What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-03 compared with 2023-05-04 · 350 added, 157 removed, 367 unchanged (58% of the section changed)

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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,” “estimates,” “should,” “could,” “anticipates,” “likely,” “commit,” “guidance,” “anticipate,” “incremental,” “preliminary,” “forecast,” “continue,” “strategy,” “confidence,” “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 “outlook,” “expects,” "intends," "will," "may," "believes," “plans,” “provisional,” “predicts,” “potential,” “estimates,” “should,” “could,” “anticipates,” “likely,” “commit,” “guidance,” “anticipate,” “incremental,” “preliminary,” “forecast,” “continue,” “strategy,” “confidence,” “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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Recent Developments Affecting our Results of Operations

The travel industry continues to be adversely affected by the global health crisis due to the outbreak of the coronavirus, including variants ("COVID-19").

The travel ecosystem has shifted over the past few years, including through the COVID-19 pandemic, resulting in the changing needs of our airline, hotel and agency customers.

This pandemic has resulted in continued material headwinds for our consolidated financial results in 2022 and through the first quarter of 2023.

Despite the continued impacts of the COVID-19 pandemic on our business and global travel volumes, as travel restrictions have been relaxed and travel patterns return, we have seen gradual improvement in our key volume metrics during 2022 and through the first quarter of 2023.

These effects have resulted in continued material headwinds for our consolidated financial results in 2022 and through the second quarter of 2023.

Despite the continued impacts on our business and global travel volumes, as travel restrictions have been relaxed and travel patterns return, we have seen gradual improvement in our key volume metrics during 2022 and through the second quarter of 2023.

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

We believe our cash position and the liquidity measures we have taken will continue to provide 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 will continue to provide flexibility as we manage through the global economic recovery, including from the COVID-19 pandemic.

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.

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

See “—Recent Events Impacting Our Liquidity and Capital Resources” and “—Senior Secured Credit Facilities.”

On May 4, 2023, we announced planned actions impacting our workforce.

During the second quarter of 2023, we announced and began to implement a cost reduction plan designed to reposition our business and to structurally reduce our cost base.

As a result of this cost reduction plan, we incurred restructuring costs beginning in the second quarter of 2023 associated with our workforce.

This cost reduction plan will continue to be implemented over the remainder of 2023 and may result in additional restructuring charges as we continue to evaluate third-party costs including our geographic and real estate footprints.

We estimate that these actions will reduce our operating expense on an annual basis by approximately $200 million.

Restructuring and other costs from these actions are estimated to be approximately $70 million.

During the three and six months ended June 30, 2023, we incurred $56 million in connection with this business plan, of which $12 million is recorded within cost of revenue, excluding technology costs, $21 million is recorded within technology costs and $23 million is recorded within selling, general and administrative costs within

our consolidated statement of operations .

Costs associated with our cost reduction plan are expected to be approximately $70 million for the year, with the majority of disbursements occurring in 2023.

In August 2022, we completed the acquisition of Conferma Limited ("Conferma"), a virtual payments technology company, to expand our investment in technology for the payments ecosystem in the travel industry .

We acquired all of the outstanding stock and ownership interest of Conferma, for net cash consideration of $62 million and conversion of a pre-existing loan into

share capital.

We acquired all of the outstanding stock and ownership interest of Conferma, for net cash consideration of $62 million and conversion of a pre-existing loan into share capital.

We have consolidated the results of Conferma from the date of acquisition into our Travel Solutions segment, which did not have a material impact on our results of operations.

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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 , which was subsequently adjusted in the second quarter of 2022 related to $12 million in contingencies identified in connection with the sale .

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

Acquisitions and Dispositions for further details.

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This legislation and these regulations have prohibited our ability to provide these services in Russia, which has and is expected to continue to negatively impact our revenue and results.

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 a certain Travel Solutions customer located in Russia.

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 a certain Travel Solutions customer located in Russia.

This amount was fully paid by the customer and it was no longer considered probable that this revenue would be reversed.

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

Factors Affecting our Results

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Selling, general and administrative expenses consist of professional service fees, certain settlement charges or reimbursements, costs to defend legal disputes, provision for expected credit losses, other overhead costs, and personnel-related expenses, including stock-based compensation, for employees engaged in sales, sales support, account management and who administratively support the business in finance, legal, human resources, information technology and communications.

Depreciation and amortization included in selling, general and administrative expenses is associated with property and equipment, acquired customer relationships, trademarks and brand names purchased through acquisitions or established through the take private transaction in 2007, which includes a remaining useful life of 14 years as of March 31, 2023 for trademarks and brand names.

Intersegment Transactions

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

Three Months Ended March 31,

2023 2022 % Change

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

2023 2022 % Change 2023 2022 % Change

Travel Solutions

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

We define Adjusted Operating Income (Loss) 1 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 1 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 1 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 for income taxes.

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

We define Adjusted Net Loss as net loss attributable to common stockholders adjusted for (income) loss from discontinued operations, net of tax, net (loss) income attributable to noncontrolling interests, preferred stock dividends, acquisition-related amortization, restructuring and other costs, (gain) 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, (gain) loss on extinguishment of debt, acquisition-related costs, litigation costs, net, stock-based compensation and the remaining provision 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 Income (Loss), Adjusted Net Loss, Adjusted EBITDA or Free Cash Flow differently, which reduces their usefulness as comparative measures.

______________________

(1) For previous periods, no restructuring and other costs were recognized.

Accordingly, such costs were not previously included in the calculation of this non-GAAP financial measure.

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 Income (Loss), and Loss from continuing operations to Adjusted EBITDA (in thousands):

Three Months Ended March 31,

Net (loss) income attributable to common stockholders $ (104,280) $ 42,060

Loss (income) from discontinued operations, net of tax 403 (134)

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

2023 2022 2023 2022

Net loss attributable to common stockholders $ (129,278) $ (192,734) $ (233,558) $ (150,674)

(Income) Loss from discontinued operations, net of tax (2) 284 401 150

Net (loss) income attributable to noncontrolling interests (1)

(66) 885 (901) 1,157

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

(Loss) income from continuing operations (99,366) 47,544

Loss from continuing operations (123,999) (186,218) (223,365) (138,674)

Acquisition-related amortization (2a)

9,934 15,448 19,867 31,251

Restructuring and other costs (4)

Loss on extinguishment of debt — 3,533

59,372 4,336 59,053 4,336

(Gain) loss on extinguishment of debt (12,543) — (12,543) 3,533

Other, net (3)

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Acquisition-related costs (5)

541 2,245 1,388 5,909

Litigation costs, net (6)

9,234 12,539 9,234 16,014

Stock-based compensation 8,738 26,127 25,743 53,732

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Operating loss $ (42,183) $ (70,193) $ (42,396) $ (149,725)

Equity method income (loss) 423 (170)

Equity method income 459 186 882 16

Acquisition-related amortization (2a)

9,934 15,448 19,867 31,251

Restructuring and other costs (4)

59,372 4,336 59,053 4,336

Acquisition-related costs (5)

541 2,245 1,388 5,909

Litigation costs, net (6)

9,234 12,539 9,234 16,014

Stock-based compensation 8,738 26,127 25,743 53,732

Adjusted Operating Income (Loss) $ 46,095 $ (9,312) $ 73,771 $ (38,467)

(Loss) income from continuing operations (99,366) $ 47,544

Loss from continuing operations (123,999) $ (186,218) (223,365) $ (138,674)

Depreciation and amortization of property and equipment (2b)

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Amortization of capitalized implementation costs (2c)

4,607 9,177 13,964 16,516

Acquisition-related amortization (2a)

9,934 15,448 19,867 31,251

Restructuring and other costs (4)

59,372 4,336 59,053 4,336

Interest expense, net 106,134 66,884 205,918 127,942

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(17,225) 43,937 (19,632) (147,304)

Loss on extinguishment of debt — 3,533

(Gain) loss on extinguishment of debt (12,543) — (12,543) 3,533

Acquisition-related costs (5)

541 2,245 1,388 5,909

Litigation costs, net (6)

9,234 12,539 9,234 16,014

Stock-based compensation 8,738 26,127 25,743 53,732

Provision (benefit) for income taxes 2,199 (596)

Provision for income taxes 5,909 5,390 8,108 4,794

Adjusted EBITDA $ 73,049 $ 24,465 $ 131,111 $ 29,616

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 328,928 409,378

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 328,928 323,658

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

Three Months Ended March 31, 2023

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 Loss from continuing operations in our statement of operations by business segment (in thousands):

Three Months Ended June 30, 2023

Travel Solutions Hospitality Solutions Corporate Total

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Acquisition-related costs (5)

Litigation costs, net (6)

— — 9,234 9,234

Stock-based compensation — — 8,738 8,738

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Acquisition-related costs (5)

Litigation costs, net (6)

— — 9,234 9,234

Stock-based compensation — — 8,738 8,738

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Other, net (3)

Gain on extinguishment of debt 12,543

Equity method income 459

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Loss from continuing operations $ (123,999)

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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Other, net (3)

Equity method income 186

Provision for income taxes (5,390)

Loss from continuing operations $ (186,218)

Six Months Ended June 30, 2023

Travel Solutions Hospitality Solutions Corporate Total

Adjusted Operating Income (Loss) $ 206,470 $ (10,531) $ (122,168) $ 73,771

Equity method income 882 — — 882

Acquisition-related amortization (2a)

— — 19,867 19,867

Restructuring and other costs (4)

— — 59,053 59,053

Acquisition-related costs (5)

— — 1,388 1,388

Litigation costs, net (6)

— — 9,234 9,234

Stock-based compensation — — 25,743 25,743

Operating income (loss) $ 205,588 $ (10,531) $ (237,453) $ (42,396)

Adjusted EBITDA $ 251,349 $ 1,497 $ (121,735) $ 131,111

Depreciation and amortization of property and equipment (2b)

33,698 9,245 433 43,376

Amortization of capitalized implementation costs (2c)

11,181 2,783 — 13,964

Acquisition-related amortization (2a)

— — 19,867 19,867

Restructuring and other costs (4)

— — 59,053 59,053

Acquisition-related costs (5)

— — 1,388 1,388

Litigation costs, net (6)

— — 9,234 9,234

Stock-based compensation — — 25,743 25,743

Equity method income 882 — — 882

Operating income (loss) $ 205,588 $ (10,531) $ (237,453) $ (42,396)

Interest expense, net (205,918)

Other, net (3)

Gain on extinguishment of debt 12,543

Equity method income 882

Provision for income taxes (8,108)

Loss from continuing operations $ (223,365)

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 loss (170)

Benefit for income taxes 596

Income from continuing operations $ 47,544

Equity method income 16

Provision for income taxes (4,794)

Loss from continuing operations $ (138,674)

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 $ (99,188) $ (212,312)

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Cash provided by (used in) financing activities 70,360 (40,408)

Three Months Ended March 31,

Six Months Ended June 30,

Cash used in operating activities $ (99,188) $ (212,312)

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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.

(3) Other, net includes the impacts of fair value adjustments of our GBT investment and a $180 million gain on the sale of AirCentre during the six months ended June 30, 2022.

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 adjustments to charges recorded in previous periods associated with severance benefits related to employee terminations.

(4) Restructuring and other costs in the current year primarily represents charges associated with our cost reduction plan implemented in the second quarter of 2023.

Restructuring Activities to our consolidated financial statements.

During 2022, charges, and adjustments to those charges, were recorded associated with planning and implementing business restructuring activities, including costs associated with third party consultants advising on our business structure and strategy.

(5) Acquisition-related costs represent fees and expenses incurred associated with acquisition and disposition-related activities.

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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,

2023 2022 2023 2022

(Amounts in thousands) (Amounts in thousands)

Revenue $ 737,529 $ 657,532 $ 1,480,224 $ 1,242,442

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Interest expense, net (106,134) (66,884) (205,918) (127,942)

Loss on debt extinguishment — (3,533)

Equity method income (loss) 423 (170)

Gain (loss) on debt extinguishment 12,543 — 12,543 (3,533)

Equity method income 459 186 882 16

Other, net 17,225 (43,937) 19,632 147,304

(Loss) income from continuing operations before income taxes (97,167) 46,948

Provision (benefit) for income taxes 2,199 (596)

(Loss) income from continuing operations $ (99,366) $ 47,544

Three Months Ended March 31, 2023 and 2022

Three Months Ended March 31,

Loss from continuing operations before income taxes (118,090) (180,828) (215,257) (133,880)

Provision for income taxes 5,909 5,390 8,108 4,794

Loss from continuing operations $ (123,999) $ (186,218) $ (223,365) $ (138,674)

Three Months Ended June 30, 2023 and 2022

Three Months Ended June 30,

2023 2022 Change

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Total revenue $ 737,529 $ 657,532 $ 79,997 12 %

Travel Solutions— R evenue increased $143 million, or 27%, for the three months ended March 31, 2023 compared to the same period in the prior year, primarily due to:

Travel Solutions— R evenue increased $72 million, or 12%, for the three months ended June 30, 2023 compared to the same period in the prior year, primarily due to:

• a $99 million, or 23%, increase in transaction-based distribution revenue primarily due to a 12% increase in Direct Billable Bookings to 90 million and favorable rate impacts from improved international and corporate bookings;

• a $40 million, or 21% decrease in IT solutions revenue primarily due to a $36 million decrease from the sale of our AirCentre portfolio on February 28, 2022 and $37 million lower revenue from a de-migrated Russian carrier, of which $24 million is related to previously deferred revenue recognized during the three months ended March 31, 2022 due to a change in facts and circumstances.

These reductions were partially offset by an increase in revenue of $15 million primarily due to a 28% increase in passengers boarded to 165 million and a $16 million increase due to the recognition of a termination fee on a de-migrated carrier that previously terminated.

Hospitality Solutions— Revenue increased $18 million, or 32%, for the three months ended March 31, 2023 compared to the same period in the prior year.

The increase was primarily driven by a $17 million increase in SynXis Software and Services revenue due to an increase in transaction volumes of 21% to 28 million, a favorable mix within our customer base, and a $1 million increase in DX revenue.

• a $27 million, or 16%, decrease in IT solutions revenue driven by an increase in passengers boarded of 8% or $5 million, offset by $29 million of lower revenue from de-migrations due primarily to recently-enacted Russian regulatory requirements.

Hospitality Solutions— Revenue increased $10 million, or 16%, for the three months ended June 30, 2023 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 8% to 32 million driven by new customer deployments, and a favorable mix within our distribution channels.

Cost of revenue, excluding technology costs

Three Months Ended March 31,

Three Months Ended June 30,

2023 2022 Change

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Total cost of revenue, excluding technology costs $ 316,370 $ 274,245 $ 42,125 15 %

Travel Solutions— Cost of revenue, excluding technology costs, increased $78 million, or 41%, for the three months ended March 31, 2023 compared to the same period in the prior year.

The increase was primarily driven by an $85 million increase in incentive consideration due to higher transaction volume as well as an increase in rates.

This increase was partially offset by a $7 million decrease in labor and professional costs primarily due to the sale of AirCentre.

Hospitality Solutions— Cost of revenue, excluding technology costs, increased $9 million, or 34%, for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to costs associated with increased transaction volumes and the mix of our customer base.

Travel Solutions— Cost of revenue, excluding technology costs, increased $34 million, or 15%, for the three months ended June 30, 2023 compared to the same period in the prior year.

The increase was primarily driven by a $40 million increase in incentive consideration due to higher transaction volume as well as an increase in rates.

This increase was partially offset by a $6 million decrease in labor and professional services costs.

Hospitality Solutions— Cost of revenue, excluding technology costs, increased $3 million, or 10%, for the three months ended June 30, 2023 compared to the same period in the prior year primarily due to costs associated with increased transaction volumes and the mix of our transactions across our distribution channels.

Corporate— Cost of revenue, excluding technology costs, increased $12 million, or 579%, for the three months ended June 30, 2023 primarily due to a $12 million restructuring charge associated with the reduction of our workforce in the current period.

Depreciation and Amortization— Cost of revenue, excluding technology costs, decreased $5 million, or 53%, for the three months ended June 30, 2023 primarily due to the completion of amortization associated with certain customer implementations.

Technology Costs

Three Months Ended March 31,

Three Months Ended June 30,

2023 2022 Change

4 unchanged sentences

Total technology costs $ 284,279 $ 277,172 $ 7,107 3 %

Travel Solutions— Technology cos ts increased $8 million, or 3%, for the three months ended March 31, 2023 compared to the same period in the prior year.

The increase was primarily driven by an $18 million increase in labor and professional services costs to support our technology transformation initiatives.

Travel Solutions— Technology cos ts decreased $1 million for the three months ended June 30, 2023 compared to the same period in the prior year.

The decrease was primarily driven by a decrease in depreciation and amortization of $3 million pr imarily due to the completion of amortization of certain capitalized internal use software and a $2 million decrease in technology costs due to cost savings related to our mainframe offloads and data migrations.

These decreases were partially offset by an $3 million increase in labor and professional services costs to support our technology transformation and strategic growth initiatives.

Hospitality Solutions— Technology cost s decreased $3 million, or 10%, for the three months ended June 30, 2023 compared to the same period in the prior year due to a $4 million decrease in labor and professional services.

This decrease was partially offset by a $1 million increase in technology costs associated with our technology transformation initiatives, including the migration of SynXis to the cloud.

Corporate— Technology costs increased $11 million, or 58%, for the three months ended June 30, 2023 compared to the same period in the prior year due to a $21 million restructuring charge associated with the reduction of our workforce in the current period .

This increase was partially offset by a $5 million decrease in depreciation and amortization due to the completion of amortization of technology assets from prior acquisitions, a $4 million decrease in stock-based compensation primarily due to forfeitures of unvested shares, and a $2 million decrease in labor and professional services.

Selling, General and Administrative Expenses

Three Months Ended June 30,

2023 2022 Change

(Amounts in thousands)

Travel Solutions $ 54,905 $ 70,105 $ (15,200) (22) %

Hospitality Solutions 12,081 11,986 95 1 %

Corporate 112,077 94,217 17,860 19 %

Total selling, general and administrative expenses $ 179,063 $ 176,308 $ 2,755 2 %

Travel Solutions— Selling, general and administrative expenses decreased $15 million, or 22%, for the three months ended June 30, 2023 compared to the same period in the prior year primarily due to a $6 million decrease in legal costs, a $4 million decrease in other business expenses, a $2 million decrease in labor and professional services, and a $1 million decrease in the provision for credit losses.

Corporate— Selling, general and administrative expenses increased $18 million, or 19%, for the three months ended June 30, 2023 compared to the same period in the pri or year.

This increase was primarily due to a $23 million restructuring charge associated with the reduction of our workforce in the current period , a $9 million charge associated with a tax litigation matter, a $3 million increase in technology costs, a $5 million increase in labor and professional services, and an increase in other ongoing business expenses.

These increases were partially offset by a $13 million decrease in stock-based compensation primarily due to forfeitures of unvested shares, a $13 million decrease in legal costs resulting from ongoing litigation, and a $1 million decrease in risk and security costs.

Interest expense, net

Three Months Ended June 30,

2023 2022 Change

(Amounts in thousands)

Interest expense, net $ 106,134 $ 66,884 $ 39,250 59 %

Interest expense increased $39 million, or 59%, during the three months ended June 30, 2023 compared to the same period in the prior year primarily due to higher interest rates on our term loans and additional interest incurred in connection with the 11.25% Senior Secured Note due 2027 and the refinancing that occurred in the current quarter.

Debt for further details regarding these debt transactions.

Gain on extinguishment of debt

We recognized a gain on extinguishment of debt of $13 million for the three months ended June 30, 2023 as a result of the refinancing that occurred in the second quarter of 2023.

Debt for further details.

Three Months Ended June 30,

2023 2022 Change

(Amounts in thousands)

Other, net $ (17,225) $ 43,937 $ (61,162) (139) %

Other, n et decreased $61 million for the three months ended June 30, 2023 compared to the same period in the prior year primarily due to a change in fair value of our GBT investment from a loss of $30 million in the prior year to a gain of $5 million in the current year, other non-operating gains of $14 million in the current year, and a $12 million decrease due to adjustments to the AirCentre gain in the prior year.

Provision for Income Taxes

Three Months Ended June 30,

2023 2022 Change

(Amounts in thousands)

Provision for income taxes $ 5,909 $ 5,390 $ 519 10 %

For the three months ended June 30, 2023, we recognized $6 million of income tax expense, representing an effective tax rate of less than 1%, compared to an income tax expense of $5 million, also representing an effective tax rate of less than 1% for the three months ended June 30, 2022.

The effective tax rate remained relatively flat for the for the three months ended June 30,

2023 as compared to the same period in 2022.

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, 2023 and 2022

Six Months Ended June 30,

2023 2022 Change

(Amounts in thousands)

Travel Solutions $ 1,348,202 $ 1,133,147 $ 215,055 19 %

Hospitality Solutions 150,483 122,208 28,275 23 %

Total segment revenue 1,498,685 1,255,355 243,330 19 %

Eliminations (18,461) (12,913) (5,548) 43 %

Total revenue $ 1,480,224 $ 1,242,442 $ 237,782 19 %

Travel Solutions— Rev enue increased $215 million, or 19%, for the six months ended June 30, 2023 compared to the same period in the prior year, primarily due to:

• a $282 million, or 36%, increase in transaction-based distribution revenue due to a 28% increase in Direct Billable Bookings to 187 million and favorable rate impacts from improved international and corporate bookings;

• a $67 million or 19%, decrease in IT solutions revenue consisting of a $66 million decrease as a result of de-migrations primarily due to recently-enacted Russian regulatory requirements and $24 million of revenue recognized in the prior year that was previously deferred and recognized due to a change in facts and circumstance associated with a Russian carrier.

In addition, we had a $36 million decrease due to the sale of our AirCentre portfolio on February 28, 2022.

These decreases were partially offset by a $20 million increase due to a 17% increase in Passengers Boarded to 338 million and a $14 million increase due to the recognition of a termination fee on a de-migrated carrier that previously terminated.

Hospitality Solutions— Revenue increased $28 million, or 23%, for the six months ended June 30, 2023 compared to the same period in the prior year.

The increase was primarily driven by a $28 million increase in SynXis Software and Services revenue due to an increase in transaction volumes of 14% to 60 million driven by new customer deployments, and a favorable mix within our distribution channels.

Cost of revenue, excluding technology costs

Six Months Ended June 30,

2023 2022 Change

(Amounts in thousands)

Travel Solutions $ 538,017 $ 426,043 $ 111,974 26 %

Hospitality Solutions 74,193 61,390 12,803 21 %

Eliminations (18,461) (12,913) (5,548) 43 %

Total segment cost of revenue, excluding technology costs 593,749 474,520 119,229 25 %

Corporate 15,365 4,012 11,353 283 %

Depreciation and amortization 14,298 18,747 (4,449) (24) %

Total cost of revenue, excluding technology costs $ 623,412 $ 497,279 $ 126,133 25 %

Travel Solutions— Cost of revenue, excluding technology costs, increased $112 million, or 26%, for the six months ended June 30, 2023 compared to the same period in the prior year.

The increase was primarily driven by a $125 million increase in incentive consideration due to higher transaction volume as well as an increase in rates.

This increase was partially offset by a decrease in labor and professional services costs partially due to the sale of AirCentre.

Hospitality Solutions— Cost of revenue, excluding technology costs, increased $13 million, or 21%, for the six months ended June 30, 2023 compared to the same period in the prior year primarily due to costs associated with increased transaction volume s and the mix of our transactions across our distribution channels.

Corporate— Cost of revenue, excluding technology costs, increased $11 million, or 283%, for the six months ended June 30, 2023 primarily due to a $12 million restructuring charge associated with the reduction of our workforce in the current period, partially offset by a $1 million decrease in labor and professional services.

Depreciation and Amortization— Cost of revenue, excluding technology costs, decreased $4 million, or 24%, for the three months ended June 30, 2023 primarily due to the completion of amortization associated with certain customer implementations.

Technology Costs

Six Months Ended June 30,

2023 2022 Change

(Amounts in thousands)

Travel Solutions $ 459,046 $ 451,834 $ 7,212 2 %

Hospitality Solutions 57,976 59,907 (1,931) (3) %

Corporate 38,695 39,161 (466) (1) %

Total technology costs $ 555,717 $ 550,902 $ 4,815 1 %

Travel Solutions— Technology costs increased $7 million, or 2%, for the six months ended June 30, 2023 compared to the same period in the prior year.

The increase was primarily driven by a $20 million increase in labor and professional services costs to support our technology transformation and strategic growth initiatives.

This increase was partially offset by a $7 million decrease in technology costs due to cost savings related to our mainframe offloads and data migrations.

A dditionally, depreciation and amortization decreased by $7 million pr imarily due to the sale of our AirCentre portfolio and the completion of amortization of capitalized internal use software.

Hospitality Solutions— Technology cost s increased $1 million, or 5%, for the three months ended March 31, 2023 compared to the same period in the prior year due to a $4 million increase in technology costs to support our technology transformation initiatives, including the migration of SynXis to the cloud.

This increase was partially offset by a $2 million decrease in labor and professional services.

Corporate— Technology costs decreased $11 million, or 57%, for the three months ended March 31, 2023 compared to the same period in the prior year due to a $5 million decrease in depreciation and amortization associated with a reduction in intangible amortization as a result of the completion of amortization of technology assets from prior acquisitions, a $4 million decrease in labor and professional services and a $2 million decrease in stock-based compensation.

Hospitality Solutions— Technology costs decreased $2 million, or 3%, for the six months ended June 30, 2023 compared to the same period in the prior year due to a $7 million decrease in labor and professional services.

This increase was partially offset by a $5 million increase in technology costs associated with our technology transformation initiatives, including the migration of SynXis to the cloud.

Corporate— Technology costs remained flat for the six months ended June 30, 2023 compared to the same period in the prior year.

A $21 million restructuring charge associated with the reduction of our workforce in the current period is offset with a $10 million decrease in depreciation and amortization due to the completion of amortization of technology assets from prior acquisitions a $6 million decrease in labor and professional services, and a $6 million decrease in stock-based compensation primarily due to forfeitures of unvested shares.

Selling, General and Administrative Expenses

Three Months Ended March 31,

Six Months Ended June 30,

2023 2022 Change

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Total selling, general and administrative expenses $ 343,491 $ 343,986 $ (495) — %

Travel Solutions— Selling, general and administrative expenses increased $12 million, or 18%, for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to a $6 million increase in the provision for credit losses and a $5 million increase due to continued investment in our internal business systems.

Corporate— Selling, general and administrative expenses decreased $16 million, or 18%, for the three months ended March 31, 2023 compared to the same period in the pri or year.

This decrease was driven by an $8 million decrease in stock-based compensation primarily due to forfeitures of unvested shares, a $3 million decrease in professional services related to our business structure and strategy, a $3 million decrease in technology costs, and a reduction in other business expenses.

These decreases were partially offset by a $2 million increase in labor and professional services and a $1 million increase in risk and security costs.

Travel Solutions— Selling, general and administrative expenses decreased $3 million, or 2%, for the six months ended June 30, 2023 compared to the same period in the prior year primarily due to an $8 million decrease in labor and professional services and a decrease in other ongoing business expenses.

These decreases were partially offset by a $6 million increase in the provision for credit losses.

Hospitality Solutions— Selling, general and administrative expenses remained flat for the six months ended June 30, 2023 compared to the same period in the prior year.

A $2 million increase in the provision for credit losses, primarily due to an unfavorable fluctuation to provision reductions in the prior year, was offset with a $2 million decrease in labor and professional services.

Corporate— Selling, general and administrative expenses increased $2 million, or 1%, for the six months ended June 30, 2023 compared to the same period in the pri or year.

This increase was driven by a $23 million restructuring charge associated with the reduction of our workforce in the current period, a $10 million increase in labor and professional services and a $9 million charge associated with a tax litigation matter.

These increases were partially offset by a decrease of $20 million in stock-based compensation primarily due to forfeitures of unvested shares, an $18 million decrease in legal costs resulting from ongoing litigation, and a $3 million decrease in professional services related to our business structure and strategy.

Interest expense, net

Three Months Ended March 31,

Six Months Ended June 30,

2023 2022 Change

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Interest expense, net $ 205,918 $ 127,942 $ 77,976 61 %

Interest expense increased $39 million, or 63%, during the three months ended March 31, 2023 compared to the same period in the prior year primarily due to higher interest rates on our term loans.

This increase was partially offset by the impact of our interest rate swaps.

Derivatives for further details regarding our interest rate swaps.

Loss on extinguishment of debt

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

Interest expense increased $78 million, or 61% during the six months ended June 30, 2023 compared to the same period in the prior year primarily due to higher interest rates on our term loans and additional interest incurred in connection with the 11.25% Senior Secured Note due 2027 and the refinancing that occurred in the current quarter.

These increases were partially offset by the impact of our interest rate swaps.

Debt for further details regarding these debt transactions.

Gain/Loss on extinguishment of debt

We recognized a gain on extinguishment of debt of $13 million du ring the six months ended June 30, 2023 as a result of the refinancing that occurred in the second quarter of 2023 and a loss on extinguishment of debt of $4 million 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,

2023 2022 Change

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Other, net $ (19,632) $ (147,304) $ 127,672 (87) %

Other, n et decreased $189 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to the sale of AirCentre in the first quarter of 2022, which resulted in a gain of approximately $192 million.

Acquisitions and Dispositions for further details regarding the sale of AirCentre.

Provision (benefit) for Income Taxes

Three Months Ended March 31,

Other, net increased $128 million for the six months ended June 30, 2023 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 change in fair value of our GBT investment from a loss of $30 million in the prior year to a gain of $4 million in the current year, as well as other non-operating gains of $14 million in the current year .

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,

2023 2022 Change

(Amounts in thousands)

Provision (benefit) for income taxes $ 2,199 $ (596) $ 2,795 (469) %

For the three months ended March 31, 2023, we recognized $2 million of income tax expense, representing an effective tax rate of less than 1%, compared to an income tax benefit of $1 million, also representing an effective tax rate of less than 1% for the three months ended March 31, 2022.

The effective tax rate remained relatively flat for the for the three months ended March 31, 2023 as compared to the same period in 2022.

Provision for income taxes $ 8,108 $ 4,794 $ 3,314 69 %

For the six months ended June 30, 2023, we recognized a $8 million income tax expense, representing an effective tax rate of less than 1%, compared to an income tax expense of $5 million, also representing an effective tax rate of less than 1% for the six months ended June 30, 2022.

The effective tax rate remained relatively flat for the six months ended June 30, 2023 as compared to the same period in 2022.

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, 2023 and December 31, 2022, our cash and cash equivalents and outstanding letters of credit were as follows (in thousands):

March 31, 2023 December 31, 2022

As of June 30, 2023 and December 31, 2022, our cash and cash equivalents and outstanding letters of credit were as follows (in thousands):

June 30, 2023 December 31, 2022

Cash and cash equivalents $ 706,148 $ 794,888

Available balance under the AR Facility 3,700 —

Available undrawn balance under the AR Facility 50,400 —

AR Facility outstanding balance 130,000 —

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Outstanding letters of credit under the bilateral letter of credit facility 12,649 11,527

On March 30, 2023, we drew $115 million under the AR Facility to supplement our liquidity, which remained outstanding as of March 31, 2023.

As of March 31, 2023 , the borrowing base was $119 million, of which Sabre had availability of $4 million.

As of June 30, 2023, we had $130 million outstanding under the AR Facility with a borrowing base of $180 million, of which Sabre had availability of $50 million.

Our AR Facility matures on January 14, 2025 at the earliest and February 13, 2026 at the latest, depending on certain "springing" maturity conditions.

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Securities with contractual maturities of three months or less, when purchased, are considered cash equivalents.

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

We record changes in a book overdraft position, in which our bank account is not overdrawn but recently issued and outstanding checks result in a negative

general ledger balance, as cash flows from financing activities.

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

We held no short-term investments as of March 31, 2023 and December 31, 2022.

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, 2023 and December 31, 2022.

We held no short-term investments as of June 30, 2023 and December 31, 2022.

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, 2023 and December 31, 2022.

Liquidity Outlook

The ongoing effects of COVID-19 on our operations and global bookings have had, and we believe they will continue to have, a material negative impact on our financial results and liquidity, and this negative impact may continue notwithstanding any ongoing recovery from the outbreak.

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

The travel ecosystem has shifted over the past few years, including through the COVID-19 pandemic, resulting in the changing needs of our airline, hotel and agency customers.

These changes have had, and we believe they will continue to have, a material negative impact on our financial results and liquidity, and this negative impact may continue notwithstanding any ongoing recovery from the outbreak.

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

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.

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In 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.

In 2022, we further refinanced and extended the maturity on other portions of our debt, which also negatively impacted our results due to increasing interest rates.

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 notwithstanding any ongoing recovery from the outbreak.

We believe our cash position and the liquidity measures we have taken will provide additional flexibility as we manage through the industry's recovery from the COVID-19 pandemic.

In 2022 and during the second quarter of 2023, we further refinanced and extended the maturity on other portions of our debt, which also negatively impacted our results due to increasing interest rates.

We believe the ongoing effects of the global economic recovery 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 notwithstanding any ongoing recovery from COVID-19.

We believe our cash position and the liquidity measures we have taken will provide additional flexibility as we manage through the industry's recovery.

We will continue to monitor our liquidity levels and take additional steps should we determine they are necessary.

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

Cash payments for restructuring and other related costs are expected to be approximately $50 million for the full year 2023, which will impact our free cash flow.

In 2023, we expect total capital expenditures to be approximately $80 million.

Costs associated with our cost reduction plan are expected to be approximately $70 million for the year, with the majority of disbursements occurring in 2023.

See “—Risk Factors" for further details.

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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.

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.”

See “Risk Factors—The ongoing recovery from the effects of the COVID-19 outbreak on our business and the impact on our 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.”

On an ongoing basis, we will evaluate and consider strategic acquisitions, divestitures, joint ventures, equity method investments, refinancing our existing debt or repurchasing our outstanding debt obligations in open market or in privately negotiated transactions, as well as other transactions we believe may create stockholder value or enhance financial performance.

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

While the COVID-19 pandemic has had an adverse impact on our business, we recognized federal taxable income in 2022 based on our operating and non-operating results along with provisions of the Tax Cuts and Jobs Act that limit interest expense deduction and the annual use of Net Operating Loss ("NOL") carryforwards, and requires companies to capitalize and amortize research and development costs.

While our business has incurred net losses on a GAAP basis, we recognized federal taxable income in 2022 based on our operating and non-operating results along with provisions of the Tax Cuts and Jobs Act that limit interest expense deduction and the annual use of Net Operating Loss ("NOL") carryforwards, and requires companies to capitalize and amortize research and development costs.

As a result, we expect to be a U.S.

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Capital Resources

As of March 31, 2023, our outstanding debt totaled $4,855 million, which is net of debt issuance costs and unamortized discounts.

As of June 30, 2023, our outstanding debt totaled $4.8 billion, which is net of debt issuance costs and unamortized discounts of $128 million.

Currently approximately 26% of our debt, net of cash and hedging impacts from interest rates swaps, is variable and impacted by changes in interest rates.

See “Risk Factors—We are exposed to interest rate fluctuations." In the future, we may review opportunities to refinance our existing debt, as well as conduct debt or equity offerings to support future strategic investments, support operational requirements, provide additional liquidity, or pay down debt.

The global capital markets experienced periods of volatility throughout 2022 and the first quarter of 2023, in response to the conflict in Ukraine, increases in the rate of inflation, and uncertainty regarding the path of U.S.

The global capital markets experienced periods of volatility throughout 2022 and through the second quarter of 2023, in response to the conflict in Ukraine, increases in the rate of inflation, and uncertainty regarding the path of U.S.

monetary policy.

During 2022, we refinanced portions of our debt which resulted in higher interest rates than prior years, increasing our current and future interest expense.

During 2022 and the second quarter of 2023, we refinanced portions of our debt which resulted in higher interest rates than prior years, increasing our current and future interest expense.

However, the June 2023 Refinancing (as defined below) provides the ability for interest to be payable in kind, such that amounts due are capitalized into the note balance at the payment date rather than paid in cash, reducing our near-term cash payments for interest on this debt.

We expect to further refinance portions of our debt in 2023 and 2024 which, at current interest rates, may negatively impact our interest expense.

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In the first quarter of 2023, we entered into a securitization transaction on our accounts receivable balances pursuant to the AR facility which provided a maximum of $200 million in additional funding.

As of March 31, 2023, we were in compliance with all covenants under the terms of the Amended and Restated Credit Agreement and the AR Facility.

In June 2023, we entered into the 2023 Term Loan Agreement, which provides for a senior secured term loan of up to $700 million in aggregate principal amount and requires that we maintain cash balances of at least $100 million in certain foreign subsidiaries and other covenants to ensure collateral of the applicable foreign guarantors meet certain minimum levels.

The 2023 Term Loan Agreement also includes various non-financial covenants, including restrictions on making certain investments, disposition activities and affiliate transactions.

In addition, the 2023 Term Loan Agreement contains customary prepayment events and financial and negative covenants and other representations, covenants and events of default based on, but in certain instances more restrictive than, the Amended and Restated Credit Agreement.

As of June 30, 2023, we were in compliance with all covenants under the terms of the Amended and Restated Credit Agreement, the AR Facility and the 2023 Term Loan Agreement.

We are required to pay down our 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, net of taxes, or borrowings, that are not otherwise reinvested in the business, as provided in the Amended and Restated Credit Agreement.

As of March 31, 2023, we have reinvested $245 million of the proceeds from the disposition of AirCentre.

Additional reinvestments are expected prior to May of 2023.

To the extent not considered reinvested into the business, any remaining proceeds from the disposition of AirCentre, net of taxes, will be used to pay down the term loans.

As of March 31, 2023, we had outstanding approximately $1 billion of variable debt that is indexed to the London Interbank Offered Rate ("LIBOR") consisting of 2021 Term Loan B-1 for $396 million and 2021 Term Loan B-2 for $628 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.

In July 2021, we entered into the 2021 Refinancing which, among other things, allows for the LIBOR rate to be phased out and replaced with SOFR plus a credit spread adjustment factor for 2021 Term Loan B-1 and 2021 Term Loan B-2, and we therefore do not anticipate a material impact from the anticipated phase out of LIBOR with respect to these loans.

As of June 30, 2023, we had reinvested, or are bound by contractual terms to reinvest, $277 million of the proceeds from the disposition of AirCentre.

If we ultimately do not reinvest these proceeds that are subject to such contractual terms within a 180-day period, we are required to apply those proceeds to pay down additional debt.

On May 24, 2023, we prepaid $48 million in principal and unaccrued interest on 2021 Term Loan B-2, 2022 Term Loan B-1 and 2022 Term Loan B-2, using the remaining net cash proceeds from the sale of AirCentre, in accordance with the contractual terms of the Amended and Restated Credit Agreement dated February 19, 2023.

We recorded a loss on extinguishment charge of $1 million in our consolidated statements of operations during the three months ended June 30, 2023, which consisted of the write-off of unamortized debt issuance costs and discounts.

Recent Events Impacting Our Liquidity and Capital Resources

Debt Agreements

On March 9, 2022 and August 15, 2022, we refinanced and extended the maturity on a portion of the Term Loan B facility.

See “— Senior Secured Credit Facilities" below.

On December 6, 2022, Sabre GLBL entered into a new debt agreement consisting of $555 million aggregate principal amount of 11.250% senior secured notes due 2027 (the “December 2027 Notes”).

We used the proceeds of the December 2027 Notes issuance to redeem the remaining principal balance on the Term Loan B of $536 million, plus $1 million of accrued interest (the “December 2022 Refinancing”).

We recognized a loss on extinguishment of debt of $1 million during the year ended December 31, 2022 in connection the December 2022 Refinancing, which consisted of the write-off of unamortized debt issuance costs and discount of $1 million.

Debt, to our consolidated financial statements for further information.

On May 16, 2023, Sabre GLBL entered into Amendment No.

5 to the Credit Agreement (the “SOFR Amendment”).

The SOFR Amendment was entered into pursuant to the Amended and Restated Credit Agreement, dated as of February 19, 2013.

The SOFR Amendment provides for the replacement of LIBOR-based rates with a SOFR-based rate for the 2021 Term Loan B-1 and 2021 Term Loan B-2 and amends certain provisions of the Credit Agreement.

The change from LIBOR to SOFR is due to the reference rate reform and the phasing out of LIBOR as a loan benchmark.

The SOFR Amendment did not have a material impact on our financial position or results of operations.

On June 13, 2023, Sabre Financial Borrower, LLC (“Sabre FB”), our indirect, consolidated subsidiary entered into a series of transactions including a new term loan credit agreement with certain lenders (the "2023 Term Loan Agreement") and an intercompany secured term loan agreement (the "Pari Passu Loan Agreement").

The 2023 Term Loan Agreement provides for a senior secured term loan (the “Senior Secured Term Loan Due 2028”) of up to $700 million in aggregate principal amount, subject to Sabre FB using the proceeds from the Senior Secured Term Loan Due 2028 for an intercompany loan to Sabre GLBL.

On June 13, 2023, Sabre FB borrowed the full $700 million amount under the 2023 Term Loan Agreement and lent the funds to Sabre GLBL under the Pari Passu Loan Agreement.

Borrowings under 2023 Term Loan Agreement are secured by the assets of Sabre FB, including Sabre FB's claims under the Pari Passu Loan Agreement, and assets of certain of our foreign subsidiaries.

Borrowings under the Pari Passu Loan Agreement are secured by first-priority liens on the same collateral securing the indebtedness owing under the Senior Secured Credit Facilities and Sabre GLBL's outstanding Senior Secured Notes.

Sabre GLBL used the proceeds borrowed under the Pari Passu Loan Agreement to repurchase $650 million of its outstanding 9.25% Senior Secured Notes due 2025 (the “June 2023 Refinancing”) and $15 million of its outstanding 2021 Term Loan B-1, 2021 Term Loan B-2 and 2022 Term Loan B-2.

The remaining proceeds, net of a discount of $23 million, were used to pay $13 million in other fees and expenses.

We incurred additional fees of $13 million, plus $10 million of accrued and unpaid interest on the 9.25% Senior Secured Notes, which were funded with cash on hand.

We recognized a net gain on extinguishment of debt in connection with the June 2023 Refinancing during the six months ended June 30, 2023 of $14 million.

As of June 30, 2023, we are in compliance with the covenants under the 2023 Term Loan Agreement and the Pari Passu Loan Agreement.

On February 14, 2023, Sabre Securitization, LLC, an indirect, consolidated subsidiary of Sabre Corporation and a special purpose entity (“Sabre Securitization”), entered into a three-year committed accounts receivable securitization facility (the “AR Facility”) of up to $200 million with PNC Bank, N.A.

On March 30, 2023, we borrowed $115 million under the AR Facility.

As of June 30, 2023, we had $130 million outstanding under the AR Facility.

These proceeds are being used for general corporate purposes.

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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, 2023 and 2022.

During the three months ended March 31, 2023 and 2022, we paid cash dividends on our preferred stock of $5 million.

On April 26, 2023, the Board of Directors declared a dividend of $1.625 per share on Preferred Stock payable on June 1, 2023 to holders of record of the Preferred Stock on May 15, 2023.

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, 2023 and 2022, respectively.

During the three and six months ended June 30, 2023 and 2022, we paid cash dividends on our preferred stock of $11 million and $11 million, respectively.

On July 26, 2023, the Board of Directors declared a dividend of $1.625 per share on Preferred Stock payable on September 1, 2023 to holders of record of the Preferred Stock on August 15, 2023.

Share Repurchase Program

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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, 2023, we did not repurchase any shares pursuant to the Share Repurchase Program.

For the six months ended June 30, 2023, 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, 2023.

Approximately $287 million remains authorized for repurchases under the Share Repurchase Program as of June 30, 2023.

Senior Secured Credit Facilities

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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 March 31, 2023, we are in compliance with all covenants under the terms of the Amended and Restated Credit Agreement.

Three Months Ended March 31,

As of June 30, 2023, we are in compliance with all covenants under the terms of the Amended and Restated Credit Agreement.

Six Months Ended June 30,

(Amounts in thousands)

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Effect of exchange rate changes on cash, cash equivalents and restricted cash 1,554 (2,652)

Increase in cash, cash equivalents and restricted cash $ 22,187 $ 208,062

(Decrease) increase in cash, cash equivalents and restricted cash $ (88,739) $ 13,828

Operating Activities

Cash used in operating activities total ed $72 million for the three months ended March 31, 2023.

The $67 million increase in operating cash flow from the same period in the prior year was primarily due to increased transaction volumes, partially offset by a $29 million increase in interest payments related to our debt.

Cash used in operating activities totaled $99 million for the six months ended June 30, 2023.

The $113 million increase in operating cash flow from the same period in the prior year was primarily due to increased transaction volumes, partially offset by a $97 million increase in interest payments related to our debt and $22 million of severance payments made in connection with our cost reduction plan.

Investing Activities

For the three months ended March 31, 2023, we used $18 million of cash for capital expenditures primarily related to software developed for internal use.

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 primarily related to software developed for internal use.

For the six months ended June 30, 2023, we used $48 million of cash for capital expenditures primarily related to software developed for internal use and $13 million for acquisition-related activity.

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.

Financing Activities

For the three months ended March 31, 2023, financing activities provide d $112 million.

Sig nificant highlights of our financing activities include:

• proceeds of $115 million from borrowings on our AR Facility;

• proceeds of $16 million from the sale of our common shares of Conferma;

• payment o f $6 million o n our term loans;

• payment of $2 million f or debt discount and issuance costs;

• net payme nts of $5 million fro m the settlement of employee stock-option awards;

• payment o f $5 million in dividends on our preferred stock.

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

For the six months ended June 30, 2023, financing activities provided $70 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 $3 million on 2021 Term Loan B-1 and 2021 Term Loan B-2;

• payment of $10 million for debt prepayment fees and issuance costs;

• proceeds of $677 million from the issuance of the Senior Secured Term Loan Due 2028;

• payment of $665 million on our 9.25% senior secured notes due 2025, 2021 Term Loan B-1, 2021 Term Loan B-2 and 2022 Term Loan B-2;

• net proceeds of $130 million from borrowings on our AR Facility;

• payment of $54 million on our term loans under the Amended and Restated Credit Agreement, $48 million of which is a prepayment from the AirCentre disposition;

• payment of $23 million for debt discount and issuance costs;

• proceeds of $16 million from the sale of our common shares of the direct parent of Conferma;

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

• net payments of $6 million from the settlement of employee stock-option awards.

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 2022 Term Loan B-1;

• payment of $624 million on previous term loans under the Amended and Restated Credit Agreement;

• net payments of $15 million from the settlement of employee stock-option awards;

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

• payment of $10 million for debt prepayment fees and issuance costs;

• payment of $5 million on 2021 Term Loan B-1 and 2021 Term Loan B-2.

Contractual Obligations

There were no material changes to our future minimum contractual obligations since December 31, 2022 as previously disclosed in our Annual Report on Form 10-K filed with the SEC on February 17, 2023, other than the impact of interest rates on our debt and additional borrowings under the three-year committed accounts receivable securitization facility of $115 million.

As of March 31, 2023, we had a total debt obligation of $6.4 billion, with $345 million due for the remainder of 2023.

We had no off balance sheet arrangements during the three months ended March 31, 2023 and year ended December 31, 2022.

As of June 30, 2023, we had a total debt obligation of $7.3 billion, with $187 million due for the remainder of 2023.

We had no off balance sheet arrangements during the six months ended June 30, 2023 and year ended December 31, 2022.

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