Transport Airlines

Amadeus’ first quarter profit rises and claims its growth is “guaranteed”

May 09, 2013 5:05 am

Skift Take

There are no sure bets, but Amadeus claims its pipeline of airline deals, including an agreement to power Southwest’s reservations systems for international flights, guarantees that the company is on an upward trajectory

— Dennis Schaal

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Spain-based travel bookings company Amadeus expects revenue growth to pick up in the second half of the year, while the contribution of its U.S. and Asian units to the group should increase, its financial director said on Wednesday.

Amadeus will continue to win business from rivals this year after its share of travel agency airline bookings reached close to 40 percent in the first quarter, Ana de Pro told Reuters.

“Growth is already guaranteed. By the end of 2015 we will be managing 800 million passengers when we are still dealing with much lower numbers now, and they are already contracted,” she said.

In the first three months of this year, 132 million airline passengers worldwide booked through an Amadeus system. The company posted a 7.5 percent increase in net profit to 164 million euros for the quarter, beating the average forecast given in a Reuters poll of analysts.

The company’s share price was buoyed by the results, rising 2 percent to 23 euros at 0957 GMT, making it the second-biggest gainer on Spain’s flat IBEX-35 index.

De Pro said the Global Distribution System (GDS) industry – the platforms used for travel bookings – slowed in the first half of the year, though market share gains and geographic mix helped Amadeus grow. The last six months of 2013 would be stronger.

“We have April results and they’re in line. You always have to be cautious and it depends what happens with the global economy, but I would say we’re optimistic.”

De Pro said she saw the company growing in the United States, where it recently opened an office in Dallas after Southwest Airlines decided last year to move international bookings to Amadeus’s Altea platform. Its second-biggest market, Asia-Pacific, should also expand.

Amadeus, which competes with Sabre and Travelport’s Galileo and Worldspan GDSs, was originally set up by European airlines in 1987 to create a computer reservatons system shared by the parent carriers and travel agents and Europe still accounts for a large share of business.

Recession-hit Western Europe currently accounts for 45 percent of Amadeus’s flight bookings through travel agencies, compared with 49 percent in the first quarter of 2012, while Asia and North America account for 14 percent and 12 percent.

Amadeus reiterated its forecast for 2013 of a low single-digit percentage growth in its distribution business and high single-digit growth in the IT solutions business.

Group revenue grew 4 percent to 795 million euros in the first quarter, while pre-tax operating cash flow was flat on the year at 195 million euros.

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