A nine-month lawsuit by the U.S. government to stop Sabre’s
deal to buy Farelogix is over after a court ruled in favor of Sabre.
The victory for Sabre in a Delaware courthouse on Monday is
the first of two hurdles it hopes to pass this week, paving the way for Sabre
to complete its acquisition of Farelogix for $360 million from November 2018.
The court documents have been placed under temporary seal.
The U.S. Department of Justice launched its lawsuit last August,
claiming the deal would eliminate competition that has, so far, “substantially
benefited airlines and consumers.”
DOJ claimed the integration of Farelogix into the Sabre
family of airline distribution services would “likely result in higher prices,
reduced quality and less innovation for airlines.”
In response, Sabre said it would fight the lawsuit and
believed that the deal would be completed. It also said the suit’s claims “lack
a basis in reality and reflect a fundamental misunderstanding of the industry.”
Sabre is now awaiting a ruling from the U.K.’s Competition
& Markets Authority, due on April 9.
A statement from a Sabre official said the CMA had “previously
stated that it has ‘provisionally decided that prohibition of the merger
represents the only effective remedy’ to its competition concerns.”
The ruling will be seen as a much-needed slice of good news
for Sabre after the protracted court case and amid uncertain times for the
business as a result of the coronavirus outbreak.
Announcing a $200 million cost-saving plan in March, CEO
Sean Menke said the industry is “facing challenges beyond what has been
Last August, the DOJ claimed Farelogix had “stepped in to
address the needs of airlines” while Sabre was operating outdated technology
and resisting innovation.
In other words, Farelogix, one of the champions of IATA’s
New Distribution Capability project, was catching the eye of airlines that
wanted to move forward.
Buying the company would give Sabre an opportunity to
leap-frog the development stage of its own technology around NDC.
At the time of the acquisition, Sabre NDC chief Kathy Morgan
said: “This is all about airline-controlled retailing and, combined with Sabre,
there is tremendous opportunity in front of us. It’s about turbo-charging the
ability to deliver retailing, distribution and fulfilment solutions regardless
of PSS or GDS.”
She added that for airlines the benefits were clear, but
there were also opportunities for the travel management community and the
issues that go along with implementing NDC and its impact on corporate travel
policy, compliance and duty of care.