SABR

Good morning, welcome to Sabre's First Quarter 2026 Earnings Conference Call. My name is Siobhan, I will be your operator. As a reminder, please note today's call is being recorded. I will now turn the call over to the Vice President of Investor Relations, Jim Mathias. Please go ahead, sir.

Good morning, and welcome to our first quarter 2026 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 webpage. A replay of today's call will be available on our website later this morning. We advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including results of our growth strategies, our AI offerings and AI-related developments in the industry, transactions and bookings growth, expectations regarding the Middle East conflict and recovery, commercial and strategic arrangements, the impact of geopolitical events, our financial guidance, outlook and expectations, pro forma financial information, free cash flow 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 10-Q for the quarter ended March 31st, 2026. Throughout today's call, we will also be presenting certain non-GAAP financial measures. References during today's call to Adjusted EBITDA, Adjusted EBITDA margin, normalized Adjusted EBITDA, normalized Adjusted EBITDA margin, and adjusted technology and adjusted SG&A expenses 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. Normalized amounts have been adjusted for estimated costs historically allocated to our Hospitality Solutions business, which was sold on July 3rd, 2025.

We're also presenting certain financial information on a pro forma basis to give effect to the sale of the Hospitality Solutions business. Unless otherwise noted, results presented are based on continuing operations. Effective this quarter, we have updated the terminology used to describe our revenue to better reflect our evolving brand identity and market positioning. Historically referred to as Distribution and IT Solutions, these revenue streams have been renamed to Marketplace and Airline Technology, respectively. The specific revenue from products, services, and underlying solutions offered within each category remain unchanged. Participating with me today are Kurt Ekert, President and Chief Executive Officer, Mike Randolfi, Chief Financial Officer. Garry Wiseman, President, Product and Engineering, will be available for Q&A. With that, I will turn the call over to Kurt.

Thanks, Jim. Good morning, and thank you for joining us. We are pleased with our first quarter performance as we delivered strong operating and financial results. Revenue grew 8% and Normalized Adjusted EBITDA grew 21% year-over-year to $169 million, significantly exceeding our expectations. We also achieved our highest rate of air distribution bookings growth in more than two years of 6%, and our data shows that this growth materially outpaced the industry. We are encouraged by the continued momentum we are seeing from our growth strategies. Despite impacts from the conflict in the Middle East and higher fuel prices affecting Sabre and the broader travel industry, we performed well in the first quarter and remain confident in our ability to produce sustained growth.

Looking more closely at the Middle East, approximately 11% of Sabre's air distribution bookings either originate in or transit through the Middle East region. In March, these bookings declined by approximately 600 basis points. More specifically, flights that fly from, to, or through the region were down approximately 50%, while flights originating out of the Middle East declined approximately 70%. Additionally, we believe fuel supply and price dynamics, coupled with softening leisure travel demand, drove a roughly negative 100 basis point impact during the month. Taken together, we believe the combination of these impacts resulted in an approximate 7 percentage point headwind to total air distribution bookings in the month of March. Importantly, offsetting these headwinds, we saw strong performance in other regions. In March, the Americas delivered approximately 7% growth, corporate volumes demonstrated steady performance and resilience throughout the first quarter.

Overall, air distribution bookings in March were roughly flat, reflecting the combined headwinds of the Middle East conflict and higher fuel prices, largely offset by solid performance in the Americas and the growth in corporate travel. The trends we saw in March continued through April. Looking ahead, while the geopolitical and macroeconomic environment remains dynamic, our base assumption is that the conflict in the Middle East subsides during the second quarter, with fuel prices gradually normalizing through the summer and fall. Based on these assumptions, we expect second quarter air distribution bookings to be near flat, followed by a phased improvement, with conditions returning to a more normalized environment by the fourth quarter. Accordingly, we anticipate positive air distribution bookings growth for the second half of 2026, though at a slightly more modest pace than we had previously expected.

Consistent with this view and aligned with recent airline commentary around capacity reductions, we now anticipate full-year 2026 air distribution bookings and revenue to grow in the low to mid-single-digit range. Given our outperformance in the first quarter and our outlook for the remainder of the year, we are reaffirming our full-year 2026 guidance for pro forma Adjusted EBITDA and free cash flow. In summary, we are off to a strong start to the year. Solid execution, continued share gains, and our foundational role in enabling agentic AI-powered travel solutions should position us well to deliver sustained long-term growth. Now turning to slide 5 and our strategic priorities. We delivered strong quarterly revenue with growth in both Marketplace or Distribution and Airline Technology. Revenue growth combined with strong cost performance resulted in quarterly Normalized Adjusted EBITDA that exceeded our expectations.

In addition to reaffirming our outlook for both full-year pro forma Adjusted EBITDA and free cash flow, we are confident in our ability to continue to drive solid top and bottom line growth and generate positive free cash flow in 2027. Our financial performance, combined with no large debt maturities for approximately three years, provides us with a foundation to continue investing in innovation, driving growth, and capitalizing on our leadership position in the emerging agentic AI channel. Turning to the right side of the slide, our technology investments are driving positive results. Our Marketplace delivers multi-source travel content at incredible scale, and we generated strong air distribution bookings growth in the quarter. AI has been a core systemic part of the Sabre technology stack for several years, and we continue to lean into that advantage, which I will discuss in more detail shortly.

Both our Payment Suite and Lodging Expansion continue to grow, with Lodging Expansion recording the 13th consecutive quarter of year-on-year revenue growth. Finally, on NDC, we exited 2025 with NDC bookings representing 4% of total bookings. We saw growth during the first quarter and expect NDC bookings to continue to accelerate during 2026. Moving to slide 6 and a review of first quarter results, which were positive across the board. Revenue grew 8% year-on-year, Normalized Adjusted EBITDA increased 21% year-on-year, and margin improved 235 basis points to 22%. Driving these strong results, total Marketplace bookings grew 5% year-on-year, and air distribution bookings growth increased 6% year-on-year. Hotel distribution bookings increased by over 5% in the quarter to approximately 11 million. Our Payment Suite is one of the fastest-growing areas at Sabre.

In the first quarter, revenue increased by over 25% year-on-year to $13 million. In Airline Technology, passengers boarded grew 3% year-on-year to 170 million, and we are pleased to have recently executed a seamless migration of bringing Hawaiian Airlines back onto our platform. Moving to slide 7. Sabre is a cloud-native platform and is a true super aggregator, providing the travel industry with the critical infrastructure necessary to shop, book and service travel. Built on decades of industry technology leadership and supported by sustained investment of approximately 10% of revenue in product development and R&D, we believe we are well-positioned to extend that leadership position into the rapidly emerging agentic AI travel channel. Our AI solutions help our customers compete and win in this emerging AI ecosystem. With continued innovation, we intend to extend our leadership position.

Sabre provides the foundational layer that is required for AI to transact in the complex environment of travel. Chatbots can generate itineraries, but to book and service travel at scale requires access to sophisticated, continuously evolving logic, and that is where Sabre plays a critical role. Our modular platform enables partners to integrate seamlessly wherever travel is sold. We aggregate and normalize real-time flight content across hundreds of sources in sub-second response times, solving a significant technical challenge. This capability is a key reason why partners are building on us, not around us. We have recently gone live with our ChatGPT OpenAI plugin for Virgin Australia. This all-in-one generative AI chat solution puts both search and flight shopping into a widely used AI interface and is available to all of our travel supply partners globally.

We also recently launched the first phase of our Mindtrip and PayPal partnership, with Sabre providing the core air booking layer. Sabre is bringing conversational commerce for flights to market for the first time, and we look forward to introducing additional enhancements over the next few quarters. Demand for our agentic APIs and MCP server is strong, with well over 30 potential partners in various stages of pilot or production. Additionally, we are working with airlines to deploy an AI assistant that will sit on top of our network planning and optimization product. Taken together, these are further proof points that the infrastructure for agentic travel is being built on Sabre. Moving to Airline Technology, we offer a growing suite of modular AI-driven solutions that meet customer demand and drive growth for Sabre.

Building on the revenue growth we saw in the first quarter, we continue to expect positive Airline Technology revenue growth for 2026. Our Marketplace provides a simple and single connection to industry-leading scaled content. Air expansion growth has been driven by execution of our growth strategies, including continued share gains and growth in NDC and LCC bookings. We saw meaningful year-over-year acceleration in air distribution bookings growth in Q1 and expect positive air distribution bookings growth for the full year. Lodging Expansion continues to scale, driven by a compelling value proposition in a large addressable market. Total hotel-related revenue increased 10% to over $80 million in the quarter, with annualized gross booking value of hotel bookings exceeding $20 billion. Our hotel attach rate is consistently above 30%, and with more modernized connectivity, we see additional opportunity for expansion.

Media revenue also grew at a double-digit rate year-on-year. In Payment Suite, demand remains strong for solutions that simplify operations, increase payment flexibility, and automate risk and fraud management. First quarter gross spend on the platform reached nearly $6 billion, up more than 40%, while revenue grew over 25%. We are confident in our ability to continue to deliver strong performance in payments. We are executing well against our strategic priorities and delivering strong financial performance even in a dynamic operating environment. With that, I'll now hand the call over to Mike, who will discuss our first quarter results and our outlook in greater detail.

Thanks, Kurt. Good morning, everyone. Please turn to slide 9. Our first quarter financial results were solid and came in ahead of the guidance we provided on our fourth quarter call. The momentum we saw exiting the fourth quarter carried through the first 2 months of the year. As Kurt referenced, beginning in March, the conflict in the Middle East and the increase in fuel prices impacted air distribution bookings, and those pressures continued in April. Overall, first quarter performance reflects strong commercial execution and continued progress on our growth initiatives. Importantly, we are reaffirming our full year guidance for pro forma Adjusted EBITDA and free cash flow. Turning to the financials, total revenue was $760 million, an increase of 8% year-over-year, exceeding our expectations of mid-single digit growth.

Marketplace revenue grew $49 million, an increase of 9% due to an approximate 5% increase in distribution bookings and an approximate 3% increase in average booking fee. Airline Technology revenue came in at $142 million, up 7% year-on-year and within the range of expectations we shared on our fourth quarter earnings call. We continue to expect full year 2026 Airline Technology revenue growth. Gross margin of 56.4% came in above our expectations, due primarily to higher average booking fees attributable to a favorable mix of bookings. First quarter 2026 operating income of $116 million increased 27% year-on-year, with operating margin expanding 220 basis points to 15%.

Normalized Adjusted EBITDA was $169 million, representing a 21% increase year-on-year, with margin expanding 235 basis points to 22.2%. This growth was driven primarily by an increase in distribution bookings, higher average booking fee, and lower than expected operating expense. Free cash flow was negative $155 million for the first quarter. This lower free cash flow generation, as compared to negative $81 million from the first quarter of 2025, was driven by $67 million of additional interest payments in the first quarter of 2026, $19 million in severance related to our inflation offset program, $4 million of additional CapEx and other items related to working capital timing.

Importantly, our expectation for full year free cash flow remains the same at approximately -$70 million, which is driven almost entirely by restructuring costs associated with our inflation offset program. If not for those restructuring costs, we'd expect near breakeven free cash flow this year. We ended the quarter with a cash balance of $665 million. Moving to slide 10, comparing our first quarter results to the guidance we outlined on our fourth quarter earnings call, air distribution bookings growth of 6% was in line with our expectations of mid-single digit year-on-year growth. Revenue growth of 8% exceeded our guidance for mid-single digit year-on-year growth. Our Normalized Adjusted EBITDA result of $169 million was favorable to our guide of approximately $130 million by $39 million.

This outperformance was driven by $10 million of higher gross income attributable to higher gross margin from a favorable mix of bookings. Expenses were lower than expected by $29 million, split roughly evenly between adjusted technology and adjusted SG&A expense. Our expectation for the total benefit related to our inflation offset program has not changed for the full year. In the first quarter, we realized some expense favorability earlier than previously expected. We also had a $6 million favorable impact from the repeal of the Canadian Digital Services Tax. All in, we are very pleased with this quarter's results. Turning to slide 11. Moving to our balance sheet. Last year, we successfully completed two re-financings. The result of these re-financings is that we now have no large debt maturities until the spring of 2029, and over 90% of our debt matures in 2029 or later.

As a reminder, within the website financials available on our investor relations website, we provide a quarterly interest walk. This schedule provides our expected quarterly cash interest payments and shows we have higher cash interest payments in the first and third quarters of the year when compared to the second and fourth quarter. Moving to slide 12 and our outlook for 2026. We are reaffirming our full year 2026 guidance for both pro forma Adjusted EBITDA and free cash flow. While we now expect slightly lower air distribution bookings and revenue growth for the year, we expect our 2026 gross margin to be toward the higher end of our previous guidance range of 56%-57% due to favorable mix trends. We expect this to result in similar expected gross income as compared to our February guidance.

This gross income expectation, coupled with our operating expense outlook, which is consistent with our previous guidance, supports our expectation of approximately $585 million of pro forma Adjusted EBITDA and approximately negative $70 million of free cash flow. On to slide 13 and our expectations for the second quarter. We anticipate second quarter year-on-year revenue growth to be flat to nominal. This revenue guidance assumes air distribution bookings growth to be near flat year-on-year, consistent with March trends that continue through April. We expect second quarter gross margin to be at the higher end of our expected annual range of 56%-57%, primarily due to the favorable mix of bookings we mentioned previously. We anticipate adjusted technology and adjusted SG&A expenses to be roughly flat on a sequential basis throughout the remainder of the year.

Overall, we expect second quarter pro forma Adjusted EBITDA to be approximately $130 million. We reported strong results this quarter, highlighted by pro forma Adjusted EBITDA outperformance and the highest rate of air distribution bookings growth in over two years. We are encouraged by the momentum in the business and believe through continued execution of our growth strategies as the operating environment normalizes, Sabre is well positioned to achieve higher revenue growth going forward. With that, operator, please open the line for questions.

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name and company name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Josh Baer of Morgan Stanley. Your line is now open.

Yeah, thanks for the question and congrats on the strong results. Just want to kind of triangulate some of the assumptions in air distribution bookings for the rest of the year. You know, you're highlighting record growth in Q1, and that came in a period where, you know, there's conflict in the Middle East and fuel prices. Pretty good result. Full year, we're looking for low to mid-single digit growth. Could you review some of the assumptions and why wouldn't growth be higher, you know, coupled with all the market share wins as well?

Yeah, no, thank you for the question. You know, first that I would highlight is if you go through the first quarter, what you saw in general was that we generally exceeded the industry by around 500-600 basis points. Our overall viewpoint is that's going to likely continue. What we've seen, though, in the short run is strength in the Americas, offsetting lower distribution bookings, particularly driven by the Middle East conflict and higher fuel. As we've looked at the second quarter, we've essentially extrapolated the trends we've seen from March into April. Our underlying assumption is that, you know, the geopolitical and macro environment start to smooth out at some point during the second quarter.

With that, we see increased bookings growth in the third quarter, but more muted from our initial expectations, but still well above the industry. We see ourselves getting back to closer to our original assumption, closer to mid-single digits by the fourth quarter.

Okay, that's helpful. On free cash flow, I appreciate the, you know, details on what impacted the quarter's free cash flow versus last Q1. Just wondering, like, versus your own expectations, if there was any puts or takes in the quarter to call out.

No, it was very consistent with our expectations.

Okay, thanks.

Thank you. Our next question comes from the line of Jack Halper of Cantor Fitzgerald. Your line is now open.

Hey, guys. Thanks for taking my questions. Just two please. Just one follow-up on the macro. I know you guys mentioned your assumption is for sort of the disruptions to subside in 2Q. Are you seeing that happen already? Sort of what are the kind of underlying assumptions that you have behind that? Then secondly, on the payments, it's nice to see the revenue disclosure this quarter. Can you just talk about the key growth drivers of the payments business again, and where do you think it can go in the kind of medium to long term, and how much of a contributor to overall revenue growth it could be? Thank you.

Thanks, Jack. With respect to macro, so we spoke about the March trend. Basically, we saw the first two months of the year up 9% from a booking standpoint. March was, as we indicated, near flat. In April, we saw similar trending to what we saw in March, although it was slightly positive. The Middle East pattern improved a bit. As we go forward, if we think about Q2, again, it's our expectation that the hostilities cease by the end of the quarter, and then you get back toward normalcy. Clearly, the fuel impact on price and supply is probably going to be a bit longer in duration. It's our hope and our expectation that that unwinds through the balance of this calendar year. What we did see is very strong leisure performance early in the year.

Leisure has been more impacted relatively than other parts during March and April, but still holding up relatively well. Corporate has actually been very positive all year. Very strong trends here in the last two months included. Overall, we think there's a very good backdrop, notwithstanding the challenge of what's happening in the Middle East and the resultant flows of that. With respect to payments, we're really excited about the business. As we've spoken about, there are two elements to this. One is the Conferma virtual payments business that we own, which Mastercard is a minority shareholder of. The second is what we call Sabre Direct Pay, which is a fintech marketplace that we have within Sabre.

Think of what we do as mainly an orchestration layer for the payments industry with value-added services and products that we're beginning to put on top. As we've indicated, we're growing basically the volume of payments by in the neighborhood of 35%-40% consistently. We grew revenue by 25% this past quarter. I would note that we pivoted away from providing professional services or consulting, which was a minority portion of the revenue there. We're basically focused on those development resources which were doing that work, doing more platform-oriented stuff that will drive, we think, better benefit long term. It's our belief that we can continue to grow the payments business at a very aggressive rate for the long term.

We think this can become a much more meaningful part of the business, and we're very well positioned both with the agency and then our supplier customer community, to drive much further penetration.

Great. Thank you.

Thank you. Our next question comes from the line of Jed Kelly from Oppenheimer.

Hey, great. Just quick question. You know, we've been seeing some chatter, I guess, over in Europe, about, like, the potential impact of jet fuel supply shocks. Can you talk about that, how you kind of, you know, adjusted for it in your guidance, what we should be looking for? Just any help around that, around potential supply shocks.

Yeah. Thanks, Jed. We've watched very carefully airline commentary in the U.S. and Europe globally with respect to capacity. Generally what you've seen on a global level is capacity reductions from planned capacity growth of several hundred basis points, about 3%, 4% globally. That's not generally a reduction from current capacity, it's a reduction from planned capacity growth. That's very important. The global market, which 3 months ago was expected to grow 6% in capacity basis, I think now is gonna grow 2%-3%. Obviously, that has more acute impact in Europe because of a lot of the Middle East flying as well as some of the Asian markets. We have a strong global penetration.

I think we're factoring in basically what we're seeing from an airline commentary standpoint and saying, "What will the consequence be?" The second piece is obviously higher fuel prices. You know, to the extent that's passed on the consumer, that may have a bit of a negative effect on demand from a leisure and a corporate perspective. We're probably more so leisure. We haven't seen that yet, but we expect that that will come in a bit. I think the airlines are factoring that into capacity. Again, we're iterating through this and looking at the market. There's a lot of uncertainty out there, but we feel given the market commentary, we feel good about the guide that we provided today.

Yeah. The only thing I would add, inherent in, our air distribution bookings guide for the second quarter, it does assume, if you look at the underlying trends in both Europe and APAC, that those do have year-over-year impacts, you know, primarily from fuel, and other impacts, and it's largely offset by strength in the Americas. We've taken that into account in our air distribution bookings.

Got it. Then, you know, one of the larger corporate travel agencies, you know, is in a deal to go private, assuming, you know, they're trying to implement more AI around that. You know, we've seen some other companies with decent AI capabilities gain a lot of share. Can you just talk about how if you have more corporate travel agencies enhancing their AI capabilities, you know, how that impacts Sabre or what we should be looking for? Thanks.

That's a great question. What we've seen so far with the agencies we've been working with in terms of AI is that they're predominantly leveraging it for productivity. In terms of their own agent productivity by providing agents with chatbots that can assist in terms of travel booking and servicing. On top of that also with automation. A lot of the workflow automation that happens in their back-end system. Really they're focusing on making sure that their current workforce is as productive as possible. Of course, they're also starting to explore making sure that they provide agentic experiences to their customers. To their managed customers that they're currently dealing with through email, phone, and other methods to have chatbots that are also available to them.

Thank you.

Yeah, it's reiterate, Jed. One point to make on this is when we look at what we're doing from an agentic standpoint, we are not the B2C LLM layer that will face the consumer. We are that infrastructure and data layer that sits behind that enables search, booking, servicing. We provide that for our airline and hotel supply customers. We offer that for all of our agency customers. As we talked about, we think that the new agentic AI technology platforms will emerge as a large channel. We think we're very well-positioned to grow with them as well.

Great. Thanks, guys. Good job.

Our next question comes from the line of Victor Cheng from Bank of America. Your line is now open.

Hi, thanks for taking my questions, congrats on the solid results. Maybe just one for me on, you know, can we dig a bit deeper into the trends that you saw in March and April? I know you have talked quite a bit about it sounds like overall bookings growth is similar, what are the puts and takes within that for each month? I would imagine there will be more cancellations in March. Are we seeing, you know, cancellation in April as well? In March, I would imagine there will be some pull-forward bookings as well in corporate and U.S. I would imagine that might be a bit lower in April. If you can expand a bit on that, please. I actually have a follow-up on Mindtrip.

Yes, there was some level of cancellation activity in March. When you go forward to April, as I mentioned, April is slightly better on a macro level than March was for us. Corporate is very strong. To the extent that there was any pull forward that would have occurred more in March than April, we think that that was transitory if it occurred. It's difficult to see that discreetly. We're very encouraged by the trends we see. Effectively, we see an acute impact of things that touch or originate in the Middle East, as we spoke about. That trend improved from March to April. Second is the impact of fuel price and supply. Very difficult to get at exactly what that is.

We think that was about 100 basis points in March, similar impact globally, similar impact in April. We're encouraged by what we're seeing despite the acuteness of the war.

Understood. Thank you. Maybe on Mindtrip, obviously, you know, you're enabling end-to-end agent AI travel booking now, coupled with, you know, PayPal as well. How should we think about unit economics for that or any kinda early interest and how that can scale going forward?

Yeah. Thank you. We haven't broken out the commercials for that, Victor, or talked about that in detail. If you think about from the standpoint of what is the cost of revenue to an airline or a hotelier for the services we provide in our Marketplace business, the cost average is about 1.5% of the value of the ticket or the hotels booked, which is by almost any measure in this industry and any other industry, a very, very efficient cost of sale. Within agentic AI, obviously, there's the ability to provide both traditional as well as more modern NDC content. It enables strong merchandising and retailing by our supply partners. I think there's very strong interest from one of the airline and hotel community in how we're gonna promulgate this.

We're not intending to be an OTA. Two, with respect to these large language models or the agentic players, I think they're very intrigued by our model, which is we can plug in our MCP server and agentic APIs, and literally from day one, and this is proven with what we're doing with the Mindtrip application, they're live with search, booking, and full servicing within their platform. We think that is a first for the industry, and it's a testament to where the industry is going to go.

Understood. Thank you.

As a reminder, to ask a question, please press star one one on your telephone. Our next question comes from the line of Dan Wasiolek of Morningstar. Your line is now open.

Good morning, guys. Thanks for taking the questions. Just a clarification. Wanted to make sure I heard it right. The impact in March to total air bookings from the Middle East surrounding area, did you say that that was about 7 percentage points? Then kind of looking beyond this year, I know you had some initial revenue growth targets for 2027. Wondering if you have any color on the breakdown between the contribution of Marketplace and Airline Technology. You know, maybe on the Airline Technology, like how conversations are going or the pipeline shaping up with carriers, you know, considering going from in-house solutions to outsourcing. Thank you.

On the impacts of Middle East, it's approximately 6 points, as Kurt mentioned as prepared remarks, directly attributable to the Middle East. That's flights that fly to, from, or through the Middle East. There's about another 100 basis points that's tied to fuel associated with the knock-on impacts, obviously, of the Middle East conflict.

With respect to 27, while we're not here to talk about the guidance any further, we feel good about the trajectory that we're on and the execution of our, of our strategies. I'd say the pipeline is rich both within Marketplace as well as for Airline Technology. The one thing I would mention with respect to Airline Technology is that as we look at the addressable market for the offer, order, settlement, excuse me, and delivery capabilities or OSD, we believe that our offering, which is cloud-native, modular, and AI-infused, is the best in the marketplace. We have more modules in production than we believe than any other technology provider in the world. One of the questions will be our ability to penetrate the Amadeus Altéa PSS base.

We believe Amadeus is using PSS, and basically, they have a dominant monopoly position, and they're basically making it very difficult for airlines to choose anybody but Amadeus for the new offer and order solutions. We're working on approaches to that from a regulatory and legal standpoint. We believe we can crack that code, that this can be a double-digit CAGR revenue business for the long term.

Okay. That's very helpful. Thank you.

Our last question comes from Alex Irving at Bernstein. Your line is now open.

Good morning. I want to come back on the capacity question, please, and the phasing of that through the course of the year, what you're assuming gets put into the sky by the airlines. Clear how you're thinking about Q2. The schedules are there. You're following airline comments. You see probably some visibility, but what assumptions are you making about the winter? Are airlines making less money than usual? Jet forward curves are still up a lot, but it's mid-February. Are you still banking on air travel growth in Q4, or are you baking in some conservatism for the possibility of airlines cutting capacity into the winter to support their own margins? Thank you.

Thanks, Alex. As we indicated, we've seen projections for 2026 airline capacity growth reduce globally from about 6% to between 2%-3%. There's still capacity growth per In Q4 of this year, there's still positive capacity growth that is projected in the system. That underlies the assumptions that we have. Again, most of the capacity reductions are from planned capacity increases, so airlines are basically gonna hold the line more than they expected to early in the year, that's what's factored into our guide.

Yeah. One thing I would just add on that, when we originally set our expectations for air distribution bookings, our baseline assumption for industry air distribution bookings growth was flat year-over-year. That's still below the current expectation for capacity growth for the industry. The industry is still expected to grow, even with capacity reductions, somewhere around 2.5%. Overall, we feel pretty good about our forecast, you know, pending obviously macroeconomics and geopolitical.

All right. Thanks for the color.

I'm showing no further questions at this time. I would now like to turn it back to Kurt Ekert for any closing remarks.

Thank you, Siobhan. Thank you, everybody, for the participation and the great questions today. We look forward to, continuing to update you in future quarters and, executing against our strategy. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.