Amadeus reports an OK Q3 as it keeps on biting off bigger chunks of the airline industry
Amadeus is much more than a global distribution system provider, and the airline IT solutions side of its business is growing much faster than the still-larger travel agency side.
If you flew this year on British Airways, Lufthansa, Air France, Iberia, Qantas and about 130 other airlines, your carrier was using IT services from Amadeus, even though the majority of the 420 million passengers handled by the company’s solutions during the first nine months of 2012 probably never heard of the firm.
Madrid-based Amadeus says the number of passengers boarded on flights using all or parts of the Amadeus Altéa Suite, which provides reservations, inventory management, and departure control systems to airlines, rose 28.4% to 420.4 million through the first three quarters of the year.
And, Amadeus projects its systems will board 760 million passengers for the full year in 2014, based on contracts in the pipeline.
Amadeus also provides global distribution services to travel agencies, and that part of the business saw revenue increase 6.4% to $2.2 billion through Sepember 30, 2012, Amadeus reported today.
Airline business is a growth engine
That GDS portion is the largest part of Amadeus’ business, but its IT Solutions business — the one that provides passenger service systems to airlines — is growing faster, albeit from a smaller base.
Amadeus reported that in the first nine months of 2012, its IT Solutions revenue climbed 15.1% to $691.1 million.
Overall, Amadeus’ EBITDA increased 6.5% to $1.1 billion, on an 8.4% revenue jump to $2.8 billion during the first nine months of 2012, the company reported.
“In spite of continued global macro-economic challenges, Amadeus has maintained its growth record during the first nine months of the year, including the third quarter,” said Luis Maroto, Amadeus CEO.
Passengers migrate and so do airlines
Amadeus is expanding its airline IT business; hence the projected large increase in number of passengers boarded. In the past nine months, Amadeus migrated 110 airlines to at least some of its Altéa solutions compared with 96 during the first nine months of 2011.
In the U.S., after losing a contract several years ago to be the reservations system provider for United Airlines when the airline’s financials plummeted, Amadeus this year won the gig to provide Southwest Airlines with a reservations system for hoped-for international flights.
The Southwest deal is a very important entry point for Amadeus into the U.S. market for airline IT services.
On the distribution front during the third quarter, Amadeus-connected travel agencies got access to and began selling Delta’s Economy Comfort seats.
All told, Amadeus has agreements with 46 airlines to handle their ancillary services.
The majority of these airlines — 25 of them — use Amadeus Ancillary Services to sell their checked bag services and premium seats exclusively through airline websites and other airline-only channels, while 21 airlines have opted to market them through travel agencies, as well.