The consistent growth across all our business units as well as the success of our diversification strategy contributed to Amadeus solid financial performance during 2017.
Amadeus IT Group, S.A., a leading technology partner for the global travel industry, achieved adjusted profit of 1,116.1 million euros during 2017. This represents growth of 22.5% compared to 2016. Amadeus’ revenue grew 8.5% last year, to 4,852.7 million euros, while EBITDA increased 9.7% to 1,865.1 million euros. The strong profit growth was supported by our positive operating performance, a decrease in financial expenses and a reduction in tax expense. The income tax rate for 2017 was 20.8%, compared to 28.2% in 2016. The rate was impacted by adjustments to deferred tax liabilities in France and the U.S. due to lower corporate tax rates starting in 2018.
Luis Maroto, President & CEO of Amadeus, commented: “Amadeus’ solid financial progression continued in 2017. The positive growth registered across all of our businesses contributed to increases of 9.7% in EBITDA and 22.5% in adjusted profit last year. “In our Airline IT segment we had important milestones such as the migration of Southwest’s domestic flights to Altea in May. We also signed important deals with leading carriers such as Air Canada, which further contributes to our geographical diversification. In fact, last year 57.7% of our passengers boarded were generated outside of Europe compared to 54.1% in 2016.
“Growth was also consistent in our Distribution segment. Travel agency air bookings grew across all regions supported by industry growth and an enhancement of 0.6 p.p. of our competitive position, to 43.9%. “As for our new businesses, they continued to progress well. Premier Inn signed up for the two key capabilities (CRS and PMS) of our Hospitality Platform in November. Our Airport IT customer base grew with agreements with airports around the world, from Australia to France, the US and the CIS region. “Considering the growth outlook for the travel traffic and the economy worldwide, as well as the positive trends underlying our business, we are confident that Amadeus will continue to show healthy growth in 2018”.
Financial highlights for the year
Amadeus’ underlying financial situation remained strong. Net financial debt as per our financial covenants’ terms amounted to 2,083.3 million euros at December 31, 2017 (1.12 times last-twelve-month covenant EBITDA).
At the General Shareholders’ Meeting held in June our shareholders approved the annual gross dividend from the 2016 profit. The total value of the dividend increased 21.3% to €412.5 million, which represents a pay-out of 50% of the 2016 reported profit. Our Board of Directors proposed in December to maintain that 50% pay-out ratio for the year 2017 (the maximum percentage within the 40%-50% approved pay-out range).
In June 2018, the Board of directors will submit a final gross dividend of 1.135 euros per share to the General Shareholders’ Meeting for approval, including an interim dividend of €0.48 per share (gross) already paid on January 31, 2018.
In December, we also announced extraordinary remuneration to our shareholders in the form of a share repurchase program. The maximum investment will be 1,000 million euros, not exceeding 5.69% of the share capital of the company. The program will be executed through two tranches of up to 500 million euros investment each: the first tranche will be non-cancellable and will run from January 1, 2018 to March 31, 2019, and the second, cancellable at Amadeus’ discretion, will run from April 1, 2019 to March 31, 2020.
Business highlights for the year
- Revenue increased to 3,137.6 million euros, 7.3% more than in 2016
- Travel agency air bookings grew 6.3% to 568.4 million
Growth in our Distribution segment was driven by booking growth, increased average pricing and an increase in non-booking revenue. Amadeus’ travel agency air bookings grew consistently across all regions supported by industry growth and an enhancement of 0.6 p.p. of our competitive position. Asia Pacific, with an 11.4% increase and Latin America, with 10.0% were the best performing regions.
During 2017, we signed 55 new contracts or renewals of content agreements with airlines, including TUI fly, Air Canada, Westjet Airlines, Korean Air, Delta Airlines, Avianca Argentina and several low cost carriers (LCC).
Subscribers to Amadeus’ inventory can now access over 110 LCC and hybrid carriers’ content worldwide. LCC and hybrid carriers’ bookings grew 9% in 2017 compared to the previous year.
Amadeus also continued to receive interest from our customers in our merchandising solutions throughout 2017. At the close of the year, 143 airlines had signed up to Amadeus Airline Ancillary Services for the indirect channel, including Air Canada, Malaysia Airlines and All Nipon Airways, and 115 had implemented the solution. A total of 66 carriers had contracted Amadeus Fare Families, which allows airlines to distribute branded fares, with 50 of them already implemented.
The company achieved New Distribution Capability (NDC) Level 1 certification as an aggregator from IATA in October. This certification follows on from Amadeus becoming one of the first technology companies to receive NDC Level 3 certification as an IT provider, the highest level of certification, in June 2016. Navitaire is also NDC Level 3 certified. Its aim is to become NDC Level 3 certified as aggregator in 2018.
- Revenue grew 10.8% to 1,715.1 million euros
- Amadeus passengers boarded increased 19.8%, to a total of 1,656.5 million
The positive performance of Airline IT and our new businesses, as well as the consolidation of Navitaire (from January 26, 2016) supported revenue growth in our IT Solutions segment.
In 2017, passengers boarded increased at a double-digit growth rate, fuelled by 7.6% organic growth and carrier implementations on our PSS platforms (either Altea or New Skies), as well as a consolidation impact from Navitaire passengers boarded.
Southwest Airlines migrated its domestic flights to Altea in May. The new reservation system brings an array of features that will allow the carrier to optimise its flight schedule; manage inventory between any given origin and destination more easily; govern the value of potential ancillary services; and automate rebookings during flight disruptions. The airline began operating its international flights through Altea in July 2014.
Malaysia Airlines and Kuwait Airways also implemented Altea. Go Air, Viva Air Peru, Andes Lineas Aereas, TUI fly Belgium and JetSMART were among the carriers that implemented New Skies in 2017.
Air Canada contracted the full Amadeus Altea Suite in October, as well as a range of other Amadeus airline IT and payments solutions including Anytime Merchandising, Revenue Integrity and Passenger Recovery. This further reinforces our partnership with Air Canada, following the launch of the new aircanada.com website in March, powered by Amadeus’ technology.
Flybe, Europe’s largest regional airline, signed up for the full Altea suite in November. Additionally, the airline contracted Amadeus e-Retail, Amadeus Anytime Merchandising, and Amadeus Customer Experience Management.
Swoop, West Jet’s new ultra-low cost carrier and flyadeal, Saudia Airlines’ new low cost subsidiary, contracted New Skies in 2017.
In total, at the end of December, 199 customers had contracted either Altea or New Skies and 195 had implemented them.
Our portfolio of Airport IT customers continued to expand in 2017. Adelaide Airport announced in March that it will implement Airport Operational Database (AODB), Airport Fixed Resource Management Solution (RMS) and Flight Information Display System.
Hong Kong International Airport and Amadeus announced an agreement to deploy the world’s first movable check-in kiosks. These kiosks can be located anywhere within the airport or moved off-site so check-in can be made at train platforms, hotels or any other location. Powered by Amadeus, the versatile kiosks can be rapidly deployed and relocated for check-in by either the traveller or the airport staff to provide full-service operations.
Amadeus also made strong progress in our airport IT business across the CIS region. Aktau International Airport signed up for Amadeus Airport Common Use Service (ACUS); and Heydar Aliyev International Airport contracted the Amadeus’ full suite of airport solutions including ACUS, Baggage Reconciliation System (BRS) and AODB. Almaty International Airport successfully implemented ACUS and BRS in December.
Company signed new customers in the US, including Louis Armstrong New Orleans International Airport; Pittsburgh International Airport; and Fort Lauderdale-Hollywood International Airport.
In November, Premier Inn announced that it had signed up for two key capabilities of our Hospitality platform: the Central Reservation System (CRS) and the Property Management System (PMS). Premier Inn will also become the first hotel chain to adopt the Amadeus Payment solutions.
Angelos is the news editor for TravelDailyNews Media Network (traveldailynews.gr, traveldailynews.com and traveldailynews.asia). His role includes to monitor the hundrends of news sources of TravelDailyNews Media Network and skim the most important according to our strategy.
He currently studies Communication, Media & Culture in Panteion University of Political & Social Studies of Athens.