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Good morning and welcome to the Sabre First Quarter 2020 Earnings Conference Call.
Please note that today’s call is being recorded and is also being broadcast live over the internet on the Saber corporate website. This broadcast is the property of Sabre. Any redistribution retransmission or rebroadcast of this call in any form without the express written consent of the Company is strictly prohibited.
I will now turn the call over to the Vice President of Investor Relations, Kevin Crissey. Please go ahead, sir.
Thank you, Angie. And good morning, everyone. Thanks for joining us for our first quarter 2020 earnings call.
This morning, we issued an earnings press release, which is available on our website at investors.sabre.com. A slide presentation, which accompanies today’s prepared remarks, is also available during this call on the Sabre Investor Relations web page. A replay of today’s call will be available on our website later this morning.
We would like to advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including the duration and effects of COVID-19, industry trends, cost savings and liquidity, among others. All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today’s conference call. More information on these risks and uncertainties is contained in our earnings release issued this morning and our SEC filings, including our Form 8-K filed on April 13, 2020 and our 2019 Form 10-K.
Throughout today’s call, we will be presenting certain non-GAAP financial measures. All references during today’s call to EBITDA, operating loss and EPS have been adjusted to exclude certain items. The most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the earnings release and other documents posted on our website at investors.sabre.com.
Participating with me are Sean Menke, our President and Chief Executive Officer, and Doug Barnett, Executive Vice President and Chief Financial Officer. Dave Shirk, our Executive Vice President and President of Travel Solutions, will be available for Q&A after the prepared remarks.
Today’s call will focus primarily on COVID-19. Sean will provide perspectives on its impact on global travel trends and our business. Doug will review the cost and liquidity actions we’ve taken in response. We’ll then open the call to your questions.
With that, I’ll turn the call over to Sean.
Thanks, Kevin. Good morning, everyone, and thank you for joining us today.
Before I start, I’d like to recognize that although today’s call will focus on the financial implications of the COVID-19 pandemic on our business, this is a human health crisis with severe impact to families and individuals around the world. We are all experiencing dramatic changes to our daily lives and regular routines. Nothing is more important to us than the health and safety of our employees, customers and the communities where we live and work.
I’d like to sincerely thank my Sabre teammates who have made great sacrifices in this incredibly challenging environment. Our Sabre offices around the globe have been closed for a number of weeks now as we practice social distancing.
Before Doug takes you through our financial results, I’ll begin by discussing the unprecedented impact of COVID-19 on the global travel industry and provide detail on the decline in bookings and travel trends since its outbreak. Next, I will describe the actions we have taken in response to this challenge. Then, I will describe the impact these actions will have on our technology investments. Finally, I’ll share why we believe Sabre is resilient and well-positioned for a post-crisis environment.
The COVID-19 pandemic, as we all know, is an unprecedented challenge facing the entire travel industry. Since its initial onset in late 2019, the outbreak has caused a sharp decline in industry bookings. As we exited the quarter in March, effectively zero new bookings and the impact of cancellations resulted in a negative bookings environment on a net basis.
Total GDS industry air bookings declined by 10%, 25% and 113% in January, February and March on a net basis, with the industry down 49% for the first quarter of 2020. All regions were impacted on a similar level. This is what was reported by the total global GDS industry and factors in no exclusions.
Sabre’s new air bookings declined by 8%, 17% and 70% in January, February and March, respectively. On a net basis, including the impact of cancellations, Sabre’s air bookings declined by 9%, 23%, and 111% for the same months.
Based on the weekly industry trends we’ve been monitoring since COVID-19’s outbreak, it appears the decline in net air bookings peaked in late March across all regions. Data through April suggests the industry bookings decline was still exacerbated by cancellations.
Drilling into daily trends, cancellation activity peaked toward late March as COVID-19 restrictions went into place around the globe. This was concurrent with a very sharp decline in new bookings made. Since late March, Sabre’s new air bookings have declined to less than 100,000 daily, or down by more than 90% versus a pre-crisis 2019 average of roughly 1.5 million daily bookings.
As of mid-April, we believe we have seen a normalization in cancellation rates. We believe we have flushed out most of the cancellation activity with respect to previously made bookings. Although new bookings remain severely depressed, net booking activity improved in April versus the end of March.
In the first quarter of 2020, declines in passengers boarded and new hotel central reservation system transactions did not happen as fast as the decline in new air bookings. However, the declines in all three of our metrics, Travel Network air bookings, Airline Solutions PBs and Hospitality Solutions CRS transactions, converged at the high 90s toward the end of March and remained at this level through April.
The future impact of COVID-19 is still unknown, and the travel environment remains highly uncertain. Air carriers’ announced second quarter capacity plans indicate continued declines across all regions.
Based on data from OAG, global capacity in April declined approximately 70% year-over-year. Looking to May, North American total scheduled capacity is currently down over 75%, with American, United and Delta down 75% to over 80%. EMEA is down 75%, with Lufthansa, IAG, and Air France KLM all down over 90%. Latin America is down over 80%, with Avianca, GOL and LATAM all down over 90%. And in Asia-Pacific, Air Asia, Cathay Pacific and Qantas are all down over 90%.
The numbers I just reported are scheduled capacity levels. Operated capacity is even lower than marketing schedules files. We expect significant schedule reductions in June and beyond. It is important to note that many airlines around the world are still selling a marketing schedule that isn’t too different from last year. But the closer we get to the actual travel period, we see marketing and operating schedules being reduced. This strategy allows airlines to sell and consolidate into fewer flights.
Because we are a mission-critical technology provider to the travel industry, our top priority is to be there for our customers both now and when the business environment improves. Given the current uncertainty in the travel environment, our current focus is on long-term liquidity. We have and will continue to take actions to align our cost structure to demand, both near-term and in 2021. Importantly, our cash position and aggressive, but thoughtful, management of the business afford us the flexibility to continue advancing technology capabilities to meet demands.
Let me summarize the cost actions we have taken to date. In early Q1, our immediate response to COVID-19 was the implementation of a hiring freeze, elimination of pay increases, restriction of employee travel and reduction in consulting spend. As the impact of the virus continued to spread globally and bookings fell dramatically in mid-to-late March, we announced cost savings initiatives expected to result in $200 million savings in 2020. This includes pay reductions for U.S. salaried employees, suspension of the 401(k) match, voluntary retirements, voluntary separations and various pay reductions around the globe. I’m very grateful and proud of my colleagues around the world who have participated in these programs.
In mid-April, we announced plans to reduce 2020 costs by an additional $125 million, including the very difficult decision to furlough one-third of our global workforce. To my teammates around the world currently on furlough, I understand how difficult this is for you and your families. We will continue to work with rigor and resiliency, to ensure we are an even stronger company in the future. Because two-thirds of our cost structure is variable, it provides protection. It also provides the ability to take further actions, although we hope they will not be needed.
Next, let me summarize the actions we have taken to enhance our liquidity position. In mid-March, we suspended our dividend and share repurchases, effective after the March 30, 2020 payment. We also drew down on our revolver of $375 million. On April 17th, we raised $1.1 billion of incremental capital through upsized senior secured and exchangeable notes offerings.
Doug will share more detail, but with $1.1 billion capital raise, $325 million cost savings initiatives and other actions, we believe our current liquidity is sufficient for more than a year and a half, even in a zero bookings, no travel scenario. In addition, effective May 1, 2020, Sabre and Farelogix agreed to terminate the Farelogix acquisition agreement.
One question we are often asked is how the cost reductions we are making impact the business, including our previously announced incremental technology investments. Let me walk you through some of what will and won’t change as a result of our cost savings initiatives. To be clear, we are still proceeding with our technology transformation and transition to Google Cloud. Our technology transformation is expected to lower costs, accelerate innovation and provide competitive differentiation. We continue to expect approximately $100 million in annual cost savings by 2024, when we expect the technology transformation to be largely complete.
Our partnership with Google is off to a great start, and I couldn’t be happier with the collaboration so far. We are already executing on the innovation framework we have in place with Google. Today, I am pleased to announce we have entered into a new commercial agreement for Sabre to provide availability data APIs for consumption by Google’s flight search products.
We are delaying our billing system upgrade and our full-service property management system in partnership with Accor, primarily due to Accor’s furlough of 75% of their workforce. We continue to advance NDC-related projects with our current set of actively engaged airline, agency and corporate partners. We have made progress and reached important milestones over the last several months. However, certain incremental investments in NDC have been slowed down as many of our customers redirect their focus on financial and operational priorities. Each one of these projects is important to Sabre’s future, and we expect to return to them after we have a better insight on industry wide recovery.
To state the obvious, we do not know when travel demand will recover, or what the travel industry will look like on the other side of this crisis. We are fortunate that we have access to global data in a real time and are monitoring the significant insight this gives us for early indications of improvements throughout the world. Previous industry downturns suggest travel demand is unlikely to return to 2019 levels for at least several years.
Customers need to feel comfortable in restaurants, on trains, in airports and on planes. The timing for this level of comfort in crowded places may vary around the world. We are hoping for the best, but as I have described, planning for the worst.
We suspect leisure travel will return more quickly than corporate travel as companies carefully consider their duty of care to employees, and as leisure travelers are tempted by lower fares and room rates. Travelers may stay closer to their home market, where they better understand the health risks. The North American market may remain the most stable given its relative pre-crisis strength, but even North American carriers are retrenching significantly. Ultimately, we expect a smaller travel market for some time and are positioning Sabre for this new reality. We are confident the strength of our liquidity position, flexible cost structure, longstanding customer relationships and experienced management team will allow Sabre to endure this period of prolonged uncertainty.
And with that I’d like to hand it over to Doug.
Thanks, Sean, and hello everyone.
Before I begin, I’d like to acknowledge this is a difficult time. Our thoughts are with those around the world impacted by the COVID-19 pandemic.
We are in a time of unprecedented disruption to the travel industry. As Sean mentioned, the latest IATA projection is a 55% reduction in passenger revenue in 2020. 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, our first quarter results were significantly impacted by the pandemic.
In the first quarter, revenue was down 37%. Travel Network bookings were down 45%. Remember, we report bookings on a net basis, which means net of cancellations. In the quarter, new air bookings were down 32%, but there was significant cancellation activity as COVID-19 restrictions were put in place. As of quarter-end, we have recognized $105 million of revenue from bookings not yet departed and have a cancellation reserve of $44 million on our balance sheet. We believe we hit peak cancellation rates at the end of March and have flushed through most of the initial incremental COVID-19 cancellation activity as of mid-April. Remember that about half of our cancellation risk is offset by reductions in incentive payments.
First quarter EBITDA was positive. It was down significantly year-over-year. Our cost savings initiatives were not announced until mid-March, so we expect most of the savings will be recognized over the balance of the year. After depreciation and amortization and interest expense, we had an operating loss and negative EPS in the quarter. Finally, we generated positive Free Cash Flow of $12 million in the quarter. Our normal-course earnings results slides are in the appendix of our earnings presentation, which is available on our IR web page.
Let me provide some clarity on our cost structure. Two-thirds of our cost structure is variable, which provides protection in a downside scenario. Based on 2019 results, our variable costs are composed of approximately $1.3 billion for Travel Network incentive expenses, which are variable and tied to bookings volumes, approximately $250 million in semi-variable technology hosting costs, and approximately $500 million in headcount-related and other costs, including R&D labor. This is where our cost savings initiative is targeted.
Only one-third, or $1 billion based on 2019 results, is fixed. This includes critical headcount, including maintenance R&D labor, and fixed technology hosting costs. Our high proportion of variable costs affords us the ability to take further actions, if needed.
In response to COVID-19, we announced a $200 million cost savings initiative in March. In April, we increased the scope and are now targeting $325 million in total cost savings in 2020. Breaking down the $325 million: $200 million is related to one-time or temporary headcount-related savings. One-third of our staff is currently furloughed, and we have also implemented pay reductions and suspended certain benefits. $50 million is related to permanent headcount-related cost savings. This is the expected 2020 benefit, not the annual run-rate savings. $50 million is related to technology project delays. As Sean described, outside of our technology transformation and migration to Google Cloud, we have paused investment in the strategic initiatives discussed on our previous earnings call. Finally, $25 million is related to third-party and vendor spend savings.
The expected cost savings resulted from these activities have been included in the liquidity analysis that I will discuss shortly. These are tough actions, but we have the ability to further increase the scope if necessary. I want to thank my Sabre colleagues around the world for their support during this challenging time.
In addition to the cost reductions, we have taken several liquidity actions and expect to have significant liquidity to withstand a prolonged downturn. In addition to $325 million in expected 2020 cost savings, we suspended dividends and share repurchases in mid-March, effective after the March 30, 2020 payment of $39 million. For context, we spent $154 million on dividends and $78 million on share repurchases in 2019. We drew down on our revolver in the amount of $375 million. We raised $1.1 billion from the issuance of senior secured and exchangeable notes. Final pricing was 9.25% on $775 million in senior secured notes due in 2025 and 4% on $345 million exchangeable notes also due in 2025. Although we were in compliance with our Q1 leverage ratio requirement as of March 31, 2020, we believe that a material travel event disruption has occurred. Therefore, we expect our leverage ratio covenant under our amended and restated credit agreement will be suspended. Current carrier capacity forecasts lead to our expectation that this suspension will remain for the balance of the year.
Effective May 1, 2020, Sabre and Farelogix agreed to terminate the acquisition agreement. We recorded a termination fee of $46 million in the first quarter, $25 million of which is related to advancements already paid and $21 million in aggregate termination fees that have already been paid in the second quarter of 2020.
Taking a closer look at our liquidity position. We ended the first quarter with a cash balance of $684 million. We have a cash balance of approximately $1.7 billion pro forma for the following items: $1.1 billion raised in our recent notes offerings, less $30 million in refunds owed to airlines for Q1 cancellations, $52 million in incentive payments delayed from Q1 into Q2, $44 million in cancellation reserve, and $21 million in termination fees paid to Farelogix in Q2.
We estimate we have total liquidity of approximately $1.5 billion after taking into account minimum cash to operate the business of $150 million. We estimate we have a monthly cash burn rate of approximately $80 million in a zero bookings environment. This estimate is composed of $50 million in revenue from the 15% of our revenue not tied to travel volumes, $80 million in fixed costs, from our $1 billion in previously described annual fixed costs, $20 million in variable costs, reflecting a decline in Travel Network incentives and semi-variable technology hosting costs, as well as the impact of cost savings initiatives, and $30 million in other cash expenditures, which is primarily interest, debt repayment, and CapEx. This all results in our expectations for approximately 18 months of liquidity in a zero bookings, no travel environment.
Given that we believe we have more than a year and a half of liquidity, we do not expect to participate in the CARES Act loan program for the aviation industry.
As a reminder, we withdrew the guidance provided on our February earnings call and are not issuing guidance at this time.
With that, I’d like to turn it back to Sean.
Thanks, Doug. And thank you to our Sabre teammates around the world for their dedication to serving our customers, shareholders and each other during this difficult time.
With that, operator, we’d be happy to take questions.
[Operator Instructions] Your first question is from the line of Ashish Sabadra.
Thanks for taking the questions. So, a quick question on what percentage of your bookings are corporates and international booking? And just, I think if you can provide any color because the concern is that those might take little longer to recover compared to the leisure bookings, so any color on those terms?
Ashish, can you -- state that question again? You’re breaking up quite a bit.
Sorry about that. Can you -- sorry about that. I was just wondering what percentage of your bookings are coming from corporate and international bookings, because the concern is those might take longer to recover compared to the leisure bookings?
Yes. If you look at -- I mean, if you go back just historically, the balance, the bookings we had were actually more on the, what I would consider to be the North American side or international side, making of a smaller percentage of that. If you look at the bookings themselves, I mean, historically, we have a decent amount of the corporate bookings that are in place because of our penetration with TMCs versus what I would consider to be more the OTA side of the equation.
As you look at bookings now, as I mentioned, there really are no bookings, so in measurement, relative to what we’re seeing right now, Ashish. What I would share is, and this is very early on what we’re seeing take place, we are seeing OTA bookings picking up a little bit faster than the corporate booking side of the equation. And I’m talking very, very small numbers, as we track really where the trough was and what we’re seeing as it relates to last week’s bookings. And this is on a year-over-year workday-adjusted basis that we’re tracking that.
Yes. Ashish, just take a look historically, 70% of our bookings come through the TMCs, 30% comes from the OTAs. And obviously, most of the OTA stuff is going to be leisure and majority of the TMCs is going to be business-related travel.
Okay. That’s helpful. Just a question on -- there are concerns about potential bankruptcy risks for agencies or airlines just given the challenged travel environment. Can you just talk about, is there any potential risk to Sabre, because of any bankruptcies at the agencies or airlines?
Yes. I’m not going to speculate. We get the question a lot. I mean, everybody’s working through liquidity, managing how do they get additional liquidity and what’s out there, Ashish. It’s very early on, in what’s taking place, where I keep driving people back to the actions that we’ve taken, because we were very aggressive in what we did early on, went from a cost perspective and then going for liquidity. And in doing that, I am of the belief that there will be a travel ecosystem in the future. I do think, it’s going to be a smaller travel ecosystem for a period of time. But, we’re positioning ourselves to be able to operate in that environment. And that’s why Doug has been very adamant of talking about the zero booking environment and the same power that we have.
And maybe one final question if I can squeeze in, on the Google commercial partnership. So, congrats on that. I was wondering if you could provide any color on that front. How should we think about the revenue opportunity there? And is there opportunity for further expansion of that partnership?
Yes. I’ll kick off and then I’ll let Dave add a little bit to this. But, as we talked about, we felt that there were commercial opportunities that what I would consider to be the low-hanging fruit that we could begin to execute. The one thing that we’re doing is really providing availability data information to Google that -- and this is essentially reaching out to a number of airlines around the world that they’ll be able to use as it relates to Google flight search. So, it’s one step in what we hope will continue to be a number of other opportunities that are out there. And Dave, I don’t know if you’d add anything else to that.
Yes. No, I would just echo what Sean said. I mean, you got to start somewhere. We had a set of innovation projects that could have commercial benefit. This will kick off probably around the Q3 time period. It’s small in size, but it’s the first step of several that we’re trying to work through with Google. So, we’re pretty happy about the progress with them in the early stages of the relationship.
Your next question is from the line of Mark Moerdler.
Thank you very much. Let me first start by saying, I hope everyone on the call stays healthy and safe. And also, thank you for the detail you’ve been supplying in today’s earnings. Couple of quick questions, if you don’t mind, Sabre’s GDS air bookings decline was a bit better than the overall industry. Is this due to U.S. exposure, or is there some other factors?
It’s primarily going to be the U.S. exposure. Yes.
So, why not participate in the CARES Act?
Yes. So, obviously, we realized that we needed some additional liquidity. And quite honestly, the markets opened up. It was taken longer than expected to understand what the CARES Act was going to entail and what the terms would be that you’d be able to lend under. And quite honestly, once we got the public raise done, quite honestly, we weren’t even eligible then for the CARES Act. Because they’re primarily focused on trying to help people have liquidity through the balance of 2020. And obviously, now, we have liquidity almost all the way through 2021.
Yes. Mark, as you would imagine, we are working a number of different things. And we were heavily engaged in conversations. I was at the White House, at the Treasury, as well as congressional leaders as this was being drafted. But, in doing that we were looking at what that could potentially be for Sabre than as Doug has stated, we’re also looking at other ways of generating liquidity, based on how things were essentially progressing on the government side. As you know, there are just numerous balls that were in the air as they were working through it, we were focused. And I’ve learned this from my past, as you work aggressively to focus on your capital and your balance sheet and what you can do because you just don’t know. And we knew, that essentially the government at the end of the day was a lender of last resource. And we were going to have to prove -- we were still going to have to prove that the markets were closed to us. So, for us, like I said, in my comments is we were very focused on acting aggressively to right size the business, putting cash into -- on the balance sheet, and then being prepared to just manage through the situation as we see it right now.
Well done. One last question, if you don’t mind. How large was the negative impact of cancellations on revenue in Q1?
How large was it?
Yes.
Yes. I mean, you can tell, obviously, it was approximately $20 million bookings, and almost $60 million.
Beautiful, 60? Thank you.
60, in the month of March.
Perfect. Thank you I appreciate. And stay safe.
All right. Thanks, Mark. Take care.
Your next question is from the line of Josh Baer.
Hi. Thanks for taking the question. When we think about the future of the industry, is there anything you could share on how to think about changes to contracts, pricing, GDS fees, incentive fees, just in light of the current crisis, and expecting a smaller travel market in the medium term?
Yes. At this point in time, I’m not going to speculate. I mean, there’s -- we’re working with our customers. The one thing that you look at what takes place as it relates to the relationships that we have, they’re PB-based, passenger-boarded-based, the booking volume. So, when you look at it specifically on the airline and even on the hospitality side, it’s transaction-oriented. So, there’s some forgiveness that’s taking place there. On the agency side, it’s the incentive piece of it. But, I think we’re just way too early to even speculate on something like that.
Got it. And I appreciate all the detail on the cost structure and liquidity. I think, it’s very, very helpful and clear. And obviously, you just raised over $1 billion in capital. Wondering, one question on that net leverage covenant and I realize you might have a pass for several quarters given the year-over-year travel declines. But, should investors think about that that eventually, whether it’s three, six, nine months, you’ll be able to amend or replace that loan or the credit agreement there? Like is it -- is that a concern to you or should it be a concern to equity investors?
Yes. I think you’re probably asking a combination of two questions. One, let me address the leverage issue. More likely than not, with the kind of the capacity outlook that Sean was alluding to, the leverage suspension will probably go all the way through 2021, more likely than not, based on what we think is going to happen. So, I don’t think, between now and the end of ‘21, and maybe even going to ‘22. Remember, the maturities of those -- of the term loan is July of 2022. Obviously, now with the rates behind us and the real good relationship we have with those lending institutions, once get into the fall and early beginnings 2021, we’ll turn our attention to refinancing the term loan A.
Very helpful. Thanks.
The final question is from the line of Jed Kelly.
Hey. Great, thanks for taking my question. Can you hear me okay?
Yes, we can Jed. How are you?
I’m doing well. How are you?
Fine.
So, yes, just my first question has to do with, as you sort of look at realigning your cost structure over the next two to three years, is there a path to where your medium-term cash flow can get to pre-19 -- to 2019 levels, quicker under a lower revenue base?
Yes. Obviously, the actions that we’ve taken now obviously will help us as we move into 2021. A lot would depend on how fast the market returns, Jed, to be honest with you, because obviously some of the variable costs will kick back in. The incentive payments will kick back in. Some of the variable hosting costs will come back. But, I do think that as we enter a kind of a quote, a normal recovery, we will be in a better cost position than we were coming into -- out of 2019.
And then, as everybody in travel seems to be guiding for a multiyear recovery, is that going to be more dependent on a vaccine science breakthrough, or do you see that hopefully coming relatively quickly, but it’s just going to be more of an economic drag? I mean, how do you kind of look at the pace of the travel recovery?
Yes. I mean, I think, everybody’s got a different opinion on this, Jed. Here’s what I tell my team, this is what I talk to my family about. Tell me when you’re ready to go out to a restaurant. Tell me when you’re ready to go to a movie. Tell me when you’re ready to go to a ballpark. Tell me when you’re ready to get on an airplane. And I think you just got to be somewhat basic at this point in time. Listen, I think, everybody believes that there’s a vaccination that would help. But, we’re taking just one step at a time right now. And I go back to the actions that we’ve taken that we put ourselves in what I consider to be an enviable position to manage through the crisis.
All right. And then, before this, there was sort of -- some of the airlines I guess were being confrontational trying to drive direct bookings. Does this provide an opportunity for, I guess, more constructive partnerships going forward? And, how do you see partnering with airlines evolving in the next three years?
Yes. Well, I’ll probably just look backwards and just talk about, since I’ve really taken over the organization that’s been very-focused on constructive relationship with airlines, making sure that, as they think about modern day retailing and being able to do what they want to do that we continue to move forward. And as I look into the future, our strategy and focus and working with our airline customers, our hotel customers as well as our agency customers has not changed at all.
[Operator Instruction] We do have a follow-up question from the line of Josh Baer.
Hi. I just wanted to pop back in on the 15% of revenue, not tied to travel volumes. See, in the prepared remarks that -- in the cash burn you assume $50 million in revenue from that bucket, which would be on a monthly basis. So, that’s 600 for the year. And looking at FY19, now it’s about 15% of revenue. So, is the assumption that that is very-durable, or could you -- I guess, could you talk a little bit about the different types of revenue that’s in that 15%? Is any of that at-risk, even though it’s not tied to passenger volume?
Yes. Josh, we did take a look at that, and we didn’t really think much of it was at risk. It’s certain things that some of our customers are on a subscription basis, some of it’s back office products that we provide to agencies, some of it’s some of the work we do on hospitality on the DX side. So, we really didn’t think when we took a look at it, we didn’t slim it down a little bit. I think the other thing I want to mention, when we talk about the $50 million, just to give you a sense of how conservative it has been, obviously in some of -- particularly in the Airline Solutions contracts, there are minimums, we’ve assumed in that $50 million that all the minimums are waived. So, the airlines don’t even have to comply with the minimum requirements. So, I think we’ve taken a conservative approach to that $50 million.
Got it. Great. Thanks.
I am showing no further questions at this time. I would now like to turn the conference back to Sean Menke.
Great. As always, guys, I want to thank you for taking the time to hear the update on what’s taking place at Sabre. Once again, I want to thank my Sabre team members around the world for everything they’re doing. I really do appreciate it. With that, everybody please stay safe. Thank you very much.
Ladies and gentlemen, this concludes today’s conference. Thank you for your participation, and have a wonderful day. You may all disconnect.