Good day, ladies and gentlemen, and welcome to the Sabre Quarter 1 2014 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, the Vice President of Investor Relations, Barry Sievert. Sir, you may now begin the conference.

Thank you, Marcus, and good morning, everyone. Thanks for joining us on our first quarter earnings conference call. This morning, we issued an earnings release, which is available on our website at investors.sabre.com. The press release is also filed as an exhibit to Form 8-K, which is available on the SEC's website at sec.gov. A slide presentation, which accompanies today's prepared remarks, is also available during the call at the Sabre website. A replay of today's call, along with the slide presentation, will be available on our website beginning this afternoon. Following today's call, we would invite equity and debt investors with additional questions to follow up with Investor Relations. Please note that when we refer to the plan during the prepared remarks, this refers to the 2014 operating plan that was established in the fall of 2013. Throughout today's call, the earnings, revenues, earnings per share, EBITDA, interest expense and free cash flow information that will be provided are from continuing operations and have been adjusted to exclude expenses and other gains and losses related to reorganization, the amortization of Expedia SMA incentive payments, the working capital impact of the Travelocity business model change, litigation and tax matters and other unusual items. The most directly comparable GAAP measures and reconciliations are available in the earnings release posted on our website at investors.sabre.com. We would like to advise you that our comments contain forward-looking statements. These statements include, among others, disclosure of revenue and earnings guidance and goals, our planned dividend policy, our expectations of future -- of the industry trends and various other forward-looking statements regarding our business. These statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call. Information concerning the risks and uncertainties that could affect our financial results is contained in the company's SEC filings, including the final prospectus filed on April 17, 2014, relating to the company's initial public offering and our Form 10-Q for the quarter ended March 31, 2014, which we plan to file later this afternoon, as well as in today's earnings release, which is filed as an exhibit to Form 8-K. Participating with me on the call today are Tom Klein, our Chief Executive Officer; Rick Simonson, our Chief Financial Officer; and Chris Nester, Senior Vice President of Finance. Tom will start us off with the review of our first quarter performance. Rick will then offer some additional perspective on our financial results and forward outlook before turning the call back to Tom for closing remarks. We will then open the call for your questions. With that, I'll turn the call over to Tom.

Thank you, Barry, and good morning, everyone. Thanks for joining us this morning. Today, we reported solid financial results that were above our plan, positioning us well to meet or exceed our full year guidance. Before getting into the results, I'd like to take a minute to discuss our recent IPO and Sabre's return to the public markets after 7 years as a private company. We spent our time under private ownership, transforming our company, expanding our customer base, investing in our technology and software and completing acquisitions to bolster our technology portfolio. Today, we have an excellent competitive position that will allow us to continue to grow our company. We had a goal when we went private to double the size of our solutions business. We exceeded that goal in Airline Solutions alone, while also building our Hospitality Solutions business to over $100 million of annual revenues and the clear leader in hospitality reservation systems. Today, our solutions business is one of the largest SaaS and hosted software businesses in the world. With broad and deep product capabilities, we have strong momentum and a large market opportunity in our sites. We believe Airline and Hospitality Solutions is on its way to over $1 billion in annual revenue in the next few years. We also strengthened our Travel Network business through consistent investment in deep, scalable technology and new value-added products, like Sabre Red desktop; new capabilities that generate ancillary sales for airlines and hotels; and TripCase, our leading mobile app that allows travelers to stay connected with suppliers, social networks and travel agents and will be used by travelers to manage well over 20 million trips this year. We grew total Sabre adjusted EBITDA every year while we were private even through the worst financial crisis for lifetimes, demonstrating…

Thanks, Tom. We were ahead of plan in Q1 and expect to perform the plan across the remaining 3 quarters, putting us squarely on track to meet or beat our full-year 2014 guidance. Q1 performance was a result of strong volume growth in our 2 core businesses. Travel Network bookings grew 4.4%, and Airline Solutions passengers boarded were up 9.4%. As Tom said, given the changes in Travelocity business model, I think it's most insightful to focus on the results of our 2 growing core businesses, Travel Network and Solutions, which we refer to as Sabre excluding Travelocity. On this basis, revenue was $661 million, an increase of 7% year-on-year. Q1 adjusted gross profit totaled $287 million, a 5% improvement from the same period in 2013, and total adjusted EBITDA increased 4% to $290 million. This was less than our revenue growth as our EBITDA growth rate was impacted in the quarter by cost associated with the IPO, the pricing compression resulting from the merger of American Airlines and US Airways, as well as the impact of the unfavorable political and economic environment in Venezuela. Sabre consolidated adjusted earnings per share totaled $0.18 for the quarter. This is based on our pre-IPO share count, assuming full dilution of 188 million shares. Moving to the balance sheet and resulting cash flow for the quarter. From Sabre consolidated adjusted EBITDA of $184 million, we generated $68 million of adjusted free cash flow, a 39% increase compared to the year-ago period. Adjusted free cash flow excludes the impact of Travelocity working capital unwind and other costs related to the restructuring, as well as litigation and some other costs. Total CapEx in Q1 was $59 million, down 21% compared to Q1 2013. We used free cash flow in the quarter of $21 million to…

Thanks, Rick. We're excited to be back in the public market and to be able to tell our story and demonstrate the strength of our business over the coming the coming years. Airline and Hospitality Solutions and Travel Network are strong and growing. We put Travelocity on a positive trajectory. Our customers love the brand, and we see a significant upside going forward. Our position as the leader in the intersection of technology and travel gives us confidence as we look ahead. I'd like to thank all of you for your interest in Sabre. I look forward to getting to know many of you better over the coming quarters and years. And with that, I will ask Marcus to open the call for questions.

[Operator Instructions] Our first question comes from the line of Kash Rangan from Merrill Lynch.

And let me just rephrase the question. I'm not sure if I got through or not. Congrats on your first quarter as a newly public company again for the second time. Tom, I'm wondering if you could recap for us the opportunity in Travel Solutions and Airline and Hospitality and some rough quantification of the traditional legacy solutions that these verticals use and the dollar-for-dollar replacement potential with your solutions on top of the traditional solutions, and what might help accelerate the growth of the business as strong as it is and as solid as it seems to be heading on the $1 billion run rate? I'm wondering if there's anything that could accelerate the revenue growth rate in the Travel Solutions business.

Thanks, Kash. I think let me start with a couple of things, and start with the market sizes. I talked about the big travel industry. We think there's about a $60 billion spend in technology across the travel sector, and 35% to 40% of that is still in-sourced, the very large trend, and there's been momentum in the trend to continue to outsource that. I think a couple of things can happen. One, in the Airline Solutions business, over the next several years, we see a pipeline that has about 1 billion passengers boarded available for -- that will come up to bid here in the next 3 years. And we think most -- a good chunk of that is in-sourced business or it sits with competitors who haven't -- frankly, just haven't been winning in the marketplace. So we think there's big opportunity in the Airline Solutions business for new reservations customers, as well as the commercial and operations solutions, where again, the trend is clearly to continue to outsource. I think as far as acceleration, further acceleration, in the hospitality business, as I mentioned, very focused on expanding outside the United States. So today, the majority of our revenue, about 65% hospitality comes from the United States. We expect, over time, for that to slip to more like a 40% U.S., 60% x U.S and, I think our ability to accelerate x U.S. is where we'll get some growth, and that's why that HNA deal in China that I mentioned is important. There's about 600 hotels in China today, about 2,000 in Asia. There's a lot of upsides for us if we can get outside the U.S. market and grow more aggressively.

That's wonderful, and if I could slip in a second question. I use your TripCase app, and it's fantastic and really plugged into it. And I'm wondering maybe -- again, maybe a crazy help in trying to imagine what the future might look like for the product. But as you try to automate the travel supply chain, are there opportunities to generate advertising revenues from suppliers? There's a list of suppliers now that TripCase app seems to be growing, and you seem to be adding more and more points of value in automation through the travel supply chain. Just wondering if you could comment on that.

Sure. I mentioned over 20 million trips will be managed this year with TripCase, which means travelers are carrying their complete itinerary in TripCase as they go across their trip. And certainly, one opportunity to monetize is in advertising. We started to explore that, but we think there's other opportunities. Certainly, people want to stay connected to their suppliers. They want to stay connected with their social networks. They want to stay connected with the travel agency that booked their trip, and they want to do it as they participate on their trip or take the trip. And nobody has a solution like TripCase out there in the marketplace, and certainly, nobody's doing it at a volume, as I mentioned, more than 20 million trips this year. So we think there's lots of opportunities going forward, but I think right now, we're focused on making it the best product for travelers, and continue to grow the volume of trips, which we think is the right measure. We don't think downloading the app is what's important. We think, actually, using it on a trip is what's important. And we're confident that, over time, that core service will be a place where we can monetize.

Our next question comes from the line of Bryan Keane from Deutsche Bank.

[Audio Gap] contract lost. Maybe you can talk a little bit about what possibly happened there? What were the reasons for the loss? I guess, that's first. Second is, is does that contract go all the way through 2016? Or does it wind down before that? And then the third piece of that is, obviously, you have some big contracts ramping up with Air Berlin and American Airlines, so are we even going to notice a blip there with that loss?

Thanks, Bryan. Well, let me start with as a reminder, we're not running SabreSonic reservations systems at Southwest. We're running a legacy system that we were maintaining for them. That said, we're not going to comment on the individual customer decision. We continue to have strong momentum in the Airline Solutions business. As you mentioned, the recent wins at AA and US Air, combination along with Air Berlin, they're very big deals, and to win both in one quarter is a significant amount of business coming on. So while we would have liked to win the Southwest reservation business, we think that as I said, we'll continue to move toward our guidance, which has been 12% to 14% growth in this business. We expect to be able to do that, and we certainly see opportunities to increase, as I mentioned, the reservation business with the big pipeline that we see out there. So as far as the contract goes, the contract does run through 2016 full year and it may go beyond that, depending on Southwest's decisions around how they want to manage that migration, but we're contracted through the end of 2016.

Okay. And then just thinking about kind of your comments around guidance. You're talking about either meeting or exceeding. When you say exceed, potentially exceeding, Tom, maybe you can just give us an idea what would need to happen to exceed the guidance. What would be some of the variables?

Bryan, this is Rick. In terms of 2014, as we've commented, meet or exceed the guidance. And I think the things that we've called out that play a little bit of the dynamics in the move from Q1 to Q2 are the ones that if they play little more in our favor, for instance, Venezuela, like it did in first quarter, then that would be something that would be contribute to certainly exceeding. In terms of overall volumes in the Travel Network business, again, macro in terms of pickup in corporate travel in the U.S. that would help us further exceed our plan. But essentially, we banked the exceed that we've had in Q1. We expect to meet fully our internal plan on the remaining 3 quarters. So right there, your -- you should be a little bit ahead of your 2014 guidance, but those 2 factors are the ones that would have the most impact above and beyond that.

Okay. Last question for me. I just wanted to switch gears and ask about pricing in the marketplace. I think from the longer-term model, you talked about stable with modest increases in pricing. Some of that might be mix as well. Can you just give us an idea how the pricing environment looks? Obviously, with American Airlines renegotiating the deal, there was some pricing pressure. But going forward, do you guys think you'll be able to get some pricing leverage?

First, on AA/US, look, I mean, we have a significant market share in the U.S. We're by far, the largest player here, therefore, have the most US Airways booking. So there was price compression as they rolled into the American Airlines, higher volume airline contract. So that was a unique thing. We think that consolidation in the U.S. is largely behind us, and we've been able, for the most part, to step through consolidation and continue to see prices in the GDS business in the low single digit, up every year. That's what our goal is. We expect, as we push towards that 4% to 6% midterm growth rate, our expectation is some of that growth rate comes from price every year. We continue to drive more value to airlines. We're providing a broad set of services around how they can get more ancillary revenues. We saw our ancillary revenues from the airlines that we serve go up over 800% in the first quarter, so significant traction there. So we're providing more value. We expect we'll get a little pricing change for that.

And we saw a positive price year-on-year in the first quarter even in spite of the impacts Tom just mentioned both with the merger and with Venezuela. So Bryan, we remain -- in the quarter, you don't see a lot of change that you should extrapolate. But everything's working, and again, we're expecting those low-single digits in terms of pricing across the longer arc here.

Our next question comes from the line of Jason Kupferberg from Jefferies.

This is Ryan Cary calling in for Jason. Just a quick question on the air bookings share in the GDS. Is this a number you plan on releasing going forward? I'm just curious how you did in the quarter. I know over the last couple years, it's kind of been ticking down, and I was just wondering if this is a -- if you think this has troughed in what might be some catalysts going forward?

Yes, Ryan, a couple of things I'd share. First, yes, we'll talk about bookings share every year -- every quarter, and actually, we're at -- today, we're sitting at 35.4%. And the only downtrend we've had has been around the one-time loss of Expedia bookings. That was a risk mitigation decision that Expedia made. They're the biggest air-booker in the world. So we still have between 75% and 80% of their business. They're still our largest customer, but we understood that diversification and worked with them on it for a while. But because it was such a big customer, that impacted our share. Net net, we've been growing share in every region of the world. Our global share sometimes moves around based on mix. So there's regional mix issues. We're obviously heavily weighted to the Americas, and we have a leading share in Asia but -- so there's some noise in the share numbers because of regional mix and how regions are growing. But from a standpoint of customer, wins, losses, we've been a net gainer of customers, and we've been gaining share in most regions of the world. And as I mentioned, in the first quarter, we saw year-over-year 1 point increase in Europe, which is where we're really focused, and that we saw a 14% growth in Europe way better than market.

And on the quarter, Ryan, it's 0.1% up in terms of market share on the bookings. So we had growth.

Great. And just speaking about that 75% to 80% share of Expedia, is that a number you expect, going forward, to be pretty steady? And kind of building on that, I think I was reading that Orbitz is planning on moving or using multiple GDS providers when it rolls on in '15. Is there any way to see what percentage you think you will get of that business?

We expect -- to the first part of your question, we expect stability in our relationship with Expedia. And as it relates to Orbitz, we're working with them. We signed a contract with them to expand our relationship. We do have some more of its bookings today, but we've signed a contract to expand the relationship. But we're still working through where we're going to land as far as share percentage, but it's definitely opportunity for us. We won't see it until '15.

Our next question comes from the line of David Togut from Evercore.

This is Rayna Kumar for David Togut. Could you quantify your expected interest expense and debt paydown plan for the remainder of '14 and 2015?

Yes. So in terms of the interest expense, as I mentioned, Rayna, we'll that decline by about $55 million year-on-year. And then in terms of the total interest expense, in terms of what we've got in terms of amortizing, we've got about 1% of the term loans amortized over the next 2 periods, and so that's about $21 million in 2014, 2015. And then as you look out to 2016 and you look at those bonds, we would expect to pay those down with cash on the balance sheet and availability under our revolver or refinance. So really, what you see is that constant paydown of about $21 million on the term loans across '14, '15 and '16. And then '16, the 2016 bonds, we'll either pay down from cash available through those 2 sources or do a refinancing. There's no benefit in paying off those 2016 bonds before then. So in terms of our interest expense, we'll be about $255 million less what we had in 2013, as I mentioned before.

Great. That's very helpful. And just going back to Venezuela, could you please quantify the revenue and EBITDA pressure you expect from the region in 2014?

Well, as we said, we expect to offset most of that through other means. We had some tens of millions of revenue, and we have some tens of millions but less EBITDA, but it is a good profitable market for us. It's a franchise market. We've played Venezuela successfully for a decade or more, Tom, right? I mean, you're intimate. You were in the market there, and we expect that to continue. Again, it's something that we didn't change in our teams. The plan that they needed to meet, they needed to kind of make that up. But as we've highlighted to everyone, it is a risk that we're overcoming. We did the majority of that at the end of Q1. We still had a little bit of impact, and it kind of sets up with the possible risk that I mentioned for the rest of the year.

Okay, great. And just one last question from me. What are your top 3 R&D priorities this year?

I think it's a couple of areas. Certainly, we have to continue to the -- in both business, both the solutions business as well as the Travel Network business, continue deliver services to suppliers, so airlines and hotels primarily, that allow them to get revenues and to personalize the experiences for their customers. So you saw on the day -- on the IPO day, we've put out a release on 3 products across the portfolio that get the personalization of offers to consumers, and we have airlines and hotels now using those capabilities. We're certainly going to continue to invest behind some of the big trends. We think we have the best mobile product in the industry with TripCase and the highest number of trips managed through a mobile product. We'll continue to invest there, and we're very focused on data and analytics. We sit on a lot of data for our customers, and being able to package that data in new ways and provide analytics to customers is a big focus for our company. So -- and that's, again, across all the businesses. And we think we can both create better business analytics on top of current software solutions and be able to price into that, as well as create completely new solutions, as we have with Intelligence Exchange in the Airlines Solutions business, which we think will be a meaningful line of business over time. So those are the big areas we're focused on.

Our next question comes from the line of Brian Essex from Morgan Stanley.

I just wanted to dig in a little bit again on Southwest if I could. Maybe if you could comment on, as people look at maybe the volume of PBs on their website, and maybe they're drawing the wrong conclusions or the right conclusions. I don't know kind of how to approach it. But maybe if you could speak to the quantity of PBs on their website, what the impact may be, what kind of considerations. For example, direct bookings versus reward customers and what kind of puts and takes to consider with that. And then, additionally, if we could talk about long term the confidence in being able to deliver on the long-term growth in that segment. I mean you have a pretty substantial pipeline. You've already announced a couple hundred million PB wins. How do we look at the size of that pipeline, your win rate in that pipeline and the confidence that you have for the longer-term performance in that segment?

Brian, this is Rick. Let me start with -- as we said, in the press release of that day, Southwest, in that contract, account for less than approximately 1% of our Sabre revenues and less than 3% of EBITDA. We are contracted through the end of 2016, as Tom reiterated earlier. And in terms of their passengers boarded, which is publicly reported out there, I think it's somewhat over 110 million passengers boarded. And again, they're using a legacy system currently that we run for them. It's not our current modern system. Of course, that's why -- I guess part of why they're having to change that and they're having to rationalize multiple systems there. So they have those switching costs that they have to incur because they've been somewhat using older legacy systems so -- and then Tom...

Yes, I mean, on the broader opportunity, look, I think there's -- we've shown the ability to continue to win airlines all over the world. Last year, we had LAN, and well, LATAM in Chile. We had Etihad in Abu Dhabi, and we had Virgin Australia in Brisbane, Australia, come over to Sabre. These announcements we just made are 2 of our bigger players out there that will be up for bid over the next couple years that we won. So we feel like we can walk into every deal and be in a position to win. And we have a broader set of services that we can provide beyond reservations that creates opportunities for us at every airline. So even when we don't win the reservations business, we have opportunities to put a broad set of solutions into an airline, as we've done at a number of Amadeus' customers and Navitaire's customers. So every airline is a potential customer for us. We have solutions at almost 300 airlines, and we'll win our fair share of the reservations business. There's a lot of it, as I said, is in-house. That outsource trend will continue. We don't believe that there's many airlines in the world that have the capability to spend and also have the technology, expertise and talent to be able to maintain their own systems long-term. So we think we'll continue to see the outsourcing of those in-house capabilities and we'll win our fair share of the market.

I think it speaks to the breadth of your platform that you remain -- that Southwest remains a customer of yours. I mean, can you talk about those solutions? And then the second part of my questioning is geographical expansion. As you expand into Turkey, is there anything you can relay from your experience there that we can kind of extrapolate to other geographic expansion, particularly considering that, I mean, globally I think the U.S. is one of the lower-priced markets out there. I mean, if you're looking geographically, how do you approach that? And what kind of pricing uplift can we be looking at for that?

So let me start with the back end of your question first as far as geographic expansion. We have a product that we think, at this point, is highly differentiated and it's highly differentiated globally. We've talked about some the reasons. TripCase is one of the reasons, but another one would be we, hands down, have the best products for travel agents that work for corporations booking corporate travel. We find the lowest fare more frequently than any of our competitors, and we have lots of third-party studies that suggests that. So there's a lot of differentiation in our product today that we believe will resonate no matter what market we're selling into, and that's why we have confidence that we cannot just expand in EMEA where we are today, but also go into some of these new markets where we traditionally haven't played. Besides the 11 markets that we entered in the last 18 months, there's not a lot of places where we don't have a presence today. Our focus will be on expanding. Again, we're going to be stay focused on EMEA. It's a place where we've proven that we can grow, evidenced by the 1%, the 1 market share point we gained in the first quarter, growing significantly in the Middle East portion of EMEA over the last several years, which has been -- which has had characteristics like -- that are consistent with any emerging market. Some of the best growth rates in the world have come out of the Middle East. And you're right, the pricing environment in those EMEA markets is very, very favorable. So we'll continue to look to expand there and see the kind of growth that we saw here in the first quarter. But we'll use a product-led approach around the world. As far as the solutions business, it's at a -- at an airline -- we have Amadeus customers, like Saudia, that have 12 solutions wrapped around the reservation system. So we have lots of opportunities to sell into airlines. The operations suite is a very powerful suite. It helps airlines save costs. We have best-of-breed capabilities there, and we'll continue to expand our solutions business with big reservations deals as well as selling modules of software.

I mean, I guess just on the geographical, any sense of the pricing uplift? Is Turkey representative of what you can do geographically from a pricing perspective? Or I mean, how do we think about the differential there? I mean, there's clearly an opportunity in other markets. I'm just kind of wondering how we think about pricing [indiscernible].

We've talked about low-single-digit pricing increases that includes the mix. We have a very big base in the Americas, and so we think that low-single digits. And if we expand faster globally than our current plan, we'll be able to move that up a little bit, but we expect that kind of moderate pricing increases every year in the GDS business.

Our next question comes from the line of from Arun Seshadri from Crédit Suisse.

I just wanted to ask in terms of Travel Network, just wanted to understand the operating leverage model there. Revenue grew nicely. You talked about the delta between bookings and revenue, but if you could comment a little bit on operating leverage and what we should see there going forward.

Arun, this is Rick. In terms of first quarter, we had revenue growth of 7%. We had EBITDA growth of 4%, and that's not indicative of the operating leverage overall or what you've seen in the previous history or what we expect going forward, and really, that was an issue. We had some expenses related, overall, in the IPO, and we had some things in -- related to a settlement here. So Sabre, overall, in terms of that operating leverage in the first quarter, we were impacted by those things. In terms of Travel Network, coming to it and looking forward, as we talked in the IPO, we've increased our margins there, the adjusted EBITDA margins by over 500 basis points since 2009, and we're in the 42%-ish range. We expect to continue those and hold those steady at that good level and then have the growth that we talked about over the medium term to drive overall EBITDA.

Okay. And then I just want to also ask about the margin accretion potential on the Airline Hospitality business. What kind of incremental margin can we expect for additional revenue there? I mean, I noticed that your margins relative to Amadeus are lower, but I imagine it's a result of scale. If you could sort of qualitatively talk about the type of margin accretion possible there.

Yes, in the -- as we spoke in the roadshow, we're sitting right around 30% EBITDA margin in new solutions. Somebody's -- we have a cell phone noise at the back. We're not going to take this. [Technical Difficulty] Okay. Thank you. That's better. So Arun, in solutions, we've been running last year at about 30% adjusted EBITDA margin, and as we talked, we expect to see expansion of that. As we get scale, we get benefit across the SG&A, and we've gotten maturity in terms of our ability to efficiently implement new airline reservations platforms. And of course, we're starting to get scale across operational and commercial suite as well. And then in hospitality as well, we've taken that from a very small business to one that's over $100 million in revenue, one of the biggest in the business. And it starts to reach the earlier stages of scale, while Airline Solutions, we believe, are at scale. And now we start to get the benefit. So as we talked, as we look across the medium-term in this kind of 3-year arc, we expect to move into the mid-30s and above as we go forward, and that's the benefit of efficiency in leveraging the model, and you get the top line growth as well. So it's the double positive in terms of how that starts to drive a big increase in total aggregate to EBITDA. And with the moderation of a less intensity per dollar revenue on the CapEx, that of course then, is what the contributor to and the confidence that I talked about of increasing free cash flow. Okay, is there one more question, operator?

Yes, we have time for one more question. Our last question comes from the line of John King from Bank of America.

Just a couple of follow-ups, if that's all right. Firstly, on the Southwest side of things, you mentioned it was on a legacy platform. Can you quantify how much of your solutions revenue is on a similar legacy platform and not on SabreSonic?

Yes, John, thanks. There's no other revenue on that platform. It was a unique situation at Southwest. We had a very long-term relationship with them where we managed this internal systems for them, did all the custom development for it, et cetera. So it was a one-off. All of our other -- more than 80 airlines use our SabreSonic CSS platform. And in all those cases, they use the reservation system, the inventory system and the departure control system at the airports. So all 3 big components are installed at all of our airline customers.

Good to know. And just one other comment around the commission or incentive levels that you're seeing at the travel agencies. You gave some good comments around the pricing, but what would you expect in terms of the commission levels, going forward, in the medium term? I noticed that the gross margin were slightly down, and I wonder whether that was -- part of it was slightly higher commissions.

No, it wasn't. But I'll let Rick talk about it a little further. But let me just start with we've seen good moderation on the incentive line over time. Again, it's based on us going to market with a product-led strategies. So when we go into travel agencies, whether they're online travel agencies or whether they're business travel or leisure travel, we're trying to map for them how our product will help make their operation better, either help them drive revenues or help them reduce costs in their operation or help them appear to be more innovative to their customers and deliver more innovative services to their customers. That's where our conversation starts. And generally, our market research says that's why people pick us when they do pick us versus our competitors. And because of that, our economic offers have moderated over time.

John, and we didn't see anything different in Q1. We had slight increase there, and that's what we've seen. That's what we expect is a slight increase, and that's what we've manage well in the past and expect going forward. So there's nothing, new nothing to comment on in the dynamics around incentives in Q1.

Yes, and the increase is primarily driven by the growth rates of larger agency sources, small agencies.

Right.

Got it. And just last one, if you could comment, Rick, maybe on the cash outflows you're expecting on the Travelocity working capital side for the rest of the year, just to try and understand how that's phased through the year. That would be great.

Yes, as we talked that we expect the majority of that to be done in the first half, and we had some in 2013. There was somewhat less than $50 million on that unwind in 2013. And we've got somewhere in the range of $125 million to $150 million to go in the totality of the first half in terms of the working capital unwind associated with both the Travelocity migration to the Expedia platform, and a little bit of around TPN. Look, it's both TPN, the divestiture of that and the Travelocity. So that gives you the quantum.

We have no further questions in the queue at this time. I would now like to turn the conference over to Mr. Klein for closing remarks.

Well, thanks, everybody, again, for joining us on the call this morning and for joining us on this next leg of the exciting journey that we're on. We appreciate your interest in Sabre, and we look forward to speaking with you again very soon. Have a good afternoon.

Ladies and gentlemen, thank you for attending today's conference. This does conclude today's program. You may all disconnect. Everyone, have a fantastic day.