Sabre’s Bottom Line Got a Lift From U.S. Tax Cuts
Photo Credit: A view of the relatively new Tel Aviv office for Sabre Travel Network, the tech giant's distribution arm. Sabre reported its fourth-quarter and full-year 2018 earnings on Tuesday. Auerbach Halevy Architects
Skift Take
A year ago the U.S. changed its corporate tax law. A look at the impact on travel tech giant Sabre may show, by example, the benefits to many U.S. businesses broadly. The reform appeared to give the company added financial flexibility in 2018.
Last year's cut in the headline U.S. federal tax rate for corporations from 35 percent to 21 percent affected many businesses. Sabre, a travel technology giant based in Southlake, Texas, is a case in point.
On Tuesday Sabre reported its earnings. In 2018, Sabre's management-adjusted results included $117 million of tax expense in 2018, versus $162 million in 2017.
The drop in its effective tax rate was from 29.5 percent to 21.6 percent, reflecting a reduction in a U.S. statutory tax rate due to U.S. tax reform.
The savings appeared to give the company more financial flexibility last year. On a call with analysts Tuesday, Sabre's executives said that its earnings per share increased 6 percent in the quarter, driven by operating income growth and a lower tax rate due to the impact of U.S. tax reform.
A caveat: Sabre's tax rate and tax expense reflected on its income statement were not equivalent to actual cash taxes handed to Uncle Sam.
Sabre has not been a U.S. cash ta
