Sabre Reports 2Q Growth Despite Business Travel CutsSabre Reports 2Q Growth Despite Business Travel Cuts

Holding onto its title as one of the most successful spin-offs of an internal IT department, Sabre Holdings Corp. Thursday reported second-quarter earnings growth of 19% and predicted 20% growth for the year, despite a slowing economy that has slashed business travel and caused heavy turbulence for Sabre's airline and hotel customers.

Sabre, the former IT arm of American Airlines, is one of four global distribution systems in the travel industry, and owns 70% of lead travel Web site Travelocity.com. The industry is clearly in flux; Sabre competitor Galileo International is being acquired by Cendant Corp., and Worldspan is up for grabs. Travelocity's biggest online competitor, Microsoft's Expedia.com, this week was bought by USA Networks. Last month, the major U.S. airlines launched their own site, Orbitz.com, while the European carriers launched two.

Sabre, meanwhile, changed its business model. Just this month it received antitrust approval to sell its airline IT outsourcing business to EDS.

Sabre executives were notably unruffled by the changing landscape during their analyst call Thursday. In addition to beating the Street's earnings expectation of 67 cents per share by a penny, they reported that revenue was up 16%, to $582 million, sparked in part by Travelocity's revenue growth of 76%, from $46.8 million to $82.3 million.

Amid the fallout in the tech sector, Sabre stock is up more than 21% this year. Meanwhile, its former parent, AMR Corp., reported its first loss in the second quarter since 1992. UAL Corp., the former parent of Galileo and United Airlines, reported the second-worst quarterly result in its history, citing a "collapse in business travel."

Sabre's GetThere division, which sells business-to-business travel purchasing software that allows corporations to direct their travelers to preferred suppliers, reported a sales increase of 150% from last year, though off a small base. Sales this year reached $11 million, as corporations succeeded in moving about 10% of their market share online.

CEO William Hannigan did quietly slip in one negative piece of information: The Sabre Marketplace, an electronic exchange of parts and services for the airline industry, is closing.