Sabre

Sabre just struck a deal to sell its hotel software business to TPG, with the cash going straight toward debt. That move wipes out roughly 800 million dollars of long-term debt and trims annual interest costs by about 80 million dollars. A leaner balance sheet means more breathing room for the core airline business.

Q1 revenue from the continuing airline business came in around 700 million dollars with operating income of 90 million dollars. With global air travel still climbing and Sabre powering bookings for thousands of carriers, the company posted positive net income of 42 million dollars this quarter. Revenue grew nearly 1 percent year over year and net margins improved to almost 19 percent.

Even after the hotel sale, Sabre will still carry about 4 billion dollars in long-term debt. Interest payments are projected to eat over 425 million dollars per year, which is a massive chunk of operating profit. The company has been losing money on the bottom line for years, posting a 261 million dollar loss in 2024 on a pro forma basis.

Sabre gets paid every time someone books a flight through its network, so a recession or pullback in travel spending would hit revenue fast. With a market value of just 818 million dollars, the stock is tiny compared to its debt load and any softness in airline bookings could squeeze cash flow. The company is essentially betting everything on travel staying strong.