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Amadeus: Positive start of the year thanks to strength of IT Solutions

Revenue increased 14.6%1, to 1,409.9m. euros; EBITDA expanded 11.3%1, to 599.8m. euros. In the Distribution segment, travel agency air bookings grew 1.6% to 162.6m.

Amadeus IT Group S.A maintained its positive growth trend in the first quarter of 2019, supported by the solid operating performances of its Distribution and IT Solutions businesses and the consolidation of TravelClick (since October 4, 2018). This contributed to double-digit growth both in revenue and EBITDA in the quarter, as well as to an adjusted profit2 of 334.7 million euros, which represents an increase of 9.5%1 compared to the same period of 2018.

Luis Maroto, President & CEO of Amadeus, commented: “Within a complex travel industry environment, Amadeus has maintained its good momentum into 2019, with healthy growth levels in both of its core segments.

“In Distribution, we continued to expand content for our subscribers and increased our competitive positioning in terms of air bookings. Our IT Solutions also performed positively, thanks to a growth in passengers boarded, an increase in upselling and new functionalities for our customers, and the addition of TravelClick to the Amadeus family. I am confident that thanks to the resilience of our business and the broadening of our customer base, we will continue to deliver good growth in 2019.”

Business highlights for the quarter

Revenue in this segment grew 5.6% to 839.9 million euros. The global slowdown in growth in travel agency industry air bookings continued during the first quarter of 2019 (0.0% growth compared to 1.1% in the fourth quarter of 2018). Apart from North America and Latin America, all other regions reported an industry decline mainly driven by geopolitical and macroeconomic factors. Asia Pacific registered the strongest deceleration, largely driven by a poor performance of India (due to several factors, including the severe financial distress of a large Indian GDS airline and the upcoming elections).

Despite this environment, Amadeus’ travel agency air bookings increased 1.6% between January and March, supported by market share growth in all regions except Asia Pacific, mainly due to India (excluding India, our bookings grew 3.4%
globally). North America was our fastest growing region with an increase of 14.6%. Amadeus returned to growth in Western Europe, on the back of market share gains.

Amadeus’ booking growth was supported by market share expansion in all
regions expect for Asia Pacific. Our global competitive position expanded by 1.1 p.p. excluding India. During the first quarter of the year, Amadeus signed 7 new contracts or renewals of content or distribution agreements with airlines, and our subscribers can now access the content of 115 low cost carriers (LCCs) and hybrid carriers worldwide.

Amadeus also maintained the positive track record of signings for our merchandizing solutions. During the first three months of the year, we added 3 airlines to Amadeus Fare Families and another 3 to Amadeus Airline Ancillary Services. At the close of March, 84 airlines had contracted for Amadeus Airline Fare Families (of which 74 had already implemented the solution) and 154 airlines had contracted for Amadeus Airline Ancillary Services (of which 132 had already implemented it). 

IT Solutions
"In April, we announced that FCM Travel Solutions, the flagship global business travel division of Flight Centre Travel Group, will start using the new NDCenabled Amadeus Selling Platform Connect interface, and making NDC bookings through it in the coming months. As one of the largest global travel management companies, with a presence in over 97 markets, FCM and Flight Centre’s feedback will be key to driving adoption of the NDC standard among travel sellers.

In May, we renewed our distribution agreement with Finnair, which now includes the Finnair NDC Partner Program. This agreement will allow Amadeus travel sellers that sign up for this program to access the wide range of content available to it and will bring NDC forward in the indirect channel. Additionally, Finnair, as one of our partners in the NDC-X program, will be the driver airline to integrate Altea NDC with the Amadeus Travel Platform."

"The positive operating performance of Airline IT and the solid growth of our new businesses, including the TravelClick consolidation, were the key drivers for the 31.2%1 increase in IT Solutions’ revenue during the first quarter, to 570.0 million euros."

IT Solutions – Airline IT
This segment maintained its positive operating performance, with an increase in passengers boarded. Unitary revenue expanded thanks to the good performance of several revenue lines, including revenue management, passenger recovery and merchandizing.

Passengers boarded grew 4.6% during the quarter, to 436.1 million, supported by 2018 implementations (including S7 Airlines, Maldivian Airlines, Cyprus Airways and Aeromar to Altea and Volaris Costar Rica to New Skies) and the ones so far in 2019 (including Philippine Airlines). Organic growth of 6.0% also contributed to this passenger boarded increase. This organic growth is 1.6 p.p less than that in the same period of 2018, mainly due to a softening in global air traffic growth. All these factors contributed to mitigate the negative impact of the de-migration of LATAM Airlines Brazil from our platform during the second quarter of 2018 and the cessation of operations of Germania and bmi Regional (both in February 2019).

"We continued to broaden our international footprint. At the close of March, 63.9% of our passengers boarded were generated outside of Europe, compared to the 60.3% registered at the close of 2018."

Amadeus continued to expand its portfolio of customers in Airline IT and at the close of March, 214 customers had contracted either of the Amadeus Passenger Service Systems (Altea or New Skies) and 205 had implemented one of them.

Etihad Airways contracted Altea Departure Control System Flight Management to improve productivity, better manage capacity and reduce costs.

"Our upselling efforts during the first quarter of the year also contributed to the positive growth. In April, All Nipon Airways (ANA) announced that it had implemented Amadeus Airline Cloud Availability. The carrier is now able to
boost customer conversion because its offers are consistent across all sales channels, while having a cost-effective way to distribute content dynamically. ANA is also the first airline to take advantage of Interactive Codeshare through Amadeus’ Cloud Availability solution, which means that it can process availability interactively with codeshare partners."

Also in April, Qatar Airways signed up for additional functionality to improve its revenue optimization: Amadeus Altea Revenue Availability with Active Valuation (RAAV) and Amadeus Altea Booking Intelligence. RAAV calculates real-time availability at Origin & Destination level and can be customized to help the airline tailor its offer and generate more revenue. Altea Booking Intelligence helps detect abusive or fraudulent bookings during the booking process in real time and takes corrective actions before the booking is completed. Kenya Airways, a customer of Altea for the last 12 years, implemented Amadeus Altea Network Revenue Management in April.

Amadeus’ NDC-X program continued to drive the industrialization of NDC and making the standard works for all players in the value chain. As an IT provider, Amadeus is now certified by IATA as NDC capable at level 4.

Both Navitaire and Amadeus were granted ONE Order certifications by IATA during the first quarter of 2019. IATA’s ONE Order initiative is an industry program which aims to simplify and replace the multiple booking, ticketing, delivering and accounting records with one single order record. In March, Navitaire was granted ONE Order capable certification as Accounting Provider, which recognizes that Navitaire’s revenue accounting system supports deployments for ancillaries whose schemas are compliant with the ONE Order message standard. A month later, IATA certified that Amadeus is ONE Order capable as an Order Management System. This means that our ONE Orderbased solution can communicate and receive orders from both delivery and accounting systems following the ONE Order standard.

IT Solutions – New Businesses
"Our new businesses grew strongly during the first three months of the year, boosted by the TravelClick consolidation and double-digit revenue growth in our new businesses excluding TravelClick."

New businesses – Hospitality
"During the first quarter of the year we also strengthened our Hospitality business, as we expanded our portfolio of customers and shopping options. We partnered with Agoda, one of the world’s fastest growing online travel agents, to extend our hospitality content offer. Now, all of Agoda’s pre-paid hotel content, a total of 150,000 properties, will be available to travel agents through Amadeus at the same price as Agoda’s website.

We also signed an agreement with Restel, the Spanish hotel booking platform, which sees Amadeus become the only hotel distribution service to offer Restel’s portfolio of 200,000 hotel properties."

Amadeus now offers over 4 million hotel shopping options.

New Businesses – Airport IT
"Our Airport IT business progressed well between January and March. Carrasco International Airport in Montevideo (Uruguay) signed up for Amadeus Passenger Verification, while San Diego Country Regional Airport Authority (U.S.) contracted Amadeus Airport Operational Database and Resource Management System. Mobile Brookley Field (Alabama, U.S.) signed up for Amadeus Extended Arline System Environment (EASE)."

New Orleans Louis Armstrong International Airport (U.S.), already a customer of EASE, signed for Amadeus Airport Operational Database and Resource Management System.

"In March, we reinforced our Airport IT offering with the announcement of the acquisition of ICM Airport Technics (“ICM”). ICM, headquartered in Sydney, Australia, specializes in the provision of passenger automation and self-service bag drop solutions for customers, principally in Asia Pacific and Europe. The acquisition brings Amadeus a portfolio of market leading products, complementary to our own components. ICM serves around 25 airports, including some of the most important airports in the world. The acquisition of ICM is expected to close during the second quarter of 2019."

New Businesses – Rail
In March, Ctrip and Amadeus announced a new distribution agreement through which Ctrip customers from anywhere in the world will be able to book and pay for tickets from Renfe, the Spanish rail operator, in their own language and currency.

Also in March, Deutsche Bahn unveiled its new booking engine, developed in partnership with Amadeus, to enable passengers to book rail journeys across Europe in one place. Thanks to this new engine, Deustche Bahn’s customers can now buy cross border trips outside of Germany on, and via our mobile app DB Navigator.

Vicky Karantzavelou
Co-Founder & Chief Editor - TravelDailyNews Media Network | Website

Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.

She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.