Sabre Gains 17% on Maiden Flight

Sabre Group Holdings Inc. shares rose 17% in their first day amid optimism for steady growth of the travel reservation system operator.

“Predictable and steady is attractive,” said Harvey Bateman, a portfolio manager at $7-billion-asset Sirach Capital Management in Seattle, which bought shares in the initial public offering. Bateman said he expects Sabre’s revenue to rise 15% a year.

The stock rose $4.625 to close at $31.625 in trading of 10.2 million shares, making it the fourth-most active issue in U.S. markets. Earlier, shares rose as high as $33.25.

Sabre, a unit of AMR Corp., sold 20.2 million shares, or a 15.8% stake, at $27 each to raise $545.4 million. The proceeds from the IPO, which values Sabre at $3.45 billion, will be used to repay part of Sabre’s $850 million in debt.

For AMR, the parent of American Airlines, the IPO sets a value for Sabre that will probably boost AMR’s stock price, money managers said. AMR’s stock is trading at about 8.8 times its 1997 expected earnings, while Sabre shares trade at 20.6 times Goldman, Sachs & Co.’s 1997 earnings estimate of $1.59 a share.

AMR was unchanged at $85.375 in trading of 2.13 million shares, more than twice the three-month daily average.

Sabre has found favor with investors because it dominates U.S. airline reservations, analysts said. The Fort Worth-based company booked more than 40% of all airline trips made through U.S. travel agents last year.

In 1995 alone, the company estimates, $40 billion of travel products and services were booked through the system.

Sabre, introduced in the 1960s, was one of the first airline reservation systems in the world at the time, allowing travel agents to find airline ticket prices and scheduling information.

Though Sabre’s prospects are rosy, the company faces new competition, analysts said. Travelers may increasingly book flights directly on the Internet.