In March, American Airlines' parent company AMR, which has owned 83% of Sabre since a 1996 initial public offering, will spin this stake off to existing shareholders, involving 107 million shares of Sabre common stock.
In a related development, Sabre has named Michael Hannigan, president of SBC Global Markets, a unit of Southwestern Bell, to the posts of president and chief executive. He succeeds Michael Durham, who left Sabre last year, reportedly because of differences with AMR chairman Donald Carty. Carty says the spin-off will enable AMR to focus on American Airlines and its regional subsidiary, American Eagle.
James Kissane, who follows Sabre for investment house Bear Stearns, calls the spin-off "extremely positive" for Sabre. "With AMR owning 83%, it was always unclear who was in control; the AMR or Sabre folks. There's no question now who's in charge. Being independent allows Sabre to control its own destiny."
Kissane predicts Sabre's new independence will open up a lot of doors on the outsourcing side. Sabre failed to win outsourcing contracts from United Airlines and Continental Airlines, supposedly because of its ties to American. "Whatever scepticism existed before should now go away," says Kissane.
According to Kissane, Sabre is the number one global distribution system, with leading market share in every geographic region except Europe, and a 44% share of the US market.
Agreeing that the spin-off is a good move, Sam Buttrick, aviation analyst for Paine Webber, says: "It will allow AMR and other airlines eventually to move more aggressively to control ticket distribution costs and develop innovative alternatives." This prediction is supported by comments by Carty, in which he says that Sabre and American were increasingly finding themselves competing on their respective travel Web sites, Travelocity.com and AA.com.
Buttrick predicts that Worldspan, a global distribution system and the booking engine behind Priceline.com and Expedia.com, will be spun off next year by its airline owners Northwest Airlines, Delta Air Lines and TWA.
Source: Airline Business
