What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-02 compared with 2023-08-03 · 220 added, 183 removed, 534 unchanged (43% of the section changed)

18 unchanged sentences

Recent Developments Affecting our Results of Operations

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 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, 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 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.”

The travel ecosystem has shifted over the past few years, resulting in the changing needs of our airline, hotel and agency customers, for which we have established strategic priorities with the goal of achieving sustainable long-term growth.

We have experienced continued material headwinds for our consolidated financial results in 2022 and through the third quarter of 2023.

While growth on a year-over-year basis continues to result in improvement in our key volume metrics with the return of global travel volumes, recent industry air distribution volume growth has leveled-off.

This may continue into the future and could impact our rate of growth.

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

In the third quarter of 2023, the impact of Travel Solutions customer de-migrations on passengers boarded for IT solutions is being substantially offset by customer growth.

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.

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.

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

During the nine months ended September 30, 2023, we incurred $56 million in connection with this business plan, 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.

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 ongoing recovery 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;

See “—Recent Events Impacting Our Liquidity and Capital Resources” and “—Senior Secured Credit Facilities.” During 2022 and the second and third quarters of 2023, we refinanced portions of our debt which resulted in higher interest rates than prior years, increasing our current and future interest expense.

As a result of our recent refinancing activity, we believe our debt maturity profile better aligns with our future prospective free cash flow generation.

Currently approximately 44% of our debt, net of cash and hedging impacts from interest rates swaps, is variable and impacted by changes in interest rates.

Approximately 27% of our debt is variable, excluding the Senior Secured Term Loan due in 2028, where pricing is subject to the highest yield to maturity of Sabre GLBL secured debt as defined by the Reference Rate.

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

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 .

1 unchanged sentence

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.

In February 2023, we sold 19% of the common shares of the direct parent of Conferma to a third party for proceeds of $16 million, resulting in a redeemable non-controlling interest.

In February 2023, we sold 19% of the share capital of the direct parent of Conferma to a third party for proceeds of $16 million, resulting in a redeemable non-controlling interest.

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 $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.

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 nine months ended September 30, 2022.

Acquisitions and Dispositions for further details.

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A Travel Solutions customer of these types of services located in Russia ceased using our systems on that date.

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

During the nine months ended September 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.

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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 June 30, 2023 for trademarks and brand names.

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 13 years as of September 30, 2023 for trademarks and brand names.

Intersegment Transactions

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Air bookings are presented net of bookings cancelled within the period presented.

Travel Solutions also recognizes IT solutions revenue from recurring usage-based fees for Passengers Boarded ("PBs").

Travel Solutions also recognizes IT solutions revenue from recurring usage-based fees for passengers boarded.

The primary metric utilized by Hospitality Solutions is booking transactions processed through the Sabre Hospitality Solutions SynXis Central Reservation System (the “HS Central Reservation System”).

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 % Change 2023 2022 % Change

5 unchanged sentences

Hospitality Solutions

Central Reservations System Transactions 31,916 29,533 8.1% 59,662 52,561 13.5%

HS Central Reservations System Transactions 33,790 31,640 6.8% 93,452 84,200 11.0%

Definitions of Non-GAAP Financial Measures

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) 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 Adjusted Operating Income (Loss) as operating loss adjusted for equity method income, impairment and related charges, 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, impairment and related charges, 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, impairment and related charges, 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.

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 June 30, Six Months Ended June 30,

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

Net loss attributable to common stockholders $ (211,848) $ (140,722) $ (445,406) $ (291,396)

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

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

Loss from discontinued operations, net of tax 116 446 517 596

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

379 776 (522) 1,933

1 unchanged sentence

Loss from continuing operations (207,789) (134,154) (431,154) (272,828)

Impairment and related charges (2)

— 5,146 — 5,146

Acquisition-related amortization (3a)

2 unchanged sentences

3,909 9,944 62,962 14,279

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

Loss on extinguishment of debt, net 121,120 — 108,577 3,533

Other, net (4)

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Diluted weighted-average common shares outstanding 345,128 328,228 335,460 326,170

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

Operating income (loss) $ 52,201 $ (56,535) $ 9,805 $ (206,260)

Equity method income 512 199 1,394 215

Impairment and related charges (2)

— 5,146 — 5,146

Acquisition-related amortization (3a)

15 unchanged sentences

10,176 9,824 30,043 41,075

Impairment and related charges (2)

— 5,146 — 5,146

Restructuring and other costs (5)

3 unchanged sentences

11,548 7,687 (8,084) (139,617)

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

Loss on extinguishment of debt, net 121,120 — 108,577 3,533

Acquisition-related costs (6)

3 unchanged sentences

Stock-based compensation 13,094 16,349 38,837 70,081

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

Provision (benefit) for income taxes 8,462 (6,989) 16,570 (2,195)

Adjusted EBITDA $ 110,168 $ 34,251 $ 241,279 $ 63,867

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

Three Months Ended September 30, 2023

Travel Solutions Hospitality Solutions Corporate Total

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Other, net (4)

Gain on extinguishment of debt 12,543

Loss on extinguishment of debt (121,120)

Equity method income 512

1 unchanged sentence

Loss from continuing operations $ (207,789)

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Travel Solutions Hospitality Solutions Corporate Total

1 unchanged sentence

Equity method income 199 — — 199

Impairment and related charges (2)

— — 5,146 5,146

Acquisition-related amortization (3a)

3 unchanged sentences

Acquisition-related costs (6)

— — 2,245 2,245

Litigation costs, net (7)

9 unchanged sentences

— — 9,824 9,824

Impairment and related charges (2)

— — 5,146 5,146

Restructuring and other costs (5)

1 unchanged sentence

Acquisition-related costs (6)

— — 2,245 2,245

Litigation costs, net (7)

1 unchanged sentence

Stock-based compensation — — 16,349 16,349

Equity method loss 186 — — 186

Equity method income 199 — — 199

Operating income (loss) $ 69,112 $ (11,312) $ (114,335) $ (56,535)

2 unchanged sentences

Equity method income 199

Provision for income taxes (5,390)

Benefit for income taxes 6,989

Loss from continuing operations $ (134,154)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Travel Solutions Hospitality Solutions Corporate Total

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Other, net (4)

Gain on extinguishment of debt 12,543

Loss on extinguishment of debt, net (108,577)

Equity method income 1,394

1 unchanged sentence

Loss from continuing operations $ (431,154)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Travel Solutions Hospitality Solutions Corporate Total

1 unchanged sentence

Equity method income 215 — — 215

Impairment and related charges (2)

— — 5,146 5,146

Acquisition-related amortization (3a)

15 unchanged sentences

— — 41,075 41,075

Impairment and related charges (2)

— — 5,146 5,146

Restructuring and other costs (5)

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Equity method income 215

Provision for income taxes (4,794)

Benefit for income taxes 2,195

Loss from continuing operations $ (272,828)

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):

Six Months Ended June 30,

Nine Months Ended September 30,

Cash used in operating activities $ (39,781) $ (314,770)

Cash (used in) provided by investing activities (80,631) 186,251

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

Six Months Ended June 30,

Cash used in financing activities (72,518) (61,646)

Nine Months Ended September 30,

Cash used in operating activities $ (39,781) $ (314,770)

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of 40%, (iii) Sabre Travel Network Lanka (Pte) Ltd of 40%, (iv) Sabre Bulgaria of 4 0%, and (v) FERMR Holdings Limited (the direct parent of Conferma) of 19%.

(2) Impairment and related charges in the prior year represents a $5 million impairment charge associated with the impact of regulatory changes in Russia on the future recoverability of certain assets.

(3) Depreciation and amortization expenses:

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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 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.

(4) 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 nine months ended September 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.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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Selling, general and administrative 150,736 172,359 494,227 516,345

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

Operating income (loss) 52,201 (56,535) 9,805 (206,260)

Interest expense, net (119,372) (77,120) (325,290) (205,062)

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

Loss on debt extinguishment, net (121,120) — (108,577) (3,533)

Equity method income 512 199 1,394 215

1 unchanged sentence

Loss from continuing operations before income taxes (199,327) (141,143) (414,584) (275,023)

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

Provision (benefit) for income taxes 8,462 (6,989) 16,570 (2,195)

Loss from continuing operations $ (207,789) $ (134,154) $ (431,154) $ (272,828)

Three Months Ended June 30, 2023 and 2022

Three Months Ended June 30,

Three Months Ended September 30, 2023 and 2022

Three Months Ended September 30,

2023 2022 Change

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Total revenue $ 740,461 $ 663,394 $ 77,067 12 %

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:

Travel Solutions— Revenue increased $68 million, or 11%, for the three months ended September 30, 2023 compared to the same period in the prior year, primarily due to:

• a $94 million, or 22%, increase in transaction-based distribution revenue primarily due to a 12% increase in direct billable bookings to 89 million and favorable rate impacts from improved international and corporate bookings;

• 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.

• a $26 million, or 15%, decrease in IT solutions revenue driven by a $33 million decline in revenue from de-migrations, primarily due to changes in Russian law and impacts of termination fees from such carriers, which resulted in a decrease in passengers boarded for the period.

These decreases were partially offset by an increase of $9 million due to an increase in passengers boarded from growth by our customer base (excluding the impact of de-migrations noted above).

Hospitality Solutions— Revenue increased $11 million, or 16%, for the three months ended September 30, 2023 compared to the same period in the prior year.

The increase was primarily driven by an $10 million increase in SynXis Software and

Services revenue due to an increase in transaction volumes of 7% to 34 million driven by new customer deployments, and a favorable mix within our distribution channels.

Additionally, DX revenue increased by $1 million.

Cost of revenue, excluding technology costs

Three Months Ended June 30,

Three Months Ended September 30,

2023 2022 Change

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Total cost of revenue, excluding technology costs $ 294,120 $ 274,330 $ 19,790 7 %

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.

Travel Solutions— Cost of revenue, excluding technology costs, increased $25 million, or 11%, for the three months ended September 30, 2023 compared to the same period in the prior year.

The increase was primarily driven by a $39 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.

This increase was partially offset by a $14 million decrease in labor and professional services costs driven by our cost reduction plan.

Hospitality Solutions— C ost of revenue, excluding technology costs, increased $4 million, or 11%, for the three months ended September 30, 2023 compared to the same period in the prior year primarily due to a $5 million increase in costs associated with increased transaction volumes and the mix of our transactions across our distribution channels, partially offset by a $1 million decrease in labor and professional services costs driven by our cost reduction plan.

Depreciation and Amortization— Cost of revenue, excluding technology costs, decreased $6 million, or 57%, for the three months ended September 30, 2023 primarily due to the completion of amortization associated with certain customer implementations.

Technology Costs

Three Months Ended June 30,

Three Months Ended September 30,

2023 2022 Change

4 unchanged sentences

Total technology costs $ 243,404 $ 273,240 $ (29,836) (11) %

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.

Travel Solutions— Technology cos ts decreased $21 million, or 9% for the three months ended September 30, 2023 compared to the same period in the prior year.

The decrease was primarily driven by a $9 million decrease in technology costs due to cost savings related to our mainframe offloads and data migrations, an $8 million decrease in labor and professional services driven by our cost reduction plan, and a decrease in depreciation and amortization of $2 million pr imarily due to the completion of amortization of certain capitalized internal use software.

Hospitality Solutions— Technology cost s decreased $4 million, or 12%, for the three months ended September 30, 2023 compared to the same period in the prior year due to a $5 million decrease in labor and professional services driven by our cost reduction plan.

This decrease was p artially offset by a $1 million increase in technology costs associated with our technology transformation initiatives.

Corporate— Technology costs decreased $5 million, or 40%, for the three months ended September 30, 2023 compared to the same period in the prior year due to a $2 million decrease in stock-based compensation primarily due to forfeitures of unvested shares, and a $2 million decrease in labor and professional services driven by our cost reduction plan.

Selling, General and Administrative Expenses

Three Months Ended June 30,

Three Months Ended September 30,

2023 2022 Change

4 unchanged sentences

Total selling, general and administrative expenses $ 150,736 $ 172,359 $ (21,623) (13) %

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.

Travel Solutions— Selling, general and administrative expenses decreased $1 million, or 2%, for the three months ended September 30, 2023 compared to the same period in the prior year primarily due to a $3 million decrease in legal costs , a $2 million decrease in the provision for credit losses and a $1 million decrease in labor and professional services driven by our cost reduction plan.

These decreases were partially offset by a $3 million increase in other business expenses.

Corporate— Selling, general and administrative expenses decreased $20 million, or 20%, for the three months ended September 30, 2023 compared to the same period in the prior year.

The decrease was primarily driven by a $15 million decrease due to a litigation reserve recorded in the prior year, a $2 million decrease in stock-based compensation primarily due to forfeitures of unvested shares, a $2 million decrease in labor and professional services driven by our cost reduction plan, a $1 million decrease in risk and security costs, and a decrease in other ongoing business expenses.

These decreases were partially offset by a $2 million increase associated with a tax litigation matter.

Interest expense, net

Three Months Ended June 30,

Three Months Ended September 30,

2023 2022 Change

1 unchanged sentence

Interest expense, net $ 119,372 $ 77,120 $ 42,252 55 %

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.

Interest expense increased $42 million, or 55%, during the three months ended September 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 financing activities that have occurred since the prior year period.

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.

Loss on extinguishment of debt, net

We recognized a loss on extinguishment of debt of $121 million for the three months ended September 30, 2023 as a result of the financing activity that occurred in the current quarter.

Debt for further details.

Three Months Ended June 30,

Three Months Ended September 30,

2023 2022 Change

1 unchanged sentence

Other, net $ 11,548 $ 7,687 $ 3,861 50 %

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,

Other, n et increased $4 million for the three months ended September 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 $5 million in the prior year period to a loss of $14 million in the current year period as well as an increase due to a $4 million gain recognized in conjunction with the acquisition of Conferma in the prior year, partially offset by a $5 million decrease due to debt modification costs in connection with the refinancing that occurred in August 2022, as well as higher realized and unrealized foreign currency exchange gains.

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

Acquisitions and Dispositions for further details regarding the Conferma aquisition.

Provision (Benefit) for Income Taxes

Three Months Ended September 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.

Provision (benefit) for income taxes $ 8,462 $ (6,989) $ 15,451 (221) %

For the three months ended September 30, 2023, we recognized $8 million of income tax expense, representing an effective tax rate of less than 1%, compared to an income tax benefit of $7 million, representing an effective tax rate of 5% for the three months ended September 30, 2022.

The effective tax rate decreased for the three months ended September 30, 2023 as compared to the same period in 2022 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, 2023 and 2022

Six Months Ended June 30,

Nine Months Ended September 30, 2023 and 2022

Nine Months Ended September 30,

2023 2022 Change

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Total revenue $ 2,220,685 $ 1,905,836 $ 314,849 17 %

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:

Travel Solutions— Revenue increased $283 million, or 16%, for the nine months ended September 30, 2023 compared to the same period in the prior year, primarily due to:

• a $376 million, or 31%, increase in transaction-based distribution revenue due to a 23% increase in direct billable bookings to 277 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.

• a $93 million or 17%, decrease in IT solutions revenue consisting of a $83 million decrease as a result of de-migrations, primarily due to changes in Russian law and impacts of termination fees in both periods from such carriers and $16 million decline in the recognition of previously deferred revenue in each period presented, partially due to a change in facts and circumstances associated with a Russian carrier in the prior year.

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

These decreases were partially offset by an increase in revenue due to a 10% increase in passengers boarded to 518 million.

Hospitality Solutions— Revenue increased $39 million, or 21%, for the nine months ended September 30, 2023 compared to the same period in the prior year.

The increase was primarily driven by a $38 million increase in SynXis Software and Services revenue due to an increase in transaction volumes of 11% to 93 million driven by new customer deployments, and a favorable mix within our distribution channels.

Additionally, DX revenue increased by $1 million.

Cost of revenue, excluding technology costs

Six Months Ended June 30,

Nine Months Ended September 30,

2023 2022 Change

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Total cost of revenue, excluding technology costs $ 917,532 $ 771,609 $ 145,923 19 %

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.

Travel Solutions— Cost of revenue, excluding technology costs, increased $137 million, or 21%, for the nine months ended September 30, 2023 compared to the same period in the prior year.

The increase was primarily driven by a $164 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.

This increase was partially offset by a decrease in labor and professional services costs partially due to the sale of AirCe ntre and our cost reduction plan.

Hospitality Solutions— Cost of revenue, excluding technology costs, increased $17 million, or 17%, for the nine months ended September 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 184%, for the nine months ended September 30, 2023 primarily due to a $12 million restructuring charge associated with the reduction of our workforce in the

current period.

This increase was partially offset by a $1 million decrease in labor and professional services costs due to our cost reduction plan.

Depreciation and Amortization— Cost of revenue, excluding technology costs, decreased $11 million, or 36%, for the nine months ended September 30, 2023 primarily due to the completion of amortization associated with certain customer implementations.

Technology Costs

Six Months Ended June 30,

Nine Months Ended September 30,

2023 2022 Change

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Total technology costs $ 799,121 $ 824,142 $ (25,021) (3) %

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.

Travel Solutions— Technology costs decreased $14 million, or 2%, for the nine months ended September 30, 2023 compared to the same period in the prior year primarily due to a $16 million decrease in technology costs due to cost savings related to our mainframe offloads and data migrations.

A dditionally, depreciation and amortization decreased by $9 million pr imarily due to the sale of our AirCentre portfolio and the completion of amortization of capitalized internal use software.

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.

These decreases were partially offset by an $11 million increase in labor and professional services costs to support our technology transformation and strategic growth initiatives, offset by reductions in the third quarter of 2023 driven by our cost reduction plan.

Hospitality Solutions— Technology costs decreased $6 million, or 6%, for the nine months ended September 30, 2023 compared to the same period in the prior year primarily due to a $12 million decrease in labor and professional services driven by our cost reduction plan.

This decrease was partially offset by a $6 million increase in technology costs associated with our technology transformation initiatives, including the migration of SynXis to the cloud.

Corporate— Technology costs decreased $5 million, or 10%, for the nine months ended September 30, 2023 compared to the same period in the prior year primarily due to a $10 million decrease in depreciation and amortization due to the completion of amortization of technology assets from prior acquisitions, an $8 million decrease in labor and professional services driven by our cost reduction plan, and an $8 million decrease in stock-based compensation primarily due to forfeitures of unvested shares.

These decreases were partially offset by a $21 million restructuring charge associated with the reduction of our workforce in the current period.

Selling, General and Administrative Expenses

Six Months Ended June 30,

Nine Months Ended September 30,

2023 2022 Change

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Total selling, general and administrative expenses $ 494,227 $ 516,345 $ (22,118) (4) %

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.

Travel Solutions— Selling, general and administrative expenses decreased $5 million, or 2%, for the nine months ended September 30, 2023 compared to the same period in the prior year primarily due to a $13 million decrease in labor and professional services driven by our cost reduction plan.

This decrease was partially offset by a $4 million increase in the provision for credit losses and a $3 million increase due to investment in our internal business systems.

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

Corporate— Selling, general and administrative expenses decreased $18 million, or 6%, for the nine months ended September 30, 2023 compared to the same period in the prior year.

This decrease was partially driven by a decrease of $22 million in stock-based compensation primarily due to forfeitures of unvested shares, a $16 million decrease in legal costs resulting from ongoing litigation, a $15 million decrease due to a litigation reserve recorded in the prior year, and a decrease in other ongoing business expenses.

These decreases were partially offset by a $23 million restructuring charge associated with the reduction of our workforce in the second quarter of 2023, an $11 million charge associated with a tax litigation matter, and a $5 million increase in labor and professional services costs.

Interest expense, net

Six Months Ended June 30,

Nine Months Ended September 30,

2023 2022 Change

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Interest expense, net $ 325,290 $ 205,062 $ 120,228 59 %

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.

Interest expense increased $120 million, or 59% during the nine months ended September 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 financing activities that have occurred since the prior year period.

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.

Loss on extinguishment of debt, net

We recognized a loss on extinguishment of debt of $109 million du ring the nine months ended September 30, 2023, including a loss on extinguishment of debt of $121 million as a result of the financing activity that occurred in the third quarter of 2023, partially offset by a gain on extinguishment of debt of $13 million as a result of the financing activity that occurred in the second quarter of 2023.

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

Debt for further details.

Six Months Ended June 30,

Nine Months Ended September 30,

2023 2022 Change

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Other, net $ (8,084) $ (139,617) $ 131,533 (94) %

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 .

Other, net increased $132 million for the nine months ended September 30, 2023 compared to the same period in the prior year primarily due to the gain on the sale of AirCentre of $180 million in the prior year, partially offset by a change in fair value of our GBT investment from a loss of $35 million in the prior year to a loss of $10 million in the current year, as well as other non-operating gains of $14 million in the second quarter of 2023 and realized and unrealized foreign currency exchange gains .

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,

Provision (Benefit) for Income Taxes

Nine Months Ended September 30,

2023 2022 Change

(Amounts in thousands)

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.

Provision (benefit) for income taxes $ 16,570 $ (2,195) $ 18,765 (855) %

For the nine months ended September 30, 2023, we recognized $17 million of income tax expense, representing an effective tax rate of less than 1%, compared to an income tax benefit of $2 million, also representing an effective tax rate of less than 1% for the nine months ended September 30, 2022.

The effective tax rate decreased for the nine months ended September 30, 2023 as compared to the same period in 2022 primarily due to an increase in valuation allowance recorded in the current period and various discrete items recorded in each of the respective nine 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 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

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

September 30, 2023 December 31, 2022

Cash and cash equivalents $ 601,604 $ 794,888

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Outstanding letters of credit under the bilateral letter of credit facility 12,431 11,527

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.

As of September 30, 2023, we had $130 million outstanding under the AR Facility with a borrowing base of $139 million, of which Sabre had availability of $9 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.

The AR Facility allows us the ability to prepay the principal amount prior to the maturity date without penalty.

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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 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.

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

Liquidity Outlook

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.

We have experienced continued material headwinds for our consolidated financial results in 2022 and through the third quarter of 2023.

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.

Given the uncertainties surrounding the global economic recovery and ongoing recovery from COVID-19 on transaction volumes in the global travel industry, particularly air travel transaction volumes, 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.

Given the magnitude of travel decline, the uncertain economic environment and the unknown duration of the COVID-19 impact, we will continue to monitor travel activity and take additional steps should we determine they are necessary.

As previously disclosed, we responded to the impact of COVID-19 on our business 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"), and completing debt and equity offerings.

Additionally, given the market conditions resulting from COVID-19, we responded with cost savings measures during 2020, including the reduction of our workforce through voluntary severance and early retirement programs and a right-sizing of our global organization.

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 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.

Given the magnitude of travel decline, the uncertain economic environment and the unknown trajectory of travel recovery, we will continue to monitor travel activity and take additional steps should we determine they are necessary.

In 2022 and during the second and third quarters of 2023, we refinanced and extended the maturity on portions of our debt, which also negatively impacted our results due to increasing interest rates and included utilizing $130 million in cash from our balance sheet.

In the second quarter of 2023, we implemented a cost reduction plan designed to reposition our business to the current environment and to structurally reduce our cost base.

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.

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

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.

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

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

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

Our ability to make payments on and to refinance our indebtedness, and to fund working capital needs and planned capital expenditures will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, business, legislative, regulatory and other factors that are beyond our control, including the impacts of COVID-19.

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.”

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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.

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.

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 (“NO”) 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 June 30, 2023, our outstanding debt totaled $4.8 billion, which is net of debt issuance costs and unamortized discounts of $128 million.

As of September 30, 2023, our outstanding debt totaled $4.8 billion, which is net of debt issuance costs and unamortized discounts of $134 million.

Currently approximately 44% of our debt, net of cash and hedging impacts from interest rates swaps, is variable and impacted by changes in interest rates.

Approximately 27% of our debt is variable, excluding the Senior Secured Term Loan due in 2028, where pricing is subject to the highest yield to maturity of Sabre GLBL secured debt as defined by the

Reference Rate.

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 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.

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

monetary policy.

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.

During 2022 and the second and third quarters 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.

Additionally, the issuance of the June 2027 Notes (as defined below) resulted in cash payments totaling $130 million primarily to holders of prior notes but allowed us to better manage our ongoing interest expense and payments and extend our debt maturities.

As a result of our recent refinancing activity, we believe our debt maturity profile better aligns with our future prospective free cash flow generation.

Current cash on the balance sheet ending September 30, 2023 exceeds cumulative debt maturities through the end of 2026.

Subject to market conditions, we may opportunistically refinance portions of our debt in 2023 and 2024 which, at current interest rates and market conditions, may negatively impact our interest expense or result in higher dilution.

In addition, as a result of the judgment in our antitrust litigation with US Airways, we may be required as early as 2024 to pay US Airways' reasonable attorneys' fees and costs.

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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.

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

As of September 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

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We incurred additional fees of $15 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.

We recognized a net gain on extinguishment of debt in connection with the June 2023 Refinancing during the nine months ended September 30, 2023 of $13 million.

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

On September 7, 2023, Sabre GLBL completed exchange offers in which approximately $787 million of our 7.375% senior secured notes due 2025 and approximately $66 million of our 9.25% senior secured notes due 2025 were exchanged for a combination of cash and approximately $853 million aggregate principal amount of 8.625% senior secured notes due 2027 (the “June 2027 Notes”), issued at par (the “September 2023 Exchange Transaction”).

The June 2027 Notes are jointly and severally, irrevocably and unconditionally guaranteed by Sabre Holdings and all of Sabre GLBL’s restricted subsidiaries that guarantee the Senior Secured Credit Facilities and the Secured Term Loan Due 2028.

The June 2027 Notes bear interest at a rate of 8.625% per annum and interest payments are due semi-annually in arrears on March 1 and September 1 of each year, beginning March 1, 2024.

The June 2027 Notes mature on June 1, 2027.

Sabre GLBL did not receive any cash proceeds from the exchange and did not incur additional indebtedness in excess of the aggregate principal amount of existing notes that were exchanged.

We incurred additional fees of approximately $133 million, primarily consisting of approximately $115 million in exchange fees, $15 million in underwriting and associated fees and expenses plus $3 million of accrued and unpaid interest, all of which were funded with cash on hand.

We determined that the exchange transaction, including the impact of the exchange fees, represents a debt extinguishment and therefore recognized a loss on extinguishment of debt during the three and nine months ended September 30, 2023, of $121 million, consisting of $115 million in exchange fees related to the June 2027 Notes and $6 million related to the write-off of unamortized debt issuance costs on the 9.25% senior secured notes and 7.375% senior secured notes.

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.

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

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

These proceeds are being used for general corporate purposes.

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

Declared dividends on the Preferred Stock 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 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.

The Preferred Stock accumulated cumulative dividends at a rate per annum equal to 6.50% payable, at our election, in cash, shares of our common stock or a combination of cash and shares of our common stock.

We recorded $4 million and $14 million of accrued preferred stock dividends in our consolidated results of operations for the three and nine months ended September 30, 2023, and $5 million and $16 million for the three and nine months ended September 30, 2022, respectively.

During the three and nine months ended September 30, 2023 and 2022, we paid cash dividends on our preferred stock of $5 million and $16 million, respectively.

On September 1, 2023, the mandatory conversion date, each outstanding share of Preferred Stock was automatically converted into shares of our common stock.

Stock and Stockholders' Equity for further details.

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 six months ended June 30, 2023, we did not repurchase any shares pursuant to the Share Repurchase Program.

For the nine months ended September 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 June 30, 2023.

As of September 30, 2023, the Share Repurchase Program remains suspended and approximately $287 million remains authorized for repurchases..

Senior Secured Credit Facilities

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

The 2022 Term Loan B-1 Facility matures on June 30, 2028 and offers us the ability to prepay or repay the 2022 Term Loan B-1 Facility after 12 months or to prepay or repay at a 101 premium before that date.

The 2022 Term Loan B-1 Facility matures on June 30, 2028 and offers us the ability to prepay or repay the 2022 Term Loan B-1 Facility after 12 months months or to prepay or repay at a 101 premium before that date.

The interest rates on the 2022 Term Loan B-1 Facility are based on Term SOFR, replacing LIBOR, plus an applicable margin.

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No loss on extinguishment of debt was recorded as a result of the August 2022 Refinancing.

The 2022 Term Loan B-2 Facility matures on June 30, 2028 and offers us the ability to prepay or repay the 2022 Term Loan B-2 Facility after 12 months or to prepay or repay at a 101 premium before that date.

The 2022 Term Loan B-2 Facility matures on June 30, 2028 and offers us the ability to prepay or repay the 2022 Term Loan B-2 Facility after 12 months months or to prepay or repay at a 101 premium before that date.

The interest rates on the 2022 Term Loan B-2 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 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, 2023, we are in compliance with all covenants under the terms of the Amended and Restated Credit Agreement.

Six Months Ended June 30,

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

Nine Months Ended September 30,

(Amounts in thousands)

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Cash (used in) provided by investing activities (80,631) 186,251

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

Cash provided by (used in) discontinued operations 80 (2,698)

Cash used in financing activities (72,518) (61,646)

Cash used in discontinued operations (148) (3,231)

Effect of exchange rate changes on cash, cash equivalents and restricted cash (205) (2,197)

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

Decrease in cash, cash equivalents and restricted cash $ (193,283) $ (195,593)

Operating Activities

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

Cash used in operating activities totaled $40 million for the nine months ended September 30, 2023.

The $275 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 $73 million increase in interest payments related to our debt and $41 million of severance payments made in connection with our cost reduction plan.

Investing Activities

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.

For the nine months ended September 30, 2023, we used $69 million of cash for capital expenditures primarily related to software developed for internal use and $12 million for acquisition-related activity.

For the nine months ended September 30, 2022, we received proceeds of $392 million from the sale of AirCentre, partially offset by $53 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 $73 million for Conferma and other acquisitions.

Financing Activities

For the six months ended June 30, 2023, financing activities provided $70 million.

For the nine months ended September 30, 2023, we used $73 million of cash for financing activities.

Significant highlights of our financing activities include:

• proceeds of $853 million from the issuance of the 8.625% senior secured notes due 2027;

• payment of $787 million on our 7.375% senior secured notes due 2025 and $66 million on our 9.25% senior secured notes due 2025;

• 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;

• payment of $159 million for debt discount and issuance costs;

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

• payment of $55 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;

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• net payments of $5 million from the settlement of employee stock-option awards.

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

For the nine months ended September 30, 2022, financing activities used $62 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;

• proceeds of $624 million and $650 million from the issuance of 2022 Term Loan B-1 and 2022 Term Loan B-2, respectively;

• payment of $1.3 billion on previous term loans under the Amended and Restated Credit Agreement;

• payment of $11 million on 2021 Term Loan B-1, 2021 Term Loan B-2 and 2022 Term Loan B-1;

• payment of $24 million for debt discount and issuance costs;

• net payments of $16 million from the settlement of employee stock-option awards;

• payment of $16 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 $130 million and impacts of the June 2023 Refinancing.

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.

As of September 30, 2023, we had a total debt obligation of $7.3 billion, with $97 million due for the remainder of 2023.

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

Recent Accounting Pronouncements

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In addition, our reported financial condition and results of operations could vary due to a change in the application of a particular accounting standard.

We regard an accounting estimate underlying our financial statements as a “critical accounting estimate” if the accounting estimate requires us to make assumptions about matters that are uncertain at the time of estimation and if changes in the estimate are reasonably likely to occur and could have a material effect on the presentation of financial condition, changes in financial condition, or results of operations.

financial condition, or results of operations.

For a discussion of the accounting policies involving material estimates and assumptions that we believe are most critical to the preparation of our financial statements, how we apply such policies and how results differing from our estimates and assumptions would affect the amounts presented in our financial statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” included in our Annual Report on Form 10-K filed with the SEC on February 17, 2023.

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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