Sabre posts earning gains for 2014, right on track

Many people doubt the strength of global distribution systems to survive in an era of change. Sabre Holdings's chief executive, Tom Klein, is not among them.

No surprise why. For full year 2014, the Dallas-based technology company's total revenue grew 4%. Its full year, adjusted earnings grew 8%. The results were in line with what the company teased earlier this month.

On an earnings call today, Klein said he expected stronger growth over the next three years, in line with the guidance it gave during its initial public offering roadshow.

Klein boasted that Sabre Holdings saw solid growth in two of its three main businesses -- hospitality and airline solutions, which had their best years ever in terms of new sales.

Klein anticipated even more opportunity to increase business in the coming year.

For 2015, it expects total revenue growth of 4%, and as much as $295 million in annual net income. Share buybacks or acquisitions are likely, added CFO Rick Simonson.

In the next three years, Sabre Holdings expects 12 to 14% growth in its hospitality and airline solutions business. For its traditional GDS, or Travel Network, business, it expects growth of 4% to 6% over that time.

Its goal in three years' time is to get to $500 million a year in free cash flow. It was $160 million in 2014.

Making acquisitions versus paying down debt

Sabre Holdings has brought its net debt ratio down to 3.5 times. If it used the proceeds from the sale of Travelocity and LastMinute.com to pay down its bonds, it could, on a pro forma basis, bring down that to 3.2 times.

But Klein said the company is also looking at strategic mergers and acquisitions. In that case, it could alternatively switch out its bonds that are being called to lower-interest rate options.

Sabre Holdings has said officially that it is considering an acquisition of up to $500 million soon.

Tnooz has made the case that Abacus, an Asian Pacific GDS it is in a joint-venture with, is the likely target.

Simonson was asked by an analyst about the acquisition possibility. He said:

We're in an awkward spot with that because we were doing an equity offering at the time and had to disclose.

He said the company couldn't say more, but that it would seize opportunities where available. He confirmed that the acquisition would be on the air GDS side of the business.

Experts Tnooz has interviewed have said that, given the nature of Abacus's business, it would naturally fit in the travel network arm of the company, and its value is near certainly less than the projected $500 million amount.

Another possibility is Navitaire, an airline solutions tool owned by Accenture, which is its main competitor, along with Amadeus, for new contracts in the airline solutions space.

Navitaire is rumored to be for sale.

Hospitality solutions

Last year, its hospitality division launched its SynXis enterprise platform. Sabre Holdings announced that the Wyndham has signed up for it, and that the hotel chain will bring on its 4,500 properties onto the platform this year.

Yesterday Sabre Holdings launched SynXis InstaSite, a service that builds websites for hotels.