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Amadeus

Press Release

Good business growth in first half of 2018

Tomás Monge

Corporate Communications

Good performances across our Distribution and IT Solutions segments bolstered revenues and profitability in the first six months of the year.

First half of the year highlights (six months ended June 30, 2018)

  • Revenue increased 4.1%1, to €2,477.0 million 
  • EBITDA grew 8.2%1, to €1,078.2 million 
  • In the Distribution segment, travel agency air bookings reached 305.1 million, which represents growth of 3.4%
  • In IT Solutions, Passengers Boarded increased 18.0% to 888.8 million

Amadeus IT Group, S.A achieved an adjusted profit of €606.8 million for the first half of 2018. This represents growth of 6.1%1 compared to the same period last year. Amadeus’ revenue grew 4.1%1 from January to June compared to the first half of 2017, reaching €2,477.0 million, while EBITDA increased 8.2%1 to €1,078.2 million. 

As happened in the first quarter, our results for the period continued to be distorted by the USD/Euro exchange rate compared to the same period last year, which had an important negative effect. Excluding foreign exchange effects (and also, the IFRS 16 impact on EBITDA)2, in the first half of the year both revenue and EBITDA grew at high single digit rates, with a broadly stable EBITDA margin. 

Luis Maroto, President & CEO of Amadeus, commented: 

“Amadeus’ financial results continue their positive trend in the first half of the year. Our businesses again showed solid growth with both revenue and EBITDA growing at high single-digit rate  excluding foreign exchange effects with a broadly stable EBITDA margin”.

“We remain optimistic on the outlook for the rest of the year. We continued to secure and expand the content available for our subscribers through the Amadeus system, with content agreements signed or renewed with 15 carriers. The 18% increase in the number of passengers boarded of our IT Solutions business (which amounted to 888.8 million in the first half of 2018) was supported by a 7.8% organic growth and by our latest migrations. We also continued to progress successfully in our diversification strategy into new businesses”.


[1] Compared to H1 2017 figures restated for IFRS 15 and IFRS 9, applied from January 1, 2018.

[2] We are early adopters of IFRS 16, which we applied since January 1, 2018. 2017 figures will not be restated for IFRS 16. In the first half of 2018, IFRS 16 had a positive €22.5 million impact on EBITDA. See section 3.1 of our Management Review for further details.


Financial highlights for the first six months of the year

In June 2018, the General Shareholders’ Meeting approved a final gross dividend of €1.135 per share, representing a 20.7% increase in comparison with the dividend in 2016. An interim dividend of €0.48 per share (gross) was paid in January, and a complementary dividend of €0.655 per share (gross) was paid on June 29, 2018.

As part of our share repurchase program (announced in December 2017), at the close of June the company had acquired 3,558,231 shares for an amount of €212.4 million. This is part of the first tranche of the program (January 1, 2018 to March 31, 2019, non-cancellable) during which we will buy shares for up to €500 million.

Consolidated debt as per our financial covenants’ terms amounted to €2,128.6 million at June 30, 2018 (1.10 times last-twelve-month covenant EBITDA). 

Business highlights for the first six months of the year

Distribution

  • Revenue increased 2.6%1 to €1,563.4 million
  • Travel agency air bookings grew 3.4% to 305.1 million

Revenue growth was impacted by negative foreign exchange effects in the first half of 2018.

Asia & Pacific, Central, Eastern & South Europe and North America were our fastest growing regions in terms of travel agency air bookings. Western European bookings decreased compared to the first quarter of 2017, impacted by the industry decline and the loss of share at some European mid-size online travel agencies. Excluding Western Europe, Amadeus bookings grew 9.2% in the first half of the year.


[1] Excluding also the IFRS16 impact on EBITDA growth and margin. See section 3 of the Management Review for further detail.

Amadeus TA air bookings (figures in millions)

 

Jan-Jun 2018

% of total

Jan-Jun 2017

% of total

% change

Western Europe

102.4 

33.6

109.5

37.1

-6.5

Asia & Pacific

64.2

21.1

54.7

18.5

17.4

North America

56.8

18.6

52.5

17.8

8.2

Middle East & Africa

36.6

12.0

35.8

12.1

2.1

Central, Eastern & Southern Europe

25.6

8.4

23.7

8.0

7.8

Latin America

19.4

6.4

18.9

6.4

2.9

Total TA Air bookings

305.1

100.0

295.2

100.0

3.4

           

During the second quarter of 2018, we signed 15 new contracts or renewals of content agreements with airlines, including United Airlines, Alitalia, Scandinavian Airlines (SAS) and Ethiopian Airlines. Subscribers to Amadeus’ inventory can now access over 110 low cost carriers (LCCs) and hybrid carriers’ content worldwide. LCC and hybrid carriers’ bookings grew 9% between January and June compared to the same period last year.

Amadeus has received the level 3 New Distribution Capability (NDC) certification as an aggregator from International Air Transport Association (IATA). This comes in addition to Amadeus’ existing level 3 NDC certification as an IT provider, making Amadeus one of the first providers with dual level 3 certification. Level 3 is the highest NDC certification.

This certification has been achieved through Amadeus’ work with a leading online travel agency that joined the NDC-X program earlier this year. On the airline side, Qantas also joined NDC-X. Thanks to this partnership, Amadeus will connect to the Qantas Distribution Platform (QDP) and deliver NDC content to travel sellers.

Korean online travel agency HanaTour unveiled in May its new international website, which thanks to Amadeus Pricer with Instant Search now offers travelers faster online search results and more choices when making bookings. Travelers can search by dates, fares or destination, receiving recommendations catered to their specific needs. This project is part of a multi-year agreement between HanaTour and Amadeus to power the agency’s global expansion and technology innovation. Trip.com, a leading online travel agency part of the Ctrip Group, also contracted Amadeus Pricer with Instant Search during the second quarter to deliver the ultimate search and shopping experience to its customers.

Demand from our customers for our merchandizing solutions remained strong. At the close of June, 145 airlines had signed up for Amadeus Airline Ancillary Services (and 116 of them had already implemented it) and 75 had contracted Amadeus Fare Families (of which 60 had already implemented it).

 

IT Solutions

  • Revenue grew 6.8%1 to €913.7 million
  • Amadeus passengers boarded increased to 888.8 million, 18.0% more than in the same period of 2017

IT Solutions revenue increased by 6.8%1 in the first half of 2018, impacted by negative foreign exchange effects.

 

Airline IT

Passengers boarded grew 18.0% thanks to the impact from 2017 migrations and organic growth of 7.8%. Last year’s implementations contributed to expanding our international footprint, with 61.9% of our passengers boarded generated outside Europe in the first half. 

Total passengers boarded (figures in millions)

 

Jan-Jun 2018

% of total

Jan-Jun 2017

% of total

% change

Asia & Pacific

291.4

32.8

235.8

31.3

23.5

Western Europe

290.8

32.7

286.3

38.0

1.6

North America

119.9

13.5

58.8

7.8

104.1

Latin America

72.6

8.2

71.7

9.5

1.2

Middle East & Africa

66.0

7.4

61.2

8.1

7.8

Central, Eastern & Southern Europe

48.0

5.4

39.5

5.2

21.8

Total passengers boarded

888.8

100.0

753.4

100

18.0

           
 

At the close of June, 205 customers had contracted either of the Amadeus Passenger Service Systems (Altéa or New Skies) and 196 had implemented them.

Russia’s second largest airline, S7 Airlines, recently signed for the full Altéa suite. S7 group of companies, to which S7 Airlines belongs, carried more than 14m passengers in 2017. The implementation is expected to take place before year-end. Royal Jordanian renewed in May for the full Altéa Suite, including Reservation, Inventory and Departure Control, and signed additional products. In addition, through Amadeus’ Altéa technology, Royal Jordanian will have access to the latest NDC capabilities. Together, all these solutions will help the airline increase revenues by upselling ancillary services through multiple channels, improve its competitiveness and business performance, and better measure its key performance indicators.

Scandinavian Airlines (SAS), one of Altéa suite’s first customers, renewed its multi-year partnership with Amadeus in June, including inventory, reservation, ticketing and departure control systems. The carrier also signed up for the Amadeus Payment Platform to simplify its payments, as it accepts virtually any payment method with payment embedded directly within the airline’s selling and booking flow, ensuring a more responsive digital experience. SAS will continue using Amadeus Altéa Network Revenue Management, which it contracted in 2015. 

LATAM implemented Altéa Departure Control Flight Management, which it contracted during the fourth quarter of 2017, to optimize fuel consumption and maximize operational performance.

New Businesses – Airport IT

Killeen-Fort Hood Regional Airport, located in Texas, contracted Amadeus Extended Airline System Environment (EASE) in May. With this addition, EASE is now available in 51 airports in North America including Los Angeles International Airport, JFK Airport, Charlotte Douglas International Airport in North Carolina and Fort Lauderdale–Hollywood International Airport.

Copenhagen Airport reached another milestone thanks to Amadeus technology. The airport, which became the first worldwide to operate fully in the cloud thanks to Amadeus systems in 2016, is now also the first in Europe to exchange data with EUROCONTROL in the most effective manner, and according to the new web services standards. The new connectivity is native to Amadeus’ solutions for airports.

Pristina Airport has migrated to the next-generation of Amadeus Altéa Ground Handler DCS in April, which allowed it to further improve its operational agility, and to generate an impressive 20% reduction of its costs associated with check-in and airline weight and balance activities in just two months.

New Businesses – Hospitality

We are progressing in the roll-out of the Guest Reservation System with Intercontinental Hotels Group. Over half of the properties have now been migrated to the platform, including properties from all brands and regions. Full deployment is expected for late 2018 to early 2019.

New Businesses – Airport IT

Swiss Federal Railways (SBB) selected Amadeus to design and power its new intelligent and flexible booking solution, which will offer travelers an at-a-glance look at all possible travel routes and costs, just by entering a departure and destination station. The new tool will be used across all SBB’s sales channels – online, at stations or even third parties – enabling SBB to sell a more enriched offer from railways in neighboring countries and popular destinations. 

 

Total passengers boarded (figures in millions)

 

Jan-Jun 2018

Jan-Jun 20171

Change

Operating KPI 

 

   

TA air competitive position2

43.5%

43.6%

-0.1 p.p.

TA air bookings (m)

305.1

295.2

3.4%

Non air bookings (m)

32.5

33.2

(2.0%)

Total bookings (m)

337.7

328.4

2.8%

Passengers boarded (m)

888.8 

753.4

18.0%

Financial results      

Distribution revenue

1,563.3

1523.3

2.6%

IT Solutions revenue

913.7

855.2

6.8%

Revenue

2,477.0

2,378.5

4.1%

EBITDA

1,078.2

996.3

8.2%

EBITDA margin (%)

43.5%

41.9%

1.6 p.p

Adjusted profit3

606.8

572.2

6.1%

Adjusted EPS (euros)4

1.41

1.31

8.2%

Cash flow      

Capital expenditure

342.5

290.8

17.8%

Free cash flow5

461.2

449.1

2.7%

Indebtedness6

Mar 31,2018

Dec 31,2017

Change

Covenant Net Financial Debt

2,128.6

2,083.3

2.2%

Covenant Net Financial Debt/LTM Covenant EBITDA

1.10x

1.12x

       
 

[1] 2017 figures have been restated for IFRS 15 and IFRS 9. See Management Review for details on these accounting changes as well as for a reconciliation to the 2017 reported figures.

[2] Competitive position is measured as our TA air bookings in relation to the TA air booking industry, defined as the total volume of travel agency air bookings processed by the global Central Reservation System (CRS). Excludes air bookings made directly through in-house airline systems or single country operators, the latter primarily in China, Japan and Russia

[3] Excluding after-tax impact of the following items: (i) accounting effects derived from PPA exercises and impairment losses, (ii) non-operating exchange gains (losses) and (iii) other non-recurring items.

[4] EPS corresponding to the Adjusted profit attributable to the parent company. Calculated based on weighted average outstanding shares of the period. 

[5] Calculated as EBITDA minus capital expenditure plus changes in our operating working capital minus taxes paid minus interests and financial fees paid. 

[6] Based on the definition included in the senior credit agreement covenants.