Sabre (NASDAQ: SABR) reported Q1 EPS of ($0.29), $0.03 better than the analyst estimate of ($0.32). Revenue for the quarter came in at $659 million versus the consensus estimate of $666.89 million.

Business Outlook and Financial Guidance:

"Our thoughts are with those around the world who have been impacted by the COVID-19 pandemic," said Doug Barnett, CFO. "We are in a time of unprecedented disruption to the travel industry. The latest IATA projection is for a 55% reduction in passenger revenue in 2020, putting 25 million jobs around the world at risk.

"Approximately 15% of our revenue is not tied to travel volumes, which partially mitigates the exposure we have to COVID-19's impact on travel. However, new bookings made in March declined 70% year-over-year, and net bookings were negative due to a significant amount of cancellations. This trend continued in April, with the drop-off of new bookings exacerbated by cancellations. As of quarter end, we have recognized $105 million in revenue from bookings that have not yet departed and have a cancellation reserve of $44 million on our balance sheet.

"Approximately two-thirds of our cost structure is variable or adjustable, which provides protection in a downside scenario. These costs include Travel Network incentives, which are variable and tied to bookings volume, semi-variable technology hosting costs, and labor and headcount-related costs. In response to COVID-19's impact on our business, we announced a $200 million cost savings initiative in March. We increased the scope of our initiatives and are now targeting total cost savings of approximately $325 million in 2020. Only one-third of our cost structure, or approximately $1 billion based on 2019 results, is fixed in nature. Our high proportion of variable costs affords us the ability to take further cost reduction actions, if needed.

"Sabre has significant liquidity to withstand a prolonged travel downturn and has no expected significant near-term liquidity needs. We have suspended our dividend, effective after the March 30, 2020 payment, and share repurchases. Effective May 1, 2020, Sabre and Farelogix agreed to terminate the Farelogix acquisition, and we have paid Farelogix aggregate termination fees of $21 million in the second quarter of 2020 pursuant to the acquisition agreement. Although we were in compliance with our leverage ratio requirement as of March 31, 2020, we believe that a Material Travel Event Disruption has occurred and therefore expect our leverage ratio covenant under our Amended and Restated Credit Agreement will be suspended. We drew down on our revolver in the amount of $375 million in March and raised $1.1 billion from the issuance of senior secured notes and exchangeable notes in April to further strengthen our liquidity.

"Our March 31, 2020 ending cash balance totaled $684 million. Pro forma for our recent notes offerings, as well as refunds owed to airlines for first quarter cancellations, incentive payments delayed from the first quarter, cancellation reserve and termination fees paid to Farelogix in the second quarter, our cash balance is $1.7 billion. Based on our estimated cash burn rate of approximately $80 million per month, we believe we have more than a year and a half of liquidity even in a zero bookings environment. At this time, we do not expect to participate in the CARES Act loan program for the aviation industry."

Given the magnitude and the uncertainty related to the COVID-19 pandemic and its economic effects, on March 20, 2020, Sabre withdrew its February 26, 2020 guidance and has not given further guidance at this time.

For earnings history and earnings-related data on Sabre (SABR) click here.