What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-08-03 compared with 2021-05-04 · 330 added, 116 removed, 371 unchanged (55% of the section changed)

27 unchanged sentences

The travel industry continues to be adversely affected by the global health crisis due to the outbreak of the coronavirus ("COVID-19"), as well as by government directives that have been enacted to slow the spread of the virus.

As expected, this pandemic has continued to have a material impact to our consolidated financial results in the first quarter of 2021, resulting in a material decrease in transaction-based revenue across both of our business units compared to the prior year.

Lower GDS volumes have continued to result in a material decline in incentive consideration costs, as expected.

Despite the continued negative impacts of the COVID-19 pandemic on our business and global travel volumes, as COVID-19 vaccines have continued to be administered, we have seen some continued improvement in our key volume metrics during the first quarter of 2021, led by

our Hospitality Solutions business.

Domestic bookings continue to exceed international bookings, however, negatively impacting revenue.

In the second quarter of 2020, we experienced significant decreases in transaction-based revenue in our Travel Solutions segment, including increased cancellation activity beyond what was initially estimated, as well as a reduction in SynXis Software and Services revenue in our Hospitality Solutions segment due to a decrease in transaction volumes as a result of the COVID-19 pandemic.

As expected, this pandemic has continued to have a material impact to our consolidated financial results in the second quarter of 2021.

during the second quarter of 2021.

With the continued increase in volumes, our incentive consideration costs are also increasing significantly compared to the prior year.

The inputs into our judgments and estimates consider the economic implications of COVID-19 on our critical and significant accounting estimates.

Our air booking cancellation reserve totaled $18 million as of March 31, 2021, which is consistent with the reserve as of December 31, 2020.

Additionally, our provision for expected credit losses for the three months ended March 31, 2021 decreased $39 million from the same period in the prior year, primarily related to fully reserving for aged balances of certain customers in the prior year and an overall improvement in our forecasted credit losses in the current year given the slow global economic recovery from the COVID-19 pandemic.

Our air booking cancellation reserve totaled $18 million as of June 30, 2021, which is consistent with the reserve as of December 31, 2020.

Additionally, our provision for expected credit losses for the six months ended June 30, 2021 decreased $52 million from the same period in the prior year, primarily related to fully reserving for aged balances of certain customers in the prior year and an overall improvement in our forecasted credit losses in the current year given the slow global economic recovery from the COVID-19 pandemic.

During the year ended December 31, 2020, several of our customers filed for bankruptcy protection in various jurisdictions.

2 unchanged sentences

Credit Losses.

Given the uncertainties surrounding the duration and effects of COVID-19 on transaction volumes in the global travel industry, particularly air travel transaction volumes and future cancellation activity, including from airlines’ insolvency or suspension of service or aircraft groundings, we cannot provide assurance that the assumptions used in the estimates of our cancellation reserve and our allowance for expected credit losses will be accurate.

Given the uncertainties surrounding the duration and effects of COVID-19, including any variants, on transaction volumes in the global travel industry, particularly air travel transaction volumes and future cancellation activity, including from airlines’ insolvency or suspension of service or aircraft groundings, we cannot provide assurance that the assumptions used in the estimates will be accurate and the impacts could be material on our cancellation reserves, credit loss provisions and results of operations.

We believe the ongoing effects of COVID-19 on our operations and global bookings will continue to have a material negative impact on our financial results and liquidity, and this negative impact may continue well beyond the containment of the outbreak.

Given the liquidity measures we enacted during 2020 and our ending cash balance of $1.3 billion as of March 31, 2021, we believe that we have resources to sufficiently fund our liquidity requirements over at least the next twelve months;

Given the liquidity measures we enacted during 2020 and our ending cash balance of $1.1 billion as of June 30, 2021, we believe that we have resources to sufficiently fund our liquidity requirements over at least the next twelve months;

however, given the magnitude of travel decline and the unknown duration of the COVID-19 impact, we will continue to monitor our liquidity levels and take additional steps should we determine they are necessary.

During 2020, and particularly during the second quarter of 2020, we took several actions with regard to our workforce and compensation programs as both temporary and permanent cost reduction efforts which are impacting our year-over-year results of operations, including:

a temporary reduction in base compensation pay for our US-based salaried workforce;

a temporary reduction in the cash retainer for members of our Board of Directors;

a temporary furlough of approximately one-third of our workforce;

the temporary suspension of our 401(k) match program for US-based employees;

reductions in third-party contracting, vendor costs and other discretionary spending;

an offering of voluntary unpaid time off, voluntary severance and a voluntary early retirement program;

and a right-sizing of our global organization through a reduction in force.

Factors Affecting our Results

10 unchanged sentences

Cost of revenue, excluding technology costs

Cost of revenue incurred by Travel Solutions and Hospitality Solutions consists primarily of costs associated with the delivery and distribution of our products and services and includes employee-related costs for our delivery, customer operations and call center teams as well as allocated overhead such as facilities and other support costs.

Cost of revenue, excluding technology costs, incurred by Travel Solutions and Hospitality Solutions consists primarily of costs associated with the delivery and distribution of our products and services and includes employee-related costs for our delivery, customer operations and call center teams as well as allocated overhead such as facilities and other support costs.

Cost of revenue for Travel Solutions also includes incentive consideration expense representing payments or other consideration to travel agencies for reservations made on our GDS which accrue on a monthly basis.

Cost of revenue also includes amortization of upfront incentive consideration representing upfront payments or other consideration provided to travel agencies for reservations made on our GDS which are capitalized and amortized over the expected life of the contract.

Cost of revenue excludes technology costs, which are presented separately below.

Corporate cost of revenue includes certain expenses such as stock-based compensation, restructuring charges and other items not identifiable with either of our segments.

Depreciation and amortization included in cost of revenue is associated with capitalized implementation costs and intangible assets associated with contracts, supplier and distributor agreements purchased through acquisitions or established with our take private transaction in 2007.

Cost of revenue, excluding technology costs, also includes amortization of upfront incentive consideration representing upfront payments or other consideration provided to travel agencies for reservations made on our GDS which are capitalized and amortized over the expected life of the contract.

The technology costs excluded from Cost of revenue, excluding technology costs, are presented separately below.

Corporate cost of revenue, excluding technology costs, includes certain expenses such as stock-based compensation, restructuring charges and other items not identifiable with either of our segments.

Depreciation and amortization included in cost of revenue, excluding technology costs, is associated with capitalized implementation costs and intangible assets associated with contracts, supplier and distributor agreements purchased through acquisitions or established with our take private transaction in 2007.

Technology Costs

15 unchanged sentences

These key metrics allow management to analyze customer volume over time for each of our product lines to monitor industry trends and analyze performance.

We believe that these key metrics are useful for investors and other third parties as indicators of our financial performance and industry trends.

We believe that these key metrics are useful for investors and other third parties as indicators of our financial performance and industry

While these metrics are based on what we believe to be reasonable estimates of our transaction counts for the applicable period of measurement, there are inherent challenges associated with their measurement.

1 unchanged sentence

The following table sets forth these key metrics for the periods indicated (in thousands):

Three Months Ended March 31,

2021 2020 % Change

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 % Change 2021 2020 % Change

Travel Solutions

7 unchanged sentences

We have included both financial measures compiled in accordance with GAAP and certain non-GAAP financial measures in this Quarterly Report on Form 10-Q, including Adjusted Operating Loss, Adjusted Net Loss from continuing operations ("Adjusted Net Loss"), Adjusted EBITDA, Free Cash Flow and ratios based on these financial measures.

our technology costs for analytical and decision-making purposes and to align costs with the current leadership and operational organizational structure.

We define Adjusted Operating Loss as operating loss adjusted for equity method (loss) income, acquisition-related amortization, restructuring and other costs, acquisition-related costs, litigation costs, net, and stock-based compensation.

We define Adjusted Net Loss as net loss attributable to common stockholders adjusted for loss (income) from discontinued operations, net of tax, net income attributable to noncontrolling interests, impairment and related charges, acquisition-related amortization, loss on extinguishment of debt, other, net, restructuring and other costs, acquisition-related costs, litigation costs, net, stock-based compensation, and the tax impact of adjustments.

We define Adjusted EBITDA as Loss from continuing operations adjusted for depreciation and amortization of property and equipment, amortization of capitalized implementation costs, acquisition-related amortization, restructuring and other costs, interest expense, net, other, net, acquisition-related costs, litigation costs, net, stock-based compensation and the remaining provision for income taxes.

As a result of the strategic realignment in the third quarter of 2020, we have separated our technology costs from cost of revenue and moved certain expenses previously classified as cost of revenue to selling, general and administrative to provide increased visibility to our technology costs for analytical and decision-making purposes and to align costs with the current leadership and operational organizational structure.

We define Adjusted Operating Loss as operating loss adjusted for equity method income (loss), acquisition-related amortization, restructuring and other costs, acquisition-related costs, litigation costs, net, and stock-based compensation.

We define Adjusted Net Loss as net loss attributable to common stockholders adjusted for loss from discontinued operations, net of tax, net income (loss) attributable to noncontrolling interests, preferred stock dividends, acquisition-related amortization, other, net, restructuring and other costs, acquisition-related costs, litigation costs, net, stock-based compensation, and the tax impact of adjustments.

We have revised our calculation of Adjusted EBITDA to no longer exclude the amortization of upfront incentive consideration in all periods presented.

19 unchanged sentences

The following table sets forth the reconciliation of net loss attributable to common stockholders to Adjusted Net Loss from continuing operations, operating loss to Adjusted Operating Loss, and loss from continuing operations to Adjusted EBITDA (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net loss attributable to common stockholders $ (251,282) $ (442,570) $ (517,388) $ (655,250)

Loss from discontinued operations, net of tax 81 672 344 2,798

Net income attributable to non-controlling interests (1)

Net income (loss) attributable to non-controlling interests (1)

459 (71) 943 712

Preferred stock dividends 5,428 — 10,856 —

7 unchanged sentences

Acquisition-related costs (5)

1,709 4,373 2,429 22,200

Litigation costs, net (6)

11,521 115 12,251 1,856

Stock-based compensation 29,478 8,762 53,904 26,339

Tax impact of adjustments (7)

16,355 1,791 22,681 4,873

Adjusted Net Loss from continuing operations $ (167,772) $ (356,320) $ (396,046) $ (436,296)

2 unchanged sentences

Operating loss $ (180,370) $ (384,070) $ (382,923) $ (535,481)

Equity method loss (911) (686)

Equity method income (loss) 630 (499) (281) (1,185)

Acquisition-related amortization (2a)

3 unchanged sentences

Acquisition-related costs (5)

1,709 4,373 2,429 22,200

Litigation costs, net (6)

11,521 115 12,251 1,856

Stock-based compensation 29,478 8,762 53,904 26,339

4 unchanged sentences

Amortization of capitalized implementation costs (2c)

8,378 9,417 16,788 18,964

Acquisition-related amortization (2a)

6 unchanged sentences

Acquisition-related costs (5)

1,709 4,373 2,429 22,200

Litigation costs, net (6)

11,521 115 12,251 1,856

Stock-based compensation 29,478 8,762 53,904 26,339

Provision for income taxes 3,997 (27,254)

(Benefit) provision for income taxes (1,897) (4,629) 2,100 (31,883)

Adjusted EBITDA $ (70,458) $ (229,364) $ (179,958) $ (223,174)

The following tables set forth the reconciliation of Adjusted Operating Loss to operating loss in our statement of operations and Adjusted EBITDA to loss from continuing operations in our statement of operations by business segment (in thousands):

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Travel Solutions Hospitality Solutions Corporate Total

Adjusted Operating Loss $ (67,182) $ (8,521) $ (46,049) $ (121,752)

Equity method income 630 — — 630

Acquisition-related amortization (2a)

— — 16,136 16,136

Restructuring and other costs (4)

— — (856) (856)

Acquisition-related costs (5)

— — 1,709 1,709

Litigation costs, net (6)

— — 11,521 11,521

Stock-based compensation — — 29,478 29,478

Operating loss $ (67,812) $ (8,521) $ (104,037) $ (180,370)

Adjusted EBITDA $ (22,618) $ (2,031) $ (45,809) $ (70,458)

Depreciation and amortization of property and equipment (2b)

37,228 5,448 240 42,916

Amortization of capitalized implementation costs (2c)

7,336 1,042 — 8,378

Acquisition-related amortization (2a)

— — 16,136 16,136

Restructuring and other costs (4)

— — (856) (856)

Acquisition-related costs (5)

— — 1,709 1,709

Litigation costs, net (6)

— — 11,521 11,521

Stock-based compensation — — 29,478 29,478

Equity method income 630 — — 630

Operating loss $ (67,812) $ (8,521) $ (104,037) $ (180,370)

Interest expense, net (64,272)

Other, net (3)

Equity method income 630

Benefit for income taxes 1,897

Loss from continuing operations $ (245,314)

Three Months Ended June 30, 2020

Travel Solutions Hospitality Solutions Corporate Total

Adjusted Operating Loss $ (251,640) $ (19,409) $ (35,760) $ (306,809)

Equity method loss (499) — — (499)

4 unchanged sentences

Acquisition-related costs (5)

— — 4,373 4,373

Litigation costs, net (6)

11 unchanged sentences

Acquisition-related costs (5)

— — 4,373 4,373

Litigation costs, net (6)

5 unchanged sentences

Equity method loss (499)

Provision for income taxes (3,997)

Benefit for income taxes 4,629

Loss from continuing operations $ (441,969)

Three Months Ended March 31, 2020

Six Months Ended June 30, 2021

Travel Solutions Hospitality Solutions Corporate Total

32 unchanged sentences

Loss from continuing operations $ (505,245)

Six Months Ended June 30, 2020

Travel Solutions Hospitality Solutions Corporate Total

Adjusted Operating Loss $ (262,247) $ (35,866) $ (81,566) $ (379,679)

Equity method loss (1,185) — — (1,185)

Acquisition-related amortization (2a)

— — 33,310 33,310

Restructuring and other costs (4)

— — 73,282 73,282

Acquisition-related costs (5)

— — 22,200 22,200

Litigation costs, net (6)

— — 1,856 1,856

Stock-based compensation — — 26,339 26,339

Operating loss $ (261,062) $ (35,866) $ (238,553) $ (535,481)

Adjusted EBITDA $ (131,506) $ (12,906) $ (78,762) $ (223,174)

Depreciation and amortization of property and equipment (2b)

114,001 20,736 2,804 137,541

Amortization of capitalized implementation costs (2c)

16,740 2,224 — 18,964

Acquisition-related amortization (2a)

— — 33,310 33,310

Restructuring and other costs (4)

— — 73,282 73,282

Acquisition-related costs (5)

— — 22,200 22,200

Litigation costs, net (6)

— — 1,856 1,856

Stock-based compensation — — 26,339 26,339

Equity method loss (1,185) — — (1,185)

Operating loss $ (261,062) $ (35,866) $ (238,553) $ (535,481)

Interest expense, net (93,373)

Other, net (3)

Equity method loss (1,185)

Benefit for income taxes 31,883

Loss from continuing operations $ (651,740)

The following tables present information from our statements of cash flows and set forth the reconciliation of Free Cash Flow to cash (used in) provided by operating activities, the most directly comparable GAAP measure (in thousands):

Three Months Ended March 31,

Cash (used in) provided by operating activities $ (197,403) $ 40,431

Six Months Ended June 30,

Cash used in operating activities $ (338,460) $ (395,036)

Cash provided by (used in) investing activities 7,634 (43,746)

Cash (used in) provided by financing activities (44,620) 1,308,193

Three Months Ended March 31,

Cash (used in) provided by operating activities $ (197,403) $ 40,431

Six Months Ended June 30,

Cash used in operating activities $ (338,460) $ (395,036)

Additions to property and equipment (17,240) (39,333)

7 unchanged sentences

(c) Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model.

(3) Other, net includes a $15 million gain on sale of equity securities during the three months ended March 31, 2021 and a $46 million charge related to termination payments incurred in the first quarter of 2020 in connection with the now-terminated acquisition of Farelogix Inc.

(3) Other, net includes a $4 million pension settlement charge recorded in the second quarter of 2021, a $15 million gain on sale of equity securities during the first quarter of 2021, and a $46 million charge related to termination payments incurred in the first quarter of 2020 in connection with the now-terminated acquisition of Farelogix Inc.

("Farelogix").

In addition, all periods presented include foreign exchange gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency.

In addition, all periods presented include foreign exchange

gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency.

Accumulated Other Comprehensive Loss for discussion of the pension settlement.

(4) Restructuring and other costs represents charges, and adjustments to those charges, associated with business restructuring and associated changes as well as other measures to support the new organizational structure and to respond to the impacts of the COVID-19 pandemic on our business, facilities and cost structure.

6 unchanged sentences

The following table sets forth our consolidated statement of operations data for each of the periods presented:

Three Months Ended March 31,

(Amounts in thousands)

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

(Amounts in thousands) (Amounts in thousands)

Revenue $ 419,668 $ 83,044 $ 747,152 $ 742,021

4 unchanged sentences

Interest expense, net (64,272) (55,931) (128,373) (93,373)

Equity method loss (911) (686)

Equity method income (loss) 630 (499) (281) (1,185)

Other, net (3,199) (6,098) 8,432 (53,584)

Loss from continuing operations before income taxes (247,211) (446,598) (503,145) (683,623)

Provision for income taxes 3,997 (27,254)

(Benefit) provision for income taxes (1,897) (4,629) 2,100 (31,883)

Loss from continuing operations $ (245,314) $ (441,969) $ (505,245) $ (651,740)

Three Months Ended March 31, 2021 and 2020

Three Months Ended March 31,

Three Months Ended June 30, 2021 and 2020

Three Months Ended June 30,

2021 2020 Change

5 unchanged sentences

Total revenue $ 419,668 $ 83,044 $ 336,624 405 %

Travel Solutions— Revenue decreased $319 million, or 52%, for the three months ended March 31, 2021 compared to the same period in the prior year, primarily due to:

• a $243 million, or 62%, decrease in transaction-based distribution revenue due to a 55% decrease in Direct Billable Bookings to 39 million primarily as a result of reduced travel caused by the COVID-19 pandemic and unfavorable rate impacts as domestic bookings continue to exceed international bookings;

• a $76 million decrease in IT solutions revenue consisting of a $37 million, or 48%, decrease in reservation revenue primarily due to a 55% decrease in Passengers Boarded to 75 million as a result of reduced travel caused by the COVID-19 pandemic, partially offset by a rate increase due to revenue that does not fluctuate with our volumes.

Additionally, commercial and operations revenue decreased $39 million primarily due to the impact of the COVID-19 pandemic on our existing customer base.

Hospitality Solutions— Revenue decreased $17 million, or 29%, for the three months ended March 31, 2021 compared to the same period in the prior year.

The decrease was primarily driven by a reduction in SynXis Software and Services revenue due to a decrease in transaction volumes of 16% to 18 million, as a result of the COVID-19 pandemic and a decrease of $5 million in DX revenue.

Travel Solutions— Revenue increased $317 million, or 564%, for the three months ended June 30, 2021 compared to the same period in the prior year, primarily due to:

• a $266 million, or 555%, increase in transaction-based distribution revenue due to a 878% increase in Direct Billable Bookings to 57 million primarily as a result of the continued gradual recovery from the COVID-19 pandemic and a favorable comparison to significant cancellations in the prior year period.

Revenue for the three months ended June 30, 2020 was negatively impacted by approximately $100 million resulting from increased cancellation activity beyond what was initially estimated.

Additionally, we further increased our reserve for future cancellations to $60 million as of June 30, 2020 to account for the significant effect that COVID-19 had on the travel industry and the resulting volume of airline travel cancellations in that period and the impacts on booking fee rate due to the mix in bookings and cancellations;

• a $51 million increase in IT solutions revenue consisting of a $32 million, or 186%, increase in reservation revenue primarily due to a 424% increase in Passengers Boarded to 104 million as a result of the continued gradual recovery from the COVID-19 pandemic, partially offset by a dilution in rate due to revenue that does not fluctuate with our volumes.

Additionally, commercial and operations revenue increased $19 million primarily due to the continued gradual recovery from the COVID-19 pandemic on our existing customer base and license fee revenue

from new implementations recognized upon delivery to the customer.

Recognition of license fees upon delivery has previously resulted and will continue to result in periodic fluctuations in revenue recognized.

Hospitality Solutions— Revenue increased $22 million, or 75%, for the three months ended June 30, 2021 compared to the same period in the prior year.

The increase was primarily driven by an increase in SynXis Software and Services revenue due to an increase in transaction volumes of 117% to 24 million, as a result of the continued gradual recovery from the COVID-19 pandemic and an increase of $4 million in DX revenue.

This increase was partially offset by dilution in rate from the prior year due to revenue that does not fluctuate with volumes.

Cost of revenue, excluding technology costs

Three Months Ended March 31,

Three Months Ended June 30,

2021 2020 Change

7 unchanged sentences

Total cost of revenue, excluding technology costs $ 179,821 $ 61,227 $ 118,594 194 %

Travel Solutions— Cost of revenue decreased $124 million, or 48%, for the three months ended March 31, 2021 compared to the same period in the prior year.

The decrease was primarily the result of a $118 million decline in incentive consideration in all regions due to lower transaction volume as a result of the COVID-19 pandemic, as well as a $4 million reduction in labor and professional services costs in connection with our cost reduction measures implemented in 2020.

Hospitality Solutions— Cost of revenue decreased $15 million, or 44%, for the three months ended March 31, 2021 compared to the same period in the prior year.

The decrease was primarily driven by a $12 million reduction in transaction-related costs due to the decline in transaction volume as a result of the COVID-19 pandemic and a reduction in labor costs in connection with our cost reduction measures.

Depreciation and amortization —Depreciation and amortization increased $1 million, or 10%, for the three months ended March 31, 2021 compared to the same period in the prior year due to customer implementations.

Travel Solutions— Cost of revenue, excluding technology costs, increased $132 million, or 725%, for the three months ended June 30, 2021 compared to the same period in the prior year.

The increase was primarily the result of a $131 million increase in incentive consideration in all regions due to higher transaction volume given the continued gradual recovery trends from the COVID-19 pandemic, as well as a $2 million increase in labor and professional services costs resulting from the expiration of the temporary cost reduction measures implemented in the second quarter of 2020.

Hospitality Solutions— Cost of revenue, excluding technology costs, increased $9 million, or 55%, for the three months ended June 30, 2021 compared to the same period in the prior year.

The increase was primarily driven by a $6 million increase in transaction-related costs due to the increase in transaction volume as a result of the continued gradual recovery trends from the COVID-19 pandemic, as well as a $3 million increase in labor and professional services costs resulting from the expiration of the temporary cost reduction measures implemented in the second quarter of 2020.

Corporate— Cost of revenue, excluding technology costs, decreased $20 million, or 102%, for the three months ended June 30, 2021 compared to the same period in the prior year.

The decrease was primarily due to a $17 million decrease in severance costs associated with the reduction of our workforce in 2020 and continued expense management in the current year.

Restructuring Activities, to our consolidated financial statements for further details on restructuring activities.

Technology Costs

Three Months Ended March 31,

Three Months Ended June 30,

2021 2020 Change

4 unchanged sentences

Total technology costs $ 261,217 $ 282,103 $ (20,886) (7) %

Travel Solutions— Technology costs decreased $55 million, or 20%, for the three months ended March 31, 2021 compared to the same period in the prior year.

The decrease was primarily driven by a decrease in technology labor of $26 million in connection with our cost reduction measures, a decrease in depreciation and amortization of $21 million primarily due to a change in the mix of our technology spend in 2019 resulting in less capitalized internal use software, and a decline in technology costs of $16 million associated with lower transaction volumes resulting from the COVID-19 pandemic.

Travel Solutions— Technology costs decreased $6 million, or 3%, for the three months ended June 30, 2021 compared to the same period in the prior year.

The decrease was primarily driven by a decrease in depreciation and amortization of $23 million primarily due to a change in the mix of our technology spend in 2019 resulting in less capitalized internal use software.

This decrease was partially offset by an increase in technology costs of $9 million associated with higher transaction volumes and an increase in labor and professional services costs of $8 million resulting from the expiration of the temporary cost reduction measures implemented in the second quarter of 2020.

We expect depreciation and amortization expense to be significantly lower in 2021 than in the prior year due to the lower capitalization rate on technology spend.

Hospitality Solutions— Technology costs decreased $1 million, or 4%, for the three months ended June 30, 2021 compared to the same period in the prior year due to a $6 million decline in depreciation and amortization primarily driven by a change in the mix of our technology spend in 2019 resulting in less capitalized internal use software.

This decrease was partially offset by an increase of $3 million in labor and professional services costs resulting from the expiration of the temporary cost reduction measures implemented in the second quarter of 2020, as well as a continued decline in the capitalization mix of our technology spend as we implement opensource and cloud-based solutions, resulting in an increase in labor costs.

Corporate— Technology costs decreased $14 million, or 40%, for the three months ended June 30, 2021 compared to the same period in the prior year primarily due to a decline in severance costs of $19 million associated with the reduction of our

workforce in 2020.

This decrease was partially offset by an increase in labor and professional services costs of $5 million resulting from the expiration of the temporary cost reduction measures implemented in the second quarter of 2020.

Restructuring Activities, to our consolidated financial statements for further details on restructuring activities.

Selling, General and Administrative Expenses

Three Months Ended June 30,

2021 2020 Change

(Amounts in thousands)

Travel Solutions $ 65,401 $ 58,285 $ 7,116 12 %

Hospitality Solutions 11,271 8,179 3,092 38 %

Corporate 82,328 57,320 25,008 44 %

Total selling, general and administrative expenses $ 159,000 $ 123,784 $ 35,216 28 %

Travel Solutions— Selling, general and administrative expenses increased $7 million, or 12%, for the three months ended June 30, 2021 compared to the same period in the prior year.

The increase is driven by an increase in labor and professional services costs of $19 million primarily resulting from the expiration of the temporary cost reduction measures implemented in the second quarter of 2020.

This increase was partially offset by a $12 million decline in the provision for expected credit losses primarily related to fully reserving for aged balances of certain customers in the prior year and an overall improvement in our forecasted credit losses in the current year as a result of the continued gradual recovery from the COVID-19 pandemic.

Hospitality Solutions — Selling, general and administrative expenses increased $3 million, or 38%, for the three months ended June 30, 2021 compared to the same period in the prior year.

The increase is primarily driven by an increase in labor and professional services costs resulting from the expiration of the temporary cost reduction measures implemented in the second quarter of 2020.

Corporate— Selling, general and administrative expenses increased $25 million, or 44%, due to a $20 million increase in labor costs resulting from an increase in stock based compensation associated with performance based units, a $13 million increase in legal and other professional services costs and $3 million in security costs.

This increase was partially offset by a $12 million decrease in severance costs associated with the reduction of our workforce in 2020.

Restructuring Activities, to our consolidated financial statements for further details on restructuring activities.

Interest expense, net

Three Months Ended June 30,

2021 2020 Change

(Amounts in thousands)

Interest expense, net $ 64,272 $ 55,931 $ 8,341 15 %

Interest expense increased $8 million, or 15% during the three months ended June 30, 2021 compared to the same period in the prior year primarily due to additional borrowings under the 9.250% senior secured notes due 2025 and the 4.000% senior exchangeable notes due 2025 entered into during the second quarter of 2020, and the 7.375% senior secured notes due 2025 entered into in the third quarter of 2020.

We expect interest expense will be significantly higher in 2021 as compared to the prior year due to these changes to our capital structure, implemented during 2020.

Three Months Ended June 30,

2021 2020 Change

(Amounts in thousands)

Other, net $ 3,199 $ 6,098 $ (2,899) **

** Not meaningful

Other, net decreased $3 million for the three months ended June 30, 2021 compared to the same period in the prior year primarily due to realized and unrealized foreign currency exchange gains in the current period as well as a reduction of pension related expense of $2 million.

(Benefit) provision for income taxes

Three Months Ended June 30,

2021 2020 Change

(Amounts in thousands)

Benefit for income taxes $ (1,897) $ (4,629) $ 2,732 **

** Not meaningful

For the three months ended June 30, 2021, we recognized $2 million income tax benefit, representing an effective tax rate of 0.8%, compared to an income tax benefit of $5 million, representing an effective tax rate of 1% for the three months ended June 30, 2020.

The difference between our effective tax rates and the U.S.

federal statutory income tax rate primarily results from valuation allowances, our geographic mix of taxable income in various tax jurisdictions, tax permanent differences and tax credits.

Six Months Ended June 30, 2021 and 2020

Six Months Ended June 30,

2021 2020 Change

(Amounts in thousands)

Travel Solutions $ 662,260 $ 663,850 $ (1,590) — %

Hospitality Solutions 92,966 88,239 4,727 5 %

Total segment revenue 755,226 752,089 3,137 — %

Eliminations (8,074) (10,068) 1,994 20 %

Total revenue $ 747,152 $ 742,021 $ 5,131 1 %

Travel Solutions— Revenue decreased $2 million, for the six months ended June 30, 2021 compared to the same period in the prior year, primarily due to:

• a $23 million, or 7%, increase in transaction-based distribution revenue, which consists of a $243 million decrease in transaction based revenue during the first quarter of 2021 and a $266 million increase during the second quarter of 2021.

These quarterly changes are due to the significant impact of the COVID-19 pandemic on our revenue beginning in the latter portion of the first quarter of 2020, which included significant cancellations beyond original estimates of approximately $100 million in the second quarter of 2020.

We are currently experiencing a continued gradual recovery in volumes, offset by an unfavorable rate mix due to higher domestic leisure bookings, resulting in the overall increase in revenue for the six months ended June 30, 2021 compared to the prior period.

Direct Billable Bookings increased 22% to 96 million due to these factors;

• a $25 million decrease in IT solutions revenue consisting of a $76 million decrease during the first quarter of 2021 and a $51 million increase during the second quarter of 2021.

These quarterly changes are due to the significant impact of the COVID-19 pandemic on our revenue beginning in the latter portion of the first quarter of 2020.

We are currently experiencing a continued gradual recovery in Passengers Boarded volumes, more than offset by an unfavorable rate mix due to revenue that does not fluctuate with our volumes, resulting in the overall decrease in reservation revenue of $5 million for the six months ended June 30, 2021 compared to the prior period.

Passengers Boarded decreased 4% to 179 million due to these factors.

Additionally, commercial and operations revenue decreased $21 million primarily due to the impact of the COVID-19 pandemic on our customer base, consisting of a $39 million decrease in the first quarter of 2021, offset by a $19 million increase in the second of 2021 when compared to the prior period.

Hospitality Solutions— Revenue increased $5 million, or 5%, for the six months ended June 30, 2021 compared to the same period in the prior year.

The increase was primarily driven by an increase in SynXis Software and Services revenue due to an increase in transaction volumes of 30% to 42 million, as a result of the continued gradual recovery from the COVID-19 pandemic.

This increase is partially offset by dilution in rate from the prior year due to revenue that does not fluctuate with volumes and a change in transaction mix versus 2021, as well as a $1 million decrease in DX revenue.

Cost of revenue, excluding technology costs

Six Months Ended June 30,

2021 2020 Change

(Amounts in thousands)

Travel Solutions $ 267,257 $ 257,216 $ 10,041 4 %

Hospitality Solutions 44,637 51,155 (6,518) (13) %

Eliminations (8,072) (10,066) 1,994 20 %

Total segment cost of revenue, excluding technology costs 303,822 298,305 5,517 2 %

Corporate 2,762 25,755 (22,993) (89) %

Depreciation and amortization 19,998 18,582 1,416 8 %

Total cost of revenue, excluding technology costs $ 326,582 $ 342,642 $ (16,060) (5) %

Travel Solutions— Cost of revenue, excluding technology costs, increased $10 million, or 4%, for the six months ended June 30, 2021 compared to the same period in the prior year.

The increase was primarily the result of a $15 million increase in incentive consideration due to higher overall transaction volume consisting of a $115 million decline in the first quarter of 2021 and a $130 million increase in the second quarter of 2021, compared to the same periods in the prior year.

This increase is offset

primarily by a $3 million decline in labor and professional services costs resulting from the reduction in workforce from our cost reduction measures implemented in the prior year.

Hospitality Solutions— Cost of revenue, excluding technology costs, decreased $7 million, or 13%, for the six months ended June 30, 2021 compared to the same period in the prior year.

The decrease was primarily driven by a $9 million reduction in transaction-related costs due to the change in mix of bookings offset by an increase in transaction volumes as a result of the continued gradual recovery from the COVID-19 pandemic.

This decrease is offset by a $2 million increase in labor and professional services costs resulting from the expiration of the temporary cost reduction measures implemented in the second quarter of 2020.

Corporate— Cost of revenue, excluding technology costs, decreased $23 million, or 89%, for the six months ended June 30, 2021 compared to the same period in the prior year.

The decrease was due to a decline in severance costs of $23 million associated with the reduction of our workforce in 2020.

Restructuring Activities, to our consolidated financial statements for further details on restructuring activities.

Depreciation and amortization —Depreciation and amortization increased $1 million, or 8%, for the six months ended June 30, 2021 compared to the same period in the prior year due to customer implementations.

Technology Costs

Six Months Ended June 30,

2021 2020 Change

(Amounts in thousands)

Travel Solutions $ 431,518 $ 491,943 $ (60,425) (12) %

Hospitality Solutions 44,600 49,622 (5,022) (10) %

Corporate 37,762 65,910 (28,148) (43) %

Total technology costs $ 513,880 $ 607,475 $ (93,595) (15) %

Travel Solutions— Technology costs decreased $60 million, or 12%, for the six months ended June 30, 2021 compared to the same period in the prior year.

The decrease was primarily driven by a decrease in depreciation and amortization of $44 million primarily due to a change in the mix of our technology spend in 2019 resulting in less capitalized internal use software, a decrease in labor and professional services costs of $18 million resulting from the reduction in workforce from our cost reduction measures implemented in the prior year, and a decline in technology costs of $7 million associated with lower mainframe transaction volumes.

This decrease was partially offset by a continued decline in the capitalization mix of our technology spend as we implement opensource and cloud-based solutions, resulting in an increase in labor costs of $8 million.

We expect depreciation and amortization expense may be significantly lower in 2021 than in the prior year due to the lower capitalization rate on technology spend.

Hospitality Solutions— Technology costs decreased $4 million, or 15%, for the three months ended March 31, 2021 compared to the same period in the prior year due to a $4 million decline in depreciation and amortization primarily driven by a change in the mix of our technology spend in 2019 resulting in less capitalized internal use software.

Corporate— Technology costs decreased $14 million, or 46%, for the three months ended March 31, 2021 compared to the same period in the prior year primarily due a decline in severance costs of $14 million associated with the reduction of our workforce in 2020.

We expect depreciation and amortization expense to be significantly lower in 2021 than in the prior year due to the lower capitalization rate on technology spend.

Hospitality Solutions— Technology costs decreased $5 million, or 10%, for the six months ended June 30, 2021 compared to the same period in the prior year.

The decrease was primarily due to a $10 million decline in depreciation and amortization primarily driven by a change in the mix of our technology spend in 2019 resulting in less capitalized internal use software.

This decrease was partially offset by an increase in labor and professional services costs of $3 million resulting from the expiration of the temporary cost reduction measures implemented in the second quarter of 2020, as well as continued decline in the capitalization mix of our technology spend as we implement opensource and cloud-based solutions, resulting in an increase in labor costs.

Corporate— Technology costs decreased $28 million, or 43%, for the six months ended June 30, 2021 compared to the same period in the prior year primarily due a decline in severance costs of $33 million associated with the reduction of our workforce in 2020.

This decrease was partially offset by an increase in labor and professional services costs of $7 million resulting from the expiration of the temporary cost reduction measures implemented in the second quarter of 2020.

Restructuring Activities, to our consolidated financial statements for further details on restructuring activities.

Selling, General and Administrative Expenses

Three Months Ended March 31,

Six Months Ended June 30,

2021 2020 Change

4 unchanged sentences

Total selling, general and administrative expenses $ 289,613 $ 327,385 $ (37,772) (12) %

Travel Solutions— Selling, general and administrative expenses decreased $48 million, or 47%, for the three months ended March 31, 2021 compared to the same period in the prior year.

Travel Solutions— Selling, general and administrative expenses decreased $41 million, or 25%, for the six months ended June 30, 2021 compared to the same period in the prior year.

The decrease is driven by a $52 million decline in the provision for expected credit losses primarily related to fully reserving for aged balances of certain customers in the prior year and an overall improvement in our forecasted credit losses in the current year given the slow global economic recovery from the COVID-19 pandemic.

Additionally, labor and professional services costs declined by $5 million in connection with our cost reduction measures.

Corporate— Selling, general and administrative expenses decreased $25 million, or 28%, due to a $17 million decrease in legal costs associated with the now-terminated acquisition of Farelogix and a $9 million decrease in severance costs associated with the reduction of our workforce in 2020.

This decrease was partially offset by an increase in labor and professional services costs of $14 million primarily resulting from the expiration of the temporary cost reduction measures implemented in the second quarter of 2020.

Hospitality Solutions— Selling, general and administrative expenses increased $3 million, or 13%, for the six months ended June 30, 2021 compared to the same period in the prior year.

The increase is primarily driven by higher depreciation and amortization.

Corporate— Selling, general and administrative expenses were flat for the six months ended June 30, 2021 compared to the same period in the prior year.

Labor costs increased $3 million as a result of a $19 million increase in stock based compensation associated with performance based units and a $5 million increase resulting from the expiration of the temporary cost reduction measures implemented in the second quarter of 2020, partially offset by a $21 million decrease in severance costs associated with the reduction of our workforce in 2020.

This increase in labor costs was offset by a $3 million decrease in legal and professional fees primarily due to a $20 million decrease in acquisition-related costs primarily associated with the now terminated Farelogix acquisition, partially offset by $17 million in legal and professional expenses incurred in the current year.

Restructuring Activities, to our consolidated financial statements for further details on restructuring activities.

Interest expense, net

Three Months Ended March 31,

Interest, net

Six Months Ended June 30,

2021 2020 Change

1 unchanged sentence

Interest expense, net $ 128,373 $ 93,373 $ 35,000 37 %

Interest expense increased $27 million, or 71% during the three months ended March 31, 2021 compared to the same period in the prior year primarily due to additional borrowings under the 9.250% senior secured notes due 2025 and the 4.000% senior exchangeable notes due 2025 entered into during the second quarter of 2020, and the 7.375% senior secured notes due 2025 entered into in the third quarter of 2020.

We expect interest expense may be significantly higher in 2021 than in the prior year due to these changes to our capital structure implemented during 2020.

Three Months Ended March 31,

Interest expense increased $35 million, or 37% during the six months ended June 30, 2021 compared to the same period in the prior year primarily due to additional borrowings under the 9.250% senior secured notes due 2025 and the 4.000% senior exchangeable notes due 2025 entered into during the second quarter of 2020, and the 7.375% senior secured notes due 2025 entered into in the third quarter of 2020.

We expect interest expense will be significantly higher in 2021 as compared to the prior year due to these changes to our capital structure, implemented during 2020.

Other expense, net

Six Months Ended June 30,

2021 2020 Change

2 unchanged sentences

** Not meaningful

Other, net decreased $59 million for the three months ended March 31, 2021 compared to the same period in the prior year primarily due to a $46 million charge related to the termination payments in connection with our proposed acquisition of Farelogix recorded in the first quarter of 2020 and a $15 million gain on sale in investment recorded in the first quarter of 2021 as well as realized and unrealized foreign currency exchange gains.

Provision for Income Taxes

Three Months Ended March 31,

Other, net decreased $62 million for the six months ended June 30, 2021 compared to the same period in the prior year primarily due to a $46 million charge related to the termination payments in connection with the now-terminated acquisition of Farelogix recorded in the first quarter of 2020, a $15 million gain on sale in investment recorded in the first quarter of 2021, as well as realized and unrealized foreign currency exchange gains, partially offset by a pension settlement expense of $4 million during the six months ended June 30, 2021.

(Benefit) provision for income taxes

Six Months Ended June 30,

2021 2020 Change

(Amounts in thousands)

Provision for income taxes $ 3,997 $ (27,254) $ 31,251 **

Provision (benefit) for income taxes $ 2,100 $ (31,883) $ 33,983 **

** Not meaningful

For the three months ended March 31, 2021, we recognized $4 million income tax expense, representing a negative effective tax rate of 2%, compared to an income tax benefit of $27 million, representing an effective tax rate of 11% for the three months ended March 31, 2020.

The decrease in the effective tax rate for the three months ended March 31, 2021 as compared to the same period in 2020 was primarily due to a $43 million valuation allowance generated in the current quarter related to the impact of COVID-19 on our results of operations and various discrete items recorded in each of the respective three month periods.

For the six months ended June 30, 2021, we recognized $2 million income tax expense, representing a negative effective tax rate of 0.42%, compared to an income tax benefit of $32 million, representing an effective tax rate of 4.7% for the six months ended June 30, 2021.

The decrease in the effective tax rate for the six months ended June 30, 2021 as compared to the same period in 2020 was primarily due to a higher percent of valuation allowance generated in the current period on earnings related to the impact of COVID-19 on our results of operations and various discrete items recorded in each of the respective six month periods.

The difference between our effective tax rates and the U.S.

2 unchanged sentences

Our current principal source of liquidity is our cash and cash equivalents on hand.

As of March 31, 2021 and December 31, 2020, our cash and cash equivalents, Revolver and outstanding letters of credit were as follows (in thousands):

March 31, 2021 December 31, 2020

As of June 30, 2021 and December 31, 2020, our cash and cash equivalents, Revolver and outstanding letters of credit were as follows (in thousands):

June 30, 2021 December 31, 2020

Cash and cash equivalents $ 1,122,114 $ 1,499,665

6 unchanged sentences

We record changes in a book overdraft position, in which our bank account is not overdrawn but recently issued and outstanding checks result in a negative general ledger balance, as cash flows from financing activities.

We invest in a money market fund which is classified as cash and cash equivalents in our consolidated balance sheets and statements of cash flows.

We held no short-term investments as of March 31, 2021 and December 31, 2020.

We invest in a money market fund which is classified as cash and

cash equivalents in our consolidated balance sheets and statements of cash flows.

We held no short-term investments as of June 30, 2021 and December 31, 2020.

As of December 31, 2020, we have significant U.S.

6 unchanged sentences

We believe that approximately two-thirds of our cost structure is adjustable in the near-term, comprised largely of incentive expenses that decline proportionally with bookings and including other variable expenses that are subject to cost savings measures.

Given the uncertainties surrounding the duration and effects of COVID-19 on transaction volumes in the global travel industry, particularly air travel transaction volumes, including from airlines’ insolvency or suspension of service or aircraft groundings, we cannot provide assurance that the assumptions used to estimate our liquidity requirements will be accurate.

Given the uncertainties surrounding the duration and effects of COVID-19, including any variants, on transaction volumes in the global travel industry, particularly air travel transaction volumes, including from airlines’ insolvency or suspension of service or aircraft groundings, we cannot provide assurance that the assumptions used to estimate our liquidity requirements will be accurate.

However, based on our assumptions and estimates with respect to our financial condition, we believe that we have resources to sufficiently fund our liquidity requirements over at least the next twelve months.

2 unchanged sentences

Additionally, we may conduct debt or equity offerings to support future strategic investments, provide additional liquidity, or pay down debt.

We utilize cash and cash equivalents, supplemented by our Revolver, primarily to pay our operating expenses, make capital expenditures, invest in our information technology infrastructure, products and offerings, pay taxes, and service our debt and other long-term liabilities.

We had $375 million outstanding under the Revolver as of March 31, 2021 and December 31, 2020.

We had outstanding letters of credit totaling $10 million as of March 31, 2021 and December 31, 2020 which reduced our overall credit capacity under the Revolver.

We utilize cash and cash equivalents primarily to pay our operating expenses, make capital expenditures, invest in our information technology infrastructure, products and offerings, pay taxes, and service our debt and other long-term liabilities.

We had $375 million outstanding under the Revolver as of June 30, 2021 and December 31, 2020.

We had outstanding letters of credit totaling $10 million as of June 30, 2021 and December 31, 2020, which reduced our overall credit capacity under the Revolver.

The current interest rate for borrowings under the Revolver is LIBOR plus an adjusted spread based on leverage as reflected in the Revolver.

On July 12, 2021 we refinanced the Revolver and terminated the commitments thereunder.

See “— Senior Secured Credit Facilities below.

Our ability to generate cash depends on many factors beyond our control, and any failure to meet our debt service obligations could harm our business, financial condition and results of operations.

3 unchanged sentences

On an ongoing basis, we will evaluate and consider strategic acquisitions, divestitures, joint ventures, equity method investments, repurchasing shares of our common stock (including pursuant to our multi-year $500 million Share Repurchase Program) or our outstanding debt obligations in open market or in privately negotiated transactions, as well as other transactions we believe may create stockholder value or enhance financial performance.

These transactions may require cash expenditures or generate proceeds and, to the extent they require cash expenditures, may be funded through a combination of cash on hand, debt or equity offerings, or utilization of our Revolver.

These transactions may require cash expenditures or generate proceeds and, to the extent they require cash expenditures, may be funded through a combination of cash on hand, debt or equity offerings.

Recent Events Impacting Our Liquidity and Capital Resources

Interest Payments

As a result of the 9.250% senior secured notes due 2025 and the 4.000% senior exchangeable notes due 2025 entered into during the second quarter of 2020, and the 7.375% senior secured notes due 2025 entered into in the third quarter of 2020, interest expense increased $27 million during the three months ended March 31, 2021 compared to the same period in the prior year and will continue to remain a significant use of cash during 2021.

As a result of the 9.250% senior secured notes due 2025 and the 4.000% senior exchangeable notes due 2025 entered into during the second quarter of 2020, and the 7.375% senior secured notes due 2025 entered into in the third quarter of 2020, interest expense increased $8 million and $35 million during the three and six months ended June 30, 2021, respectively, compared to the same period in the prior year and will continue to remain a significant use of cash during 2021.

The Preferred Stock accumulates cumulative dividends at a rate per annum equal to 6.50% and dividends are payable when, as and if declared by our board of directors, out of funds legally available for their payment to the extent paid in cash, quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, beginning on December 1, 2020 and ending on, and including, September 1, 2023.

Declared dividends on the Preferred Stock will be payable, at our election, in cash, shares of our common stock or a combination of cash and shares of our common stock.

We recorded $5 million of accrued preferred stock dividends in our consolidated results of operations for the three months ended March 31, 2021.

During the three months ended March 31, 2021, we paid cash dividends on our preferred stock of $5 million.

On April 28, 2021, the Board of Directors declared a dividend of $1.625 per share on Preferred Stock payable on June 1, 2021 to holders of record of the Preferred Stock on May 15, 2021.

We recorded $5 million and $11 million of accrued preferred stock dividends in our consolidated results of operations for the three and six months ended June 30, 2021, respectively.

During the three and six months ended June 30, 2021, we paid cash dividends on our preferred stock of $5 million and $11 million, respectively.

On July 28, 2021, the Board of Directors declared a dividend of $1.625 per share on Preferred Stock payable on September 1, 2021 to holders of record of the Preferred Stock on August 15, 2021.

On March 16, 2020, we announced the suspension of the payment of quarterly cash dividends on our common stock, effective with respect to the dividends occurring after the March 30, 2020 payment.

2 unchanged sentences

Repurchases under the Share Repurchase Program may take place in the open market or privately negotiated transactions.

For the three months ended March 31, 2021, we did not repurchase any shares pursuant to the Share Repurchase Program.

During the six months ended June 30, 2021, we did not repurchase any shares pursuant to the Share Repurchase Program.

On March 16, 2020, we announced the suspension of share repurchases under the Share Repurchase Program in conjunction with the cash management measures we are undertaking as a result of the market conditions caused by COVID-19.

Approximately $287 million remains authorized for repurchases under the Share Repurchase Program as of March 31, 2021.

Approximately $287 million remains authorized for repurchases under the Share Repurchase Program as of June 30, 2021.

Senior Secured Credit Facilities

2 unchanged sentences

On August 27, 2020, Sabre GLBL entered into a Third Revolving Facility Refinancing Amendment to the Amended and Restated Credit Agreement (the "Third Revolving Refinancing Amendment") and the First Term A Loan Extension Amendment to the Amended and Restated Credit Agreement (the "Term A Loan Extension Amendment" and, together with the Third Revolving Refinancing Amendment, the "2020 Refinancing"), which extended the maturity of the Revolver from July 1, 2022 to November 23, 2023 at the earliest and February 22, 2024 at the latest, depending on certain "springing" maturity conditions as described in the Third Revolving Refinancing Amendment.

In the event that, as of November 23, 2023, the maturity date of the Term Loan B has not been extended or refinanced to a date after August 20, 2024, the extension is subject to an earlier "springing" maturity date of November 23, 2023.

In addition to extending the maturity date of the Revolver, the 2020 Refinancing also provides that, during any covenant suspension resulting from a "Material Travel Event Disruption" (as defined in the Amended and Restated Credit Agreement and discussed further below), including during the current covenant suspension period, we must maintain liquidity of at least $300 million on a monthly basis, which was lowered in December 2020 from $450 million.

In addition, during this covenant suspension, the 2020 Refinancing limits certain payments to equity holders, certain investments, certain prepayments of unsecured debt and the ability of certain subsidiaries to incur additional debt.

The applicable margins for the Revolver are between 2.50% and 1.75% per annum for Eurocurrency rate loans and between 1.50% and 0.75% per annum for base rate loans, with the applicable margin for any quarter reduced by 25 basis points (up to 75 basis points total) if the Senior Secured First-Lien Net Leverage Ratio (as defined in the Amended and Restated Credit Agreement) is less than 3.75 to 1.0, 3.00 to 1.0, or 2.25 to 1.0, respectively.

In addition to extending the maturity date of the Revolver, the 2020 Refinancing also provided that, during any covenant suspension resulting from a "Material Travel Event Disruption" (as defined in the Amended and Restated Credit Agreement), including during the current covenant suspension period, we were required to maintain liquidity of at least $300 million on a monthly basis, which was lowered in December 2020 from $450 million.

In addition, during this covenant suspension, the 2020 Refinancing limited certain payments to equity holders, certain investments, certain prepayments of unsecured debt and the ability of certain subsidiaries to incur additional debt.

The applicable margins for the Revolver were between 2.50% and 1.75% per annum for Eurocurrency rate loans and between 1.50% and 0.75% per annum for base rate loans, with the applicable margin for any quarter reduced by 25 basis points (up to 75 basis points total) if the Senior Secured First-Lien Net Leverage Ratio (as defined in the Amended and Restated Credit Agreement) was less than 3.75 to 1.0, 3.00 to 1.0, or 2.25 to 1.0, respectively.

These interest rate spreads for the Revolver were increased by 0.25%, during covenant suspension, in connection with the 2020 Refinancing.

On July 12, 2021, Sabre GLBL entered into agreements to refinance the Other Term Loan B facility and the Revolver, and terminated the revolving commitments thereunder.

Among other things, the refinancing amended the financial performance covenant to remove the $300 million minimum liquidity requirement, and certain other limitations, including the items listed above.

Subsequent Events for further detail.

On December 17, 2020, Sabre GLBL entered into a Sixth Term A Loan Refinancing and Incremental Amendment to our Amended and Restated Credit Agreement, resulting in additional Term Loan B borrowings of $637 million ("Other Term B Loans") due December 17, 2027.

1 unchanged sentence

The net proceeds of $623 million from the issuance, net of underwriting fees and commissions, were used to fully redeem both the $500 million outstanding 5.25% senior secured notes due November 2023 and the $134 million outstanding Term Loan A.

Additionally, on December 17, 2020, Sabre GLBL entered into a Pro Rata Amendment and the

Refinancing Amendment which reduced the minimum liquidity requirement to $300 million.

We incurred no material additional indebtedness as a result of these transactions, other than amounts for certain interest, fees and expenses.

We recognized a loss on extinguishment of debt of $11 million during the year ended December 31, 2020 in connection with these transactions, which consisted of a redemption premium of $6 million and the write-off of unamortized debt issuance costs of $5 million.

Under the Amended and Restated Credit Agreement, the loan parties are subject to certain customary non-financial covenants, including certain restrictions on incurring certain types of indebtedness, creation of liens on certain assets, making of certain investments, and payment of dividends, as well as a maximum leverage ratio.

Pursuant to Credit Agreement Amendments, effective July 18, 2016, the maximum leverage ratio has been adjusted to be based on the Total Net Leverage Ratio (as defined in the Amended and Restated Credit Agreement) and we are required, at all times (no longer solely when a threshold amount of revolving loans or letters of credit were outstanding), to maintain a Total Net Leverage Ratio of less than 4.5 to 1.0.

However, under the terms of the Amended and Restated Credit Agreement, our Total Net Leverage Ratio requirement may be suspended for a limited time if a “Material Travel Event Disruption” has occurred.

“Material Travel Event Disruption,” as defined in the Amended and Restated Credit Agreement, means a decrease of 10% or more has occurred in any given calendar month in the number of “domestic revenue passenger enplanements” as a result of, or in connection with, a Travel Event (as defined in the Amended and Restated Credit Agreement) when compared to the number of “domestic revenue passenger enplanements” occurring in the corresponding month during the prior year, or if a Material Travel Event Disruption existed during such month, the most recent corresponding month in which no Material Travel Event Disruption occurred/existed.

The number of “domestic revenue passenger enplanements” is determined by reference to the monthly “Air Traffic Statistics,” which terms are published by the Bureau of Transportation Statistics.

The capacity reductions by domestic airlines in response to the COVID-19 outbreak and related decreases in domestic passenger enplanements, and the sharp decline in GDS bookings, has led to a finding that a Material Travel Event Disruption occurred in the first quarter of 2021.

As such, the leverage ratio covenant has been suspended for the first and second quarters of 2021.

Based on industry forecasts for COVID-19 recovery, we would expect to remain under covenant suspension through the remainder of 2021 and until such time that domestic passenger enplanements reach at least 90% of pre-COVID-19 levels.

As of March 31, 2021, we are in compliance with all covenants not suspended under the terms of the Amended and Restated Credit Agreement and with the additional covenants of the 2020 Refinancing.

On July 12, 2021, Sabre GLBL entered into agreements to refinance the Other Term Loan B facility and the Revolver, and terminated the revolving commitments thereunder.

Subsequent Events for further detail.

certain investments, and payment of dividends.

As of June 30, 2021, we are in compliance with all covenants not suspended under the terms of the Amended and Restated Credit Agreement and with the additional covenants of the 2020 Refinancing.

In addition, the Amended and Restated Credit Agreement provided for a maximum leverage ratio for the loan parties, based on the Total Net Leverage Ratio (as defined in the Amended and Restated Credit Agreement).

We were required, at all times (no longer solely when a threshold amount of revolving loans or letters of credit were outstanding), to maintain a Total Net Leverage Ratio of less than 4.5 to 1.0.

The capacity reductions by domestic airlines in response to the COVID-19 outbreak and related decreases in domestic passenger enplanements, and a recent sharp decline in GDS bookings, led to a finding that a Material Travel Event Disruption occurred in the first quarter of 2021.

As such, the leverage ratio covenant was suspended through at least the second quarter of 2021.

As noted above, on July 12, 2021, we entered into agreements to refinance the Other Term Loan B facility and the Revolver, and terminated the revolving commitments thereunder.

Among other things, the refinancing amended the financial performance covenant to remove the Total Net Leverage Ratio maintenance requirement.

Subsequent Events for further detail.

We are also required to pay down the term loans by an amount equal to 50% of annual excess cash flow, as defined in the Amended and Restated Credit Agreement.

8 unchanged sentences

See “Risk Factors—We are exposed to interest rate fluctuations.” We anticipate amending our Amended and Restated Credit Agreement prior to the phaseout of LIBOR to provide for a Eurocurrency rate alternative to LIBOR.

Three Months Ended March 31,

Six Months Ended June 30,

(Amounts in thousands)

Cash (used in) provided by operating activities $ (197,403) $ 40,431

Cash used in operating activities $ (338,460) $ (395,036)

Cash provided by (used in) investing activities 7,634 (43,746)

4 unchanged sentences

Operating Activities

Cash used in operating activities totaled $197 million for the three months ended March 31, 2021.

The $238 million decrease in operating cash flow from the same period in the prior year was primarily due to the impact of COVID-19 on the travel industry and on our results of operations, additional interest payments of $16 million resulting from debt refinancing activities during 2020, and severance payments of $8 million during the three months ended March 31, 2021 related to restructuring activities initiated in 2020.

This decrease in operating cash flow was partially offset by acquisition termination fees of $21 million paid in the first quarter of 2020 in connection with the now-terminated agreement to acquire Farelogix and a $20 million decrease in upfront incentive consideration payments.

Cash provided by operating activities totaled $40 million for the three months ended March 31, 2020.

The $112 million decrease in cash flow provided by operating activities from the same period in the prior year was primarily due to the impact of COVID-19 on the travel industry and on our results of operations and acquisition termination fees of $21 million paid in the first quarter of 2020 in connection with the now-terminated agreement to acquire Farelogix.

Cash used in operating activities totaled $338 million for the six months ended June 30, 2021.

The $57 million increase in operating cash flow from the same period in the prior year was primarily due to the impact of COVID-19 on the travel industry and on our results of operations, acquisition termination fees of $21 million paid in the first quarter of 2020 in connection with the now-terminated agreement to acquire Farelogix, and a $23 million reduction in upfront incentive consideration payments.

This increase in operating cash flow was partially offset by additional interest payments of $31 million resulting from debt refinancing activities during 2020, and severance payments of $11 million during the six months ended June 30, 2021 related to restructuring activities initiated in 2020.

Investing Activities

For the three months ended March 31, 2021, we received proceeds of $15 million from the sale of an investment, partially offset by $6 million of cash used on capital expenditures related to software developed for internal use.

For the three months ended March 31, 2020, we used cash of $28 million on capital expenditures, including $15 million related to software developed for internal use.

For the six months ended June 30, 2021, we received proceeds of $25 million from the sale of certain investments and assets, partially offset by $17 million of cash used on capital expenditures primarily related to software developed for internal use.

For the six months ended June 30, 2020, we used cash of $39 million on capital expenditures, including $24 million related to software developed for internal use.

Financing Activities

For the three months ended March 31, 2021, financing activities used $24 million.

For the six months ended June 30, 2021, financing activities used $45 million.

Significant highlights of our financing activities include:

2 unchanged sentences

• payment of $11 million in dividends on our preferred stock.

For the three months ended March 31, 2020, financing activities provided $238 million.

For the six months ended June 30, 2020, financing activities provided $1,308 million.

Significant highlights of our financing activities include:

• proceeds from borrowings under the Notes of $1,120 million;

• proceeds from borrowings under the Revolver of $375 million;

2 unchanged sentences

• payment of $38 million on our Term Loan A and Term Loan B;

• payment of $29 million on debt issuance costs;

• net payments of $5 million from the settlement of employee stock-option awards, including payments of $5 million in income tax withholdings associated with the settlement of employee restricted-stock awards;

3 unchanged sentences

Off Balance Sheet Arrangements

We had no off balance sheet arrangements during the three months ended March 31, 2021 and year ended December 31, 2020.

We had no off balance sheet arrangements during the six months ended June 30, 2021 and year ended December 31, 2020.

Recent Accounting Pronouncements

10 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis