Published on : Thursday, March 26, 2020
Sabre Corporation, the global travel technology giant has decided to undertake important measures to strengthen the financial condition and position of the company in order to stand strong amidst the adverse effects of the coronavirus pandemic.
Sean Menke, President and CEO, Sabre Corporation, said in a recent press statement that the global travel industry is facing challenges like it has never experienced before However, he believes that the company is well-positioned to navigate its way through the unstable condition prevalent at the moment.
Sabre noticed the decline in global travel driven by the COVID-19 outbreak. The turndown is expected to result in a proportional decline in Sabre Travel Network’s incentive expense, and a reduction in Sabre’s approximately $250 million semi-variable technology hosting costs.
He said that the company is fortunate that important aspects of their cost structure are variable. He shared that Sabre is taking steps to help align their other costs with the current demand in the present environment. He informed that the organisation have identified the cash costs for the year. Sabre is currently in the process of removing over US$200 million ($338 million) in cash costs from the business in 2020.
He further added that the company will continue to monitor travel activity as long as it is required. It will also take the necessary additional steps when realising the requirement. He said that this needs to be done due to the magnitude of travel decline and the unknown duration of the COVID-19 impact.
Sabre has begun implementing several immediate actions as part of its cost reductions. Main actions are undertaken with regard to the workforce and other costs during the difficult business climate.
The actions include a temporary reduction in base compensation pay for its US-based salaried workforce. It also includes a 25% reduction for its CEO. Sabre will also work with international employees on a country-by-country basis.
In addition, the company has decided to apply a reduction in the cash retainer for members of its board. Sabre will also temporarily suspend its 401(k) match program for US-based employees who contribute to this.
Sabre is offering voluntary unpaid time off globally. It is also providing voluntary severance and a voluntary early retirement program for staff. The company is also reducing third-party contracting, vendor costs and additional discretionary spending.
Sabre’s board of directors also voted to suspend the payment of quarterly cash dividends on the company’s common stock. This will be effective with respect to the dividends occurring after the March 30th 2020 payment. Sabre has also suspended its share repurchase program and withdrawn its FY20 earnings guidance provided in February.