What changed in this filing

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Item 1A. Risk Factors

2021-08-03 compared with 2021-05-04 · 42 added, 41 removed, 528 unchanged (14% of the section changed)

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The spread of COVID-19 and the recent developments surrounding the global pandemic are having significantly negative impacts on all aspects of our business.

In response to the pandemic, many governments around the world are implementing a variety of measures to reduce the spread of COVID-19, including travel restrictions and bans, instructions to residents to practice social distancing, quarantine advisories, shelter-in-place orders and required closures of non-essential businesses.

In response to the pandemic, many governments around the world have implemented a variety of measures to reduce the spread of COVID-19, including travel restrictions and bans, instructions to residents to practice social distancing, quarantine advisories, shelter-in-place orders and required closures of non-essential businesses.

These government mandates have had a significant negative impact on the travel industry and many of the travel suppliers on whom our business relies, including airlines and hotels, and forced many of them, including airlines, to pursue cost reduction measures and seek financing, including government financing and support, in order to reduce financial distress and continue operating, and to curtail drastically their service offerings.

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Our financial results and prospects are largely dependent on these transaction volumes.

Although it is impossible to accurately predict the ultimate impact of these developments on our business, our financial results for the year ended December 31, 2020 and the quarter ended March 31, 2021 have been significantly and negatively impacted, with a material decline in total revenues, net income, cash flow from operations and Adjusted EBITDA as compared to 2019.

Although it is impossible to accurately predict the ultimate impact of these developments on our business, our financial results for the year ended December 31, 2020 and the first half of 2021 have been significantly and negatively impacted, with a material decline in total revenues, net income, cash flow from operations and Adjusted EBITDA as compared to 2019.

This downward trend could continue for an unpredictable period.

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and increases in cash outlays to refund travel service providers for cancelled bookings.

We did not record any material impairments in 2020 or in the first quarter of 2021;

We did not record any material impairments in 2020 or in the first half of 2021;

however, future changes in our expected cash flows or other factors as a result of the COVID-19 pandemic may cause our goodwill or other assets to be impaired, resulting in a non-cash charge.

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actions taken by national, state and local governments to contain the disease or treat its impact, including travel restrictions and bans, required closures of non-essential businesses, vaccination levels and aid and economic stimulus efforts;

the effect of the changes in hiring levels and remote working arrangements that we have implemented on our operations, including the health, productivity, retention, and morale of management and our employees, and our ability to maintain our financial reporting

processes and related controls;

the impact on the financial condition on our partners, and any potential restructurings or bankruptcies of our partners;

the impact on the financial condition on our partners, and any potential restructurings or

bankruptcies of our partners;

the impact on our contracts with our partners, including force majeure provisions and requests to renegotiate the terms of existing agreements prior to their expiration, including providing temporary concessions regarding contractual minimums;

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In addition, travel suppliers’ use of multiple distribution channels may also adversely affect our contract renegotiations with these suppliers and negatively impact our revenue.

For example, as we attempt to renegotiate new GDS agreements with our travel suppliers, they may withhold some or all of their content (fares and associated economic terms) for distribution exclusively through their direct distribution channels (for example, the relevant airline’s website) or offer travelers more attractive terms for content available through those direct

channels after their contracts expire.

As a result of these sources of negotiating pressure, we may have to decrease our prices to retain their business.

As a result of these sources of negotiating pressure, we may have to decrease our prices to

retain their business.

If we are unable to renew our contracts with these travel suppliers on similar economic terms or at all, or if our ability to provide this content is similarly impeded, this would also adversely affect the value of our Travel Solutions business as a marketplace due to our more limited content.

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states, have increased their focus on protecting personal data by law and regulation, and have increased enforcement actions for violations of privacy and data protection requirements.

The General Data Protection Regulation ("GDPR"), a data protection law adopted by the European Commission, went into effect on May 25, 2018, the California Consumer Protection Act went into effect on January 1, 2020, and the California Privacy Rights Act is scheduled to go into effect on January 1, 2023.

These data protection laws and regulations are intended to protect the privacy and security of personal data, including credit card information that is collected, processed and transmitted in or from the relevant jurisdiction.

The General Data Protection Regulation ("GDPR"), a data protection law adopted by the European Commission, went into effect on May 25, 2018, and various U.S.

state data protection laws have gone into effect or are scheduled to go into effect.

These and other data protection laws and regulations are intended to protect the privacy and security of personal data, including credit card information that is collected, processed and transmitted in or from the relevant jurisdiction.

Implementation of and compliance with these laws and regulations may be more costly or take longer than we anticipate, or could otherwise adversely affect our business operations, which could negatively impact our financial position or cash flows.

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Our business could be materially adversely affected by our inability, or the inability of our vendors who receive personal data from us, to comply with legal obligations regarding the use of personal data, new data handling or localization requirements that conflict with or negatively impact our business practices.

In addition, our agreements with customers may also

require that we indemnify the customer for liability arising from data breaches under the terms of our agreements with these customers.

In addition, our agreements with customers may also require that we indemnify the customer for liability

arising from data breaches under the terms of our agreements with these customers.

These indemnification obligations could be significant and may exceed the limits of any applicable insurance policy we maintain.

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Other parties might likewise seek to benefit from any unfavorable outcome by threatening to bring or actually bringing their own claims against us on the same or similar grounds or utilizing the litigation to seek more favorable contract terms.

For example, on June 29, 2021, American Airlines filed suit against us in state district court in Tarrant County, Texas, alleging that our New Airline Storefront, a modern retailing experience designed to enhance comparison shopping of airline offers in the GDS, and a new value-based incentive model with agencies breach our contract with American Airlines.

American Airlines is seeking a temporary and permanent injunction preventing the alleged breach of contract.

We strongly deny the allegations and have filed our response denying American Airlines’ allegations and seeking a declaratory judgment that, among other things, New Airline Storefront does not violate the contract and that the contract does not prohibit Sabre’s value-based fee arrangements.

If we cannot resolve this matter favorably, we could be limited in our ability to utilize New Airline Storefront and make the value-based incentive payments until our contract with American Airlines terminates.

Furthermore, if this dispute were to result in the termination of our distribution contract with American Airlines, we may be unable to negotiate a new contract with American Airlines on as favorable terms or at all, which could have a material adverse effect on our business, financial condition and results of operations.

In addition, the U.K.

Competition and Markets Authority ("CMA") blocked our proposed acquisition of Farelogix, and we have appealed the CMA's decision to the U.K.

Competition Appeal Tribunal.

Competition and Markets Authority ("CMA") blocked our proposed acquisition of Farelogix, and the U.K.

Competition Appeal Tribunal has confirmed the CMA’s decision.

We are also subject to a U.S.

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Based on its findings in the investigation, the DOJ may (i) close the file, (ii) seek a consent decree to remedy issues it believes violate the antitrust laws, or (iii) file suit against us for violating the antitrust laws, seeking injunctive relief.

In addition, the European Commission’s Directorate-General for Competition ("EC") has opened an investigation to assess whether our and Amadeus’ respective agreements with airlines and travel agents may restrict competition in breach of E.U.

antitrust rules.

There is no legal deadline for the EC to bring an antitrust investigation to an end, and the duration of the investigation is unknown.

Depending on the outcome of any of these matters, and the scope of the outcome, the manner in which our airline distribution business is operated could be affected and could potentially force changes to the existing airline distribution business model.

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Security incidents expose us to liability and could damage our reputation and our business.

We process, store, and transmit large amounts of data, including PII and PCI of our customers, and it is critical to our business strategy that our facilities and infrastructure, including those provided by DXC Technology ("DXC") or other vendors, remain secure and are perceived by the marketplace to be secure.

We process, store, and transmit large amounts of data, including PII and PCI of our customers, and it is critical to our business strategy that our facilities and infrastructure, including those provided by DXC Technology ("DXC"), cloud providers or other vendors, remain secure and are perceived by the marketplace to be secure.

Our infrastructure may be vulnerable to physical or electronic break-ins, computer viruses, or similar disruptive problems.

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To address these threats and intrusions, we have a team of experienced security experts and support from firms that specialize in data security and cybersecurity.

We are periodically subject to these threats and intrusions, and sensitive or material information has in the past been, and could at any time, including in the future, be compromised as a result.

We are periodically subject to these threats and intrusions, and sensitive information has in the past been, and could at any time, including in the

future, be compromised as a result.

The costs of investigation of such incidents, as well as remediation related to these incidents, may be material.

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Contingencies, to our consolidated financial statements for additional information.

In addition, in April 2021, our subsidiary, Radixx, announced that it has experienced an event that impacted its Radixx Res™

reservation system.

In addition, in April 2021, our subsidiary, Radixx, announced that it has experienced an event that impacted its Radixx Res™ reservation system.

An investigation indicated that malware on the Radixx Res™ reservation system caused the activity.

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In the ordinary course of business, we enter into agreements that contain indemnity obligations whereby we are required to indemnify our customers against these assertions arising from our customers’ usage of our products, services or technology.

As the competition in our industry increases and the functionality of technology offerings further overlaps, these claims and counterclaims could become more common.

As the competition in our industry increases and the functionality of technology offerings further overlaps, these claims and

counterclaims could become more common.

We cannot be certain that we do not or will not infringe third parties’ intellectual property rights.

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Depending on the nature of such claims, our businesses may be disrupted, our management’s attention and other company resources may be diverted and we may be required to redesign, reengineer or rebrand our products and services, if feasible, to stop offering certain products and services or to enter into royalty or licensing agreements in order to obtain the rights to use necessary technologies, which may not be available on terms acceptable to us, if at all, and may result in a decrease of our capabilities.

Our failure to prevail in such matters could result in

loss of intellectual property rights, judgments awarding substantial damages, including possible treble damages and attorneys’ fees, and injunctive or other equitable relief against us.

Our failure to prevail in such matters could result in loss of intellectual property rights, judgments awarding substantial damages, including possible treble damages and attorneys’ fees, and injunctive or other equitable relief against us.

If we are held liable, we may be unable to use some or all of our intellectual property rights or technology.

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Besides general litigation risks, changes in, or interpretations of, intellectual property laws may compromise our ability to enforce our rights.

We may not be aware of infringement or misappropriation or elect not to seek to prevent it.

We may not be aware of infringement or misappropriation or

elect not to seek to prevent it.

Our decisions may be based on a variety of factors, such as costs and benefits of taking action, and contextual business, legal, and other issues.

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From time to time, there have been claims by companies claiming ownership of software that was previously thought to be open source and that was incorporated by other companies into their products.

As a result, we could be subject to suits by parties claiming ownership

of what we believe to be open source software.

As a result, we could be subject to suits by parties claiming ownership of what we believe to be open source software.

Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the open source software and that we license these modifications or derivative works under the terms of a particular open source license or other license granting third parties certain rights of further use.

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and in EMEA, which may negatively impact our business results in those regions.

In addition, the terms of the U.K.’s withdrawal from the E.U., once negotiated during the transition period, if at all, could potentially disrupt the markets we serve and the tax jurisdictions in which we operate and adversely change tax benefits or liabilities in these or other jurisdictions, including our ability to obtain Value Added Tax ("VAT") refunds on transactions between the U.K.

In addition, the terms of the U.K.’s withdrawal from the E.U., could potentially disrupt the markets we serve and the tax jurisdictions in which we operate and adversely change tax benefits or liabilities in these or other jurisdictions, including our ability to obtain Value Added Tax ("VAT") refunds on transactions between the U.K.

and the E.U., and may cause us to lose customers, suppliers, and employees.

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We have a significant amount of indebtedness.

As of March 31, 2021, we had $4.7 billion of indebtedness outstanding.

As of June 30, 2021, we had $4.7 billion of indebtedness outstanding.

Our substantial level of indebtedness increases the possibility that we may not generate enough cash flow from operations to pay, when due, the principal of, interest on or other amounts due in respect of, these obligations.

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As a result, we may be required to finance our cash needs through bank loans, additional debt financing, public or private equity offerings or otherwise.

Our ability to arrange financing and

the cost of such financing are dependent on numerous factors, including but not limited to general economic and capital market conditions, the availability of credit from banks or other lenders, investor confidence in us, and our results of operations.

Our ability to arrange financing and the cost of such financing are dependent on numerous factors, including but not limited to general economic and capital market conditions, the availability of credit from banks or other lenders, investor confidence in us, and our results of operations.

There can be no assurance that financing will be available on terms favorable to us or at all, which could force us to delay, reduce or abandon our growth strategy, increase our financing costs, or both.

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Depending on the size of the exposures and the relative movements of interest rates, if we choose not to hedge or fail to effectively hedge our exposure, we could experience a material adverse effect on our results of operations and financial condition.

As of March 31, 2021, we had outstanding approximately $2.8 billion of variable debt that is indexed to the London Interbank Offered Rate ("LIBOR").

As of June 30, 2021, we had outstanding approximately $2.8 billion of variable debt that is indexed to the London Interbank Offered Rate ("LIBOR").

It is not possible to predict the effect of any changes in the methods by which LIBOR is determined or regulatory activity related to LIBOR’s phaseout.

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We may recognize impairments on long-lived assets, including goodwill and other intangible assets, or recognize impairments on our equity method investments.

Our consolidated balance sheet at March 31, 2021 contained goodwill and intangible assets, net totaling $3.1 billion.

Our consolidated balance sheet at June 30, 2021 contained goodwill and intangible assets, net totaling $3.1 billion.

Future acquisitions that result in the recognition of additional goodwill and intangible assets would cause an increase in these types of assets.

We do not amortize goodwill and intangible assets that are determined to have indefinite useful lives, but we amortize definite-lived intangible assets on a straight-line basis over their useful economic lives, which range from four to thirty years, depending on classification.

depending on classification.

We evaluate goodwill for impairment on an annual basis or earlier if impairment indicators exist and we evaluate definite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of definite-lived intangible assets used in combination to generate cash flows largely independent of other assets may not be recoverable.

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The fair values used in our impairment evaluation are estimated using a combined approach based upon discounted future cash flow projections and observed market multiples for comparable businesses.

increase in operating expenses, cost of revenue and taxes, and changes in realization of estimated cost-saving initiatives could result in material impairment charges.

Changes in estimates based on changes in risk-adjusted discount rates, future booking and transaction volume levels, travel supplier capacity and load factors, future price levels, rates of growth including long-term growth rates, rates of increase in operating expenses, cost of revenue and taxes, and changes in realization of estimated cost-saving initiatives could result in material impairment charges.

Maintaining and improving our financial controls and the requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members.

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Such changes could result in an increase or decrease in the effective tax rate applicable to all or a portion of our income or losses which would impact our profitability.

We consider the undistributed capital investments in our foreign subsidiaries to be indefinitely reinvested as of March 31, 2021 and, accordingly, have not provided deferred taxes on any outside basis differences.

We consider the undistributed capital investments in our foreign subsidiaries to be indefinitely reinvested as of June 30, 2021 and, accordingly, have not provided deferred taxes on any outside basis differences.

We establish reserves for our potential liability for U.S.

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These reserves represent our best estimate of our contingent liability for taxes.

The interpretation of tax laws and the determination of any potential liability under those laws are complex, and the amount of our liability may exceed our established reserves.

interpretation of tax laws and the determination of any potential liability under those laws are complex, and the amount of our liability may exceed our established reserves.

New tax laws, statutes, rules, regulations or ordinances could be enacted at any time and existing tax laws, statutes, rules, regulations and ordinances could be interpreted, changed, modified or applied adversely to us.

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New, changed, modified or newly interpreted or applied laws could also increase our compliance, operating and other costs, as well as the costs of our products and services.

Several countries, primarily in Europe,

and the European Commission have proposed or adopted taxes on revenue earned by multinational corporations in certain "digital economy" sectors from activities linked to the user-based activity of their residents.

Several countries, primarily in Europe, and the European Commission have proposed or adopted taxes on revenue earned by multinational corporations in certain "digital economy" sectors from activities linked to the user-based activity of their residents.

These proposals have generally been labeled as "digital services taxes" ("DSTs").

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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 1A. Risk Factors