 10-Q filed on August 10th 2020, and our Twentyth.
19 form 10-K.
Throughout today's call. We will also be presenting certain non-GAAP financial measures all references during today's call to EBITDA operating loss and need the 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 web site at <unk>.
Investors that sabre dotcom.
Participating with me are Sean Mahoney, our Chief Executive Officer, and Doug Burnett, Our Chief Financial Officer, Dave.
Dave Sherman, our president of travel solutions, and Scott Wilson, our president of hospitality solutions will be available for Q and <unk> after the prepared remarks.
And with that I'll turn the call over to Sean.
Thanks, Kevin Good morning, everyone and thank you for joining us today before.
Before we get into the details of the quarter I would like to first thank my team members around the world for their sacrifices and ongoing analysts effort.
I'm humbled and very proud of what they have done for our customers and our company.
During today's call, we will focus on a few specific areas, including comments on the ongoing to respond to the Cove in 19 pandemic and customer engagement. The continued progress with our technology transformation and product enhancements and finally, an update on our financial and balance sheet focus.
Early on in the course of the pandemic, we took swift and decisive actions to protect our people our company and our balance sheet to give us additional runway to help whether this pandemic.
Those actions have allowed us allowed our team to focus on controlling what we can and using the unprecedented time to challenge traditional thinking advanced innovations and position sabre for the future.
The COVID-19 pandemic continues to suppress travel demand and impact our customers partners and of course, our financial results Importantly, Q3 booking trends showed signs of improvement from the second quarter, and we have cautious optimism for ongoing improvements.
Even in these tough times, we continue to win new business and lock in long term commitments with some of our largest customers are valuing the travel industry continues to be well known as evidenced by the 1400 airline and agency deals. We have signed year to date, our customers Trust us to be there for them now and on the other side of this pandemic.
We took decisive actions to reduce our cost structure manage cash burn extend our debt maturities and add to our liquidity position. We have also continued to invest in our technology transformation and migration to Google cloud, which will further reduce our cost and allow for more efficient product development and deployment.
As I'll discuss in more detail in a few minutes, our partnership with Google extended well beyond just the cloud deal.
And just the past two weeks, we have announced two major advancements first we are pioneering artificial intelligence technology for travel the technology known as Sabre travel AI is powered by Googles state of the art AI technology and advanced machine learning capabilities second in partnership with Google, We will be accelerating.
Liability of the travel industry's first smart scalable retail engine we.
We expect to launch Sabre smart retail engines, the first product powered by Sabre travel AI early next year.
These advancements are the next step in our Google innovation framework.
Putting it all together, we have taken decisive actions to manage through the COVID-19, global pandemic, while continuing to execute and deliver on our technology transformation and product capabilities that will be necessary for our customers to rebound and excel once the impact of the pandemic recedes.
Turning to slide five industry Air net bookings improved in the third quarter slowly, but steadily in July GDS industry net air bookings were down 94%.
This was down 88% in September down 82%.
Improvement has been most pronounced in our largest market North America, the relative strength of the regional mix helped those savers gross and net air bookings outperformed the industry in the quarter.
North American bookings continued to recover in October and Devon and demonstrated a 20 percentage point recovery versus July growth rates.
Turning to other regions. Latin America has also shown continued signs of improvement Asia Pacific has been the slowest to recover but has trended in the right direction.
While all other region showed continued positive improvements in October the improvements in booking trends stalled in EMEA. Despite this total industry global bookings were down 80% in October.
On slide six you can see all sabre key metrics have shown improvements since were record declines driven by the Cove in 19 pandemic in April all metrics were down approximately 90% or greater.
But exiting October gross bookings were down approximately 80% passengers boarded down 70% and gross Crs transactions down 50%.
The negative impact from cancellations moderated in the third quarter as cancellations have begun to stabilize in the past few months looking at the GDS industry data on a weekly basis through October you can see net booking trends have continued to improve as I. Previously mentioned the improvement is most pronounced in North America, our largest region.
Slide eight demonstrates the passengers boarded have also shown continued signs of improvement excluding airlines that remained significantly impacted by government travel restrictions passengers boarded for our top 20 carriers approach the 40% recovery in October versus an effectively zero volume environment in April.
On slide nine you can see hotel transactions continue to outpace improvements in our air bookings and passengers boarded hospitality industry bookings were down about 50% in the third quarter. The positive trend we were beginning to see in the EMEA region flattened and reverse due to new resurgence of COVID-19 cases and re implemented travel research.
Sections in the region.
It is clear the COVID-19 pandemic has been unprecedented.
On slide 10, we provide perspective for just how unprecedented over the last 50 years global travel volumes has grown at a multiple of GDP. In fact during this time there have only been six calendar years in which global passenger volumes decline and the maximum decline was less than 2%.
Over the last five decades average annual growth has been 3.8% at its lowest and 8.6% at its highest.
We have directly benefited from the steady growth in global travel volume, our resilient volume base business model filters out noise from fluctuations in the price of air tickets or hotel room nights for all our customers may have to put a 500 dollar ticket on sale for $200 to stimulate demand we enjoy a transaction based revenue stream, but.
Because of this and the recovery data we have shared we feel we will be well positioned for an early COVID-19 recovery. We strongly believe there is pent up demand for travel and that the industry will continue to recover from this extraordinary time.
Let me now turn to a commercial update despite the challenges presented by COVID-19, we continue to win new business and signed key renewals as I mentioned, we signed 1400 individual airline and agency deals. So far. This year. These are in addition to several thousand hospitality deals also signed year to date.
Let me take a second and highlight a few that closed in the in the third quarter.
And distribution, we were very happy to announce a distribution renewal with one of our largest customers American Airlines. In addition, we had added Esas and Scandinavia and Jade you Air a top South Korea low cost carrier to the list of marquee Airlines. We have renewed this year you may recall, we highlighted renewals with United Emirates and.
Copa last quarter.
Airlines are turning to establish efficient robust distribution channels, such as our GDS to fill seats and distribute their inventory far and wide in this historic low demand environment.
As further proof points of this in Q3, we also signed new distribution agreements with fly gang lawn and air permit both in South Korea tie Smile Airways, a subsidiary of Thai Airways Air, Belgium, and voyage Air in Bulgaria.
We also made strong progress with agencies, including a new win in a competitive takeaway with bit travel the largest travel agency network in Southern Africa.
We also signed incremental conversions with Royal traveling UK Berke Hansen in Norway and ill person in the middle East.
Finally, we signed other key renewals in the quarter such as travel store the largest TMC in California trip actions and online travel management company traumatic, Italy, and tandem travel in New Zealand.
Turning to our IP solutions portfolio. After only a couple of quarters of integration with eradicate product family. We are already seeing positive movement, even despite coven and Q3, we signed a new robotics agreement with via travel a major tour operator in Vietnam that launched its own flight operations via travel is a third airline in Vietnam.
Using sabre capabilities.
To help our customers navigate through COVID-19, we launched radically touched let's go a complete no touch checking process that assists with boarding bag tags and other services all from a customers smartphone.
Any NRT operations, we implemented and recovery manager off at Air China, and China, Eastern we implemented dynamic pricing engine for at the Hot which helps airlines navigate through this crisis without historic data to rely on.
We delivered a seat recommendation solution in partnership with American Airlines, which enables optimal passenger seat reassignment after schedule or equipment changes based on algorithms and business rules.
And finally, we implemented proration engine for southwest Airlines.
Which allows airlines to see real time revenue earnings for each segment in a multi leg segment. This is a significant improvement versus the historic enormous seen segment profitability, 7% to 30 days later and accounting roll up southwest of the first airline to implement this innovative product.
As I mentioned I continue to be pleased with the progress we are making on our technology transformation.
As a reminder, the move to the Google Cloud has many advantages, including greater stability with higher availability faster recovery industry, leading security and many other enhancements all at reduced unit operating.
Cost with rightsize deployments and the ability to scale up and down quickly.
Our tech migration is helping us already.
We significantly reduced our infrastructure footprint year to date, we have reduced over 2500 physical servers across our major data centers in Texas, and Oklahoma, which represents a reduction of nearly 30% and has resulted in millions of dollars of annual savings.
As Doug will explain in more detail later by the end of 2023, we expect to move to the Google cloud and our new DXL contract to reduce our operating costs by more than $100 million per year.
Beyond the work to migrate to Google Cloud, we have discussed other important parts of our partnership with Google specifically co innovation to transform the future of travel we're now beginning to execute on this aspect of our partnership.
In October we introduced Sabre travel AI. This advancement is part of our Google Innovation framework and is an industry first and travel Sabre travel AI is infused with googles state of the art AI and advanced machine learning technology, specifically sabre travel travel AI capitalizes on Google Cloud AI solutions.
And automated machine learning tools that sense analyze and predict consumer behavior, using real time shopping information and sophisticated travel specific business insights.
We expect to travel AI can enrich products across all businesses, we support airlines hotels and agencies using next generation technology advancements, we are integrating savard sabre travel AI into certain products in our existing portfolio with plans to bring these to market in 2021.
Earlier this week, we unveiled the first product powered by Sabre travel AI technology partnering with Google We are accelerating availability of the travel industry first smart scalable retail engine with launch planned in the first quarter of 2021.
Powered by state of the art.
AI technology and advanced machine learning capability Saber smart retail engine will be the first of its kind in travel designed to both to be both PSS and channel agnostic, we expect the sabre smart retail engine to be available to both current and future airline customers, regardless of their business model PSS or GDS save.
Smart retail engine as a new innovation that integrates savers dynamic offer management and customer segmentation capabilities with googles proven and powerful merchandising solution to use real time shopping data available content and AI and ml based decision support models to test and learn and generate the most optimal offers available these personalize offer bundles or.
Dynamically price using customer segmentation techniques can include ancillary such as Ses and baggage and will eventually include third party content, such as rental cars and hotels stays.
Ultimately, we are bringing together some of the brightest minds from Google and Sabre to building connect the right offer to the right traveler at the right time to increase traveler satisfaction and provide airlines the opportunity to drive new and creative business opportunities we.
We are excited to bring savers, some smart retail engine as part of our offer management strategy one of our strategic initiatives announced at the beginning of this year and a step towards achieving our 2025 vision of delivering truly personalized travel. These.
These are examples of how we are thinking about the future. We are making the investments now that we expect will be positioned us for success post covert to recovery.
And with that I would like to turn the call over to Doug. Thanks, Sean.
The impact of the pandemic hurt our results significantly again in Q3 so.
So certainly less than the second quarter revenue was down 72% in the quarter totaling $278 million versus $984 million last year.
We described how 15% of our revenue or approximately $150 million per quarter is not tied to travel volumes. This remains the case because our net bookings are now positive our revenue surpassed this take care.
Our distribution bookings were down 86% in the quarter gross.
Gross bookings were down 84%, 83% and 81% in July August and September respectively.
We report bookings on a net basis, meaning net of cancellations net bookings were down 91%, 87% and 81% and those same months.
Consequently, our distribution revenue in the quarter was down 84% to $105 million.
In terms of future cancellations exposure, we have recognized $30 million in revenue from bookings not yet departed and happy $33 million cancellation reserves.
Our two solutions revenue fared better down 46% year over year due to a higher percentage of our revenue not tied to travel volumes.
Hospitality revenue is down 40% with a 37% decline in Crs transactions.
EBITDA operating income and net income were all negative in Q3, reflecting the impact of the code 19 pandemic.
The year over year revenue to assume that we are a decline in revenue was partially offset by a decline in incentive expense head.
Headcount expenses due to cost savings initiatives, we have already executed and technology expenses due to the lower transaction volume environment.
In addition, free cash flow was negative $201 million in the quarter.
As expected our free cash flow was reduced by $20 million in severance payments and 13 million net cash outflows to carriers resulted from previous booking cancellations. Please.
Please note.
When we previously gave our monthly cash burn guidance. These two items were addressed as reductions to our existing available cash balance rather than specifically itemized as expected future uses of cash.
Excluding these two items our monthly free cash flow was negative $56 million compared to the 80 million monthly cash burn rate. We disclosed we just discussed at a zero booking zero PB environment.
Looking ahead to Q4 I'd like to mention three items that are expected to negatively impact our Q4 free cash flow by approximately $90 million first is the seasonality of our cash interest payments second is the timing of employee cash benefits, while typically paid in the first quarter each year.
They will now be paid in Q4 2020.
This is an acceleration of what has historically been paid in the first quarter. So we will see the offsetting benefit in Q1 2021.
Third we expect to make additional severance payments related to the cost reduction measures implemented earlier this year we.
We expect this to conclude the bulk of the severance payments associated with the actions taken in 2020.
Last quarter, we talked about our business realignment and then we expect the changes to our financials as a result accordingly. Our Q3 results include two changes to our financial reporting structure and a recast of historical results for.
First.
We have implemented a change to our reported business segments.
We will now be reporting two segments travel solutions and hospitality solutions as part of our travel solutions reorganization, we combined the travel network and airline solutions businesses into one segment.
We will no longer be reporting travel network and airline solutions as separate segments. As these teams and activities have been combined we.
We will continue to report the revenue and key metrics you are accustomed to seeing and modeling.
This includes our GDS transactional revenue now called distribution revenue as bookings details will also report I T solutions revenue or revenue generated from our airline reservation systems, and commercial and operations products and we'll continue reporting passengers boarded.
Please note the majority of what was formerly reported as travel network. Other revenue is now recognized under IP solutions as mentioned, we will continue to report hospitality solutions as a separate segment.
Second.
In an effort to continue to provide clarity on our technology spend we are now presenting technology costs as a separate line on our PML. Therefore.
Our main cost buckets are now cost of revenue technology costs and SGN a.
While there was no impact to other financial measures.
As a result of these changes our adjusted gross profit is more favorable than previously reported as of now excludes technology costs.
This is expected to provide a more transparent view of variable expenses and gross margin.
Direct accountability of expense to revenue ratios to drive productivity.
Closer benchmarking to peer tech companies.
We have disclosed reclassified financials that reflect these changes for Q3 and year to date, 2019, and 2020 and our earnings materials and in the Sabre historical Excel file posted on our IR website at investors Dot Sabre dotcom.
We expect to provide reclassified quarterly financials for 2018 through 2020, when we release, our Q4 and full year 2020 results in February.
We are on track to achieve to achieve $275 million of non volume related cost savings in 2020 versus 2019.
Remember this is primarily headcount related expenses and partial savings from our renegotiated Dixie contract.
Natural savings and incentives and technology hosting expenses caused by the lower volume environment our incremental.
On a go forward basis, we expect a minimum of $200 million of non volume related cost savings per year compared to 2019.
This approx $175 million in savings is driven by lower headcount expenses from reductions that have already been executed.
To be clear these cost savings are not driven by temporary factors like staff furloughs approach.
Approximately 25 million impacts the fixed portion of our technology costs and is driven by savings from our new DXL contract.
By 2024, we expect an incremental $75 million per year of fix technology cost savings. Once we have largely completed the technology transformation and our migration to Google cloud platform.
These expected savings are already in place.
Supported by our strategic partnership with Google and our new contract with the ICSI Ultra.
Ultimately with the cost saving actions implemented this year and financial benefits of technology transformation work, we expect a total of 275 million in annual cost savings starting in 2024 versus 2019.
Please note that as we execute the tech transformation. Some of these incremental cost savings may be realized prior to 2024. However, we expect majority to be realized in 2024 and beyond.
Incremental to these figures are anticipated savings from lower unit costs on transaction volumes as we migrate to the cloud which has favorable economics.
As you are no doubt aware, we took quick action to raise additional liquidity in the event the COVID-19 pandemic persist longer than expected.
While the hope this isn't the case and continue to see signs of modest improvement in bookings we.
We closed on three important offerings in the third quarter.
We generated $598 million in net proceeds from our common stock and mandatory convertible preferred offerings.
We're also we also pushed out our debt maturity schedule.
We issued $850 million in new senior secured notes due in 2025 and used the proceeds to pay down earlier maturing debt and we extended the maturity on a portion of our bank facility.
As you can see on slide 16, we do not have a material debt maturities until the fourth quarter of 2023.
And the Georgia does not mature into 2024 and beyond so.
Upticked, a springing maturity conditions for ease of presentations, we have excluded the immaterial mandatory debt repayments. It's also important to note the material travel event disruption leverage ratio Covenant waiver language remains consequently, our leverage ratio covenant under our amended and restated credit agreement.
Has been suspended and we expect this to continue through at least the end of 2020 and possibly through 2021 based on current Ayada volume projections.
So to summarize we have strengthened our liquidity position.
Reduced our costs extended our debt maturities and are seeing improving booking trends.
Finally, we ended the quarter with a cash balance of $1.7 billion and have no significant near term uses of cash.
John back to you.
Thanks, Doug.
In summary, we remain focused on the future are confident are confident travel will rebound and feel competitively well positioned post COVID-19, I want to once again, thank by sabre teammates around the world for their dedication to serving our customers shareholders and each other during this difficult time and with that Victor I'd like to go ahead and open up the call for questions.
Who is.
As a reminder, ladies and gentlemen.
Question, you need to press star one on your telephone Tilley.
Really good question just press the pound key.
Please stand by only composite can a roster.
Your first question comes line of Mike Mark Moerdler from Bernstein Research.
You may begin.
Thank you so much.
And nice to see the steady improvement obviously, it's been a slow slog fluid.
I apologize, but I got.
Two questions. If you don't mind, Doug you had one time items impacting cash in Q3 and now there's another $90 million in items impacting Q4 can you give us any sense of what you now currently see obviously in terms of other onetime items or timing changes in terms of cash impacts for 2021 and beyond.
And then once you add mark once we once we burn through the severance payments, which will do primarily by the end of 2020, and obviously, we're seeing a lot less impact from cancellations and we saw earlier in the year. So I don't expect those two items to continue and the only the only reason why you had a variability of interest costs in the.
The fourth quarter versus the prior quarters is because of the financing that took place in April so they will commonize NB normal throughout all 2021 and beyond.
So we shouldn't expect any specific.
Let's see where in some items that's currently right now.
And then.
Can you give us any color on travel agency failure rates.
Yeah, Mark I mean, what we've seen so far.
And I'm going to go around the globe, we havent seen what I would consider a lot of failure rates. Many of them have gotten a lot of expense out theres been a number of furloughs that have taken place.
What we have seen is some level of concern.
Consolidation M&A taking place.
CTM the.
Large TMC out of Australia acquired.
Harlan transport here in the us.
For the most part we have not seen a lot of failure at this point.
Perfect.
I really do appreciate I'm sure there's lots of other questions. Thank you, yes. Thank you Mark.
Thank you our next question comes line.
Ashish Sabadra from Deutsche Bank, you may begin.
Thanks for taking my question and let me Echo the.
Good the strong sort of improvement that we've seen in the bookings here.
One of the key bids maybe look or investors is around the corporate bookings.
Specifically around the disintermediation from Xoom Liquidio conferencing, but.
But also on the positive side increased managed care. So Sean maybe if you can take your Crystal ball and you have your thoughts on what do you think about the corporate travel, particularly in the district disintermediation trend.
But also if you have done any research in the past talking about what's in each of the corporate bookings was managed and how the duty of care emphasis boost the pandemic potentially shift more volume through the GDS. Thanks.
Yep.
Thanks, Ashish for that question. So let me just touch upon the way that we look at this and again I go back in history, a little bit just my number of years in the business and go back to 911 go during the period relative to the economic.
Essentially recession that took place 2008 through 2010 roughly.
There was a call for corporate travel really slowing down and not rebounding the way that it did now.
If you look at it it did there wasn't rebound that took place no doubt that we are seeing a more of a significant impact and what's taking place. If you do a breakdown of what were looking and we looked at it I look at the data very closely.
No we do see that leisure bookings are recovering faster than corporate bookings.
But when you look at the trough it was down essentially 100% I think at the peak down it was probably 90, 899%, we're actually seeing corporate bookings in the range down about 80% or so give or take a couple of points and with that Ashish.
The one thing is clear is we don't see really corporate bookings starting to recover until 2021. The other thing that is very important and we are an organization that I have thousands of employees that travel around the world and you mentioned this and it's the duty of care.
The importance of duty of care and there are things that are being worked on relative to additional technology that is going to allow corporations.
To make sure that they are doing that the best thing and the safest thing for their employees around the world. So I look at it that we have to be patient recovery is taking place in.
And again living through this a couple of different times theres.
Theres no doubt in my mind that we have seen essentially zoom calls as well as teams calls have allowed us to be efficient, but but I do believe we will see corporate travel recover over a period of time I don't think its just going to snap back, but I think we just have to be patient. It goes back to everything that we have done as it relates to one racing liquor.
Would it be focusing on the balance sheet continuing to improve our technology products in the marketplace that position us well for the future.
Thanks, Sean that was very helpful color.
And then just moving on to the glue partnership congrats on those new product launches that.
Was just wondering if you can talk about I'll remind us how Google is helping you in developing those products.
Do they have that peak the engineers on das actively helping you with the deadline. So thats one part of the question and then the second question would be just how does it change your competitive positioning going forward with these new products.
Out in the market and then tiller I know, it's still very early days, but have you had any conversations with any of your customers on these margins on any initial feedback thanks, sorry for it so but yes no. Thanks. Thanks, Ashish I mean first and foremost I think we're already doing great things with the products and I think this is just going to pull vault us even further into into opportunity.
Is to continue to accelerate wins.
Wins in the future because it's really aligning to what the marketplace needs to do as a reminder, theres sort of four aspects of the Google relationship. One is the cloud deal that Doug talked about in the savings that we get the.
The second is really the technology transformation part of that is with Google and then also the new DXP agreement that really gives us a lot of flexibility in how we think about the transformation with that there are number of Google.
Engineers that are helping on that tech transformation.
The third part of it is really the the.
Machine learning da Eisai, the equation and we talked about this and how this is going to be integrated in its taking place now the other piece of it is the innovation framework and again this really does get into what we're doing on the merchandising side.
We'll we'll get we'll be able to share more with this but this is essentially a.
Fair logics replacement in what was taking place there and we believe it is what we consider to be Gen. Three which is really not in the marketplace because it really does get into dynamic offers so.
So when you look at it Ashish its really all the components of the relationship are beginning to come together, that's allowing us to continue to position ourselves to be able to transform the industry that we're in.
So she's just to add to your question on customer interaction, we've already had multiple customer sessions joint sessions ourselves, Google and the customer and we have a backlog of folks that with these announcements are very interested in continuing that so we've got our teams pretty busy over the course of the next several months on the topic.
That's great.
Good results once again, thank you.
Thanks Ashish.
And once again Thats star one for questions Star Wars.
Our next question will come from the line now Jed Kelly from open.
Hi, there may.
You may begin.
Great.
Thanks for taking my question.
Just just giving an update on.
Booking mix.
And when you can become free cash flow neutral.
It's still need to be 70% in 2019 levels or is there a way.
You could reach free cash flow neutral before then.
Yes, Jeff as you recall last time.
Yes.
Last conference call, we gave kind of two goalposts I'll tell you the unfavorable mix, we're seeing right now between between corporate and leisure and international domestic if that if that were to stay the same as what we're seeing right now in today's environment than we would need to have a 70% recovery, we got back to the more historical mix of what we had for those goes.
Categories, It would be 60% so they have a goalpost somewhere between 60 and 70%.
Got it and then just just on your partnership with Google.
Does that impact your relationship with HCA.
Yes, I mean, I mean is that going to be competing with them or how should we view that.
Yes, Jed I think I think the best way to thinking about this and it goes back to really just what I walked through on the technology and what that is providing and we said in a position that we have to look at.
Airlines, we have to look at hoteliers and how are we helping them create new products that they can sell and not the same time. We also have to be thinking about OTI AIDS as well as TMC is brick and mortar on the other side of the equation.
And a big part of what we continue to hear and what we're facilitating because we have.
Vast majority and a lot of focus on this is how do we make sure that those new offers are essentially pushed through to the agencies that want to sell them. So I look at it that.
As I've said all along we are a technology company. We are focused on providing the technology to our customers and we are capable of seeing sort of the end to end capabilities that are required to facilitate a change in the number of people are looking for.
Got it and then.
It's pretty well understood that leisure leisure domestic accommodation is leading and going to lead the recovery.
In the first half of next year.
Just how do you kind of had.
Look at your strategy in your in your hotel business hospitality business around alternative accommodations in those single unit inventory type.
Types that are probably going to be in high demand even into next summer.
Yes, I think it's.
I think you know this while jet as you cover that sector I mean, big part of the growth that is taking place now are essentially a number of people that because people are working from home.
People have wanted to move out of the urban areas and have been looking for places. So thats been a big driver as you look at that the other thing that is important is we have had conversations specifically as it relates to distribution and how does that get pushed through our distribution channel. It goes back to some of the things that we've done well with our lodging content services capabilities and being able to do.
Do that so I think there is a balance associated with it but I'll have Dave or we have Scott who is from remote right now who is our new president of hospitality. If you guys have a comment I think I mean, one comment I would make jet is just some of the initiatives that John was appointed pointing to with our content services on the lodging side.
We've been pretty active within the hospitality space from a distribution perspective, with the stay safe initiative and other things, which.
The question was asked a little bit earlier about duty of care, it's not just on the air side, but it's also on the hospitality side and we're doing everything we can to hell bring that piece along to make sure that certain requirements in certain measurements are met so I think that will also add to it and help and assist in both the leisure to corporate balance and then Scott you want to add any.
Thing on the.
Crs side.
Yes, actually I think the way Sean broke down makes lot of sense is there's distribution and of course, there's IP solutions, we look at that as another market for us to go with our set of IP capabilities. Both on the commercial capability side like Crs as Dave just mentioned, but in addition through our operations and execution.
As well so we think it's a great new market for us to to have some conversations with about extending our IP capability rich.
Thank you.
Thank you.
Next question comes line of Josh Baribeau from Morgan Stanley You may begin.
Great. Thanks for the question I was hoping you could talk a little bit about the kind of conversations that you're having with customers.
And maybe touch on how they have shifted over the course of Cove. It are you able to start talking about.
Sabre travel AI in smart retail and adoption of.
These new innovations.
Partly still survival mode.
Context would be interesting.
Yes, I'll kick this off and then have Dave just get into maybe some more of the.
Details of the conversation so I mean listen there are some carriers around the world I think we're seeing that the as time goes there are certain carriers that are definitely pivoting to more of how they're looking at the future. Those that have done a lot of good work relative to their balance sheet their liquidity and what's taking place.
If I look at the North American marketplace, even though that we have seen in case increased cases of Cove. It we've actually seen in the data that we shared with you. We continue to see the bookings our content are still continuing to improve.
Slowly, but they're continuing to improve.
In the European marketplace, there's definitely been a fall off so what the reason I bring it up is we're seeing different carriers thinking about different things.
In what I would say are the carriers as I think about really the options or opportunities in the future. There is a lot of focus on what we're doing as it relates to the technology a lot of interest.
Really well so what we are doing Google So Dave you want to provide maybe some color on that yes, maybe I'll break it down into LCC in full service carrier, probably a little bit easier to follow Josh on the FCC side. The conversation is is not changed is aligned and frankly the activity has been.
Very positive in terms of interest and interaction so.
Not much change there and again, we continue to knock down wins and continued to see steady progress from that the data continues to say the lccs are recovering faster than full service.
In each of the regions around the globe. So we'll continue to take advantage of that and only with a radical portfolio, but with the rest of our our capability set on the full service side.
Theres a range of discussions it depends on the region and the carrier.
There are some carriers were spending a lot of time, helping them with planning and scheduling because they're having to relook at routes and what makes sense and whats profitable other places where our operations portfolio. We had a number of go lives in milestones this quarter in Asia, with our recovery systems and movements systems and crew systems.
Those are becoming important and then to your point when you start to think about.
The retailing side, we've had big rollout of dynamic pricing with Ethicon and then the announcement of operation engine with southwest that got delivered again first of its kind innovative answer for them to help understand and take a part segments from it. So it just depends on where they are at and the maturity curve and what types of things as far as.
Our new Sabre travel AI and.
The sabre retailing engine lot of interest to learn more and understand more how about how those dynamic offers will come together, what and how the patterns and machine learning in the data are and the carriers will come together to help them drive higher revenue yields even in a recovery based environment. So we feel.
Good competitively in terms of where the portfolios out in some of the moves that we're making and taking advantage of the Google situation and the nice thing about a two is there is a good collaboration between ourselves and Google and the airlines that were talking to because this is not just saying were going and talking to these airlines bought as to request also have the discussion with Google understanding what these techniques.
Allergy capabilities can do so.
Again. This is this is part of the innovation framework. When we talk about there's been a lot of questions about it we're really happy to be able to really talk about some of the things are really coming to fruition.
Thank you.
Thank you.
Our next question will come from the line of Matthew Broome from Mizuho Securities You may begin.
Thanks, very much could you maybe comment on the pricing environment in terms of.
Are you in negotiations and travel agencies now aligned.
You renewed contracts.
Yes, if you if you look at I mean, we mentioned a lot of the GDS agreements a lot of them have been just renewal of agreements that are in place so in essence.
The economics are status quo to what they have been and it does go back to what we said all along is the desire to have.
Essentially their products and services in the GDS selling through that distribution channel.
When you look at it relative to the agency side of the equation.
A big part of it is the renewals that are taking place there as well so I would not say there has been a significant amount of cost pressure.
In any of the discussions that we're having anything that.
That we tried to help carriers with has been baked into what Doug is share.
Okay. Thanks, and I guess just in terms of your internal realignment.
So how does that folks president is going to be in any sort of meaningful challenges benefits that that have recently been anticipated just any kind of an update that would be great. Thanks.
Yeah, I think the first thing that I would state and I'd ask Dave to comment on this is what I have believed all along relative to aligning what were the former travel network and airline solutions organizations and understanding essentially the cross pollination of how they actually come together and not high load really does allow.
Just to be better educated and doing things in the marketplace that allow us to look at the full spectrum of what we offer and Dave has really been managing this and I think you can probably give you a couple of examples I.
I think.
Maybe from an outside in perspective, it's been interesting the customer feedback we've had a continued positive interaction and responses from our customer base, which is good to see the level of servicing has actually gone up our employee satisfaction levels from.
Surveys and polls checks in various different means that we use to to interact with our employee sets have been some of the highest that.
That we've seen in some time so despite the difficulty of the cobot environment I think the entire I'm really really proud of the employee population and how well they've responded.
And again, I get calls and contact constantly with Ceos and.
Commercial officers of our various customer sets are even heads of minimum of our agency partners and the feedback continues to come into the responsiveness that the teams are seeing so I think we are broke breaking down a lot of legacy silos and the innovation speak for themselves of the things that we're putting out into the marketplace. While we're in the middle of this so very resilient and very.
Happy with the progress we've made to date.
Okay. Thanks, Thanks, Dave and so on.
Thank you.
Thank you.
Hi, I'm actually not showing any further questions at this time I'd like to turn it back over to Mr. Mackey forever for any closing remarks.
Great first I want to thank Mike.
My my team members around the world they have done an enormous amount of work over the past.
Several months and what's taking place and if you actually look at it it's been going on over the past couple of years. If you look at sort of where we are right now.
We have done an enormous amount of work and really stuffed into another gear relative to managing the crisis.
We've done a lot as it relates to our financial strength.
We make really quick decisive decisions that was really based on information that we're we're we're capable of just because of the seat that we sit in and.
And so we've been able to do that really and thinking and balancing the decisions of employees customers and shareholders. I think the important thing is really were looking sort of post co bid, we're dealing with that right now, but because of what we've done.
There are true underlying cost savings that Doug has outlined as it relates to Google GCP Dfc other costs that have come out.
As you can also tell by our comments, we are laser focused on our technology transformation in the products that we're rolling out in the marketplace and we believe that when you really do look at beyond recovery here that the market opportunities and what we have done to position. This organization is going to be very successful so with that I would like to thank everybody for joining us today and look forward to talking.
To you in the future.
Okay.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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Okay.
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Yes.
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