UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

|ý                                              | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|---------------------------------------------- | ----------------------------------------------------------------------------------------
|For the Quarterly Period Ended March 31, 2004.
|OR                                            
|o                                              | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|                                               | For the Transition Period From
 To                                                      

Commission file number 1-12175.

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GRAPHICSABRE HOLDINGS CORPORATION(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of incorporation or organization)

75-2662240(I.R.S. Employer Identification No.)3150 Sabre Drive, Southlake, Texas(Address of principal executive offices)

76092(Zip Code)


Registrant's telephone number, including area code(682) 605-1000

Not Applicable(Former name, former address and former fiscal year, if changed since last report)

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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes ý    No o

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act). Yes ý    No o

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class A
Common Stock, $.01 par value139,047,372 as of April 30, 2004



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INDEX  SABRE HOLDINGS CORPORATION

|PART I:   | FINANCIAL INFORMATION                                                                      |    | 3 
|--------- | ------------------------------------------------------------------------------------------ | -- | --
|Item 1.   | Financial Statements (Unaudited)                                                           |    | 3 
|          | Consolidated Balance SheetsMarch 31, 2004 and December 31, 2003                           |    | 3 
|          | Consolidated Statements of IncomeThree months ended March 31, 2004 and 2003               |    | 4 
|          | Consolidated Condensed Statement of Stockholders' EquityThree months ended March 31, 2004 |    | 5 
|          | Consolidated Statements of Cash FlowsThree months ended March 31, 2004 and 2003           |    | 6 
|          | Notes to Consolidated Financial Statements                                                 |    | 7 
|Item 2.   | Management's Discussion and Analysis of Financial Condition and Results of Operations      |    | 23
|Item 3.   | Quantitative and Qualitative Disclosures About Market Risk                                 |    | 46
|Item 4.   | Controls and Procedures                                                                    |    | 47
|PART II:  | OTHER INFORMATION                                                                          |    | 48
|Item 1.   | Legal Proceedings                                                                          |    | 48
|Item 2.   | Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities           |    | 48
|Item 3.   | Defaults Upon Senior Securities                                                            |    | 48
|Item 4.   | Submission of Matters to a Vote of Security Holders                                        |    | 48
|Item 5.   | Other Information                                                                          |    | 48
|Item 6.   | Exhibits and Reports on Form 8-K                                                           |    | 49
|SIGNATURE |                                                                                            | 50

2

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

SABRE HOLDINGS CORPORATION  CONSOLIDATED BALANCE SHEETS  (Unaudited) (In thousands)

|                                           |                                                                                                                                                             | March 31,
2004                             |         | December 31,
2003 |          
|------------------------------------------ | ----------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ----------------- | ---------
|Assets                                     |                                                                                                                                                             |                                            |         |                   |          
|Current assets                             |                                                                                                                                                             |                                            |         |                   |          
|                                           | Cash                                                                                                                                                        |                                            | $       | 33,841            |          
|                                           | Marketable securities                                                                                                                                       |                                            |         | 841,061           |          
|                                           | Accounts receivable, net                                                                                                                                    |                                            |         | 439,910           |          
|                                           | Prepaid expenses                                                                                                                                            |                                            |         | 73,594            |          
|                                           | Deferred income taxes                                                                                                                                       |                                            |         | 13,937            |          
|                                           |                                                                                                                                                             |                                            |         |                   |          
|                                           |                                                                                                                                                             | Total current assets                       |         |                   | 1,402,343
|                                           | Property and equipment                                                                                                                                      |                                            |         |                   |          
|                                           | Buildings and leasehold improvements                                                                                                                        |                                            |         | 306,634           |          
|                                           | Furniture, fixtures and equipment                                                                                                                           |                                            |         | 36,809            |          
|                                           | Computer software and equipment                                                                                                                             |                                            |         | 291,558           |          
|                                           |                                                                                                                                                             |                                            |         |                   |          
|                                           |                                                                                                                                                             |                                            |         | 635,001           |          
|                                           | Less accumulated depreciation and amortization                                                                                                              |                                            |         | (250,433          | )        
|                                           |                                                                                                                                                             |                                            |         |                   |          
|                                           |                                                                                                                                                             | Total property and equipment               |         |                   | 384,568  
|Investments in joint ventures              |                                                                                                                                                             |                                            | 177,754 |                   |          
|Goodwill and intangible assets, net        |                                                                                                                                                             |                                            | 876,672 |                   |          
|Other assets, net                          |                                                                                                                                                             |                                            | 147,717 |                   |          
|                                           |                                                                                                                                                             |                                            |         |                   |          
|                                           |                                                                                                                                                             | Total assets                               |         | $                 | 2,989,054
|                                           |                                                                                                                                                             |                                            |         |                   |          
|Liabilities and stockholders' equity       |                                                                                                                                                             |                                            |         |                   |          
|Current liabilities                        |                                                                                                                                                             |                                            |         |                   |          
|                                           | Accounts payable                                                                                                                                            |                                            | $       | 212,070           |          
|                                           | Accrued compensation and related benefits                                                                                                                   |                                            |         | 58,304            |          
|                                           | Accrued subscriber incentives                                                                                                                               |                                            |         | 80,279            |          
|                                           | Deferred revenues                                                                                                                                           |                                            |         | 39,996            |          
|                                           | Other accrued liabilities                                                                                                                                   |                                            |         | 162,457           |          
|                                           |                                                                                                                                                             |                                            |         |                   |          
|                                           |                                                                                                                                                             | Total current liabilities                  |         |                   | 553,106  
|Deferred income taxes                      |                                                                                                                                                             |                                            | 10,915  |                   |          
|Pensions and other postretirement benefits |                                                                                                                                                             |                                            | 136,240 |                   |          
|Other liabilities                          |                                                                                                                                                             |                                            | 21,569  |                   |          
|Minority interests                         |                                                                                                                                                             |                                            | 6,370   |                   |          
|Capital lease obligation                   |                                                                                                                                                             |                                            | 164,062 |                   |          
|Notes payable and other notes              |                                                                                                                                                             |                                            | 451,392 |                   |          
|Commitments and contingencies              |                                                                                                                                                             |                                            |         |                   |          
|Stockholders' equity                       |                                                                                                                                                             |                                            |         |                   |          
|                                           | Preferred stock: $0.01 par value; 20,000 shares authorized; no shares issued                                                                                |                                            |         |                  |          
|                                           | Class A common stock, $0.01 par value; 250,000 shares authorized; 146,370 and 145,652 shares
  issued at March 31, 2004 and December 31, 2003, respectively |                                            |         | 1,459             |          
|                                           | Additional paid-in capital                                                                                                                                  |                                            |         | 1,282,389         |          
|                                           | Retained earnings                                                                                                                                           |                                            |         | 527,836           |          
|                                           | Accumulated other comprehensive loss                                                                                                                        |                                            |         | (12,062           | )        
|                                           | Less treasury stock at cost: 6,866 and 4,322 shares, respectively                                                                                           |                                            |         | (154,222          | )        
|                                           |                                                                                                                                                             |                                            |         |                   |          
|                                           |                                                                                                                                                             | Total stockholders' equity                 |         |                   | 1,645,400
|                                           |                                                                                                                                                             |                                            |         |                   |          
|                                           |                                                                                                                                                             | Total liabilities and stockholders' equity |         | $                 | 2,989,054
|                                           |                                                                                                                                                             |                                            |         |                   |          

See Notes to Consolidated Financial Statements

3

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SABRE HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) (In thousands, except per share amounts)

|                                         |                                     | Three Months Ended
March 31,   |        
|---------------------------------------- | ----------------------------------- | ------------------------------ | -------
|
|Revenues                                 |                                     | $                              | 539,753
|                                         | Cost of revenues                    |                                |        
|                                         |                                     |                                |        
|Gross profit                             |                                     |                                | 228,238
|Other operating expenses                 |                                     |                                |        
|                                         | Selling, general and administrative |                                |        
|                                         | Amortization of intangible assets   |                                |        
|                                         |                                     |                                |        
|                                         |                                     | Total other operating expenses |        
|Operating income                         |                                     |                                | 69,488 
|Other income (expense)                   |                                     |                                |        
|                                         | Interest income                     |                                |        
|                                         | Interest expense                    |                                |        
|                                         | Other, net                          |                                |        
|                                         |                                     |                                |        
|                                         |                                     | Total other expense            |        
|                                         |                                     |                                |        
|Income before provision for income taxes |                                     |                                | 66,724 
|Provision for income taxes               |                                     |                                | 23,687 
|                                         |                                     |                                |        
|Net earnings                             |                                     | $                              | 43,037 
|                                         |                                     |                                |        
|Earnings per common share                |                                     |                                |        
|                                         | Basic                               |                                | $      
|                                         |                                     |                                |        
|                                         | Diluted                             |                                | $      
|                                         |                                     |                                |        
|Dividends per common share               |                                     | $                              | .075   
|                                         |                                     |                                |        

See
Notes to Consolidated Financial Statements

4

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SABRE HOLDINGS CORPORATION
CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2004
(Unaudited) (In thousands)

|                                                                  |                                                                                       | Class A
Common
Stock |       | Additional
Paid-in
Capital |   | Retained
Earnings |         | Accumulated Other
Comprehensive Loss |         | Treasury
Stock |   | Total   |       
|----------------------------------------------------------------- | ------------------------------------------------------------------------------------- | -------------------- | ----- | -------------------------- | - | ----------------- | ------- | ------------------------------------ | ------- | -------------- | - | ------- | ------
|Balance at December 31, 2003                                      |                                                                                       | $                    | 1,457 |                            | $ | 1,291,841         |         | $                                    | 495,372 |                | $ | (8,115  | )     
|Issuance of Class A common stock and treasury shares pursuant to: |                                                                                       |                      |       |                            |   |                   |         |                                      |         |                |   |         |       
|                                                                  | Stock option plans                                                                    |                      |       |                           |   |                   | (886    | )                                    |         |               |   |         |      
|                                                                  | Restricted stock plan                                                                 |                      |       | 2                          |   |                   | (11,311 | )                                    |         |               |   |         |      
|                                                                  | Employee stock purchase plan                                                          |                      |       |                           |   |                   | (865    | )                                    |         |               |   |         |      
|Tax benefit from exercise of employee stock options               |                                                                                       |                      |      |                            |   | 236               |         |                                      |        |                |   |        |       
|Stock based compensation for employees                            |                                                                                       |                      |      |                            |   | 3,374             |         |                                      |        |                |   |        |       
|Dividends                                                         |                                                                                       |                      |      |                            |   |                  |         |                                      | (10,573 | )              |   |        |       
|Purchase of treasury stock                                        |                                                                                       |                      |      |                            |   |                  |         |                                      |        |                |   |        |       
|Comprehensive income:                                             |                                                                                       |                      |       |                            |   |                   |         |                                      |         |                |   |         |       
|                                                                  | Net earnings                                                                          |                      |       |                           |   |                   |        |                                      |         | 43,037         |   |         |      
|                                                                  | Unrealized loss on foreign currency forward
  contracts, net of deferred income taxes |                      |       |                           |   |                   |        |                                      |         |               |   |         | (1,444
|                                                                  | Unrealized loss on investments, net of deferred
  income taxes                        |                      |       |                           |   |                   |        |                                      |         |               |   |         | (562  
|                                                                  | Unrealized foreign currency translation loss                                          |                      |       |                           |   |                   |        |                                      |         |               |   |         | (1,351
|                                                                  | Other                                                                                 |                      |       |                           |   |                   |        |                                      |         |               |   |         | (590  
|                                                                  |                                                                                       |                      |       |                            |   |                   |         |                                      |         |                |   |         |       
|Total comprehensive income                                        |                                                                                       |                      |       |                            |   |                   |         |                                      |         |                |   |         |       
|                                                                  |                                                                                       |                      |       |                            |   |                   |         |                                      |         |                |   |         |       
|Balance at March 31, 2004                                         |                                                                                       | $                    | 1,459 |                            | $ | 1,282,389         |         | $                                    | 527,836 |                | $ | (12,062 | )     
|                                                                  |                                                                                       |                      |       |                            |   |                   |         |                                      |         |                |   |         |       

See Notes to Consolidated Financial Statements

5

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SABRE HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (In thousands)

|                                                                                |                                                  | Three Months Ended
March 31,                   |           
|------------------------------------------------------------------------------- | ------------------------------------------------ | ---------------------------------------------- | ----------
|
|Operating Activities                                                            |                                                  |                                                |           
|Net earnings                                                                    |                                                  | $                                              | 43,037    
|Adjustments to reconcile net earnings to cash provided by operating activities: |                                                  |                                                |           
|                                                                                | Depreciation and amortization                    |                                                |           
|                                                                                | Stock based compensation for employees           |                                                |           
|                                                                                | Deferred income taxes                            |                                                |           
|                                                                                | Tax benefit from exercise of stock options       |                                                |           
|                                                                                | Loss on disposal of equipment                    |                                                |           
|                                                                                | Equity loss in joint ventures                    |                                                |           
|                                                                                | Other                                            |                                                |           
|                                                                                | Changes in operating assets and liabilities:     |                                                |           
|                                                                                |                                                  | Accounts receivable                            |           
|                                                                                |                                                  | Prepaid expenses                               |           
|                                                                                |                                                  | Other assets                                   |           
|                                                                                |                                                  | Accrued compensation and related benefits      |           
|                                                                                |                                                  | Accounts payable and other accrued liabilities |           
|                                                                                |                                                  | Pensions and other postretirement benefits     |           
|                                                                                |                                                  | Other liabilities                              |           
|                                                                                |                                                  |                                                |           
|                                                                                | Cash provided by operating activities            |                                                |           
|Investing Activities                                                            |                                                  |                                                |           
|Additions to property and equipment                                             |                                                  |                                                | (17,744   
|Business combinations, net of cash acquired                                     |                                                  |                                                |          
|Purchases of marketable securities                                              |                                                  |                                                | (1,581,427
|Sales of marketable securities                                                  |                                                  |                                                | 1,622,984 
|Other investing activities, net                                                 |                                                  |                                                | (3,664    
|                                                                                |                                                  |                                                |           
|                                                                                | Cash provided by (used for) investing activities |                                                |           
|Financing Activities                                                            |                                                  |                                                |           
|Proceeds from issuance of common stock                                          |                                                  |                                                | 5,055     
|Dividends paid                                                                  |                                                  |                                                | (10,573   
|Purchases of treasury stock                                                     |                                                  |                                                | (68,362   
|Other financing activities, net                                                 |                                                  |                                                | (2,778    
|                                                                                |                                                  |                                                |           
|                                                                                | Cash used for financing activities               |                                                |           
|                                                                                |                                                  |                                                |           
|Increase (decrease) in cash                                                     |                                                  |                                                | (7,021    
|Cash at beginning of period                                                     |                                                  |                                                | 40,862    
|                                                                                |                                                  |                                                |           
|Cash at end of period                                                           |                                                  | $                                              | 33,841    
|                                                                                |                                                  |                                                |           

See Notes to Consolidated Financial Statements

6

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SABRE HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.     General Information



---

7

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2.     Summary of Significant Accounting Policies



8

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Three Months Ended
March 31,2004

2003Denominator for basic earnings per common shareweighted-average shares

139,220

142,411Dilutive effect of stock awards and options

411

217Denominator for diluted earnings per common shareadjusted weighted-average shares

139,631

142,628




Three Months Ended
March 31,2004

2003Net earnings as reported

$
43,037

$
64,879Add stock compensation expense determined under intrinsic value method, net of income taxes


2,176


2,870Less total stock-based employee compensation expense determined under fair value based method for all awards, net of income taxes


(8,566
)

(11,365
)Pro forma net earnings

$
36,647

$
56,384Net earnings per common share, as reported:Basic

$
.31

$
.46Diluted

$
.31

$
.45Net earnings per common share, pro forma:Basic

$
.26

$
.40Diluted

$
.26

$
.40


9

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3.     Significant Events



Severance

Facilities

TotalRemaining liability at December 31, 2003

$
7,941

$
4,264

$
12,205Amounts paid in first quarter 2004


(4,653
)

(1,016
)

(5,669
)Remaining liability at March 31, 2004

$
3,288

$
3,248

$
6,536


10

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4.     Pension and Other Post Retirement Benefit Plans



11

---





Pension Benefits

Other BenefitsComponents of net periodic benefit cost:2004

2003

2004

2003Service cost

$
1,304

$
1,538

$
795

$
899Interest cost


5,003


5,063


1,871


1,748Expected return on plan assets


(5,608
)

(5,478
)




Amortization of transition asset


(5
)

(5
)

4


4Amortization of prior service cost


44


15


81


80Amortization of net loss


706


533


696


450Net periodic benefit cost


1,444


1,666


3,447


3,181Settlement gain





126





Total net periodic benefit cost

$
1,444

$
1,792

$
3,447

$
3,181




5.     Income Taxes



Three Months Ended
March 31,2004

2003Income tax provision at statutory federal income tax rate

$
23,353

$
35,922State income taxes, net of federal benefit


1,780


2,849Other, net


(1,446
)

(1,015
)Total provision for income taxes

$
23,687

$
37,756


6.     Derivatives



12

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7.     Business Segments



13

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Three Months Ended
March 31,2004

2003Revenues from external customers, excluding special items:Sabre Travel Network

$
403,573

$
389,461Travelocity


83,507


63,503Sabre Airline Solutions


59,735


57,585Total

$
546,815

$
510,549Intersegment revenues:Sabre Travel Network

$
7,539

$
6,642Travelocity


34,734


28,416Total

$
42,273

$
35,058Equity in net income of equity method investees:Sabre Travel Network

$
(276
)
$
2,117Travelocity


(6,786
)

(5,291
)Total

$
(7,062
)
$
(3,174
)Segment revenues, excluding special items:Sabre Travel Network

$
410,836

$
398,220Travelocity


111,455


86,628Sabre Airline Solutions


59,735


57,585Elimination of intersegment revenues


(42,273
)

(35,058
)Total

$
539,753

$
507,375Revenue special itemSabre Travel Networksettlement revenue from canceled subscriber contracts

$


$
36,458Consolidated revenues:Sabre Travel Network

$
410,836

$
434,678Travelocity


111,455


86,628Sabre Airline Solutions


59,735


57,585Elimination of intersegment revenues


(42,273
)

(35,058
)Total

$
539,753

$
543,833


14

---





Three Months Ended
March 31,2004

2003Segment operating income (loss) excluding special items:Sabre Travel Network

$
84,485

$
84,915Travelocity


(1,464
)

(9,553
)Sabre Airline Solutions


(621
)

5,651Net corporate allocations


670


1,633Total

$
83,070

$
82,646Impact of special items on operating income(increase) / decrease:Sabre Travel Network:Settlement revenue from canceled subscriber contract

$


$
(36,458
)Other intangibles amortization


3,156


2,083Stock compensation





187Total Sabre Travel Network

$
3,156

$
(34,188
)Travelocity:Other intangibles amortization

$
7,462

$
8,901Stock compensation


1,937


2,978Total Travelocity

$
9,399

$
11,879Sabre Airline Solutions:Stock compensation

$


$
33Total Sabre Airline Solutions

$


$
33Corporate:Other intangibles amortization

$
1,013

$
1,013Stock compensation


14


15Total Corporate


1,027


1,028Total operating income special items

$
13,582

$
(21,248
)Consolidated operating income (loss):Sabre Travel Network

$
81,329

$
119,103Travelocity


(10,863
)

(21,432
)Sabre Airline Solutions


(621
)

5,618Net corporate allocations


(357
)

605Total

$
69,488

$
103,894


15

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8.     Supplemental Guarantor/Non-Guarantor Financial Information



16

---







UNAUDITED CONSOLIDATING CONDENSED BALANCE SHEETS  MARCH 31, 2004  (in thousands)

|                                           |                                               | Sabre
Holdings            |           | Sabre Inc. |           | Non-
Guarantor
Subsidiaries |            | Eliminating
Entries |           | Sabre
Consolidated
|------------------------------------------ | --------------------------------------------- | ------------------------- | --------- | ---------- | --------- | --------------------------- | ---------- | ------------------- | --------- | ------------------
|Assets                                     |                                               |                           |           |            |           |                             |            |                     |           |                   
|Current assets                             |                                               |                           |           |            |           |                             |            |                     |           |                   
|                                           | Cash and marketable securities                |                           | $         |           |           | $                           | 852,893    |                     | $         | 22,009            
|                                           | Accounts receivabletrade, net                |                           |           |           |           |                             | 319,782    |                     |           | 120,128           
|                                           | Intercompany accounts receivable (payable)    |                           |           | 1,465,788  |           |                             | (1,603,487 | )                   |           | 137,699           
|                                           | Prepaid expenses and other current assets     |                           |           |           |           |                             | 34,533     |                     |           | 39,061            
|                                           | Deferred income taxes                         |                           |           |           |           |                             | 12,428     |                     |           | 1,509             
|                                           |                                               |                           |           |            |           |                             |            |                     |           |                   
|                                           |                                               | Total current assets      |           |            | 1,465,788 |                             |            | (383,851            | )         |                   
|Property and equipment, net                |                                               |                           |          |            |           | 343,843                     |            |                     | 40,725    |                   
|Investments in joint ventures              |                                               |                           |          |            |           | 4,004                       |            |                     | 173,750   |                   
|Goodwill and intangible assets, net        |                                               |                           |          |            |           | 9,780                       |            |                     | 866,892   |                   
|Investments in subsidiaries                |                                               |                           | 593,823   |            |           | 1,261,848                   |            |                     |          |                   
|Other assets, net                          |                                               |                           | 26,313    |            |           | 78,883                      |            |                     | 42,521    |                   
|                                           |                                               |                           |           |            |           |                             |            |                     |           |                   
|Total assets                               |                                               | $                         | 2,085,924 |            | $         | 1,314,507                   |            | $                   | 1,444,294 |                   
|                                           |                                               |                           |           |            |           |                             |            |                     |           |                   
|Liabilities and stockholders' equity       |                                               |                           |           |            |           |                             |            |                     |           |                   
|Current liabilities                        |                                               |                           |           |            |           |                             |            |                     |           |                   
|                                           | Accounts payable                              |                           | $         | 8          |           | $                           | 118,134    |                     | $         | 93,928            
|                                           | Accrued compensation and related
    benefits |                           |           |           |           |                             | 46,003     |                     |           | 12,301            
|                                           | Other accrued liabilities                     |                           |           | 2,956      |           |                             | 187,861    |                     |           | 91,915            
|                                           |                                               |                           |           |            |           |                             |            |                     |           |                   
|                                           |                                               | Total current liabilities |           |            | 2,964     |                             |            | 351,998             |           |                   
|Deferred income taxes                      |                                               |                           | (234      | )          |           | 52,629                      |            |                     | (41,480   | )                 
|Pensions and other postretirement benefits |                                               |                           |          |            |           | 133,952                     |            |                     | 2,288     |                   
|Other liabilities                          |                                               |                           | 1,478     |            |           | 18,043                      |            |                     | 2,048     |                   
|Minority interests                         |                                               |                           |          |            |           |                            |            |                     | 6,370     |                   
|Long-term capital lease obligation         |                                               |                           |          |            |           | 164,062                     |            |                     |          |                   
|Notes payable                              |                                               |                           | 436,316   |            |           |                            |            |                     | 15,076    |                   
|Stockholders' equity                       |                                               |                           | 1,645,400 |            |           | 593,823                     |            |                     | 1,261,848 |                   
|                                           |                                               |                           |           |            |           |                             |            |                     |           |                   
|Total liabilities and stockholders' equity |                                               | $                         | 2,085,924 |            | $         | 1,314,507                   |            | $                   | 1,444,294 |                   
|                                           |                                               |                           |           |            |           |                             |            |                     |           |                   

17

---



UNAUDITED CONSOLIDATING CONDENSED BALANCE SHEETS  DECEMBER 31, 2003  (in thousands)

|                                           |                                            | Sabre
Holdings            |           | Sabre Inc. |           | Non-
Guarantor
Subsidiaries |            | Eliminating
Entries |           | Sabre
Consolidated
|------------------------------------------ | ------------------------------------------ | ------------------------- | --------- | ---------- | --------- | --------------------------- | ---------- | ------------------- | --------- | ------------------
|Assets                                     |                                            |                           |           |            |           |                             |            |                     |           |                   
|Current assets                             |                                            |                           |           |            |           |                             |            |                     |           |                   
|                                           | Cash and marketable securities             |                           | $         |           |           | $                           | 889,638    |                     | $         | 32,973            
|                                           | Accounts receivabletrade, net             |                           |           |           |           |                             | 254,656    |                     |           | 94,332            
|                                           | Intercompany accounts receivable (payable) |                           |           | 1,529,296  |           |                             | (1,650,772 | )                   |           | 121,476           
|                                           | Prepaid expenses                           |                           |           |           |           |                             | 42,478     |                     |           | 43,997            
|                                           | Deferred income taxes                      |                           |           |           |           |                             | 8,736      |                     |           | 1,501             
|                                           |                                            |                           |           |            |           |                             |            |                     |           |                   
|                                           |                                            | Total current assets      |           |            | 1,529,296 |                             |            | (455,264            | )         |                   
|Property and equipment, net                |                                            |                           |          |            |           | 345,930                     |            |                     | 38,450    |                   
|Investments in joint ventures              |                                            |                           |          |            |           | 3,994                       |            |                     | 177,148   |                   
|Goodwill and intangible assets, net        |                                            |                           |          |            |           | 10,269                      |            |                     | 877,929   |                   
|Investments in subsidiaries                |                                            |                           | 572,696   |            |           | 1,260,428                   |            |                     |          |                   
|Other assets, net                          |                                            |                           | 17,057    |            |           | 79,210                      |            |                     | 37,855    |                   
|                                           |                                            |                           |           |            |           |                             |            |                     |           |                   
|Total assets                               |                                            | $                         | 2,119,049 |            | $         | 1,244,567                   |            | $                   | 1,425,661 |                   
|                                           |                                            |                           |           |            |           |                             |            |                     |           |                   
|Liabilities and stockholders' equity       |                                            |                           |           |            |           |                             |            |                     |           |                   
|Current liabilities                        |                                            |                           |           |            |           |                             |            |                     |           |                   
|                                           | Accounts payable                           |                           | $         | 2,926      |           | $                           | 124,189    |                     | $         | 75,500            
|                                           | Accrued compensation and related benefits  |                           |           |           |           |                             | 50,554     |                     |           | 12,003            
|                                           | Other accrued liabilities                  |                           |           | 7,474      |           |                             | 140,814    |                     |           | 89,935            
|                                           |                                            |                           |           |            |           |                             |            |                     |           |                   
|                                           |                                            | Total current liabilities |           |            | 10,400    |                             |            | 315,557             |           |                   
|Deferred income taxes                      |                                            |                           | (24       | )          |           | 41,022                      |            |                     | (36,578   | )                 
|Pensions and other postretirement benefits |                                            |                           |          |            |           | 133,508                     |            |                     | 1,591     |                   
|Other liabilities                          |                                            |                           | 1,165     |            |           | 21,059                      |            |                     | 1,243     |                   
|Minority interests                         |                                            |                           |          |            |           |                            |            |                     | 6,463     |                   
|Long-term capital lease obligation         |                                            |                           |          |            |           | 160,725                     |            |                     |          |                   
|Notes payable                              |                                            |                           | 427,400   |            |           |                            |            |                     | 15,076    |                   
|Stockholders' equity                       |                                            |                           | 1,680,108 |            |           | 572,696                     |            |                     | 1,260,428 |                   
|                                           |                                            |                           |           |            |           |                             |            |                     |           |                   
|Total liabilities and stockholders' equity |                                            | $                         | 2,119,049 |            | $         | 1,244,567                   |            | $                   | 1,425,661 |                   
|                                           |                                            |                           |           |            |           |                             |            |                     |           |                   

18

---





UNAUDITED CONSOLIDATING CONDENSED STATEMENTS OF INCOME  FOR THE THREE MONTHS ENDED MARCH 31, 2004  (in thousands)

|                                                    |                                 | Sabre
Holdings               |        | Sabre Inc. |        | Non-
Guarantor
Subsidiaries |         | Eliminating
Entries |         | Sabre
Consolidated |      
|--------------------------------------------------- | ------------------------------- | ---------------------------- | ------ | ---------- | ------ | --------------------------- | ------- | ------------------- | ------- | ------------------ | -----
|Revenues                                            |                                 | $                            |       |            | $      | 391,215                     |         | $                   | 268,621 |                    | $    
|Operating expenses                                  |                                 |                              | 1,266  |            |        | 336,770                     |         |                     | 252,312 |                    |      
|                                                    |                                 |                              |        |            |        |                             |         |                     |         |                    |      
|Operating income (loss)                             |                                 |                              | (1,266 | )          |        | 54,445                      |         |                     | 16,309  |                    |      
|Other income (expense)                              |                                 |                              |        |            |        |                             |         |                     |         |                    |      
|                                                    | Interest income                 |                              |        | 25,765     |        |                             | 2,513   |                     |         | 2,414              |      
|                                                    | Interest expense                |                              |        | (4,150     | )      |                             | (29,434 | )                   |         | (300               | )    
|                                                    | Income (loss) from subsidiaries |                              |        | 29,632     |        |                             | 13,235  |                     |         |                   |      
|                                                    | Other, net                      |                              |        |           |        |                             | (350    | )                   |         | 778                |      
|                                                    |                                 |                              |        |            |        |                             |         |                     |         |                    |      
|                                                    |                                 | Total other income (expense) |        |            | 51,247 |                             |         | (14,036             | )       |                    | 2,892
|                                                    |                                 |                              |        |            |        |                             |         |                     |         |                    |      
|Income (loss) before provision for
    income taxes |                                 |                              | 49,981 |            |        | 40,409                      |         |                     | 19,201  |                    |      
|Provision for income taxes                          |                                 |                              | 6,944  |            |        | 10,777                      |         |                     | 5,966   |                    |      
|                                                    |                                 |                              |        |            |        |                             |         |                     |         |                    |      
|Net income (loss)                                   |                                 | $                            | 43,037 |            | $      | 29,632                      |         | $                   | 13,235  |                    | $    
|                                                    |                                 |                              |        |            |        |                             |         |                     |         |                    |      

19

---



UNAUDITED CONSOLIDATING CONDENSED STATEMENTS OF INCOME  FOR THE THREE MONTHS ENDED MARCH 31, 2003  (in thousands)

|                                                    |                                 | Sabre
Holdings               |        | Sabre Inc. |        | Non-
Guarantor
Subsidiaries |         | Eliminating
Entries |         | Sabre
Consolidated |      
|--------------------------------------------------- | ------------------------------- | ---------------------------- | ------ | ---------- | ------ | --------------------------- | ------- | ------------------- | ------- | ------------------ | -----
|Revenues                                            |                                 | $                            |       |            | $      | 420,167                     |         | $                   | 250,920 |                    | $    
|Operating expenses                                  |                                 |                              | 646    |            |        | 340,796                     |         |                     | 225,751 |                    |      
|                                                    |                                 |                              |        |            |        |                             |         |                     |         |                    |      
|Operating income (loss)                             |                                 |                              | (646   | )          |        | 79,371                      |         |                     | 25,169  |                    |      
|Other income (expense)                              |                                 |                              |        |            |        |                             |         |                     |         |                    |      
|                                                    | Interest income                 |                              |        | 18,750     |        |                             | 3,257   |                     |         | 4,599              |      
|                                                    | Interest expense                |                              |        | (4,382     | )      |                             | (22,449 | )                   |         | (841               | )    
|                                                    | Income (loss) from subsidiaries |                              |        | 55,840     |        |                             | 19,838  |                     |         |                   |      
|                                                    | Other, net                      |                              |        |           |        |                             | 665     |                     |         | (858               | )    
|                                                    |                                 |                              |        |            |        |                             |         |                     |         |                    |      
|                                                    |                                 | Total other income (expense) |        |            | 70,208 |                             |         | 1,311               |         |                    | 2,900
|                                                    |                                 |                              |        |            |        |                             |         |                     |         |                    |      
|Income (loss) before provision for
    income taxes |                                 |                              | 69,562 |            |        | 80,682                      |         |                     | 28,069  |                    |      
|Provision for income taxes                          |                                 |                              | 4,683  |            |        | 24,842                      |         |                     | 8,231   |                    |      
|                                                    |                                 |                              |        |            |        |                             |         |                     |         |                    |      
|Net income (loss)                                   |                                 | $                            | 64,879 |            | $      | 55,840                      |         | $                   | 19,838  |                    | $    
|                                                    |                                 |                              |        |            |        |                             |         |                     |         |                    |      

20

---





UNAUDITED CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS  FOR THE THREE MONTHS ENDED MARCH 31, 2004  (in thousands)

|                     |                                                                                     | Sabre
Holdings                                     |   | Sabre Inc. |         | Non-
Guarantor
Subsidiaries |            | Eliminating
Entries |   | Sabre
Consolidated |        
|-------------------- | ----------------------------------------------------------------------------------- | -------------------------------------------------- | - | ---------- | ------- | --------------------------- | ---------- | ------------------- | - | ------------------ | -------
|Operating Activities |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     | Net earnings                                                                        |                                                    | $ | 43,037     |         | $                           | 29,632     |                     | $ | 13,235             |        
|                     | Adjustments to reconcile net earnings
  to cash provided by operating
  activities: |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     |                                                                                     | Depreciation and amortization                      |   |            |        |                             |            | 14,607              |   |                    | 16,224 
|                     |                                                                                     | Stock compensation                                 |   |            |        |                             |            | 1,330               |   |                    | 2,044  
|                     |                                                                                     | Deferred income taxes                              |   |            |        |                             |            | 7,915               |   |                    | (5,120 
|                     |                                                                                     | Tax benefit from exercise of stock
  options       |   |            | 236     |                             |            |                    |   |                    |       
|                     |                                                                                     | Loss on disposal of equipment                      |   |            |        |                             |            | 988                 |   |                    |       
|                     |                                                                                     | (Income) loss from subsidiaries                    |   |            | (29,632 | )                           |            | (13,235             | ) |                    |       
|                     |                                                                                     | Equity loss in joint ventures                      |   |            |        |                             |            |                    |   |                    | 7,062  
|                     |                                                                                     | Other                                              |   |            | (419    | )                           |            | 442                 |   |                    | (3,037 
|                     |                                                                                     | Changes in operating assets and
  liabilities      |   |            | (13,222 | )                           |            | 2,338               |   |                    | (24,937
|                     |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     | Cash provided by operating
  activities                                             |                                                    |   |           |         |                             | 44,017     |                     |   | 5,471              |        
|Investing Activities |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     | Additions to property and equipment                                                 |                                                    |   |           |         |                             | (12,470    | )                   |   | (5,274             | )      
|                     | Purchases of marketable securities                                                  |                                                    |   |           |         |                             | (1,583,088 | )                   |   | 1,661              |        
|                     | Sales of marketable securities                                                      |                                                    |   |           |         |                             | 1,622,984  |                     |   |                   |        
|                     | Distribution from affiliates, net                                                   |                                                    |   |           |         |                             | 4,719      |                     |   |                   |        
|                     | Other investing activities, net                                                     |                                                    |   |           |         |                             |           |                     |   | (3,664             | )      
|                     |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     |                                                                                     | Cash provided by (used for)
  investing activities |   |            |        |                             |            | 32,145              |   |                    | (7,277 
|Financing Activities |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     | Proceeds from issuance of common
  stock                                            |                                                    |   | 5,055      |         |                             |           |                     |   |                   |        
|                     | Dividends paid                                                                      |                                                    |   | (10,573    | )       |                             |           |                     |   |                   |        
|                     | Contributions from affiliates, net                                                  |                                                    |   | 73,880     |         |                             |           |                     |   |                   |        
|                     | Distributions to affiliates, net                                                    |                                                    |   |           |         |                             | (73,880    | )                   |   | (4,719             | )      
|                     | Purchases of treasury stock                                                         |                                                    |   | (68,362    | )       |                             |           |                     |   |                   |        
|                     | Other financing activities, net                                                     |                                                    |   |           |         |                             |           |                     |   | (2,778             | )      
|                     |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     |                                                                                     | Cash provided by (used for)
  financing activities |   |            |        |                             |            | (73,880             | ) |                    | (7,497 
|                     |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     | Increase (decrease) in cash                                                         |                                                    |   |           |         |                             | 2,282      |                     |   | (9,303             | )      
|                     | Cash at beginning of period                                                         |                                                    |   |           |         |                             | 10,969     |                     |   | 29,893             |        
|                     |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     | Cash at end of period                                                               |                                                    | $ |           |         | $                           | 13,251     |                     | $ | 20,590             |        
|                     |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        

21

---



UNAUDITED CONSOLIDATING CONDENSED STATEMENTS OF CASH FLOWS  FOR THE THREE MONTHS ENDED MARCH 31, 2003  (in thousands)

|                     |                                                                                     | Sabre
Holdings                                     |   | Sabre Inc. |         | Non-
Guarantor
Subsidiaries |            | Eliminating
Entries |   | Sabre
Consolidated |        
|-------------------- | ----------------------------------------------------------------------------------- | -------------------------------------------------- | - | ---------- | ------- | --------------------------- | ---------- | ------------------- | - | ------------------ | -------
|Operating Activities |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     | Net earnings                                                                        |                                                    | $ | 64,879     |         | $                           | 55,840     |                     | $ | 19,838             |        
|                     | Adjustments to reconcile net earnings
  to cash provided by operating
  activities: |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     |                                                                                     | Depreciation and amortization                      |   |            |        |                             |            | 12,802              |   |                    | 18,241 
|                     |                                                                                     | Stock compensation                                 |   |            |        |                             |            |                    |   |                    | 4,648  
|                     |                                                                                     | Deferred income taxes                              |   |            |        |                             |            | 26,796              |   |                    | (22,053
|                     |                                                                                     | Tax benefit from exercise of stock
  options       |   |            | 93      |                             |            |                    |   |                    |       
|                     |                                                                                     | (Income) loss from subsidiaries                    |   |            | (55,840 | )                           |            | (19,838             | ) |                    |       
|                     |                                                                                     | Equity (income) loss in joint
  ventures           |   |            |        |                             |            | (467                | ) |                    | 3,641  
|                     |                                                                                     | Other                                              |   |            | (419    | )                           |            | 8,558               |   |                    | (828   
|                     |                                                                                     | Changes in operating assets and
  liabilities      |   |            | (10,679 | )                           |            | (62,100             | ) |                    | 1,798  
|                     |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     | Cash provided by (used for) operating
  activities                                  |                                                    |   | (1,966     | )       |                             | 21,591     |                     |   | 25,285             |        
|Investing Activities |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     | Additions to property and equipment                                                 |                                                    |   |           |         |                             | (17,681    | )                   |   | (6,290             | )      
|                     | Business combinations, net of cash
  acquired                                       |                                                    |   |           |         |                             | (10,161    | )                   |   |                   |        
|                     | Purchases of marketable securities                                                  |                                                    |   |           |         |                             | (1,611,913 | )                   |   |                   |        
|                     | Sales of marketable securities                                                      |                                                    |   |           |         |                             | 1,605,853  |                     |   | 143                |        
|                     | Distribution from affiliates, net                                                   |                                                    |   | 1,860      |         |                             | 12,218     |                     |   |                   |        
|                     | Other investing activities, net                                                     |                                                    |   |           |         |                             | 3,315      |                     |   | 1,988              |        
|                     |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     |                                                                                     | Cash provided by (used for)
  investing activities |   |            | 1,860   |                             |            | (18,369             | ) |                    | (4,159 
|Financing Activities |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     | Proceeds from issuance of common
  stock                                            |                                                    |   | 106        |         |                             |           |                     |   |                   |        
|                     | Distributions to affiliates                                                         |                                                    |   |           |         |                             | (1,860     | )                   |   | (12,218            | )      
|                     | Other financing activities, net                                                     |                                                    |   |           |         |                             |           |                     |   | (1,010             | )      
|                     |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     |                                                                                     | Cash provided by (used for)
  financing activities |   |            | 106     |                             |            | (1,860              | ) |                    | (13,228
|                     |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     | Increase in cash                                                                    |                                                    |   |           |         |                             | 1,362      |                     |   | 7,898              |        
|                     | Cash at beginning of period                                                         |                                                    |   |           |         |                             | 9,219      |                     |   | 11,957             |        
|                     |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        
|                     | Cash at end of period                                                               |                                                    | $ |           |         | $                           | 10,581     |                     | $ | 19,855             |        
|                     |                                                                                     |                                                    |   |            |         |                             |            |                     |   |                    |        

9.     Subsequent Events



22

---





Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations



23

---





24

---





25

---





26

---







27

---





28

---







Three Months Ended
March 31,2004

2003Segment revenues:Sabre Travel Network

$
410,836

$
434,678Travelocity


111,455


86,628Sabre Airline Solutions


59,735


57,585Elimination of intersegment revenues


(42,273
)

(35,058
)Total

$
539,753

$
543,833Cost of Revenues:Sabre Travel Network

$
254,630

$
254,820Travelocity


52,427


49,858Sabre Airline Solutions


47,242


43,735Elimination of intersegment expenses


(42,273
)

(35,058
)Other corporate expenses


(511
)

(1,750
)Total

$
311,515

$
311,605Gross Profit:Sabre Travel Network

$
156,206

$
179,858Travelocity


59,028


36,770Sabre Airline Solutions


12,493


13,850Other corporate expenses


511


1,750Total

$
228,238

$
232,228Selling, General & Administrative:Sabre Travel Network

$
71,721

$
58,672Travelocity


62,429


49,301Sabre Airline Solutions


12,624


7,742Other corporate expenses


(145
)

132Total

$
146,629

$
115,847Amortization of acquisition intangibles:Sabre Travel Network

$
3,156

$
2,083Travelocity


7,462


8,901Sabre Airline Solutions


490


490Other corporate amortization


1,013


1,013Total

$
12,121

$
12,487Operating income (loss)Sabre Travel Network

$
81,329

$
119,103Travelocity


(10,863
)

(21,432
)Sabre Airline Solutions


(621
)

5,618Other corporate


(357
)

605Total

$
69,488

$
103,894


29

---







30

---











31

---





32

---





33

---











34

---





35

---





Three Months Ended
March 31,2004

2003Cash provided by operating activities

$
49,488

$
44,910Cash provided by (used for) investing activities


20,149


(34,746
)Cash used for financing activities


(76,658
)

(904
)




36

---





37

---







38

---







39

---





40

---





41

---





42

---





43

---





44

---







45

---



Item 3. Quantitative and Qualitative Disclosures about Market Risk



46

---



Item 4. Controls and Procedures



47

---







PART II: OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities



ISSUER PURCHASES OF EQUITY SECURITIES

Period

Total Number of
Shares Purchased

Weighted
Average
Price Paid
per Share

Total Number of Shares
Purchased as Part of a
Publicly Announced
Program

Maximum Dollar Value
of Shares That May Yet
be Purchased Under the
ProgramJanuary 01/01/0401/31/04

1,071,122

$
21.54

1,071,122

$
48,687,887February 02/01/0402/29/04

1,029,000

$
21.31

1,029,000

$
26,764,651March 03/01/0403/31/04

1,236,740

$
21.64

1,236,740

$
140Total 1st Quarter 2004 Repurchases

3,336,862

$
21.50

3,336,862




Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

None.

48

---



Item 6. Exhibits and Reports on Form 8-K



|Exhibit Number |  | Description of Exhibit                                                                                                                                                                                     
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1            |  | Restated Certificate of Incorporation of Sabre Holdings Corporation.(1)                                                                                                                                    
|3.2            |  | Restated Bylaws of Sabre Holdings Corporation.(2)                                                                                                                                                          
|10.1           |  | Form of Executive Termination Benefits Agreement(3)                                                                                                                                                        
|10.2           |  | Forms of Addenda to Executive Termination Benefits Agreement with respect to Michael S. Gilliland, Jeffery M. Jackson and Eric J. Speck(3)                                                                 
|10.3           |  | Form of Addendum to Executive Termination Benefits Agreement with respect to David A. Schwarte(3)                                                                                                          
|10.4           |  | Form of Addendum to Executive Termination Benefits Agreement with respect to John S. Stow(3)                                                                                                               
|10.5           |  | Forms of Addenda to Executive Termination Benefits Agreement with respect to Thomas Klein(3)                                                                                                               
|10.6           |  | Form of Letter Formalizing Involuntary Termination Benefits(3)                                                                                                                                             
|12.1           |  | Computation of Ratio of Earnings to Fixed Charges(3)                                                                                                                                                       
|31.1           |  | Written statement pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated May 7, 2004, signed by Michael S. Gilliland as Chief Executive Officer(3)  
|31.2           |  | Written statement pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated May 7, 2004, signed by Jeffery M. Jackson as Chief Financial Officer(3)    
|32.1           |  | Written statement pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated May 7, 2004, signed by Michael S. Gilliland as Chief Executive Officer(4)
|32.2           |  | Written statement pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated May 7, 2004, signed by Jeffery M. Jackson as Chief Financial Officer(4)  

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Signature



|                  | SABRE HOLDINGS CORPORATION
|----------------- | --------------------------
|                  | By:                       
|Date: May 7, 2004 |                           

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