IBD: What's fueling the growth?
Gilliland: Certainly a fair amount of this growth is coming from Travelocity. Travelocity now accounts for about a third of Sabre's total revenue. That's up from about 10% in 2002. We expect Travelocity to be closer to 40% of revenue by the end of the year.
IBD: Where else is Sabre growing?
Gilliland: We're growing our hotel business as part of the Sabre Travel Network. It's grown by a fairly dramatic clip of about 25%. That's indicative of the value we're providing to hotels, not only through Travelocity but also through our larger travel distribution network.
IBD: How is Sabre doing internationally?
Gilliland: Our non-U.S. revenue has grown from a little less than 30% of total sales in 2002 to a little less than 40% today. And we operate now in about 143 countries. Our global footprint has changed considerably.
IBD: What about free cash flow?
Gilliland: Sabre expects its free cash flow to be greater than $300 million in 2006. This compares with free cash flow of $134.9 million last year.
IBD: What types of deals did Sabre strike with airlines last quarter?
Gilliland: On April 21, Sabre announced that it had signed long-term full content (fare publishing) agreements with Delta Air Lines for seven years and United Airlines for five years. (And Monday, it announced a five-year pact with Continental Airlines.)
This is in addition to a long-term five-year deal signed with Northwest in the first quarter and another five-year deal with U.S. Airways. We also signed a five-year deal late last year with AirTran.
IBD: What was the point of these deals?
Gilliland: We're focused on developing a balanced distribution model for everyone, including travel agents and corporations. The deals are cost-efficient for airlines, require us to continue our own cost reduction focus at Sabre, and drive acceptable balance between long-term stability and efficiency, and incentive reductions for travel agents.
Chairman and Chief Executive Michael S. "Sam" Gilliland said the sale wouldn't change Sabre's business strategy.
Eighty-five percent of financial executives surveyed in January 2005 feel their companies will spend more or the same on corporate travel in the coming year.
Data Shows $415 is the Price to Beat for Thanksgiving Airfare
Fares on most major airlines have been creeping up this year as the cost of jet fuel has risen. But Fort Worth-based American did make a change to its Internet pricing in April that makes fares appear...