Sabre Corporation will remove over $200 million in cash costs from its business this year, a move deemed necessary to get through the negative impact the outbreak of Covid-19 has inflicted on the travel industry.
“This is an unprecedented time. The global travel industry is facing challenges beyond what has been experienced before. We believe Sabre is well-positioned to navigate this challenging environment. We are fortunate that significant aspects of our cost structure are variable and are taking steps to help align our other costs with the current demand environment,” said Sean Menke, President and CEO.
As part of these cost reductions, Sabre has begun implementing several immediate actions including:
• A temporary reduction in base compensation pay for its US-based salaried workforce, including a 25% reduction for its CEO; Sabre will work with international employees on a country-by-country basis,
• A reduction in the cash retainer for members of its Board of Directors,
Sabre’s 401(k) match program will be temporarily suspended for US-based employees who contribute to its 401(k) program,
• On a global basis, Sabre is offering voluntary unpaid time off, voluntary severance and a voluntary early retirement program, and
• Sabre is reducing third-party contracting, vendor costs and other discretionary spending.
Additionally, the decline in global travel driven by COVID-19 is expected to result in:
• A proportional decline in Sabre Travel Network incentive expense, and
• A reduction in Sabre’s approximately $250 million semi-variable technology hosting costs.
In addition to the cost reductions described above:
• On March 16, Sabre’s Board of Directors voted to suspend the payment of quarterly cash dividends on Sabre’s common stock, effective with respect to the dividends occurring after the March 30, 2020 payment, and
• Sabre announced the suspension of its share repurchase program.
“We believe that recent capacity reductions by domestic airlines will lead in the coming months to a finding that a Material Travel Event Disruption has occurred,” said Doug Barnett, CFO. “We also note that about two-thirds of our cost structure is adjustable in the near-term. We will continue to assess the travel environment and whether additional cost actions beyond the $200 million announced today are necessary.”
Featured image credit: Getty Images
