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New Sabre CEO and
Spin-off Announcement
forward looking statement
- •
- Statements
in this presentation which are not purely historical facts, including statements regarding anticipations, beliefs, expectations, hopes,
intentions or strategies for the future may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All forward-looking statements in this
release are based on information available to Sabre on the date of this presentation.
- •
- Any
forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from the events or results
described in the forward-looking statements, including the risk that the spin-off transaction and cash dividend described will not be completed; risks of changes in relationships with AMR and American
Airlines and their affiliates; competition and technological innovation by competitors; the Company's technology; seasonality of the travel industry and booking revenues; sensitivity to general
economic conditions and events that affect airline travel; risks associated with the Company's international operations; and legal and regulatory issues. Further information regarding the factors that
could affect Sabre's financial and other results is included in the Company's annual reports, quarterly reports and other filings with the Securities and Exchange Commission. Sabre undertakes no
obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these
forward-looking statements.
Sabre's New CEO
strong leadership
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- William
J. Hannigan
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- 20-Year
Technology Services Veteran
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- Most
Recently President of SBC Global Markets
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- Responsible
for SBC's largest multi-national clients
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- Extensive
customer service experience
background
capital structure
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- Public
holds 22 million Class A shares of Sabre—representing 17% economic interest
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- AMR
holds 107 million Class B shares of Sabre—representing 83% economic interest & 98% voting interest
the spin transaction
mechanics
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- Sabre
intends to distribute a cash dividend of $675 million, approximately $5.20 per share, to all Sabre shareholders before the spin-off
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- AMR
intends to distribute a Sabre stock dividend to AMR shareholders
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- 107.3
million Sabre shares to be distributed
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- AMR
shareholders will receive 0.7 shares of Sabre for each AMR share
the spin transaction
conditions
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- Final
approval subject to positive tax ruling
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- Expected
completion in First Quarter 2000
Sabre's leadership and strength
strongest in travel distribution
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- Largest
CRS in world
• #1
market share in 3 of 4 global regions—
• 38%
global market share
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- Technology
leadership
• Planet
Sabre 2.0
• Best
Fare Finder
• Turbo
Sabre
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- Internet
leadership
• Travelocity—#1
Travel Web Site
• Virtually
There Online
• Sabre
BTS
• Web
Reservations
Sabre's leadership and strength
strongest in airline IT solutions
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- Proven
airline outsourcing business
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- Unmatched
portfolio of airline operations software
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- 150
leading airlines using Sabre products
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- Largest
multi-host business in the industry
positive aspects of spin
positive results of independence
Ability
to partner
Improved
customer relationships
Strategic
flexibility
Additional
airline IT outsourcing opportunities
Ability
to better attract and retain tech employees
Strengthening
of Sabre brand
Increased
liquidity in the equities market
contractual modifications
groundwork
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- Special
committee of the board established to review and approve changes
• Comprised
of independent directors
• Focus
was on reflecting independence, while improving AA customer relationship
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- Contract
modifications agreed in principle by both parties and documented in memorandum of understanding
contract updates
positive results
Contract
Term Extensions
Market
Based Pricing and Market Based Terms
Intellectual
Property and Marketing Rights
term extension
business flexibility
AA
has affirmed its long-term commitment to Sabre by extending certain portions of the contract
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- Real
Time Services—2 Year Extension to 2008
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- Mid-Range
Operations—1 Year Extension to 2002
market rates
market terms
Move
entirely to market based pricing, eliminates cost plus
Enforceability
of service bonuses and penalties
Provides
potential for revenue and margin expansion
AA
gains accountability from its supplier
marketing rights
intellectual property
Sabre
receives ability to market jointly developed software, including previously restricted software
Small
number of decision support professionals move to AA
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- Sabre
still to provide all software development work
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- Sabre
retains key people and majority of decision support department
AA
continues to market Sabre products—BTS savings guarantee payment is eliminated
financial implications
estimated costs
One-time
charges related to the transaction
could exceed $10 million in first Quarter 2000
Net interest impact of financing the one-time cash dividend
$46 million, annually
summary
summary
Independence
is the next crucial step in Sabre's growth and success
Strategic
goals and direction under new CEO, Bill Hannigan
forward looking statement
