This is not your father's Sabre. It's not Tom Klein's Sabre
or Sam Gilliland's Sabre. No, those former CEOs are gone, and now the travel
distribution and travel IT company is being reinvented by a former airline
executive who, in two years as CEO, has ushered in major and sometimes
surprising changes.
The biggest surprise came in November, when Sabre agreed to
acquire Farelogix for $360 million. Yes, that Farelogix. The one led by Jim
Davidson, a CEO who relished being an irritant to global distribution systems.
Yes, that Farelogix. The one whose earlier business focus was "essentially
killed" by Sabre nearly a decade ago, as Davidson recalled in testimony at
trial as a witness against Sabre a couple years ago. Yes, that Farelogix. The
one whose business model, at least for a time, was premised on bypassing GDSs
like Sabre's and disrupting the distribution status quo.
The deal is the culmination, to date at least, of Sabre's
reinvention under Menke—a "renaissance" within the company, as one of
his deputies, Dave Shirk, said. Amid that renaissance, the C-suite is
unrecognizable from a couple years ago; the company began moving its tech
foundation from mainframes to the cloud to open up its systems and shake a
legacy identity; it cut headcount by 9 percent last year and this year
introduced a new organizational structure, more closely aligning its GDS and
airline IT businesses.
At investor and client forums this year, Menke has advocated
a "one Sabre" concept and sees the company repositioning as a "microservices-enabled"
technology "platform" focused on "retailing, distribution and
fulfillment." The Farelogix deal, Menke's first strategic acquisition as
CEO, is an exclamation point on that statement. Farelogix's technology serves
airlines in pricing, retailing and merchandizing. It manages application
programming interfaces for some of the world's largest carriers—including American,
Emirates, Lufthansa Group and Qantas—to transmit fares, offers, bundles and
ancillaries from their internal systems to sales channels. Those channels
include GDSs but also those trying to bypass them.
The market responded with surprise, but many took the deal
as sign that Sabre was dead serious about playing in a distribution world that
is being reshaped by the International Air Transport Association's New
Distribution Capability. Even so, some airlines liked having David in their
corner against Goliath.
Now that Goliath has adopted David as a son and
David has disarmed his slingshot, what happens next?