During the quarter, we continued to execute on key strategic initiatives to keep us well positioned for the long term. Travelocity made significant strides in accelerating our merchant model business, and Sabre Travel Network, in anticipation of industry deregulation, signed long-term contracts with several major airlines. WILLIAM J. HANNIGAN Chairman and Chief Executive Officer Sabre Holdings Summer 2003 www.sabre-holdings.com
Highlights Second Quarter 2003 Financials Travelocity launched Travelocity TotalTrip, a dynamic shopping engine that allows consumers to book airfare and hotels together in a few clicks, giving them access to special rates not available when booking components separately. Travelocity announced Travelocity Business, a comprehensive business travel service that can dramatically lower travel costs for small- and medium-sized businesses. Sabre Travel Network signed on new carriers to the Direct Connect Availability SM Three-Year Option. As of the end of July, 18 airlines were participating in the program, including the six largest U.S. carriers: American Airlines, Delta Air Lines, Continental Airlines, Northwest Airlines, United Airlines and US Airways. GetThere rolled out the newest generation of its online corporate travel system, GetThere Release 6. It offers travelers a new interface, shorter booking path, and new features that should continue to increase travelers preference for booking online, while cutting a corporation's costs. Sabre Airline Solutions added new deals from major airline customers, including Qantas, which selected the Sabre AirFlite suite of products to develop its flight schedules and improve its profitability across all regional, short-haul and long-haul routes. Sabre Holdings Total revenue of $507 million Operating income, on a GAAP basis, of $40 million* Diluted earnings per share, on a GAAP basis, of $0.05* Cash and marketable securities of $966 million Travelocity Gross travel booked was $979 million, an increase of 7.6 percent over last year. Total revenue was $91 million, a growth of almost 20 percent, primarily attributed to transaction revenue of $71 million, a growth of 29 percent for the quarter. Sabre Travel Network Revenue was $379 million, a decrease of 10 percent year over year. Decline in revenue was driven by the significant decrease in bookings immediately following the start of the conflict in the Middle East, on top of already depressed booking volumes. Global travel bookings were 89 million, down 16.2 percent. In June, bookings returned to pre-war levels. GetThere Revenue was $12 million, down 6.3 percent year over year. Corporate revenue growth was 24 percent, primarily driven by the growth in corporate trip volume. Sabre Airline Solutions Revenue was $54 million, an increase of 5 percent year over year. This revenue growth was due to solid performance from the Products and Services group through a mix of new business and organic growth from key customers. * Operating income and earnings per share on an adjusted basis (excluding one-time items) and reconciliations to their GAAP equivalents can be found on www.sabre-holdings.com/investor/
Sabre Holdings Sabre Holdings Strategy Update Sabre Holdings TM is a world leader in travel commerce, retailing travel products, and providing distribution and technology solutions for the travel industry. Sabre Holdings supports travelers, travel agents, corporations and travel suppliers through its companies: Travelocity, the most popular online travel service; Sabre Travel Network TM, which includes the world s largest global distribution system (GDS), connecting travel agents and travel suppliers with travelers; GetThere, the leading Web-based travel reservation system for corporations and suppliers; and Sabre Airline Solutions TM, the leading provider of decision-support tools, reservations systems, and consulting services for airlines. Headquarters in Southlake, Texas Approximately 6,500 employees in 45 countries 2002 revenues of $2.06 billion S&P 500 company Sabre Holdings is committed to improving the quality of life in the communities where it operates, primarily by supporting education initiatives with an emphasis on math, science and technology. To prepare students for the demands of tomorrow, Sabre Holdings invests in local schools and regional colleges through strategic contributions and the volunteer efforts of its employees. Sabre Holdings employees volunteer an average of 6,000 hours annually. The company also contributes to United Way each year. In 2002, Sabre Holdings marked its most successful United Way campaign ever, raising more than $1.2 million through employee pledges, fund-raising activities and a dollar-for-dollar corporate match. Q+A with Eric Speck Eric Speck Executive Vice President and Chief Marketing Officer How does the Direct Connect Availability (DCA) Three-Year Option benefit travelers, travel agencies and the participating airlines? Speck: No other global distribution system comes close to having the inventory of travel products we offer, benefiting travelers, travel agencies and airlines. The option provides travelers with access to all published fares of participating airlines, including fares previously found only on the Web, when they book airline tickets through a Sabre Connected SM travel agency. Agencies benefit by gaining access to the lowest fares from participating airlines. When airlines sign up, they agree to provide not only all fares, but also sales promotions, incentives and other services to agencies. The agencies gain parity with airline Web sites and reservations offices, as well as online third-party travel sites. There is no start-up cost, and these features are immediately available to all eligible travel agencies directly through the Sabre GDS. The agreement helps airlines by allowing them to offer their customers greater access to all published fares, including Web fares, and maximizes the effectiveness of sales promotions and other marketing initiatives. It enables them to gain market share in routes where there s heavy airline competition and sensitivity to price, thereby increasing sales opportunities and reducing fare confusion. The program also reduces distribution costs by providing airlines with a lower fee from us for the next three years. Sabre Holdings, the Sabre Holdings logo, Sabre Airline Solutions, the Sabre Airline Solutions logo, Sabre Travel Network, the Sabre Travel Network logo, Sabre Connected, Aerodynamic Traveler, Exclusives, TotalTrip, Traverse and AirFlite are trademarks, and Sabre, Travelocity, GetThere and Direct Connect Availability are registered trademarks of an affiliate of Sabre Holdings Corporation. All other trademarks are the property of their respective owners. 2003 Sabre Inc. All rights reserved. Please describe the progress DCA Three-Year Option has recently seen and explain what this means for Sabre Holdings. Speck: As of the end of July, we have a total of 18 DCA Three-Year participants, including the top six major U.S. carriers: American, Delta, United, Northwest, Continental and US Airways. The program has enabled Sabre Holdings to gain distinction in the marketplace through richer content, and it greatly widens the availability of Web fares, airline promotions, and incentives to consumers and users of the Sabre system. This advantage extends to all Sabre Holdings companies. Furthermore, DCA Three-Year participants commit to using our most sophisticated communication technology for the next three years, providing customers with instant reservations confirmation and full access to seat inventory and fares.
Sabre Holdings Businesses Travelocity pioneered the online travel space and continues to be the most popular travel service on the Web. Travelocity enables travelers to get the most for their money as they design and book trips online, with instant access to valuable information on airlines, hotels, car rental companies, and cruise and vacation packages. With approximately 40 million members, Travelocity is the seventh largest travel agency in the United States. Recently, it announced Travelocity Business, the most comprehensive travel service available for small- and mid-sized companies. Sabre Travel Network connects travel buyers and sellers through the world s largest global distribution system, providing 56,000 travel agency locations with instant access to information from more than 400 airlines, nearly 60,000 hotel properties, 50 car rental companies, nine cruise lines, and more than 230 tour operators. Sabre Travel Network offers a broad range of products and services that enhance travel agency operations, including office automation and revenue management tools. Sabre Travel Network also enables travel agency customers to provide services via the Internet. GetThere is the leading provider of Webbased travel reservation systems for corporations and airlines. Through GetThere, corporations offer employees a convenient way to make travel and meeting arrangements via their company intranets, while significantly reducing costs. GetThere, the first company to deliver a Web-based corporate travel system, now has 1,000 customers, including more than half of the Fortune 200. When using GetThere, many customers save more than 20 percent on travel costs, often representing millions of dollars. GetThere also powers Webbased travel bookings for leading airlines. Sabre Airline Solutions is the world s largest provider of software products, reservations and departure-control systems, and consulting services to help airlines simplify operations and lower costs. More than 200 airlines worldwide use the Sabre Airline Solutions broad portfolio of software solutions for decision-support tools to increase revenues and improve operations. More than 70 airlines rely on Sabre Airline Solutions for their reservations and departure-control systems. In addition, more than 100 clients worldwide have turned to the Sabre Airline Solutions consulting group for strategic, commercial and operational consulting. www.travelocity.com www.sabretravelnetwork.com www.getthere.com www.sabreairlinesolutions.com Travel Value Chain Sabre Holdings delivers value to customers at all points across the travel value chain. New Products Promotion Shopping/Buying Traveling Post-travel Sabre Holdings develops products that improve travel: Travelocity TotalTrip allows consumers to book airfare and hotel together simply and at special rates not available when booked separately. Sabre Exclusives SM preferred hotels program lets travel agents beat Internet specials and brand-name hotels. Sabre Holdings helps stimulate demand for travel: Travelocity sends timely, targeted newsletters with information on the best travel deals to millions of customers. The Sabre Traverse loyalty management system enables airlines to offer recognition awards and incentives to customers. Sabre Holdings helps travelers, corporations, agencies and suppliers book travel: The Sabre GDS handles 35 percent of all travel booked globally through GDS s. The Sabre Passenger Reservation System manages reservations functions for airlines of all sizes and processes more than 300 million passengers a year. Sabre Holdings improves the traveler s experience: The Sabre Aerodynamic Traveler Self-Serve Kiosk module offers passengers a one-stop airport check-in process. Access to detailed GetThere itinerary, via computer or wireless devices, facilitates day of trip for travelers. Sabre Holdings helps travelers, corporations, agencies and suppliers complete the travel process and prepare for future trips: GetThere supplies data to corporations so they can create better policies and contracts with suppliers. Travelocity offers Travelocity Preferred memberships to customers completing five bookings in 12 months.
Worldwide Headquarters Sabre Holdings Corporation 3150 Sabre Drive, Southlake, TX 76092 Tel: 682 605 1000 www.sabre-holdings.com Investor Relations Tel: 866 SABRE IR (866 722 7347)