What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-02 compared with 2022-05-03 · 295 added, 129 removed, 382 unchanged (53% of the section changed)

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.

In many cases, you can identify forward-looking statements by terms such as “expects,” “outlook,” "intends," "will," "may," "believes," “plans,” “provisional,” “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.

In many cases, you can identify forward-looking statements by terms such as “expects,” “outlook,” "intends," "will," "may," "believes," “plans,” “provisional,” “predicts,” “potential,” “estimates,” “should,” “could,” “anticipates,” “likely,” “commit,” “guidance,” “anticipate,” “incremental,” “preliminary,” “forecast,” “continue,” “strategy,” “confidence,” “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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The inputs into our judgments and estimates consider the economic implications of COVID-19 on our critical and significant accounting estimates.

Our air booking cancellation reserve totaled $15 million and $18 million as of March 31, 2022, and December 31, 2021, respectively.

Additionally, the provision for credit losses for the three months ended March 31, 2022 was $2 million, and for the three months ended March 31, 2021 was a reversal of $2 million due to the recovery experienced in 2021.

Credit Losses.

Our air booking cancellation reserve totaled $9 million and $18 million as of June 30, 2022, and December 31, 2021, respectively, as cancellation activity has continued to decline over the year.

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

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

We believe our cash position and the liquidity measures we have taken since 2020 will provide additional flexibility as we manage through the global economic recovery from the COVID-19 pandemic.

We believe our cash position and the liquidity measures we have taken since 2020 will provide additional flexibility as

we manage through the global economic recovery from the COVID-19 pandemic.

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.

In May 2022, we acquired 8 million shares of Class A Common Stock, par value of $0.0001 per share, of Global Business Travel Group, Inc.(“GBT”) for an aggregate purchase price of $80 million.

As of June 30, 2022, we continued to own these 8 million shares.

We recognized unrealized losses of $30 million during the three and six months ended June 30, 2022 from the investment in GBT.

Fair Value Measurements for further details.

On October 28, 2021, we announced that we 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.

On February 28, 2022, we sold the AirCentre product portfolio, related technology and intellectual property for $392 million .

We recorded a pre-tax gain on sale of approximately $192 million (after-tax $121 million ) in Other, net in our consolidated statements of operations for the three months ended March 31, 2022.

We recorded a pre-tax gain on sale of approximately $180 million, which includes an adjustment recorded in the second quarter of 2022 related to $12 million in contingencies identified in connection with the sale (after-tax $112 million ) in Other, net in our consolidated statements of operations for the six months ended June 30, 2022.

In connection with the closing, we entered 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.

Dispositions for further details.

Subsequent to the initiation of the current military conflict in Ukraine, we terminated our distribution agreement with Aeroflot.

In addition, air travel in and to Russia, Ukraine, and Belarus has substantially declined, including as a result of sanctions imposed on those countries.

Acquisitions and Dispositions for further details.

Subsequent to the initiation of the current military conflict in Ukraine, we terminated our distribution agreement with a certain Travel Solutions customer located in Russia.

In the second quarter of 2022, this customer was removed from the International Air Transport Association clearing house, which has negatively impacted our ability to collect amounts due to us pursuant to our IT Solutions agreement with the customer.

Subsequent to quarter end, however, an alternative payment method has currently been established.

Air travel in and to Russia, Ukraine, and Belarus has substantially declined, including as a result of sanctions imposed on those countries.

While none of Russia, Ukraine, and Belarus constituted a significant portion of our financial results in 2021, we have experienced significantly reduced GDS bookings and passengers boarded in Russia, Belarus, and Ukraine beginning in the middle of the first quarter of 2022, and these reductions are ongoing.

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See “Risk Factors—Our business could be harmed by adverse global and regional economic and political conditions.”

During the three months ended March 31, 2022, we recognized $24 million of previously deferred revenue due to a change in facts and circumstances associated with an IT Solutions customer located in Eastern Europe.

During the six months ended June 30, 2022, we recognized $24 million of previously deferred revenue due to a change in facts and circumstances associated with an IT Solutions customer located in Russia.

It is no longer considered probable that this revenue will be reversed and this amount was fully paid by the customer.

Revenue from Contracts with Customers for details regarding the impact on revenue.

Our consolidated balance sheets include net assets of approximately $15 million as of March 31, 2022 related to customers located in Russia.

Revenue recognized during the six months ended June 30, 2022 from customers located in Russia represented a low-single digit percentage of our total 2022 Travel Solutions revenue, excluding the release of previously deferred revenue above.

Our consolidated balance sheets include net assets of approximately $33 million as of June 30, 2022 related to customers located in Russia.

If our performance under our IT Solutions agreements with such customers were terminated, or if we are unable to collect amounts due to us in the future, these net assets could be impaired.

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

Three Months Ended March 31,

2022 2021 % Change

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

2022 2021 % Change 2022 2021 % Change

Travel Solutions

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

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

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

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

We define Free Cash Flow as cash used in operating activities less cash used in additions to property and equipment.

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• other companies, including companies in our industry, may calculate Adjusted Operating Loss, Adjusted Net Loss, Adjusted EBITDA or Free Cash Flow differently, which reduces their usefulness as comparative measures.

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

Three Months Ended March 31,

Net income (loss) attributable to common stockholders $ 42,060 $ (266,106)

(Income) loss from discontinued operations, net of tax (134) 263

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

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

2022 2021 2022 2021

Net loss attributable to common stockholders $ (192,734) $ (251,282) $ (150,674) $ (517,388)

Loss from discontinued operations, net of tax 284 81 150 344

Net income attributable to noncontrolling interests (1)

885 459 1,157 943

Preferred stock dividends 5,347 5,428 10,693 10,856

Income (loss) from continuing operations 47,544 (259,931)

Loss from continuing operations (186,218) (245,314) (138,674) (505,245)

Acquisition-related amortization (2a)

1 unchanged sentence

Restructuring and other costs (4)

4,336 (856) 4,336 (5,991)

Loss on extinguishment of debt — — 3,533 —

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Acquisition-related costs (5)

2,245 1,709 5,909 2,429

Litigation costs, net (6)

12,539 11,521 16,014 12,251

Stock-based compensation 26,127 29,478 53,732 53,904

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Adjusted Net Loss from continuing operations per share $ (0.25) $ (0.52) $ (0.54) $ (1.24)

Adjusted diluted weighted-average common shares outstanding 323,658 317,634

Diluted weighted-average common shares outstanding 326,573 319,755 325,124 318,700

Operating loss $ (70,193) $ (180,370) $ (149,725) $ (382,923)

Equity method loss (170) (911)

Equity method income (loss) 186 630 16 (281)

Acquisition-related amortization (2a)

1 unchanged sentence

Restructuring and other costs (4)

4,336 (856) 4,336 (5,991)

Acquisition-related costs (5)

2,245 1,709 5,909 2,429

Litigation costs, net (6)

12,539 11,521 16,014 12,251

Stock-based compensation 26,127 29,478 53,732 53,904

Adjusted Operating Loss $ (9,312) $ (121,752) $ (38,467) $ (288,254)

Income (loss) from continuing operations $ 47,544 $ (259,931)

Loss from continuing operations $ (186,218) $ (245,314) $ (138,674) $ (505,245)

Depreciation and amortization of property and equipment (2b)

1 unchanged sentence

Amortization of capitalized implementation costs (2c)

9,177 8,378 16,516 16,788

Acquisition-related amortization (2a)

1 unchanged sentence

Restructuring and other costs (4)

4,336 (856) 4,336 (5,991)

Interest expense, net 66,884 64,272 127,942 128,373

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Acquisition-related costs (5)

2,245 1,709 5,909 2,429

Litigation costs, net (6)

12,539 11,521 16,014 12,251

Stock-based compensation 26,127 29,478 53,732 53,904

(Benefit) provision for income taxes (596) 3,997

Provision (benefit) for income taxes 5,390 (1,897) 4,794 2,100

Adjusted EBITDA $ 24,465 $ (70,458) $ 29,616 $ (179,958)

The following table sets forth the reconciliation of diluted weighted-average common shares outstanding, calculated in

accordance with GAAP, to the adjusted diluted weighted-average shares outstanding (in thousands):

Three Months Ended March 31,

GAAP diluted weighted-average common shares outstanding 409,378 317,634

Dilutive effect of stock options and restricted stock awards 4,251 —

Dilutive effect of exchangeable notes 42,302 —

Dilutive effect of preferred shares 39,167 —

Adjusted diluted weighted-average common shares outstanding 323,658 317,634

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

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Travel Solutions Hospitality Solutions Corporate Total

Adjusted Operating Income (Loss) $ 57,884 $ (12,040) $ (55,156) $ (9,312)

Equity method loss (170) — — (170)

Equity method income 186 — — 186

Acquisition-related amortization (2a)

— — 15,448 15,448

Restructuring and other costs (4)

— — 4,336 4,336

Acquisition-related costs (5)

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— — 15,448 15,448

Restructuring and other costs (4)

— — 4,336 4,336

Acquisition-related costs (5)

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Stock-based compensation — — 26,127 26,127

Equity method loss (170) — — (170)

Equity method income 186 — — 186

Operating income (loss) $ 57,698 $ (12,040) $ (115,851) $ (70,193)

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Other, net (3)

Loss on extinguishment of debt (3,533)

Equity method loss (170)

Equity method income 186

Provision for income taxes (5,390)

Loss from continuing operations $ (186,218)

Three Months Ended June 30, 2021

Travel Solutions Hospitality Solutions Corporate Total

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

Equity method income 630 — — 630

Acquisition-related amortization (2a)

— — 16,136 16,136

Restructuring and other costs (4)

— — (856) (856)

Acquisition-related costs (5)

— — 1,709 1,709

Litigation costs, net (6)

— — 11,521 11,521

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

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

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

Depreciation and amortization of property and equipment (2b)

37,228 5,448 240 42,916

Amortization of capitalized implementation costs (2c)

7,336 1,042 — 8,378

Acquisition-related amortization (2a)

— — 16,136 16,136

Restructuring and other costs (4)

— — (856) (856)

Acquisition-related costs (5)

— — 1,709 1,709

Litigation costs, net (6)

— — 11,521 11,521

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

Equity method income 630 — — 630

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

Interest expense, net (64,272)

Other, net (3)

Equity method income 630

Benefit for income taxes 1,897

Income from continuing operations $ 47,544

Three Months Ended March 31, 2021

Loss from continuing operations $ (245,314)

Six Months Ended June 30, 2022

Travel Solutions Hospitality Solutions Corporate Total

Adjusted Operating Income (Loss) $ 103,190 $ (27,157) $ (114,500) $ (38,467)

Equity method income 16 — — 16

Acquisition-related amortization (2a)

— — 31,251 31,251

Restructuring and other costs (4)

— — 4,336 4,336

Acquisition-related costs (5)

— — 5,909 5,909

Litigation costs, net (6)

— — 16,014 16,014

Stock-based compensation — — 53,732 53,732

Operating income (loss) $ 103,174 $ (27,157) $ (225,742) $ (149,725)

Adjusted EBITDA $ 159,476 $ (15,871) $ (113,989) $ 29,616

Depreciation and amortization of property and equipment (2b)

42,214 8,842 511 51,567

Amortization of capitalized implementation costs (2c)

14,072 2,444 — 16,516

Acquisition-related amortization (2a)

— — 31,251 31,251

Restructuring and other costs (4)

— — 4,336 4,336

Acquisition-related costs (5)

— — 5,909 5,909

Litigation costs, net (6)

— — 16,014 16,014

Stock-based compensation — — 53,732 53,732

Equity method income 16 — — 16

Operating income (loss) $ 103,174 $ (27,157) $ (225,742) $ (149,725)

Interest expense, net (127,942)

Other, net (3)

Loss on extinguishment of debt (3,533)

Equity method income 16

Provision for income taxes (4,794)

Loss from continuing operations $ (138,674)

Six Months Ended June 30, 2021

Travel Solutions Hospitality Solutions Corporate Total

Adjusted Operating Loss $ (173,315) $ (22,108) $ (92,831) $ (288,254)

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Acquisition-related costs (5)

— — 2,429 2,429

Litigation costs, net (6)

— — 12,251 12,251

Stock-based compensation — 53,904 53,904

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Acquisition-related costs (5)

— — 2,429 2,429

Litigation costs, net (6)

— — 12,251 12,251

Stock-based compensation — — 53,904 53,904

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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 operating activities, the most directly comparable GAAP measure (in thousands):

Three Months Ended March 31,

Six Months Ended June 30,

Cash used in operating activities $ (212,312) $ (338,460)

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Cash used in financing activities (40,408) (44,620)

Three Months Ended March 31,

Six Months Ended June 30,

Cash used in operating activities $ (212,312) $ (338,460)

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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.

(3) Other, net includes a $192 million gain on the sale of AirCentre during the three months ended March 31, 2022 and a $15 million gain on sale of equity securities during the three months ended March 31, 2021.

(3) Other, net incl udes a $180 million gain on the sale of AirCentre during 2022, a fair value loss of $30 million on our GBT investment during the second quarter of 2022 and a $15 million gain on sale of equity securities during the first quarter of 2021.

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.

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

(5) Acquisition-related costs represent fees and expenses incurred associated with the AirCentre disposition and other potential transactions.

(4) Restructuring and other costs represents charges, and adjustments to those charges, associated with planning and implementing business restructuring activities, including costs associated with third party consultants advising on our business structure and strategy going forward which are integral to the restructuring plan and will result in severance benefits related to employee terminations, which primarily occurred in July 2022.

During 2021, adjustments to charges were recorded in conjunction with the changes implemented in 2020 to support the new organizational structure and to respond to the impacts of the COVID-19 pandemic on our business, facilities and cost structure.

(5) Acquisition-related costs represent fees and expenses incurred associated with 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 statements of operations data for each of the periods presented:

Three Months Ended March 31,

(Amounts in thousands)

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

2022 2021 2022 2021

(Amounts in thousands) (Amounts in thousands)

Revenue $ 657,532 $ 419,668 $ 1,242,442 $ 747,152

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Loss on debt extinguishment — — (3,533) —

Equity method loss (170) (911)

Equity method income (loss) 186 630 16 (281)

Other, net (43,937) (3,199) 147,304 8,432

Income (loss) from continuing operations before income taxes 46,948 (255,934)

(Benefit) provision for income taxes (596) 3,997

Income (loss) from continuing operations $ 47,544 $ (259,931)

Three Months Ended March 31, 2022 and 2021

Three Months Ended March 31,

Loss from continuing operations before income taxes (180,828) (247,211) (133,880) (503,145)

Provision (benefit) for income taxes 5,390 (1,897) 4,794 2,100

Loss from continuing operations $ (186,218) $ (245,314) $ (138,674) $ (505,245)

Three Months Ended June 30, 2022 and 2021

Three Months Ended June 30,

2022 2021 Change

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Total revenue $ 657,532 $ 419,668 $ 237,864 57 %

Travel Solutions— Revenue increased $245 million, or 85%, for the three months ended March 31, 2022 compared to the same period in the prior year, primarily due to:

• a $191 million, or 126%, increase in transaction-based distribution revenue due to a 67% increase in Direct Billable Bookings to 65 million primarily as a result of continued recovery trends from the COVID-19 pandemic and favorable rate impacts as international and corporate bookings have improved at an accelerating rate since January 2022;

• a $54 million increase in IT solutions revenue consisting of a $42 million, or 102%, increase in reservation revenue primarily due to a 72% increase in Passengers Boarded to 129 million as a result of continued recovery trends from the COVID-19 pandemic and $24 million of previously deferred revenue recognized during the three months ended March 31, 2022 due to a change in facts and circumstances associated with an Eastern European customer.

Revenue from Contracts with Customers .

This increase was pa rtially offset by an unfavorable rate mix due to revenue that does not fluctuate with our volumes.

Additionally, commercial and operations revenue increased $12 million primarily due to license fee revenue related to AirCentre recognized upon delivery to the customer and increased volumes from the existing cust omer base, partially offset by reduced revenue due to the sale of our AirCentre portfolio on February 28, 2022.

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

Hospitality Solutions— Revenue increased $14 million, or 33%, for the three months ended March 31, 2022 compared to the same period in the prior year.

The increase was primarily driven by an $11 million increase in SynXis Software and Services revenue due to an increase in transaction volumes of 31% to 23 million, as a result of continued recovery from the COVID-19 pandemic and an increase of $3 million in DX revenue.

Travel Solutions— Revenue increased $226 million, or 60%, for the three months ended June 30, 2022 compared to the same period in the prior year, primarily due to:

• a $213 million, or 98%, increase in transaction-based distribution revenue due to a 42% increase in Direct Billable Bookings to 81 million primarily as a result of the continued recovery trends from the COVID-19 pandemic and favorable rate impacts from improved international and corporate bookings;

• a $13 million increase in IT solutions revenue consisting of a $36 million, or 69%, increase in reservation revenue primarily due to a 55% increase in Passengers Boarded to 160 million as a result of the continued recovery trends from the COVID-19 pandemic and the recognition of $3 million in previously deferred revenue from a customer that entered liquidation.

Additiona lly, commercial and operations revenue declined due to the sale of our AirCentre portfolio on February 28, 2022.

Hospitality Solutions— Revenue increased $15 million, or 30%, for the three months ended June 30, 2022 compared to the same period in the prior year.

The increase was primarily driven by a $14 million increase in SynXis Software and Services revenue due to an increase in transaction volumes of 23% to 30 million, as a result of the continued recovery from the COVID-19 pandemic and an increase of $1 million in DX revenue.

Cost of revenue, excluding technology costs

Three Months Ended March 31,

2022 2021 (1)

Three Months Ended June 30,

2022 2021 Change

(Amounts in thousands)

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Total cost of revenue, excluding technology costs $ 274,245 $ 179,821 $ 94,424 53 %

______________________

(1) Certain amounts previously presented for the three months ended March 31, 2021 have been reclassified between Travel Solutions and Corporate;

total cost of revenue, excluding technology costs, was not impacted by this reclassification.

Travel Solutions— Cost of revenue, excluding technology costs, increased $73 million, or 62%, for the three months ended March 31, 2022 compared to the same period in the prior year.

The increase was primarily driven by a $78 million increase in incentive consideration due to higher transaction volume given continued recovery from the COVID-19 pandemic.

Travel Solutions— Cost of revenue, excluding technology costs, increased $86 million, or 57%, for the three months ended June 30, 2022 compared to the same period in the prior year.

The increase was primarily driven by an $89 million increase in incentive consideration due to higher transaction volume given the continued recovery from the COVID-19 pandemic.

This increase was slightly offset by a decrease in labor and professional services costs resulting from the sale of AirCentre and other labor related expenses.

Hospitality Solutions— Cost of revenue, excluding technology costs, increased $8 million, or 39%, for the three months ended March 31, 2022 compared to the same period in the prior year primarily due to costs associated with increased transaction volumes.

Depreciation and amortization —Depreciation and amortization decreased $1 million, or 14%, for the three months ended March 31, 2022 compared to the same period in the prior year primarily due to the sale of previously held for sale assets within our AirCentre portfolio that incurred no depreciation charges for the current quarter.

Hospitality Solutions— Cost of revenue, excluding technology costs, increased $9 million, or 36%, for the three months ended June 30, 2022 compared to the same period in the prior year primarily due to costs associated with increased transaction volumes.

Technology Costs

Three Months Ended March 31,

Three Months Ended June 30,

2022 2021 Change

4 unchanged sentences

Total technology costs $ 277,172 $ 261,217 $ 15,955 6 %

Travel Solutions— Technology costs increased $11 million, or 5%, for the three months ended March 31, 2022 compared to the same period in the prior year.

The increase was primarily driven by a $25 million increase in technology costs due to higher transaction volumes given continued recovery from the COVID-19 pandemic and expected temporary costs resulting from our cloud migration efforts.

Travel Solutions— Technology costs increased $9 million, or 4%, for the three months ended June 30, 2022 compared to the same period in the prior year.

The increase was primarily driven by a $14 million increase in technology costs due to higher transaction volumes given the continued recovery from the COVID-19 pandemic and expected temporary costs resulting from our cloud migration efforts.

Additionally, labor and professional services increased $9 million to support our technology transformation initiatives.

We expect to incur a significant amount of incremental technology costs in 2022 over the prior year as a result of our technology transformation.

These increases were partially offset by a decrease in depreciation and amortization of $18 million primarily due to a change in the mix of our technology spend beginning in 2019 resulting in less capitalized internal use software as well as a reduction due to the sale of our AirCentre portfolio as these assets were classified as held for sale as of December 31, 2021 and incurred no depreciation for the three months ended March 31, 2022.

We expect depreciation and amortization expense to be significantly lower in 2022 than in the prior year due to the lower capitalization rate on technology spend beginning in 2019 and due to the sale of our AirCentre portfolio.

Hospitality Solutions— Technology costs increased $6 million, or 27%, for the three months ended March 31, 2022 compared to the same period in the prior year due to a $6 million increase in labor and professional services costs and a $2 million increase in technology costs to support our technology transformation initiatives.

This increase was partially offset by a $2 million decrease 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.

Corporate— Technology costs increased $3 million, or 21%, for the three months ended March 31, 2022 compared to the same period in the prior year primarily due to a $2 million increase in stock-based compensation associated with previously awarded performance-based units and a reversal of severance costs in the prior year associated with the reduction of our workforce in 2020.

These increases were partially offset by a decrease in depreciation and amortization of $16 million primarily due to a change in the mix of our technology spend beginning in 2019 resulting in less capitalized internal use software as well as reduced costs due to the sale of our AirCentre portfolio.

Hospitality Solutions— Technology costs increased $9 million, or 41%, for the three months ended June 30, 2022 compared to the same period in the prior year due to a $6 million increase in labor and professional services costs and a $4 million increase in technology costs to support our technology transformation initiatives, including the migration of SynXis to the cloud.

Selling, General and Administrative Expenses

Three Months Ended March 31,

Three Months Ended June 30,

2022 2021 Change

4 unchanged sentences

Total selling, general and administrative expenses $ 176,308 $ 159,000 $ 17,308 11 %

Travel Solutions— Selling, general and administrative expenses increased $12 million, or 22%, for the three months ended March 31, 2022 compared to the same period in the prior year.

The increase was driven by a $5 million increase in legal costs incurred due to ongoing litigation and a $7 million increase in the provision for expected credit losses due to the unfavorable comparison to a provision reversal in the prior year as the economy began to recover and payment experience began to improve.

Hospitality Solutions— Selling, general and administrative expenses increased $1 million, or 9%, for the three months ended March 31, 2022 compared to the same period in the prior year.

An increase in consulting related to our business strategy to support the long-term growth of the business was partially offset by a decrease in the provision for expected credit losses due to an improvement in our expected credit losses in the current year as a result of continued recovery from the COVID-19 pandemic, and lower depreciation and amortization.

Corporate— Selling, general and administrative expenses increased $24 million, or 38%, for the three months ended March 31, 2022 compared to the same period in the pri or year.

This increase was driven by a $6 million increase in professional services for consulting related to our business strategy to support the long-term growth of the business, a $5 million increase in risk and security costs, a $2 million increase as a result of increased compensation to attract and retain talent, a $3 million increase due to continued investments in our inter nal business systems, a $2 million increase in legal costs resulting from ongoing litigation, a $2 million increase in stock-based compensation associated with previously awarded performance-based units, a $2 million increase due to the reversal of severance costs in the prior year associated with the reduction of our workforce in 2020, and other ongoing business expenses.

Travel Solutions— Selling, general and administrative expenses increased $5 million, or 7%, for the three months ended June 30, 2022 compared to the same period in the prior year.

The increase was driven by a $2 million increase due to continued investments in our internal business systems, a $1 million increase in the provision for expected credit losses, and a $3 million increase due to other ongoing business expenses.

Hospitality Solutions—Selling, general and administrative expenses increased $1 million, or 6%, for the three months ended June 30, 2022 compared to the same period in the prior year primarily due to a $2 million increase in labor and professional services costs related to our business strategy to support the long-term growth of the business, partially offset by a decrease in the provision for expected credit losses as a result of the continued recovery from the COVID-19 pandemic.

Corporate— Selling, general and administrative expenses increased $12 million, or 14%, for the three months ended June 30, 2022 compared to the same period in the pri or year.

This increase was driven by a $5 million increase as a result of increased compensation to attract and retain talent, a $6 million increase in professional services related to our business structure and strategy to support the long-term growth of the business, a $1 million increase in risk and security costs, a $1 million increase due to the reversal of severance costs in the prior year associated with the reduction of our workforce in 2020, and other ongoing business expenses.

These increases were partially offset by a $3 million decrease in stock-based compensation.

Interest expense, net

Three Months Ended March 31,

Three Months Ended June 30,

2022 2021 Change

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Interest expense, net $ 66,884 $ 64,272 $ 2,612 4 %

Interest expense decreased $3 million, or 5% during the three months ended March 31, 2022 compared to the same period in the prior year primarily due to the maturation of our interest rate swaps in the fourth quarter of 2021.

Interest expense increased $3 million, or 4% during the three months ended June 30, 2022 compared to the same period in the prior year primarily due to higher interest rates und er the New Other Term B Facility due 2028 entered into in the first quarter of 2022.

This increase was partially offset by a decline caused by the maturation of certain interest rate swaps in the fourth quarter of 2021.

Debt for further details regarding these debt transactions.

Three Months Ended June 30,

2022 2021 Change

(Amounts in thousands)

Other, net $ 43,937 $ 3,199 $ 40,738 1,273 %

Other, net increased $41 million for the three months ended June 30, 2022 compared to the same period in the prior year primarily due to a fair value loss of $30 million on our GBT investment and a reduction of the gain on sale of AirCentre of $12 million.

Fair Value Measurements for further details regarding the GBT investment and Note 3.

Acquisitions and Dispositions for further details regarding the AirCentre sale.

Provision (benefit) for Income Taxes

Three Months Ended June 30,

2022 2021 Change

(Amounts in thousands)

Provision (benefit) for income taxes $ 5,390 $ (1,897) $ 7,287 (384) %

For the three months ended June 30, 2022 , we recognized $5 million income tax expense, representing a negative effective tax rate of 3%, compared to an income tax benefit of $2 million, representing an effective tax rate of 1% for the three months ended June 30, 2021.

The decrease in the effective tax rate for the three months ended June 30, 2022 as compared to the same period in 2021 was primarily due to an increase in valuation allowance recorded in the current period and various discrete items recorded in each of the respective three month periods.

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

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

Six Months Ended June 30, 2022 and 2021

Six Months Ended June 30,

2022 2021 Change

(Amounts in thousands)

Travel Solutions $ 1,133,147 $ 662,260 $ 470,887 71 %

Hospitality Solutions 122,208 92,966 29,242 31 %

Total segment revenue 1,255,355 755,226 500,129 66 %

Eliminations (12,913) (8,074) (4,839) 60 %

Total revenue $ 1,242,442 $ 747,152 $ 495,290 66 %

Travel Solutions— Revenue increased $471 million, or 71%, for the six months ended June 30, 2022 compared to the same period in the prior year, primarily due to:

• a $404 million, or 109%, increase in transaction-based distribution revenue due to a 52% increase in Direct Billable Bookings to 146 million primarily as a result of the continued recovery trends from the COVID-19 pandemic and favorable rate impacts from improved international and corporate bookings;

• a $66 million increase in IT solutions revenue consisting of a $76 million, or 82%, increase in reservation revenue primarily due to a 62% increase in Passengers Boarded to 289 million as a result of the continued recovery trends from the COVID-19 pandemic, $24 million of previously deferred revenue recognized during the three months ended March 31, 2022 due to a change in facts and circumstances associated with a Russian carrier and the recognition of $3 million in previously deferred revenue from a customer that entered liquidation.

Revenue from Contracts with Customers.

This increase was partially offset by an unfavorable rate mix due to revenue that does not fluctuate with our volumes.

Additionally, commercial and operations revenue decreased due to the sale of our AirCentre portfolio on February 28, 2022.

Hospitality Solutions— Revenue increased $29 million, or 31%, for the six months ended June 30, 2022 compared to the same period in the prior year.

The increase was primarily driven by a $25 million increase in SynXis Software and Services revenue due to an increase in transaction volumes of 26% to 53 million, as a result of the continued recovery from the COVID-19 pandemic and an increase of $4 million in DX revenue.

Cost of revenue, excluding technology costs

Six Months Ended June 30,

2022 2021 Change

(Amounts in thousands)

Travel Solutions $ 426,043 $ 267,257 $ 158,786 59 %

Hospitality Solutions 61,390 44,637 16,753 38 %

Eliminations (12,913) (8,072) (4,841) 60 %

Total segment cost of revenue, excluding technology costs 474,520 303,822 170,698 56 %

Corporate 4,012 2,762 1,250 45 %

Depreciation and amortization 18,747 19,998 (1,251) (6) %

Total cost of revenue, excluding technology costs $ 497,279 $ 326,582 $ 170,697 52 %

Travel Solutions— Cost of revenue, excluding technology costs, increased $159 million, or 59%, for the six months ended June 30, 2022 compared to the same period in the prior year.

The increase was primarily driven by a $167 million increase in incentive consideration due to higher transaction volume given the continued recovery from the COVID-19 pandemic.

This increase was partially offset by a decrease in labor and professional services costs resulting from the sale of AirCentre and other labor related expenses.

Hospitality Solutions— Cost of revenue, excluding technology costs, increased $17 million, or 38%, for the six months ended June 30, 2022 compared to the same period in the prior year primarily due to costs associated with increased transaction volumes.

Technology Costs

Six Months Ended June 30,

2022 2021 Change

(Amounts in thousands)

Travel Solutions $ 451,834 $ 431,518 $ 20,316 5 %

Hospitality Solutions 59,907 44,600 15,307 34 %

Corporate 39,161 37,762 1,399 4 %

Total technology costs $ 550,902 $ 513,880 $ 37,022 7 %

Travel Solutions— Technology costs increased $20 million, or 5%, for the six months ended June 30, 2022 compared to the same period in the prior year.

The increase was primarily driven by a $39 million increase in technology costs due to higher transaction volumes given the continued recovery from the COVID-19 pandemic and expected temporary costs resulting from our cloud migration efforts.

Additionally, labor and professional services increased $15 million to support our technology transformation initiatives.

We expect to incur a significant amount of incremental technology costs in 2022 over the prior year as a result of our technology transformation.

These increases were partially offset by a decrease in depreciation and amortization of $34 million primarily due to a change in the mix of our technology spend beginning in 2019 resulting in less capitalized internal use software as well as a reduction due to the sale of our AirCentre portfolio.

We expect decreases in depreciation and amortization to continue due to these factors.

Hospitality Solutions— Technology costs increased $15 million, or 34%, for the six months ended June 30, 2022 compared to the same period in the prior year due to an $11 million increase in labor and professional services costs and a $6 million increase in technology costs to support our technology transformation initiatives, including the migration of SynXis to the cloud.

The migration to the cloud for SynXis is expected to result in higher cloud-based transaction costs for Hospitality Solutions whereas historically it incurred data center operating costs and incurred hardware and infrastructure costs, which were capitalized, and became fully depreciated in prior periods.

Selling, General and Administrative Expenses

Six Months Ended June 30,

2022 2021 Change

(Amounts in thousands)

Travel Solutions $ 137,137 $ 120,361 $ 16,776 14 %

Hospitality Solutions 25,612 23,748 1,864 8 %

Corporate 181,237 145,504 35,733 25 %

Total selling, general and administrative expenses $ 343,986 $ 289,613 $ 54,373 19 %

Travel Solutions— Selling, general and administrative expenses increased $17 million, or 14%, for the six months ended June 30, 2022 compared to the same period in the prior year.

The increase was driven by an $8 million increase in the provision for expected credit losses due to the unfavorable comparison to a provision reversal in the prior year as the economy began to recover and payment experience began to improve, a $6 million increase in legal costs incurred due to ongoing litigation, a $2 million increase due to continued investments in our internal business systems, and $3 million due to other ongoing business expenses.

These increases were partially offset by a $2 million decrease in depreciation and amortization.

Hospitality Solutions— Selling, general and administrative expenses increased $2 million, or 8%, for the six months ended June 30, 2022 compared to the same period in the prior year primarily due to a $5 million increase in labor and professional services costs related to our business strategy to support the long-term growth of the business.

This increase was partially offset by a $3 million decrease in the provision for expected credit losses due to an improvement in our expected credit losses in the current year as a result of the continued recovery from the COVID-19 pandemic, and lower depreciation and amortization.

Corporate— Selling, general and administrative expenses increased $36 million, or 25%, for the six months ended June 30, 2022 compared to the same period in the pri or year.

This increase was driven by a $13 million increase in professional services related to our business structure and strategy to support the long-term growth of the business, an $5 million increase as a result of increased compensation to attract and retain talent , a $6 million increase in risk and security costs, a $5 million increase in legal costs resulting from ongoing litigation, a $2 million increase due to the reversal of severance costs in the prior year associated with the reduction of our workforce in 2020, and other ongoing business expenses.

This increase was partially offset by a $1 million decrease in stock-based compensation.

Loss on extinguishment of debt

We recognized a loss on extinguishment of debt of $4 million during the three months ended March 31, 2022 as a result of the refinancing that occurred in the first quarter of 2022.

We recognized a loss on extinguishment of debt of $4 million during the six months ended June 30, 2022 as a result of the refinancing that occurred in the first quarter of 2022.

Debt for further details.

Three Months Ended March 31,

Six Months Ended June 30,

2022 2021 Change

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Other, net $ (147,304) $ (8,432) $ (138,872) 1,647 %

Other, net decreased $180 million for the three months ended March 31, 2022 compared to the same period in the prior year primarily due to the gain on the sale of AirCentre.

Dispositions for further details regarding the AirCentre sale.

(Benefit) provision for Income Taxes

Three Months Ended March 31,

Other, net decreased $139 million for the six months ended June 30, 2022 compared to the same period in the prior year primarily due to the gain on the sale of AirCentre of $180 million partially offset by a fair value loss of $30 million on our GBT investment and a $15 million gain on sale of investment recorded in the first quarter of 2021.

Fair Value Measurements for further details regarding the GBT investment and Note 3.

Acquisitions and Dispositions for further details regarding the AirCentre sale.

Provision for Income Taxes

Six Months Ended June 30,

2022 2021 Change

(Amounts in thousands)

(Benefit) provision for income taxes $ (596) $ 3,997 $ (4,593) (115) %

For the three months ended March 31, 2022, we recognized $1 million income tax benefit, representing a negative effective tax rate of 1%, compared to an income tax expense of $4 million, representing a negative effective tax rate of 2% for the three months ended March 31, 2021.

The effective tax rate remained relatively flat for the three months ended March 31, 2022 as compared to the same period in 2021.

Provision for income taxes $ 4,794 $ 2,100 $ 2,694 128 %

For the six months ended June 30, 2022, we recognized $5 million income tax expense, representing a negative effective tax rate of 4%, compared to an income tax expense of $2 million, representing a negative effective tax rate of less than 1% for the six months ended June 30, 2021.

The decrease in the effective tax rate for the six months ended June 30, 2022 as compared to the same period in 2021 was primarily due to a increase in valuation allowance recorded in the current period and various discrete items recorded in each of the respective six month periods.

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

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

As of March 31, 2022 and December 31, 2021, our cash and cash equivalents and outstanding letters of credit were as follows (in thousands):

March 31, 2022 December 31, 2021

As of June 30, 2022 and December 31, 2021, our cash and cash equivalents and outstanding letters of credit were as follows (in thousands):

June 30, 2022 December 31, 2021

Cash and cash equivalents $ 992,180 $ 978,352

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

We held no short-term investments as of March 31, 2022 and December 31, 2021.

We had $21 million held as cash collateral for standby letters of credit in restricted cash on our consolidated balance sheets as of March 31, 2022 and December 31, 2021.

We held no short-term investments as of June 30, 2022 and December 31, 2021.

We had $21 million held as cash collateral for standby letters of credit in restricted cash on our consolidated balance sheets as of June 30, 2022 and December 31, 2021.

While the COVID-19 pandemic has had an adverse impact on our business, we expect to recognize federal taxable income in 2022 based on our operating and non-operating results, the annual limitation on the use of NOL carryforwards and a provision of the Tax Cuts and Jobs Act set to take effect.

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

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.

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.

In addition, in the third quarter of 2021, we refinanced and extended the maturity on a portion of our debt and amended the financial performance covenant to remove minimum liquidity and leverage ratio requirements and in the first quarter of 2022, we refinanced and extended the maturity on another portion of our debt.

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Free cash flow is calculated as cash flow from operations reduced by additions to property and equipment.

For 2022, we expect our free cash flow to improve on an annual basis from 2021, turning positive within the second half of 2022.

For 2022, we expect our free cash flow to improve on an annual basis from 2021, turning positive within the fourth quarter of 2022.

This expectation is based on industry projections regarding anticipated recovery levels in air travel and could change.

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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, pay quarterly dividends on our Preferred Stock (as defined below) when declared, and service our debt and other long-term liabilities.

On July 12, 2021, we refinanced the Revolver

and terminated the commitments thereunder, replacing it with term loans.

On July 12, 2021, we refinanced the Revolver and terminated the commitments thereunder, replacing it with term loans.

See “— Senior Secured Credit Facilities below.

We had outstanding letters of credit totaling $13 million and $10 million as of March 31, 2022 and December 31, 2021, respectively, which were secured by a $20 million cash collateral deposit account.

We had outstanding letters of credit totaling $12 million and $10 million as of June 30, 2022 and December 31, 2021, respectively, which were secured by a $20 million cash collateral deposit account.

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.

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

In July 2022 , we exercised a contractually binding option to acquire the outstanding shares of an entity in the payments industry for a price determined pursuant to an independent valuation process.

Our obligation under the agreement is expected to result in a payment of approximately $70 million in August 2022 to the current shareholders.

We will consolidate the results of this entity from the date of acquisition, which are not expected to have a material impact on our results of operations in the current year.

Recent Events Impacting Our Liquidity and Capital Resources

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

We recorded $5 million of accrued preferred stock dividends in our consolidated results of operations for the three months ended March 31, 2022.

During the three months ended March 31, 2022, we paid cash dividends on our preferred stock of $5 million.

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, 2022 and 2021, respectively.

During the three and six months ended June 30, 2022 and 2021, we paid cash dividends on our preferred stock of $5 million and $11 million.

On May 4, 2022, the Board of Directors declared a dividend of $1.625 per share on Preferred Stock payable on June 1, 2022 to holders of record of the Preferred Stock on May 15, 2022.

On July 27, 2022, the Board of Directors declared a dividend of $1.625 per share on Preferred Stock payable on September 1, 2022 to holders of record of the Preferred Stock on August 15, 2022.

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.

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

For the three months ended March 31, 2022, we did not repurchase any shares pursuant to the Share Repurchase Program.

For the six months ended June 30, 2022, we did not repurchase any shares pursuant to the Share Repurchase Program.

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

Approximately $287 million remains authorized for repurchases under the Share Repurchase Program as of March 31, 2022.

Approximately $287 million remains authorized for repurchases under the Share Repurchase Program as of June 30, 2022.

Senior Secured Credit Facilities

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

In addition, during this covenant suspension, the 2020 Refinancing limited certain payments to equity holders, certain investments, certain

prepayments of unsecured debt and the ability of certain subsidiaries to incur additional debt.

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

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

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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.

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 December 31, 2021.

On March 9, 2022, we entered into an amendment to refinance a portion of the Term Loan B facility (the "2022 Refinancing").

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The 2022 Refinancing included the application of the proceeds of a new $625 million term loan “B” facility (the “New Other Term B Facility”), borrowed by Sabre GLBL under our Amended and Restated Credit Agreement, with the effect of extending the maturity of approximately $623 million of the existing Term Loan B credit facility under the Amended and Restated Credit Agreement.

We recognized a loss on extinguishment of debt in connection with these transactions during the three months ended March 31, 2022 of $4 million and debt modification costs for financing fees of $1 million recorded to Other, net.

We recognized a loss on extinguishment of debt in connection with these transactions during the six months ended June 30, 2022 of $4 million and debt modification costs for financing fees of $1 million recorded to Other, net.

The New Other Term B Facility matures on June 30, 2028 and offers us the ability to prepay or repay the New Other Term B Facility after 12 months or to prepay or repay at a 101 premium before that date.

The interest rates on the New Other Term B Facility are based on Term SOFR, replacing LIBOR, plus an applicable margin.

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

As of March 31, 2022, we are in compliance with all covenants under the terms of the Amended and Restated Credit Agreement.

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

As of June 30, 2022, 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.

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We are further required to pay down the term loans with proceeds from certain asset sales or borrowings, that are not otherwise reinvested in the business, as defined in the Amended and Restated Credit Agreement.

As of March 31, 2022, we had outstanding approximately $2.2 billion of variable debt that is indexed to the London Interbank Offered Rate ("LIBOR") consisting of Term Loan B for $1.2 billion, Term Loan B-1 for $400 million and Term Loan B-2 for $634 million.

As of June 30, 2022, we had outstanding approximately $2.2 billion of variable debt that is indexed to the London Interbank Offered Rate ("LIBOR") consisting of Term Loan B for $1.2 billion, Term Loan B-1 for $399 million and Term Loan B-2 for $633 million.

In July 2017, the Financial Conduct Authority announced its intention to phase out LIBOR by the end of 2021, and subsequently extended the phase-out date to June 30, 2023.

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In March 2022, we entered into the 2022 Refinancing, which extended the maturity and replaced LIBOR with Term SOFR on a portion of our Term Loan B facility.

The remaining Term Loan B allows for a transition to the Prime rate plus a margin, and assuming the discontinuation of LIBOR in June 2023, we estimate the impact of transitioning to

the Prime rate in June 2023, assuming changes in Prime rates aligned with expected changes in the federal funds rate, which are based on market data and analysts’ forecasts, would result in an aggregate of approximately $15 million of incremental interest expense over the remaining life of Term Loan B.

The remaining Term Loan B allows for a transition to the Prime rate plus a margin, and assuming the discontinuation of LIBOR in June 2023, we estimate the impact of transitioning to the Prime rate in June 2023, assuming changes in Prime rates aligned with expected changes in the federal funds rate, which are based on market data and analysts’ forecasts, would result in an aggregate of approximately $22 million of incremental interest expense over the remaining life of Term Loan B.

We intend to seek an amendment with our lenders of Term Loan B prior to June 2023 to provide for a transition to SOFR or another alternative to LIBOR in anticipation of its discontinuation, but there can be no assurance that we will be able to reach an agreement with our lenders for any such amendment or that the incremental amount of any interest pursuant to such amendment would be significantly less than current requirements.

See “Risk Factors—We are exposed to interest rate fluctuations.”

Three Months Ended March 31,

Six Months Ended June 30,

(Amounts in thousands)

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Operating Activities

Cash used in operating activities totaled $139 million for the three months ended March 31, 2022.

The $58 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 and a $5 million decline in interest payments as our interest rate swaps have matured, offset by an increase of $67 million associated with payments to our employees under performance-based bonus plans that did not occur in the prior year.

Cash used in operating activities totaled $212 million for the six months ended June 30, 2022.

The $126 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, partially offset by an increase of $67 million associated with payments to our employees under performance-based bonus plans that did not occur in the prior year.

Investing Activities

For the three months ended March 31, 2022, we received proceeds of $392 million from the sale of AirCentre, partially offset by $17 million of cash used on capital expenditures related to software developed for internal use.

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

For the six months ended June 30, 2022, we received proceeds of $392 million from the sale of AirCentre, partially offset by $33 million of cash used on capital expenditures primarily related to software developed for internal use, $80 million of cash for the investment in GBT, and $7 million for other acquisitions.

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.

Financing Activities

For the three months ended March 31, 2022, financing activities used $26 million.

For the six months ended June 30, 2022, financing activities used $40 million.

Significant highlights of our financing activities include:

• proceeds of $625 million from the issuance of New Other Term B Facility;

• payment of $623 million on Term Loan B;

• payment of $624 million on Term Loan B and Other Term Loan B;

• payment of $5 million on Term B-1 Facility and Term B-2 Facility;

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

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

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

Significant highlights of our financing activities include:

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There were no material changes to our future minimum contractual obligations since December 31, 2021 as previously disclosed in our Annual Report on Form 10-K filed with the SEC on February 18, 2022, other than the impact of interest rates on our debt.

As of March 31, 2022, we had a total debt obligation of $6.1 billion, with $286 million due for the remainder of 2022.

We had no off balance sheet arrangements during the three months ended March 31, 2022 and year ended December 31, 2021.

As of June 30, 2022, we had a total debt obligation of $6.1 billion, with $298 million due for the remainder of 2022.

We had no off balance sheet arrangements during the six months ended June 30, 2022 and year ended December 31, 2021.

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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis