3 unchanged sentences
Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the development and introduction of new products, and the implementation of our marketing and branding strategies.
−Removed: In many cases, you can identify forward-looking statements by terms such as “expects,” "outlook," “believes,” “may,” "intends," "provisional," "plans," “will,” “predicts,” “potential,” “anticipates,” “estimates,” "should,” “plans”, "could", "likely", "commit", "guidance", "anticipate", "incremental", "preliminary", "forecast", "continue", "strategy", "confidence", "momentum", "estimate", "objective", "project", "may", or the negative of these terms or other comparable terminology.
+Added: In many cases, you can identify forward-looking statements by terms such as “expects,” “outlook,” “believes,” “may,” “intends,” “plans,” “provisional,” “will,” “predicts,” “potential,” “anticipates,” “estimates,” “should,” “could,” “likely,” “commit,” “guidance,” “anticipate,” “incremental,” “preliminary,” “forecast,” “continue,” “strategy,” “confidence,” “momentum,” “estimate,” “objective,” “project,” or the negative of these terms or other comparable terminology.
The forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions and are subject to risks, uncertainties and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement.
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Unless required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect circumstances or events after the date they are made.
−Removed: Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements.
−Removed: You are cautioned not to place undue reliance on these forward-looking statements.
−Removed: Unless required by law, we undertake no obligation to publicly update or revise any forward-looking statements to reflect circumstances or events after the date they are made.
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K filed with the SEC on February 25, 2021.
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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.
−Removed: 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.
−Removed: As expected, this pandemic has continued to have a material impact to our consolidated financial results in the second quarter of 2021.
−Removed: 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
−Removed: during the second quarter of 2021.
+Added: In the second and third quarters 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.
+Added: As expected, this pandemic has continued to have a material impact to our consolidated financial results in the third quarter of 2021.
+Added: 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 and some travel restrictions have been relaxed, we have seen some continued improvement in our key volume metrics during the third 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.
−Removed: Our air booking cancellation reserve totaled $18 million as of June 30, 2021, which is consistent with the reserve as of December 31, 2020.
−Removed: 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.
+Added: Our air booking cancellation reserve totaled $15 million and $18 million as of September 30, 2021 and December 31, 2020, respectively.
+Added: Additionally, our provision for expected credit losses for the nine months ended September 30, 2021 decreased $62 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.
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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.
−Removed: 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;
+Added: We believe our cash position and the liquidity measures we have taken will provide additional flexibility as we manage through the global economic recovery from the COVID-19 pandemic.
+Added: See “—Recent Events Impacting Our Liquidity and Capital Resources” and “—Senior Secured Credit Facilities.” As a result, 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.
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and a right-sizing of our global organization through a reduction in force.
+Added: On October 28, 2021, we announced that we have entered into an agreement with a third party to sell our suite of flight and crew management and optimization solutions, which represents our AirCentre airline operations portfolio within Travel Solution’s IT Solutions.
+Added: At closing, we will sell the AirCentre product portfolio, related technology and intellectual property for $392.5 million.
+Added: Approximately 500 employees are also expected to have the opportunity to transition to the purchaser in connection with the sale.
+Added: The sale is subject to customary closing conditions and regulatory approvals and is expected to close in the first quarter of 2022.
+Added: In connection with the closing, we expect to enter into a transition services agreement with the purchaser, pursuant to which we will continue to provide certain services and conduct certain operations in connection with the transferred business while it transitions to the purchaser’s system, in return for compensation from the purchaser with respect to these costs.
+Added: We cannot provide assurance that the sale will occur on these terms or at all.
Factors Affecting our Results
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Recognition of license fees upon delivery has previously resulted and will continue to result in periodic fluctuations in revenue recognized.
+Added: Our distribution revenue in the current quarter and in future periods is expected to be impacted by a certain online travel agency ("OTA") notifying us of their intent to shift a significant portion of its North America volumes to a competitor.
+Added: This shift began in the third quarter of 2021 and is expected to result in a decline in our volumes offset by an increase in our rate going forward.
Hospitality Solutions generates revenue through upfront solution fees and recurring usage-based fees for the use of our software solutions hosted on secure platforms or deployed through our SaaS and through other professional service fees including Digital Experience ("DX").
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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.
−Removed: 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.
+Added: Cost of revenue, excluding technology costs, 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, 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.
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“Direct Billable Bookings” and “Passengers Boarded” are the primary metrics utilized by Travel Solutions to measure operating performance.
−Removed: Travel Solutions generates distribution revenue for each Direct Billable Booking, which includes bookings made through our GDS (e.g., Air, and Lodging, Ground and Sea ("LGS")) and through our equity method investments in cases where we are paid directly by the travel supplier.
+Added: Travel Solutions generates distribution revenue for each Direct Billable Booking, which includes bookings made through our GDS (e.g., Air, and Lodging, Ground and Sea ("LGS")) and through our equity method investments in cases
+Added: where we are paid directly by the travel supplier.
Air Bookings are presented net of bookings cancelled within the period presented.
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These key metrics allow management to analyze customer volume over time for each of our product lines to monitor industry trends and analyze performance.
−Removed: We believe that these key metrics are useful for investors and other third parties as indicators of our financial performance and industry
+Added: We believe that these key metrics are useful for investors and other third parties as indicators of our financial performance and industry trends.
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.
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The following table sets forth these key metrics for the periods indicated (in thousands):
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 % Change 2021 2020 % Change
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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.
−Removed: 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.
−Removed: 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 (benefit) provision for income taxes.
+Added: 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, loss on extinguishment of debt, restructuring and other costs, acquisition-related costs, litigation costs, net, stock-based compensation, and the tax impact of adjustments.
+Added: 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, loss on extinguishment of debt, acquisition-related costs, litigation costs, net, stock-based compensation and the remaining (benefit) provision for income taxes.
We have revised our calculation of Adjusted EBITDA to no longer exclude the amortization of upfront incentive consideration in all periods presented.
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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):
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Net loss attributable to common stockholders $ (240,641) $ (309,664) $ (758,029) $ (964,914)
−Removed: Loss from discontinued operations, net of tax 81 672 344 2,798
−Removed: Net income (loss) attributable to non-controlling interests (1)
+Added: (Income) loss from discontinued operations, net of tax (186) 533 158 3,331
+Added: Net income attributable to non-controlling interests (1)
714 125 1,657 837
5 unchanged sentences
269 947 (5,722) 74,229
+Added: Loss on extinguishment of debt 13,070 10,333 13,070 10,333
Other, net (3)
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Operating loss $ (156,688) $ (233,049) $ (539,611) $ (768,530)
−Removed: Equity method income (loss) 630 (499) (281) (1,185)
+Added: Equity method loss (114) (460) (395) (1,645)
Acquisition-related amortization (2a)
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5,993 18,431 (2,439) 72,015
+Added: Loss on extinguishment of debt 13,070 10,333 13,070 10,333
Acquisition-related costs (5)
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Stock-based compensation 32,218 18,566 86,122 44,905
−Removed: (Benefit) provision for income taxes (1,897) (4,629) 2,100 (31,883)
+Added: Benefit for income taxes (6,613) (19,874) (4,513) (51,757)
Adjusted EBITDA $ (54,928) $ (123,814) $ (234,886) $ (346,988)
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):
−Removed: Three Months Ended June 30, 2021
+Added: Three Months Ended September 30, 2021
Travel Solutions Hospitality Solutions Corporate Total
Adjusted Operating Loss $ (39,078) $ (8,868) $ (54,698) $ (102,644)
−Removed: Equity method income 630 — — 630
+Added: Equity method loss (114) — — (114)
Acquisition-related amortization (2a)
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Restructuring and other costs (4)
−Removed: — — (856) (856)
Acquisition-related costs (5)
−Removed: — — 1,709 1,709
Litigation costs, net (6)
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Restructuring and other costs (4)
−Removed: — — (856) (856)
Acquisition-related costs (5)
−Removed: — — 1,709 1,709
Litigation costs, net (6)
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Stock-based compensation — — 32,218 32,218
−Removed: Equity method income 630 — — 630
+Added: Equity method loss (114) — — (114)
Operating loss $ (38,964) $ (8,868) $ (108,856) $ (156,688)
1 unchanged sentence
Other, net (3)
−Removed: Equity method income 630
+Added: Loss on extinguishment of debt (13,070)
+Added: Equity method loss (114)
Benefit for income taxes 6,613
Loss from continuing operations $ (234,713)
−Removed: Three Months Ended June 30, 2020
+Added: Three Months Ended September 30, 2020
Travel Solutions Hospitality Solutions Corporate Total
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Restructuring and other costs (4)
−Removed: — — 48,001 48,001
Acquisition-related costs (5)
−Removed: — — 4,373 4,373
Litigation costs, net (6)
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Restructuring and other costs (4)
−Removed: — — 48,001 48,001
Acquisition-related costs (5)
−Removed: — — 4,373 4,373
Litigation costs, net (6)
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Other, net (3)
+Added: Loss on extinguishment of debt (10,333)
Equity method loss (460)
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Loss from continuing operations $ (306,775)
−Removed: Six Months Ended June 30, 2021
+Added: Nine Months Ended September 30, 2021
Travel Solutions Hospitality Solutions Corporate Total
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Other, net (3)
+Added: Loss on extinguishment of debt (13,070)
Equity method loss (395)
−Removed: Provision for income taxes (2,100)
+Added: Benefit for income taxes 4,513
Loss from continuing operations $ (739,958)
−Removed: Six Months Ended June 30, 2020
+Added: Nine Months Ended September 30, 2020
Travel Solutions Hospitality Solutions Corporate Total
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Other, net (3)
+Added: Loss on extinguishment of debt (10,333)
Equity method loss (1,645)
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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):
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
Cash used in operating activities $ (408,152) $ (587,069)
−Removed: Cash provided by (used in) investing activities 7,634 (43,746)
+Added: Cash used in investing activities (5,535) (52,634)
Cash (used in) provided by financing activities (37,013) 1,873,804
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
Cash used in operating activities $ (408,152) $ (587,069)
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(c) Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model.
−Removed: (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.
−Removed: ("Farelogix").
−Removed: In addition, all periods presented include foreign exchange
−Removed: gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency.
+Added: (3) Other, net includes a $15 million gain on sale of equity securities during the first quarter of 2021, a $4 million and $2 million pension settlement charge recorded in the second and third quarters of 2021, respectively, debt modification costs for financing fees of $2 million
+Added: recorded in the third quarter of 2021, 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.
+Added: ("Farelogix") and a $14 million pension settlement charge recorded in the third quarter of 2020.
+Added: 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.
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Restructuring Activities to our consolidated financial statements for further details.
−Removed: (5) Acquisition-related costs represent fees and expenses incurred associated with the now-terminated agreement to acquire Farelogix.
+Added: (5) Acquisition-related costs represent fees and expenses incurred associated with the now-terminated agreement to acquire Farelogix and other acquisition and disposition related activities.
(6) Litigation costs, net represent charges associated with antitrust litigation and other foreign non-income tax contingency matters.
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The following table sets forth our consolidated statement of operations data for each of the periods presented:
−Removed: Three Months Ended June 30, Six Months Ended June 30,
+Added: Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
6 unchanged sentences
Interest expense, net (65,461) (64,376) (193,834) (157,749)
−Removed: Equity method income (loss) 630 (499) (281) (1,185)
+Added: Loss on extinguishment of debt (13,070) (10,333) (13,070) (10,333)
+Added: Equity method loss (114) (460) (395) (1,645)
Other, net (5,993) (18,431) 2,439 (72,015)
Loss from continuing operations before income taxes (241,326) (326,649) (744,471) (1,010,272)
−Removed: (Benefit) provision for income taxes (1,897) (4,629) 2,100 (31,883)
+Added: Benefit for income taxes (6,613) (19,874) (4,513) (51,757)
Loss from continuing operations $ (234,713) $ (306,775) $ (739,958) $ (958,515)
−Removed: Three Months Ended June 30, 2021 and 2020
−Removed: Three Months Ended June 30,
+Added: Three Months Ended September 30, 2021 and 2020
+Added: Three Months Ended September 30,
2021 2020 Change
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Total revenue $ 441,086 $ 278,365 $ 162,721 58 %
−Removed: 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:
−Removed: • 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.
−Removed: 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.
−Removed: 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;
−Removed: • 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.
−Removed: 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
−Removed: from new implementations recognized upon delivery to the customer.
+Added: Travel Solutions— Revenue increased $153 million, or 65%, for the three months ended September 30, 2021 compared to the same period in the prior year, primarily due to:
+Added: • a $141 million, or 135%, increase in transaction-based distribution revenue primarily due to a 169% increase in Direct Billable Bookings to 54 million as a result of the continued recovery from the COVID-19 pandemic, partially offset by revenue recognized in the third quarter of 2020 of $18 million resulting from less cancellation activity on bookings scheduled to depart during the third quarter than was estimated.
+Added: Additionally, our revenue in the current quarter was impacted by a certain OTA shifting a significant portion of its North America volumes to a competitor, as described above.
+Added: This shift diluted our volume growth at a rate that is lower than our average rate due to the nature of these bookings as leisure;
+Added: • a $12 million increase in IT solutions revenue consisting of a $22 million, or 61% increase in reservation revenue primarily due to a 103% increase in Passengers Boarded to 116 million as a result of the continued recovery from
+Added: the COVID-19 pandemic, partially offset by a dilution in rate due to revenue that does not fluctuate with our volumes.
+Added: This increase was partially offset by a decrease in commercial and operations revenue of $9 million primarily due to license fee revenue from new implementations recognized upon delivery to customers in the prior year and certain product divestitures.
Recognition of license fees upon delivery has previously resulted and will continue to result in periodic fluctuations in revenue recognized.
−Removed: 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.
−Removed: 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.
+Added: Hospitality Solutions— Revenue increased $10 million, or 23%, for the three months ended September 30, 2021 compared to the same period in the prior year.
+Added: The increase was primarily driven by an increase in SynXis Software and Services revenue due to an increase in transaction volumes of 39% to 27 million, as a result of the continued recovery trends from the COVID-19 pandemic and an increase of $3 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
−Removed: Three Months Ended June 30,
+Added: Three Months Ended September 30,
2021 2020 Change
7 unchanged sentences
Total cost of revenue, excluding technology costs $ 171,429 $ 115,426 $ 56,003 49 %
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: Restructuring Activities, to our consolidated financial statements for further details on restructuring activities.
+Added: Travel Solutions— Cost of revenue, excluding technology costs, increased $50 million, or 57%, for the three months ended September 30, 2021 compared to the same period in the prior year.
+Added: The increase was primarily the result of a $49 million increase in incentive consideration due to higher transaction volume given the continued recovery trends from the COVID-19 pandemic offset by a temporary reduction in rate due to certain travel agencies not meeting certain contractual volume commitments.
+Added: Hospitality Solutions— Cost of revenue, excluding technology costs, increased $6 million, or 28%, for the three months ended September 30, 2021 compared to the same period in the prior year.
+Added: The increase was primarily driven by a $3 million increase in transaction-related costs and a $2 million increase in professional services costs related to our call center due to the increase in transaction volume as a result of the continued recovery trends from the COVID-19 pandemic.
+Added: Corporate— Cost of revenue, excluding technology costs, increased $1 million, or 31%, for the three months ended September 30, 2021 compared to the same period in the prior year.
+Added: The increase was primarily due to a $1 million increase in labor costs resulting from an increase in stock-based compensation primarily associated with previously awarded performance-based units .
+Added: Depreciation and amortization —Depreciation and amortization increased $1 million, or 10%, for the three months ended September 30, 2021 compared to the same period in the prior year due to assets placed in service.
Technology Costs
−Removed: Three Months Ended June 30,
+Added: Three Months Ended September 30,
2021 2020 Change
4 unchanged sentences
Total technology costs $ 269,111 $ 276,362 $ (7,251) (3) %
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Travel Solutions— Technology costs decreased $11 million, or 5%, for the three months ended September 30, 2021 compared to the same period in the prior year.
+Added: The decrease was driven by a decrease in depreciation and amortization of $23 million primarily due to a change in the mix of our technology spend beginning in 2019 resulting in less capitalized internal use software and a decrease in labor and professional services costs of $6 million resulting from cost reduction measures and attrition.
+Added: This decrease was partially offset by an increase in technology hosting costs of $16 million associated with higher transaction volumes.
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.
−Removed: 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.
−Removed: 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.
−Removed: 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
−Removed: workforce in 2020.
−Removed: 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.
+Added: Hospitality Solutions— Technology costs increased $1 million, or 5%, for the three months ended September 30, 2021 compared to the same period in the prior year.
+Added: This increase was due to an increase of $4 million in labor and professional services costs to support our technology operations and a $2 million increase as the result of higher transaction volumes.
+Added: This increase was partially offset by a $4 million decline in depreciation and amortization primarily driven by a change in the mix of our technology spend beginning in 2019 resulting in less capitalized internal use software.
+Added: Corporate— Technology costs increased $2 million, or 13%, for the three months ended September 30, 2021 compared to the same period in the prior year primarily due to an increase in labor and professional services costs of $4 million resulting from an increase in stock-based compensation primarily associated with previously awarded performance-based units.
+Added: This increase was partially offset by a $1 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.
Selling, General and Administrative Expenses
−Removed: Three Months Ended June 30,
+Added: Three Months Ended September 30,
2021 2020 Change
4 unchanged sentences
Total selling, general and administrative expenses $ 157,234 $ 119,626 $ 37,608 31 %
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: This increase was partially offset by a $12 million decrease in severance costs associated with the reduction of our workforce in 2020.
−Removed: Restructuring Activities, to our consolidated financial statements for further details on restructuring activities.
+Added: Travel Solutions— Selling, general and administrative expenses increased $7 million, or 12%, for the three months ended September 30, 2021 compared to the same period in the prior year.
+Added: The increase is driven by an increase in professional services costs of $11 million primarily resulting from the reversal of certain third-party commissions in the prior year which did not reoccur in the current year, and increases in professional services for risk and security and consulting related to our business strategy to support the long-term growth of the business .
+Added: This increase was partially offset by a $6 million decline in the provision for expected credit losses primarily related to an overall improvement in our expected credit losses in the current year as a result of the continued recovery from the COVID-19 pandemic.
+Added: Hospitality Solutions— Selling, general and administrative expenses remained flat for the three months ended September 30, 2021 compared to the same period in the prior year.
+Added: The decrease in the provision for expected credit losses, which is related to an overall improvement in our expected credit losses in the current year as a result of the continued recovery from the COVID-19 pandemic, was offset by a slight increase in labor and professional services costs.
+Added: Corporate— Selling, general and administrative expenses increased $31 million, or 58%, due to a $21 million increase in labor costs resulting from a $10 million increase in stock-based compensation primarily associated with previously awarded performance based units and an $11 million increase due to continued investments in business systems and other labor related expenses.
+Added: Additionally, legal and professional services costs increased by $9 million, primarily due to ongoing litigation.
Interest expense, net
−Removed: Three Months Ended June 30,
+Added: Three Months Ended September 30,
2021 2020 Change
1 unchanged sentence
Interest expense, net $ 65,461 $ 64,376 $ 1,085 2 %
−Removed: 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.
−Removed: 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.
−Removed: Three Months Ended June 30,
+Added: Interest expense increased $1 million, or 2% during the three months ended September 30, 2021 compared to the same period in the prior year primarily due to additional borrowings under the 7.375% senior secured notes due 2025 entered into in the third quarter of 2020.
+Added: Loss on Extinguishment of Debt
+Added: We recognized a loss on extinguishment of debt of $13 million in 2021 as a result of the refinancing that occurred in the current quarter (the "2021 Refinancing") and a loss on extinguishment of debt of $10 million in 2020 as a result of the refinancing that occurred in the third quarter of 2020 (the "2020 Refinancing").
+Added: Debt for additional details.
+Added: Three Months Ended September 30,
2021 2020 Change
1 unchanged sentence
Other, net $ 5,993 $ 18,431 $ (12,438) (67) %
−Removed: ** Not meaningful
−Removed: 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.
−Removed: (Benefit) provision for income taxes
−Removed: Three Months Ended June 30,
+Added: Other, net decreased $12 million, or 67% for the three months ended September 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 in pension related expense of $12 million.
+Added: Benefit for income taxes
+Added: Three Months Ended September 30,
2021 2020 Change
1 unchanged sentence
Benefit for income taxes $ (6,613) $ (19,874) $ 13,261 (67) %
−Removed: ** Not meaningful
−Removed: 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.
+Added: For the three months ended September 30, 2021, we recognized $7 million income tax benefit, representing an effective tax rate of 2.7%, compared to an income tax benefit of $20 million, representing an effective tax rate of 6.1% for the three months ended September 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.
−Removed: Six Months Ended June 30, 2021 and 2020
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30, 2021 and 2020
+Added: Nine Months Ended September 30,
2021 2020 Change
5 unchanged sentences
Total revenue $ 1,188,238 $ 1,020,386 $ 167,852 16 %
−Removed: 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:
−Removed: • 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.
+Added: Travel Solutions— Revenue increased $152 million, or 17%, for the nine months ended September 30, 2021 compared to the same period in the prior year, primarily due to:
+Added: • a $164 million, or 36%, increase in transaction-based distribution revenue, which consists of a $243 million decrease in transaction based revenue during the first quarter of 2021, a $266 million increase during the second quarter of 2021 and a $141 million increase in the third 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.
−Removed: 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.
+Added: Additionally, during the third quarter of 2020 we recognized $18 million resulting from less cancellation activity on bookings scheduled to depart during the third quarter than was estimated.
+Added: We are currently experiencing a continued recovery in volumes, offset by an unfavorable rate mix due to higher domestic leisure bookings, resulting in the overall increase in revenue for the nine months ended September 30, 2021 compared to the prior period.
Direct Billable Bookings increased 52% to 149 million due to these factors;
−Removed: • 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.
+Added: • a $13 million decrease in IT solutions revenue consisting of a $76 million decrease during the first quarter of 2021, a $51 million increase during the second quarter of 2021 and a $12 million increase in the third 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.
−Removed: 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.
−Removed: Passengers Boarded decreased 4% to 179 million due to these factors.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Commercial and operations revenue decreased $28 million primarily due to the continued impact of the COVID-19 pandemic on our customer base and certain product divestitures, offset by license fee revenue from new implementations recognized upon delivery to the customer.
+Added: Recognition of license fees upon delivery has previously resulted and will continue to result in periodic fluctuations in revenue recognized.
+Added: In addition, we are currently experiencing a continued recovery in Passengers Boarded volumes, offset by an unfavorable rate mix due to revenue that does not fluctuate with our volumes, resulting in an overall increase
+Added: in reservation revenue of $16 million for the nine months ended September 30, 2021 compared to the prior period.
+Added: Passengers Boarded increased 21% to 294 million due to these factors.
+Added: Hospitality Solutions— Revenue increased $15 million, or 11%, for the nine months ended September 30, 2021 compared to the same period in the prior year.
+Added: The increase was primarily driven by an increase in SynXis Software and Services revenue due to an increase in transaction volumes of 33% to 68 million, as a result of the continued recovery from the COVID-19 pandemic, and an increase of $2 million in DX revenue.
+Added: 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.
Cost of revenue, excluding technology costs
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
2021 2020 Change
7 unchanged sentences
Total cost of revenue, excluding technology costs $ 498,011 $ 458,068 $ 39,943 9 %
−Removed: 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.
−Removed: 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.
−Removed: This increase is offset
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: The decrease was due to a decline in severance costs of $23 million associated with the reduction of our workforce in 2020.
+Added: Travel Solutions— Cost of revenue, excluding technology costs, increased $60 million, or 17%, for the nine months ended September 30, 2021 compared to the same period in the prior year.
+Added: The increase was primarily the result of a $64 million increase in incentive consideration due to high er overall transaction volume consisting of a $115 million decline in the first quarter of 2021, a $130 million increase in the second quarter of 2021, and a $49 million increase in the third quarter of 2021, compared to the same periods in the prior year.
+Added: This i ncrease is offset primarily by a $2 million decline in labor and professional services costs resulting from the reduction in workforce from our cost reduction measures implemented in the prior year.
Restructuring Activities , to our consolidated financial statements for further details on restructuring activities.
−Removed: 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.
+Added: Hospitality Solutions— Cost of revenue, excluding technology costs, decreased $1 million, or 1%, for the nine months ended September 30, 2021 compared to the same period in the prior year.
+Added: The decrease was primarily driven by a $ 6 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 recovery from the COVID-19 pandemic.
+Added: This decrease is offset by a $5 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 and an increase in professional services costs related to our call center to support the increase in transaction volumes in the current year.
+Added: Corporate— Cost of revenue, excluding technology costs, decreased $22 million, or 80%, for the nine months ended September 30, 2021 compared to the same period in the prior year.
+Added: The decrease was due to a decline in severance costs of $23 million associated wi th the reduction of our workforce in 2020.
+Added: The decrease was partially offset by a slight increase in labor costs resulting from an increase in stock-based compensation primarily associated with previously awarded performance-based units.
+Added: Restructuring Activities , to our consolidated financial statements for further details on restructuring activities.
+Added: Depreciation and amortization —Depreciation and amortization increased $2 million, or 8%, for the nine months ended September 30, 2021 compared to the same period in the prior year due to assets placed in service .
Technology Costs
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
2021 2020 Change
4 unchanged sentences
Total technology costs $ 782,991 $ 883,837 $ (100,846) (11) %
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Travel Solutions— Technology costs decreased $71 million, or 10%, for the nine months ended September 30, 2021 compared to the same period in the prior year.
+Added: The decrease was primarily driven by a decrease in depreciation and amortization of $67 million primarily due to a change in the mix of our technology spend beginning in 2019 resulting in less capitalized internal
+Added: use software, and a decrease in labor and professional services costs of $24 million resulting from the reduction in workforce from our cost reduction measures implemented in the prior year and attrition and cost reduction measures in the current year.
+Added: This decrease was partially offset by an increase in technology hosting costs of $10 million associated with higher transaction volumes and an increase in labor costs of $9 million resulting from continued decline in the capitalization mix of our technology spend as we implement open-source and cloud-based solutions.
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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Hospitality Solutions— Technology costs decreased $4 million, or 5%, for the nine months ended September 30, 2021 compared to the same period in the prior year.
+Added: The decrease was primarily due to a $14 million decline in depreciation and amortization primarily driven by a change in the mix of our technology spend beginning in 2019 resulting in less capitalized internal use software.
+Added: This decrease was partiall y offset by an increase in labor and professional services costs of $6 million resulting fro m the expiration of the temporary cost reduction measures implemented in the second quarter of 2020 and to support our technology operations in the current year.
+Added: The continued decline in the capitalization mix of our technology spend as we implement open-source and cloud-based solutions also resulted in an increase in labor costs of $2 million.
+Added: Additionally, technology hosting costs increased by $2 million resulting from higher transaction volumes.
+Added: Corporate— Technology costs decreased $26 million, or 31%, for the nine months ended September 30, 2021 compared to the same period in the prior year primarily due to a decline in severance costs of $34 million associated with the reduction of our workforce in 2020, partially offset by an increase in labor costs of $10 million resulting from an increase in stock-based compensation primarily associated with previously awarded performance-based units.
Restructuring Activities , to our consolidated financial statements for further details on restructuring activities.
Selling, General and Administrative Expenses
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
2021 2020 Change
4 unchanged sentences
Total selling, general and administrative expenses $ 446,847 $ 447,011 $ (164) — %
−Removed: 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.
+Added: Travel Solutions— Selling, general and administrative expenses decreased $34 million, or 16%, for the nine months ended September 30, 2021 compared to the same period in the prior year.
The decrease is driven by a $58 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.
−Removed: 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.
−Removed: 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.
+Added: This decrease was partially offset by an increase in labor and professional services costs of $24 million primarily resulting from the expiration of the temporary cost reduction measures implemented in the second quarter of 2020, the reversal of certain third-party commissions in the prior year which did not reoccur in the current year, and increases in professional services for risk and security and consulting related to our business strategy to support the long-term growth of the business .
+Added: Hospitality Solutions— Selling, general and administrative expenses increased $2 million, or 7%, for the nine months ended September 30, 2021 compared to the same period in the prior year.
The increase is primarily driven by higher depreciation and amortization.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: Corporate— Selling, general and administrative expenses increased $31 million, or 16%, for the nine months ended September 30, 2021 compared to the same period in the prior year.
+Added: The increase is driven by an increase in labor costs of $23 million as a result of a $28 million increase in stock-based compensation primarily associated with previously awarded performance-based units, an $11 million increase due to continued investments in business systems in the current year and other labor related expenses, 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.
+Added: Additionally, legal and professional fees increased $6 million due to a $26 million increase in costs primarily associated with ongoing legal matters in the current year, partially offset by a $20 million decrease in acquisition-related costs primarily associated with the now terminated Farelogix acquisition.
Restructuring Activities , to our consolidated financial statements for further details on restructuring activities.
Interest, net
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
2021 2020 Change
1 unchanged sentence
Interest expense, net $ 193,834 $ 157,749 $ 36,085 23 %
−Removed: 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.
+Added: Interest expense increased $36 million, or 23% during the nine months ended September 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 (the "Exchangeable Notes") 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.
+Added: Loss on Extinguishment of Debt
+Added: We recognized a loss on extinguishment of debt of $13 million in 2021 as a result of the 2021 Refinancing and a loss on extinguishment of debt of $10 million in 2020 as a result of the 2020 Refinancing.
Other expense, net
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
2021 2020 Change
2 unchanged sentences
** Not meaningful
−Removed: 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.
−Removed: (Benefit) provision for income taxes
−Removed: Six Months Ended June 30,
+Added: Other, net decreased $74 million for the nine months ended September 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, a reduction of pension related expense of $9 million compared to the same period in 2020, as well as realized and unrealized foreign currency exchange gains during the nine months ended September 30, 2021.
+Added: Benefit for income taxes
+Added: Nine Months Ended September 30,
2021 2020 Change
(Amounts in thousands)
−Removed: Provision (benefit) for income taxes $ 2,100 $ (31,883) $ 33,983 **
−Removed: ** Not meaningful
−Removed: 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.
−Removed: 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.
+Added: Benefit for income taxes $ (4,513) $ (51,757) $ 47,244 (91) %
+Added: For the nine months ended September 30, 2021, we recognized $5 million income tax benefit, representing an effective tax rate of less than 1%, compared to an income tax benefit of $52 million, representing an effective tax rate of 5.1% for the nine months ended September 30, 2021.
+Added: The decrease in the effective tax rate for the nine months ended September 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 nine 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.
−Removed: 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):
−Removed: June 30, 2021 December 31, 2020
+Added: As of September 30, 2021 and December 31, 2020, our cash and cash equivalents, Revolver, bilateral letter of credit facility and outstanding letters of credit were as follows (in thousands):
+Added: September 30, 2021 December 31, 2020
Cash and cash equivalents $ 1,023,769 $ 1,499,665
3 unchanged sentences
Outstanding letters of credit — 9,674
+Added: Available under the bilateral letter of credit facility 9,583 —
+Added: Outstanding letters of credit under the bilateral letter of credit facility 10,417 —
We consider cash equivalents to be highly liquid investments that are readily convertible into cash.
1 unchanged sentence
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.
−Removed: We invest in a money market fund which is classified as cash and
−Removed: cash equivalents in our consolidated balance sheets and statements of cash flows.
−Removed: We held no short-term investments as of June 30, 2021 and December 31, 2020.
+Added: 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.
+Added: We held no short-term investments as of September 30, 2021 and December 31, 2020.
+Added: We had $21 million held as cash collateral for standby letters of credit in restricted cash on our consolidated balance sheets as of September 30, 2021.
+Added: We had no restricted cash as of December 31, 2020.
As of December 31, 2020, we have significant U.S.
9 unchanged sentences
As previously disclosed, we responded with measures to increase our cash position during 2020, including the suspension of quarterly cash dividends on our common stock, effective with respect to the dividends occurring after the March 30, 2020 payment and share repurchases under our $500 million share repurchase program (the "Share Repurchase Program"), borrowing under our Revolver, implementing cost savings measures, and completing debt and equity offerings.
+Added: In addition, in the third quarter of 2021, we refinanced and extended the maturity on a portion of our debt, and established the $300 million at-the-market equity distribution program (the "ATM Program").
+Added: We believe these actions will provide additional flexibility as we manage through the global economic recovery from the COVID-19 pandemic.
Given the magnitude of travel decline and the unknown duration of the COVID-19 impact, we will continue to monitor travel activity and take additional steps should we determine they are necessary.
−Removed: Additionally, we may conduct debt or equity offerings to support future strategic investments, provide additional liquidity, or pay down debt.
+Added: Additionally, we may review opportunities to refinance our existing debt, as well as conduct debt or equity offerings to support future strategic investments, provide additional liquidity, or pay down debt.
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.
−Removed: We had $375 million outstanding under the Revolver as of June 30, 2021 and December 31, 2020.
−Removed: 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.
−Removed: 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.
+Added: We had outstanding letters of credit totaling $10 million as of September 30, 2021, which were secured by a $20 million cash collateral deposit account.
+Added: We had $375 million outstanding under the Revolver on December 31, 2020, and had outstanding letters of credit totaling $10 million as of December 31, 2020, which reduced our overall credit capacity under the Revolver.
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.
Our ability to make payments on and to refinance our indebtedness, and to fund working capital needs and planned capital expenditures will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, business, legislative, regulatory and other factors that are beyond our control, including the impacts of COVID-19.
−Removed: See “Risk Factors—The ongoing impact of the COVID-19 outbreak on our business and results of operations is highly uncertain" and "—We may require more cash than we generate in our operating activities, and additional funding on reasonable terms or at all may not be available.”
+Added: See “Risk Factors—The COVID-19 pandemic has had and is expected to continue to have a significant adverse impact on our business, including our financial results and prospects, and the travel suppliers on whom our business relies." and "—We may require more cash than we generate in our operating activities, and additional funding on reasonable terms or at all may not be available.”
We believe the ongoing effects of COVID-19 on our operations and global bookings have had, and 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.
3 unchanged sentences
Interest Payments
−Removed: 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.
+Added: As a result of the 9.250% senior secured notes due 2025 and the 4.000% Exchangeable Notes 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 payments increased $79 million during the nine months ended September 30, 2021, 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.
−Removed: 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.
−Removed: 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.
−Removed: 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.
+Added: We recorded $5 million and $16 million of accrued preferred stock dividends in our consolidated results of operations for the three and nine months ended September 30, 2021, respectively.
+Added: During the three and nine months ended September 30, 2021, we paid cash dividends on our preferred stock of $5 million and $16 million, respectively.
+Added: On October 19, 2021, the Board of Directors declared a dividend of $1.625 per share on Preferred Stock payable on December 1, 2021 to holders of record of the Preferred Stock on November 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.
+Added: At-the-Market (ATM) Program
+Added: On August 19, 2021, we established the $300 million ATM Program by entering into a sales agreement (the “Sales Agreement”) with BofA Securities, Inc., Citigroup Global Markets Inc., and Mizuho Securities USA LLC, each acting as a sales agent for Sabre (each, a “Sales Agent” and, collectively, the “Sales Agents”), pursuant to which we may issue and sell, from time to time, shares of our common stock, par value $0.01 per share, in “at-the-market” offerings having an aggregate gross sales price of up to $300 million .
+Added: We are not obligated to sell any shares under the Sales Agreement, and may at any time suspend offers under the Sales Agreement or terminate the Sales Agreement.
+Added: Sales of the shares, if any, may be made by means that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, including block trades and sales made in ordinary brokers’ transactions on the Nasdaq Global Select Market or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices.
+Added: Under the terms of the Sales Agreement, we may also sell shares to any Sales Agent as principal for our own account.
+Added: If we sell shares to any Sales Agent as principal, we will enter into a separate terms agreement setting forth the terms of such transaction with the applicable Sales Agent.
+Added: As of September 30, 2021 , we have no t sold any shares pursuant to the ATM Program.
Share Repurchase Program
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Repurchases under the Share Repurchase Program may take place in the open market or privately negotiated transactions.
−Removed: During the six months ended June 30, 2021, we did not repurchase any shares pursuant to the Share Repurchase Program.
+Added: During the nine months ended September 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.
−Removed: Approximately $287 million remains authorized for repurchases under the Share Repurchase Program as of June 30, 2021.
+Added: Approximately $287 million remains authorized for repurchases under the Share Repurchase Program as of September 30, 2021.
Senior Secured Credit Facilities
6 unchanged sentences
These interest rate spreads for the Revolver were increased by 0.25%, during covenant suspension, in connection with the 2020 Refinancing.
−Removed: 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.
−Removed: 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.
−Removed: 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.
3 unchanged sentences
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.
−Removed: 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.
−Removed: Subsequent Events for further detail.
−Removed: 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
−Removed: certain investments, and payment of dividends.
−Removed: 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.
−Removed: 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).
−Removed: 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.
−Removed: 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” (as defined in the Amended and Restated Credit Agreement) has occurred.
−Removed: 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.
−Removed: As such, the leverage ratio covenant was suspended through at least the second quarter of 2021.
−Removed: 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.
−Removed: Among other things, the refinancing amended the financial performance covenant to remove the Total Net Leverage Ratio maintenance requirement.
−Removed: Subsequent Events for further detail.
+Added: On July 12, 2021, we completed the 2021 Refinancing, which included entering into agreements to refinance the Other Term Loan B facility and the Revolver, and terminated the revolving commitments thereunder.
+Added: We incurred no additional indebtedness as a result of the 2021 Refinancing above the refinanced amount, other than amounts covering certain interest, fees and expenses.
+Added: Among other things, the 2021 Refinancing amended the financial performance covenant to remove the minimum liquidity requirement of $300 million, the Total Net Leverage Ratio maintenance requirement, and certain other limitations.
+Added: The 2021 Refinancing included the application of the proceeds of (i) a new $404 million term loan “B-1” facility (the “New Term B-1 Facility”) and (ii) a new $644 million term loan “B-2” facility (the "New Term B-2 Facility" and together with the New Term B-1 Facility, the “New Facilities”), borrowed by Sabre GLBL under our Amended and Restated Credit Agreement, to pay down in full approximately $634 million of Other Term B Loans and the outstanding $400 million revolver balance, and to terminate the revolving commitments thereunder.
+Added: The remaining proceeds, net of a $3 million discount, were used to pay a $6 million redemption premium and $6 million in other fees associated with the refinancing.
+Added: We recognized a loss on extinguishment of debt in connection with these transactions during the three months ended September 30, 2021 of $13 million and debt modification costs for financing fees of $2 million recorded to Other, net.
+Added: The New Facilities mature on December 17, 2027, and we have the ability to prepay the New Facilities after December 17, 2021 without a premium or to prepay at a 101 premium before that date.
+Added: In addition, on July 2, 2021, in anticipation of the Revolver repayment and termination of the revolving commitments (and related letter of credit subfacility), Sabre GLBL entered into a new $20 million bilateral letter of credit facility, which is secured by a cash collateral deposit account and included as Restricted cash on our consolidated balance sheets as of September 30, 2021.
+Added: 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.
+Added: As of September 30, 2021, we are in compliance with all covenants under the terms of the Amended and Restated Credit Agreement.
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.
−Removed: Six Months Ended June 30,
+Added: Nine Months Ended September 30,
(Amounts in thousands)
Cash used in operating activities $ (408,152) $ (587,069)
−Removed: Cash provided by (used in) investing activities 7,634 (43,746)
+Added: Cash used in investing activities (5,535) (52,634)
Cash (used in) provided by financing activities (37,013) 1,873,804
1 unchanged sentence
Effect of exchange rate changes on cash and cash equivalents (1,781) 1,814
−Removed: (Decrease) increase in cash and cash equivalents $ (377,551) $ 870,112
+Added: (Decrease) increase in cash, cash equivalents and restricted cash $ (454,857) $ 1,232,176
Operating Activities
−Removed: Cash used in operating activities totaled $338 million for the six months ended June 30, 2021.
−Removed: 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.
−Removed: 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.
+Added: Cash used in operating activities totaled $408 million for the nine months ended September 30, 2021.
+Added: The $179 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, a reduction in severance payments of $21 million related to restructuring activities initiated in 2020 and a $23 million reduction in upfront incentive consideration payments.
+Added: This increase in operating cash flow was partially offset by additional interest payments of $79 million re sulting from debt refinancing activities during 2020.
Investing Activities
−Removed: 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.
−Removed: 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.
+Added: For the nine months ended September 30, 2021, we received proceeds of $25 million from the sale of certain investments and assets, offset by $30 million of cash used on capital expenditures primarily related to software developed for internal use.
+Added: For the nine months ended September 30, 2020, we used cash of $48 million on capital expenditures, including $32 million related to software developed for internal use.
Financing Activities
−Removed: For the six months ended June 30, 2021, financing activities used $45 million.
+Added: For the nine months ended September 30, 2021, financing activities used $37 million.
Significant highlights of our financing activities include:
−Removed: • net payments of $22 million from the settlement of employee stock-option awards;
−Removed: • payment of $13 million on Term Loan B and Other Term Loan B;
+Added: • proceeds of $403 million and $642 million from the issuance of New Term B-1 Facility and New Term B-2 Facility, respectively;
+Added: • proceeds of $25 million from the Revolver;
+Added: • ne t payments of $22 million from the settlement of employee stock-option awards;
• payment of $16 million in dividends on our preferred stock;
−Removed: For the six months ended June 30, 2020, financing activities provided $1,308 million.
+Added: • payment of $12 million in debt prepayment fees and issuance costs;
+Added: • payments of $400 million for the Revolver;
+Added: • payment of $654 million on Term Loan B and Other Term Loan B;
+Added: For the nine months ended September 30, 2020, financing activities provided $1,874 million.
Significant highlights of our financing activities include:
• proceeds from borrowings under the Notes of $1,970 million;
+Added: • proceeds from issuance of stock of $598 million;
• proceeds from borrowings under the Revolver of $375 million;
1 unchanged sentence
• payment of $39 million in dividends on our common stock;
−Removed: • payment of $38 million on our Term Loan A and Term Loan B;
+Added: • payment of $530 million on 5.375% senior secured notes due 2023;
+Added: • payment of $365 million on Term Loan A and Term Loan B;
• payment of $54 million on debt issuance costs;
4 unchanged sentences
Off Balance Sheet Arrangements
−Removed: We had no off balance sheet arrangements during the six months ended June 30, 2021 and year ended December 31, 2020.
+Added: We had no off balance sheet arrangements during the nine months ended September 30, 2021 and year ended December 31, 2020.
Recent Accounting Pronouncements
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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.