Global Business Travel Group, Inc.GBTG
Global Business Travel Group, Inc. Fair Value Disclosure
Fair Value Measurements
Financial instruments which are measured at fair value, or for which a fair value is disclosed, are classified in the fair value hierarchy, as discussed and outlined in note 2 - Summary of Significant Accounting Policies - Fair Value Measurements.
As of December 31, 2024, the Company’s financial assets and liabilities recorded at fair value on a recurring basis consist of its derivative instruments — interest rate swaps, cross currency interest rate swaps and non-employee earnout shares. The fair value of the Company’s interest rate swaps is primarily calculated using a discounted cash flow analysis by taking the present value of the fixed and floating rate cash flows utilizing the appropriate forward SOFR curves and the counterparty’s credit risk, which was determined to be not material. The fair value of the Company’s cross currency interest rate swaps is calculated by using discounted cash flows of the contracts using market observable inputs including currency spot and forward rates of the underlying currencies. The fair value of non-employee earnout shares is determined using Monte Carlo valuation method.
Presented below is a summary of the gross carrying value and fair value of the Company’s assets and liabilities measured at a fair value on a recurring basis:
| (in $ millions) | Fair Value Hierarchy | Asset/(Liability) | ||||||||||||||||||
| December 31, 2024 | December 31, 2023 | |||||||||||||||||||
| Interest rate swap asset | Level 2 | $ | 27 | $ | 7 | |||||||||||||||
Interest rate swap liability | Level 2 | — | (5) | |||||||||||||||||
| Non-employee earnout shares | Level 3 | (133) | (77) | |||||||||||||||||
As of December 31, 2024, the fair value of CCS liability was less than $1 million.
The fair value of earnout shares was estimated using the Monte Carlo method. Inherent in the Monte Carlo method are assumptions related to expected stock-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimated the volatility of the earnout shares based on weighted average of its own share price volatility and implied historical volatility of select peer companies’ common stock that matches the expected remaining life of the earnout shares. The risk-free interest rate was based on the U.S. Treasury zero-coupon yield curve for a maturity similar to the expected remaining life of the earnout shares. The expected life of the earnout shares was assumed to be equivalent to their remaining contractual term. The Company anticipated the dividend rate will remain at zero.
The following table presents the assumptions used for the measurement of the fair value of outstanding earnout shares liabilities:
| December 31, 2024 | December 31, 2023 | |||||||||||||
| Stock price ($) | $ | 9.28 | $ | 6.45 | ||||||||||
| Risk-free interest rate | 4.26 | % | 3.98 | % | ||||||||||
| Volatility | 44.0 | % | 47.5 | % | ||||||||||
| Expected term (years) | 2.4 | 3.4 | ||||||||||||
| Expected dividends | 0.0 | % | 0.0 | % | ||||||||||
| Fair value ($) (per earnout share – Tranche 1) | $ | 6.50 | $ | 3.71 | ||||||||||
| Fair value ($) (per earnout share – Tranche 2) | $ | 5.11 | $ | 3.02 | ||||||||||
The following table presents changes in Level 3 financial liabilities measured at fair value for the years ended December 31, 2024 and 2023:
| (in $ millions) | Earnout Shares (Amount) | ||||||||||
| Balance as of December 31, 2022 | $ | 90 | |||||||||
| Change in fair value | (13) | ||||||||||
| Balance as of December 31, 2023 | 77 | ||||||||||
| Change in fair value | 56 | ||||||||||
| Balance as of December 31, 2024 | $ | 133 | |||||||||
The Company does not measure its debt at fair value in its consolidated balance sheets. Where the fair value of the Company’s long-term debt is determined based on quoted prices in inactive markets for identical debt instruments, or for similar debt instruments, when traded as assets, it is categorized within Level 2 of the fair value hierarchy. Where quoted prices are not available, fair value is estimated using discounted cash flows and market-based expectation of interest rates, credit risks and the contractual term of the debt instruments and is categorized within Level 3 of the fair value hierarchy.
The fair values of the Company’s outstanding senior secured term loans are as follows:
| (in $ millions) | Fair Value Hierarchy | As of December 31, 2024 | As of December 31, 2023 | |||||||||||||||||||||||||||||
| Carrying amount ⁽¹⁾ | Fair Value | Carrying amount ⁽¹⁾ | Fair Value | |||||||||||||||||||||||||||||
| Senior secured term loans - amended and restated | Level 2 | $ | 1,376 | $ | 1,405 | $ | — | $ | — | |||||||||||||||||||||||
| Senior secured initial term loans - original | Level 2 | $ | — | $ | — | $ | 234 | $ | 236 | |||||||||||||||||||||||
| Senior secured tranche B-3 term loans | Level 3 | $ | — | $ | — | $ | 990 | $ | 1,013 | |||||||||||||||||||||||
Senior secured tranche B-4 term loans | Level 3 | $ | — | $ | — | $ | 132 | $ | 137 | |||||||||||||||||||||||
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(1)Outstanding principal amount of the relevant class of senior secured term loans less unamortized debt discount and debt issuance costs with respect to such loans.
The carrying amounts of cash and cash equivalents, accounts receivable, due from affiliates, other current assets, accounts payable, due to affiliates and accrued expenses and other current liabilities approximate their fair value due to the short-term maturities of these assets and liabilities.
Certain non-financial assets and liabilities, such as long-lived assets, goodwill and other intangible assets, are adjusted to fair value when an impairment charge is recognized. The Company continually monitors events and changes in circumstances such as changes in market conditions, near and long-term demand and other relevant factors, that could indicate that the fair value of such non-financial assets may more likely than not have fallen below its respective carrying amounts. Such fair value measurements are based predominately on Level 3 inputs utilizing several methods including discounted cash flow method.
The Company has not identified any triggering events or changes in circumstances requiring it to perform an impairment testing and determination of fair value of long-lived assets and other intangible assets. For goodwill, the Company carried out a quantitative assessment and concluded there is no impairment as the fair value of the reporting units was determined to be more than their carrying value.About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.