Amadeus Reports 26.1 Percent Rise in Profits for First Half 2012
By James Shillinglaw
August 03, 2012 2:18 PM
Amadeus IT Holding, S.A., parent the Amadeus Group, a transaction processor and provider of technology solutions for the travel industry, said during the first six months of 2012 adjusted profit increased 26.1 percent to reach €332.5 million, due principally to the substantial reduction in interest expense. This was backed by an 8.6 percent growth in revenue to €1,508.9 million and a 6.1 percent rise in EBITDA to €606.9 million.
The improved results would seem to indicate that the major GDS companies are still doing quite well, despite airline efforts to reduce booking fees or find other reservations solutions entirely. Amadeus said its growth was supported by significant year-on-year increases in both its Distribution and IT Solutions businesses. Revenue in the Distribution business increased by 7.2 percent, rising to €1,157.4 million while the number of total bookings, including both air travel agency and non air bookings, improved by 4.2 percent, to 252.2 million.
Amadeus also expanded its global market share of travel agency air bookings by 1 percentage point to reach 38.3 point. In the IT Solutions business, revenue increased by 13.6 percent, rising to €351.4 million, and the Passengers Boarded (PB) figure was lifted by 27 percent, rising to 259 million. Currently Amadeus projects over 750 million passengers boarded for 2014, based upon existing contracts.
The company’s financial performance for the first half of the year was backed by strong year-over-year results from both quarters. During the second quarter, Amadeus’ adjusted profit increased by 30.3 percent, to €164.6 million, total revenues were up by 8.8 percent to €744.7 million, and EBITDA rose by 6.8 percent to €299.7 million.
“Despite the ongoing challenges of the global economic environment, this has been a successful first half of the year and we have continued our growth record,” said Luis Maroto, president and CEO of Amadeus. “At the financial level, year-on-year during the first half we have grown revenues by 8.6 percent and adjusted profit by 26.1 percent to €332.5 million….The global economic outlook remains uncertain, and air traffic and GDS volumes have shown weakness in recent months, driven by the economic environment. Nonetheless, we believe that our business model will continue to prove resilient and support good results for the second half of this year.”
Amadeus said growth in North America continued with four key announcements. First, Expedia signed a multi-year content and technology agreement for North America, whereby Amadeus will provide fare search technologies for air travel among other products, as well as access to global travel supplier content through the Amadeus system. Second, Kayak, a leading U.S.-based travel search company, signed a multi-year agreement that extends its existing strategic global alliance to expand the use of Amadeus’ airline fare and availability technology.
Third, Metasearch website Hipmunk selected Amadeus’ advanced technology solutions to provide international low fare search and shopping to help assure its users of the best online experience and speed. Hipmunk will utilize Amadeus Meta Pricer, Amadeus Master Pricer, and Amadeus Web Services solutions to enable it to deliver international low fare search capabilities for air travel. Finally, Atlas Travel became the first customer to select the full Amadeus One suite, which is a portfolio of innovative IT solutions and services for North American business travel agencies. Atlas Travel is a U.S.-based global travel management company serving more than 500 corporations worldwide.
Separately, Amadeus signed an extension of a content agreement with STA Travel, which is a global travel organization that handles six million passengers each year and specializes in the student and youth sector. Over 29 STA Travel markets will use the Amadeus distribution system to access travel content throughout Amadeus´ global partner network, including, among others, the U.K., Germany, the United States, and Japan.
During the second quarter, Amadeus signed content agreements with seven airlines, including Air Austral, Croatia Airlines, Malmö Aviation, TransAsia Airways, and Ural Airlines. These agreements guaranteed access to a comprehensive range of fares, schedules, and availability for Amadeus travel agents. In addition to these, global distribution agreements were signed with Lao Central Airlines, which began operations earlier this year and is the first independent airline in Laos, and Mongolian Airlines Group, a newly launched full service domestic and regional carrier.
In June Air France implemented the Amadeus Ancillary Services solution. Travel agencies in France can now sell the airline's Seat Plus service, which offers more legroom than standard economy seats. Air France uses Electronic Miscellaneous Document (EMD), the industry standard fulfillment solution to sell seats in France. EMD enhances ticket services and enables airlines to distribute a wide range of products, such as seats. Amadeus Ancillary Services is an end-to-end solution which helps airlines to sell additional services in full compliance with industry standards, using both travel agencies and either the airline’s own call center or website. At the close of the quarter, 46 airlines in total had contracts for this service, 19 of which had opted to implement the service in the Amadeus GDS; of those 19 airlines, six are already selling ancillary services using Amadeus technology.
On the rail front, SNCF (Société Nationale des Chemins de Fer Français) became the launch customer for Amadeus Agent Track, a state-of-the-art rail booking solution for travel agents that enables them to access the rail company’s schedules and inventory. The booking solution provides a “single view” of fares and availability on one screen, using a graphical user interface which improves agent productivity. In addition, Amadeus and SNCF also agreed an extension to their full content agreement by which travel sellers have access to all SNCF fares, origins and destinations, and products.
Amadeus also formed a partnership with Trenitalia, the transport division of the Italian FS Group, to distribute Trenitalia content through all Amadeus channels. Travel agents around the world will be able to book both Trenitalia’s high-speed rail products Frecce Alta Velocità and Frecciabianca through the existing sales channels and through the Amadeus global distribution system, which links 91,000 travel agency points of sale worldwide. Travel agents who use the Amadeus Selling Platform will have a standardized way to access Trenitalia services, in turn making bookings through an air/rail- based search solution, FlyByRail Track, and Rail Agent Track.
In April Southwest Airlines, the largest U.S. carrier in terms of domestic passengers boarded, entered into a contract for the Amadeus Altéa Reservation solution to support the carrier’s international flights. While the agreement focused on the international element of Southwest's reservation system, which will be implemented by 2014, the contract also provides a future option for Southwest to convert its domestic business to Amadeus.
As of the close of the second quarter, a total of 120 airlines had contracted for both Altéa Reservation and Altéa Inventory, of which 108 had implemented both solutions. Based upon these contracts, Amadeus estimates that by 2014 the number of Passengers Boarded (PB) will be more than 750 million, which would represent an increase of almost 70 percent vs. the 439 million passengers boarded processed on the Altéa platform during 2011, or a compounded annual growth rate (CAGR) of around 20 percent.