Moody's slices Sabre

Moody's Investors Service said it downgraded all of Sabre Holdings Corp.'s credit ratings two notches including the corporate family rating to B2 from Ba3, the probability of default rating to B2-PD from Ba3-PD, and the senior secured credit facilities and senior secured notes at Sabre's wholly-owned subsidiary, Sabre GLBL Inc., to B2 from Ba3. The speculative grade liquidity rating remains unchanged at SGL-2.

“The rating action reflects materially weaker performance than Moody's previously expected and our expectation for a slow recovery in profitability which will cause Sabre's credit metrics to remain very weak for an extended period relative to 2019. Despite various cost-cutting and growth initiatives, the company's direct and significant exposure to the airline industry has slowed its recovery relative to most online travel agency peers.

“Sabre's performance has been constrained by the long duration of Covid-era restrictions in the Asia Pacific region (only recently lifted), the high mix of slower-to-recover higher-margin corporate and long-haul international travel, lower than normal airline capacity which will take time to resolve, the permanent loss of a significant customer in North America (Expedia Group, Inc., Baa3 positive), and losses due to travel restrictions caused by the Russia / Ukraine military conflict. Though Moody's expects revenues and profitability to gradually improve, we expect leverage to remain well above 7x through the end of 2024,” the agency said in a press release.

The outlook is stable.

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