Sabre Summer 2002 Defining times. Defining company. The travel industry is not recovering as we had anticipated, yet we met earnings expectations. We continue to take actions across our portfolio to bring greater value to customers and strengthen our leadership position. WILLIAM J. HANNIGAN Chairman and Chief Executive Officer
Highlights Sabre launched the Sabre Corporate Connect booking fee program. The U.S. corporate pricing program enables thousands of corporations, including half of the Fortune 200, and all airlines to enter into a significantly lowerpriced distribution model for airlines. Sabre launched the Empowering Agenda for travel agencies. The agenda includes Sabre Exclusives, the first GDS-developed merchant model program for hotels; access to Web fares through FareChase; and Sabre Magnify SM breakthrough revenue management tools. Sabre secured a multi-year strategic alliance with Yahoo! and extended its agreement for Travelocity to serve as the online booking engine for the Yahoo! Travel Web site. Sabre became the leading GDS in Greece, gaining more than 40 percent of the bookings share following Marine Tours conversion to the Sabre GDS for travel bookings. Top Flight Travel, the United Kingdom s largest Uniglobe franchisee, also chose Sabre for its travel bookings. Travelocity opened its online Walt Disney World Resort Vacations Store through a major distribution agreement with Walt Disney Parks and Resorts. The deal increases Travelocity s merchant capabilities and offers consumers one-stop shopping access to all Disney-theme parks, resorts and events, including special packages and promotions to Disney s theme parks in Orlando. Computerworld magazine honored Travelocity with its prestigious 21st Century Achievement Award in transportation as an innovative company leading the global information technology revolution. Travelocity was selected from 59 finalists in seven countries. Ultramar Travel Management and GetThere announced an agreement in which Ultramar would provide the GetThere online corporate reservations system as a preferred offering for its small and mediumsized clients. Sabre signed agreements with major airlines in all three lines of its Airline Solutions businesses. Among them was a deal with Air Jamaica for reservations systems. Second quarter financials Diluted earnings per share of $0.57, down 14.9% from year-ago quarter excluding special items Diluted earnings per share of $0.47 on a GAAP basis Total revenues of $533 million, down 8.5% Operating margin of 25% Second quarter free cash flow generated: $79 million Second quarter earnings before interest, taxes, depreciation and amortization (EBITDA): $132 million Second quarter net cash position of: $483 million
Sabre Sabre Holdings Corporation (NYSE: TSG) is the leading provider of technology, distribution and marketing services for the travel industry. The company distributes and markets travel through the world s leading global distribution system (GDS), as well as through its companies: Travelocity, the most popular travel service on the Web; and GetThere, the No. 1 provider of Web-based travel reservation systems for corporations and travel suppliers. Sabre is also the leading provider of technology products and services to travel suppliers. Headquarters: Southlake, Texas Population of approximately 7,000 employees located in 45 countries 2001 revenues of $2.1 billion (from continuing operations) S&P 500 company Sabre is committed to improving the quality of life in the communities where it operates, primarily by supporting educational initiatives with an emphasis on technology. To influence the workforce of tomorrow, Sabre invests in local schools and regional colleges through strategic contributions and the volunteer efforts of its employees. Sabre strategy update Q+A with Sam Gilliland 1As the new CEO of Travelocity, what is your initial assessment of the company s strengths and opportunities? SAM GILLILAND Sabre Executive Vice President, and Travelocity President and CEO GILLILAND: We have the opportunity to build upon the great foundation built by the team over the past six years. Travelocity has the strongest brand in online travel and the largest online travel membership at nearly 35 million members. In addition, we sell more air tickets than any other travel site. Given that air sales are the entry point for nearly 70 percent of all online travel transactions, we have a tremendous opportunity to sell additional travel products, such as car, hotel, cruise, vacation packages, and last-minute deals and we will continue to add new content. We re already the online leader in the cruise and vacations segments. But we must continuously enhance our merchandizing and cross-sell capabilities throughout Travelocity, through our best-of-breed e-mail customer relationship management (CRM) campaigns and at our call centers. 2 What actions has Travelocity taken already to pursue these opportunities? GILLILAND: We have numerous efforts underway to expand our travel content offerings primarily oriented toward merchant model offerings and better merchandizing of that content. Our acquisition of Site59 (an online company specializing in last-minute travel) in March has accelerated our efforts. But again, we are playing from a position of strength in the cruise and vacations area. As an example, since April, we have launched vacation offerings for Hawaii, Orlando, Las Vegas and Florida. And we ll add several more destinations before year-end. From a distribution perspective, we have strengthened our relationship with Yahoo! with a multi-year deal announced in June. We have also launched several international joint ventures Travelocity.eu in Europe and tabini in Japan which promise to expand our presence and distribution capabilities well beyond North America. Sabre, the Sabre logo, Sabre Connected, Sabre Magnify, Sabre Traverse, Sabre Exclusives, Sabre Inform, Sabre Sologic, Sabre TransVision, GetThere and Virtually There are trademarks and/or service marks of an affiliate of Sabre Inc. All other trademarks, service marks and trade names are owned by their respective companies. 2002 Sabre Inc. All rights reserved. Printed in the USA. 07/02
Travel value chain Stimulate Demand Shop Sell Confirm/ Fulfill Experience Post-travel Initiation Reservation Embarkation Conclusion During Initiation, Sabre helps stimulate demand in many ways: Travelocity sends timely newsletters with information on travel deals to 11 million customers The Sabre Traverse TM loyalty management system enables airlines to offer recognition awards and incentives to customers Sabre Exclusives SM preferred hotels program provides travel agents with a new revenue stream by offering commissionable hotel inventory backed by a Low Rate Guarantee Corporations direct employees to the GetThere online system to capture savings on travel costs During the Reservations process, the Sabre GDS helps suppliers, agents, corporations and travelers book trips: Sabre handles 38 percent of all travel booked globally and $80 billion in travel annually The Sabre.Res Internet booking engine provides an e-storefront so travelers can book when it s convenient for them Sabre Passenger Reservation System is the only fully integrated solution that can deliver a seamless booking experience to travelers while reducing airline costs GetThere extensive travel options allow for convenient and cost-efficient booking for corporate travelers At Embarkation, Sabre improves the traveler s experience in a variety of ways: Sabre Inform SM mobile services allow travelers to access travel information such as delays, cancellations and gate changes via a mobile device or wireless network Travelocity customers receive Bon Voyage e-mails with offers for car, hotel and ground activity options at their destinations The Sabre Sologic TM Self-Serve Kiosk System offers passengers a one-stop airport checkin process Access to detailed GetThere itinerary via computer or wireless devices facilitates day of trip for travelers At the Conclusion of a trip, Sabre can help travelers, corporations, and travel agencies perform analysis and tracking to improve the travel experience and costs for the next time: GetThere supplies data to corporations for analysis so they can create better policies and contracts with suppliers for future travel Sabre TransVision TM analyzes traffic flows and passenger travel behavior to help airlines identify actions needed to shift share, increase revenue and change trends Travelocity Welcome Home e-mails encourage travelers to submit reviews and stimulate incentives for their next journeys
Sabre businesses TRAVEL MARKETING AND DISTRIBUTION Sabre connects travel buyers and sellers through its industry-leading global distribution system (GDS). The Sabre GDS connects over 60,000 travel agency locations worldwide, providing content from approximately 400 airlines, 55,000 hotel properties, 52 car rental companies, nine cruise lines, 33 railroads and 229 tour operators. Sabre also provides Sabre Connected SM travel agencies with a broad range of products and services that enhance operations and their ability to serve the traveler. Among the company s innovations is Sabre Virtually There, a personalized Web site that automatically gives travelers up-to-the-minute details about their itineraries, while also providing a wealth of information about their destinations. Business metrics of $416 million, down 10.9% year-over-year Worldwide travel bookings down 10.3%, with full-year estimate down 8%, yearover-year GETTHERE GetThere is the leading provider of Web-based corporate travel procurement, including the purchase of air, hotel, car and meeting planning services. Through the GetThere products, corporations can offer employees a convenient way to make travel and meeting arrangements through their company intranets, while significantly reducing costs. Customers include more than 800 leading corporations, many of which save more than 20 percent on travel costs, often representing millions of dollars. GetThere also powers Web-based travel bookings for leading airlines. These airlines can incorporate value-added services into the tool such as air, car and hotel reservations, awards programs and redemption, and flight status information. of $13 million, up 21.2% from year-ago quarter Corporate adoption rates average 16%, an increase of about 55% from yearago quarter TRAVELOCITY Travelocity is the most popular travel service on the Web. In 2001, Travelocity generated more than $300 million in revenues, and today has approximately 35 million members the highest in the industry. Travelocity offers innovative tools for air, car, hotel, cruise and vacation package shopping to help travelers plan, save and improve their trips. In addition, Travelocity generates revenues from advertisers who use its Web site to reach potential customers with highly targeted marketing messages. of $76 million, down 7.3% year-over-year Second quarter gross travel bookings of $910 million 3.5% higher year-over-year AIRLINE SOLUTIONS Sabre provides pacesetting software products and services that help airlines improve performance and increase revenue. Building on a 40-year history of technological advancement, Sabre continues to innovate with industry-specific solutions for each key business area, such as pricing and yield management and flight operations. Sabre airline reservations hosting provides more than 60 airlines worldwide with vital functionality, from inventory management to departure control. The airline reservations complete suite of product solutions and travel distribution capabilities allows airlines to offer passengers a seamless travel experience. Sabre consulting uses in-depth transportation experience and comprehensive industry knowledge to help airlines analyze their challenges and opportunities and achieve optimum results. of $52 million, up 9.9% from year-ago quarter Second quarter operating margins improved significantly, year-overyear, primarily due to cost control
Worldwide headquarters Sabre Inc. 3150 Sabre Drive Southlake, Texas 76092 Investor relations Tel: 866 SABRE IR (866 722 7347) www.sabre.com