Amadeus IT Holding, S.A, parent company of the Amadeus Group, a leading transaction processor and provider of advanced technology solutions for the global travel and tourism industry, has announced year-on-year financial and operating results for the first half of 2011 (six months ended June 30, 2011).
Adjusted profit for the first half increased 12.2% to reach €263.7 million. This was backed by a growth in revenue from continuing operations of 3.9% to €1,389.0 million and an improvement in EBITDA of 6.0% to €572.1 million. Excluding the impact of the sales of equity stakes in Vacation.com and Hospitality Group during 2010, and the impact of a change in treatment of certain bookings within IT Solutions, revenue grew by 5.8%3.
During the second quarter of the year Amadeus successfully refinanced its debt with a new €2.7 billion senior unsecured financing. Amadeus’ consolidated net financial debt on June 30, 2011 was €1,895.8 million (based on covenants’ definition), representing 1.82x last twelve months’ EBITDA. With the benefit of the net proceeds of the sale of Opodo, this figure was down by €675.5 million or 26.3% vs. December 2010.
Both the Distribution and IT Solutions businesses contributed to the company’s performance during the first half. Revenue in the Distribution area increased by 4.1% (4.9% excluding the impact of the sale of Vacation.com), rising to €1,079.6 million. Total bookings increased by 4.3%, up from 232.1 million to 242.0 million. Amadeus also increased its global market share of travel agency air bookings by 0.8 percentage points, maintaining its leadership position with 37.2% of the global market share of travel agency air bookings during the first half of 2011.
The IT Solutions business continued its growth by increasing revenue 3.2% during the first half (7.2% excluding the impact of the sale of Hospitality Group and the change in treatment of certain bookings ) to €309.4 million. Passengers Boarded (PB) increased by 32.5% in the same period, rising from 153.9 million to 203.9 million. Five contracts with new airlines for the Amadeus Altéa Suite were signed and the scope of an existing contract with airberlin was increased.
The financial performance during the first half of 2011 is backed by strong year-on-year results both in the first and the second quarters of the year: Amadeus’ adjusted profit increased by 13.4% in the second quarter, up from €111.4 million to €126.3 million, total revenues in the second quarter were up by 5.0% (6.7% excluding the impact of the sale of Vacation.com and Hospitality Group) from €651.9 million to €684.7 million, and EBITDA rose in the second quarter by 5.2% from €266.8 million to €280.6 million.
Luis Maroto, President & CEO of Amadeus, said:
“This has been a positive and active first half of the year. At an operational level, both our Distribution and IT Solutions businesses continued to grow and in particular had significant successes in the Asia-Pacific region, adding further visibility to our future growth. In Distribution, our global market share of air travel agency bookings increased by 0.8 percentage points and an important partnership was signed with TOPAS, a subsidiary of Korean Air, to launch a reservation system using Amadeus technology which will handle more than 50% of all travel agency bookings in Korea. In IT Solutions, the number of Passengers Boarded increased by 32.5% and we signed further Amadeus Altéa Suite contracts with leading global airlines such as All Nippon Airways (ANA) for its international flights, Korean Air and Thai Airlines. We are confident that our ongoing investment in developing the best technology will continue to produce long-term results and now expect our annual Passengers Boarded (PB) to be more than 700 million by 2014 .”
“This period also includes many non-operating key developments, such as the agreement to refinance our debt through a new senior unsecured credit facility, the assignment of an investment grade rating by both Standard & Poor’s and Moody’s, and the completion of the sale of Opodo following the approval of the European Commission.”
“From a financial perspective, the results are also encouraging: year-on-year EBITDA grew by 6.0% to €572.1 million, adjusted profit rose by 12.2% to €263.7 million, and net debt decreased by €675.5 million to represent now only 1.82x last twelve months’ EBITDA. We look forward to the second half of the year with confidence.”
During the second quarter Amadeus announced a long-term content agreement with Turkish Airlines, which carries over 30 million passengers each year and is one of the fastest-growing airlines in Europe, Middle East, Africa and Central Asia. Content agreements were also signed with an additional ten airlines. These agreements guarantee access to a comprehensive range of fares, schedules and availability for Amadeus travel agents. Today 80% of Amadeus bookings worldwide are made on airlines with whom Amadeus has a content agreement.
Additionally, in North America a global distribution and full content agreement was announced with Canada’s third largest airline Porter Airlines; and a global distribution contract was signed with the fast-growing, American low-cost carrier Vision Airlines. In Australia the newest domestic and international carrier, Strategic Airlines, also signed a global distribution agreement to provide Amadeus with international and domestic fares, schedules and inventory.
Amadeus has maintained its commitment to helping airlines adapt and evolve their ancillary services strategy with 16 airlines already signed up for Amadeus Airline Ancillary Services, of which nine will implement the solution both for their websites and the travel agency channels. Two of these airlines, Cimber Sterling and Corsairfly, are live and in production, selling ancillary services on their websites and via travel agencies in Denmark, Norway, Sweden and France. Research sponsored by Amadeus and published in June revealed that airlines reported €15.1 billion ($21.5 billion) of ancillary revenue in 2010, which is 38% more than in 2009 and an increase of 96% since 2008.
Low-cost carrier bookings remained a steady source of significant growth for Amadeus. Total bookings on low-cost carriers by travel agencies using Amadeus in the second quarter of 2011 increased by 27% compared with the same quarter in 2010. Low cost carriers bookings in the first half of 2011 increased by 21% compared with the first half of 2010.
Hotel, rail and other travel providers
In June, one of the world’s leading hotel operators Accor extended its distribution agreement to enable over 1,100 of the chain’s budget Motel 6 and Studio 6 properties to be booked through the Amadeus system. Today over 100,000 unique hotel properties are available through Amadeus.
Also in June, Amadeus launched two new innovative solutions, Amadeus Agent Track and Amadeus Web Services Track. These new products, part of the Amadeus Total Rail Solution, will improve the way travel agents sell and book rail travel, whilst helping rail companies to drive sales and growth through the indirect channel. Amadeus Agent Track is an easy-to-use desktop graphical user interface that provides a ‘single view’ of fares and availability; the solution grants easy access to all rail companies available in the Amadeus system and permits full integration with the travel agent’s back office system. Amadeus Web Services Track is a toolkit that connects the online travel agent’s interface to the Amadeus system, providing them with the first tool that offers a single source of content for the major European rail companies.
In Germany, Amadeus expanded its cooperation with the international sales department of Deutsche Bahn, Germany’s national rail carrier, now allowing travel agencies in Italy, Singapore, Malaysia, Finland and Greenland to offer the same tickets and services that are available from Deutsche Bahn offices in Germany.
Travel professionals in North America can now search and book online the worldwide itineraries for small ship cruises available from eWaterways, the niche and river cruise specialists. The itineraries are made available via Amadeus Vacation Link, a free point-of-sale portal available to all North American travel agents that provides access to unlimited travel content regardless of which GDS the travel agent uses.
In the insurance market, Allianz Global Assistance Group and Europ Assistance began selling their products via Amadeus Insurance, the automated solution that forms an integral part of the Amadeus Selling Platform and allows Amadeus airline users to sell insurance and other assistance products. Allianz Global Assistance Group was implemented for Flying Blue, the loyalty program of Air France and KLM, and TAM off-line point of sales; Europ Assistance was implemented for Air Madagascar, for both the online and offline channels.
In May it was announced that Amadeus technology will become widely available to the Korean travel industry for the first time following an agreement with TOPAS, Korea’s leading travel information system provider and a subsidiary of Korean Air. TOPAS will partner with Amadeus to launch a next generation travel agency reservation system which will handle more than 50% of all travel agency bookings in Korea. The system, which is based on the Amadeus GDS and customised for the Korean market, will increase efficiency for travel agents as well as providing new content options, leading to more sales opportunities.
Club Méditerranée, the French global operator of all inclusive holiday resorts, has renewed its global partnership with Amadeus for another three years. The agreement includes 24 markets worldwide and covers both GDS and IT services. Integrated travel business company The Jetset Travelworld Group signed a long-term agreement for the use of Amadeus technology, including Amadeus Sales Management Solutions and Amadeus e-Travel Management. In the UK, the travel management company Ian Allan Travel renewed its long-standing business partnership with Amadeus for another three years.
MakeMyTrip.com, the largest online travel agency in Asia-Pacific, renewed its agreement for the use of Amadeus distribution technology, including Amadeus Web Services 2.0 and Amadeus Master Pricer. Also in the region, Amadeus OneClick, a duty-of-care solution for corporate travel managers, was launched in Japan to respond to the need for stronger corporate risk management following the recent earthquake in eastern Japan.
Omega World Travel, the third-largest travel management company in the United States, selected Amadeus One to drive operational efficiencies, reduce costs and offer corporate clients around the world improved managed travel services. Live bookings are expected to begin later in the year. Omega World Travel has annual sales revenues in excess of $1 billion, is a leading provider of official government travel, and has clients including Fortune 500 companies. Amadeus One is a point-of-sale corporate agent desktop for the U.S. market.
Continuing to break the boundaries of online travel technology, Amadeus launched its latest inspirational shopping tool, Extreme Search, for online travel agencies worldwide, following a pilot with the leading Nordic online travel agency European Travel Interactive (eTRAVELi). Extreme Search offers an intuitive search solution that revolutionises the way consumers search for travel online, allowing them to search by budget, type of activity or geography, rather than searching by traditional criteria such as origin and destination.
Airline IT continued its record of impressive growth for airlines contracted to the Amadeus Altéa Suite, the fully integrated customer management solution for airlines. Five contracts with new airlines were signed and the scope of an existing contract with airberlin was increased. Altogether these contracts represent approximately an additional 90 million annual Passengers Boarded (PB) and will increase the total to more than 700 million PB annually by 2014. Amadeus is deploying the required resources and investments necessary to adapt its platform to the needs and requirements of these new partners as they migrate onto the platform over the next few years.
These new contracts included four airlines signing up for the full Amadeus Altéa Suite: Reservation, Inventory, and Departure Control. Among these were the Kingdom of Thailand’s national carrier Thai Airways International, allowing it to join the Star Alliance Common IT Platform. In 2010 Thai Airways International carried a total of 17.5 million passengers and operated a fleet of 90 aircraft. All Nippon Airways (ANA) will use the Altéa Suite for its international flights to help expand its global marketing and improve productivity. ANA is the eighth largest airline in the world by revenues and Japan’s leading airline group, with the largest number of Japanese passengers. The Altéa Suite was also selected by South Korea’s flagship airline Korean Air, which has a fleet of 133 aircraft and operates almost 400 flights per day, making the Altéa Suite available in all Korean Air offices and airports globally once migrated.
Meanwhile an existing contract with airberlin, which is the second largest carrier in Germany, was expanded to cover its entire business, including bookings from both the direct and indirect channels, and therefore ensuring consistency across its multiple sales channels. The airline is scheduled to become the newest member of oneworld, the airline alliance, in early 2012 and the ability of Altéa to enable seamless sharing of information with full service partners was a primary driver for its IT transformation. In 2010 airberlin carried 33.6 million passengers and the airline flies to 163 destinations in 39 countries. airberlin also contracted for Amadeus Altéa Departure Control, becoming the first hybrid carrier to sign up for the full Altéa Suite.
Eight further airlines also completed the Amadeus Altéa Suite when they contracted Amadeus Altéa Departure Control. During the quarter, six previously contracted airlines also successfully migrated onto the Amadeus Altéa Departure Control System, including the Latin American airline group AviancaTaca.
Airline IT also signed further contracts for the Stand Alone IT Solutions portfolio. Three new contracts were signed for Amadeus e-Retail, the integrated airline Internet booking engine that is hosted on the Amadeus secure servers and available in up to 28 languages. Additionally, in Asia-Pacific the Chinese national carrier Air China announced a three year contract extension for the Amadeus e-Retail Internet Booking Engine. Currently Air China uses the solution to cover 28 international markets across Asia, Europe and North America, allowing customers to check fares and flight availability, make real-time bookings and benefit from instant e-ticketing. Hong Kong Airlines and Hong Kong Express Airways have also implemented Amadeus e-Merchandise, a powerful online calendar search interface for websites which allows airlines to offer a comprehensive range of fare options by ‘fare family’ bands.
Seven new contracts were signed for Amadeus Ticket Changer (ATC), with three airlines also implemented during the same period. ATC simplifies the ticket re-issuing process by combining the state-of-the-art Amadeus Fares and Pricing engine with a powerful, multi-channel ticketing functionality. Six new contracts were also signed and two implemented for Amadeus Revenue Integrity, which allows airlines to improve yield, forecasting and load factors by increasing the accuracy of predictions for the number of passengers that do not show-up for a flight.
Eight airlines, including Royal Jordanian and Air Mauritius, signed contracts to become users of electronic messaging standard Electronic Miscellaneous Document (EMD) – with Air Mauritius later in the quarter migrating onto the system, along with five other airlines. EMD enables the way for airlines to better distribute ticket servicing to passengers as well as a wide range of products that help customise their journeys, through ancillary services such as excess baggage.
An additional noteworthy highlight included the very first agreement with a ground handler, Map Handling - AMC Group, for the use of the Altéa Departure Control System. This allows all of the handler’s airline customers to benefit from leading-edge technological capabilities such as customer management and flight management services, regardless of whether or not the airline uses the Amadeus Altéa Suite.
Additional news from the second quarter
In May it was announced that Amadeus had agreed to dissolve a contract under which United Airlines would migrate onto the Amadeus Altéa Suite in 2013. Following United Airlines’ decision to merge with Continental Airlines, and as part of its overall integration efforts, the airline decided to migrate to Continental Airlines’ existing IT system and will review its alternatives for a long-term IT solution in due course. United Airlines made a one-time payment to Amadeus of $75 million in consideration of the change in plans.
Also in May Amadeus announced an agreement to refinance its debt through a new senior unsecured credit facility. This was structured via a “club deal” for a total of €2.7 billion and was part of the Amadeus long-term strategy to strengthen its financial structure, bringing more flexibility through extended maturity periods and improved terms and conditions, as well as significantly decreasing the cost of servicing debt. This was followed in early June by both Standard and Poor’s and Moody’s assigning Amadeus an investment grade rating.
Late in May the sale of 100% of the share capital of Opodo to AXA Private Equity and Permira Funds was approved by the European Commission under the EU Merger Regulation and Amadeus received the cash proceeds on June 30, which were subsequently used to pay down, on July 7, a bridge loan of €400 million, bringing down the total amount of existing debt facilities to €2.3 billion.
At the Annual General Meeting (AGM) in June the shareholders of the Company approved the payment of the annual dividend. The total value of the dividend was €134.3 million, representing a pay-out of 35% of the 2010 Reported profit for the year (excluding extraordinary items related to the IPO), or €0.30 per share, and was paid on July 27. All other agenda items proposed by the Board of Directors were also approved by the shareholders following a vote, including the re-election and appointment of Directors.
Shortly before the AGM Amadeus published the Amadeus 2010 Corporate Responsibility Report, which describes how Amadeus works to generate economic, social, and environmental value – and how this is integrated into the Amadeus culture and decision-making process. The report was granted a level ‘A’ rating by the Global Reporting Initiative, whose guidelines set a framework for organisations to disclose their economic, environmental, and social performance in a transparent manner. The full Report can be downloaded from the Travel Further section of the Amadeus website.
Amadeus continued its commitment to innovation and thought leadership in the travel industry with further reports on market trends and predictions for the future of the travel industry. The following reports are available for download from the Amadeus website:
• The always-connected traveller: How mobile will transform the future of air travel revealed changing traveller attitudes to airline mobile services whilst also highlighting the specific, emerging mobile technologies that are going to revolutionise each stage of the travel experience.
• Transform Your Growth Strategy Now was published in conjunction with leading hotel industry expert Robert Cole and advised hotels to align strategic business and IT priorities now in order to secure growth over the next three years. The report identified gaps that exist between hotel technology, marketing and operations that are currently blunting growth strategies and ambitions.
• An analysis published by the market intelligence solution Amadeus Total Demand by airconomy showed that Asia Pacific and the Middle East, followed by Europe, have become global hot spots for inter-regional long distance air travel. The review looked at trends in worldwide passenger demand between regions over the last two years, comparing the first quarter of 2009 to the first quarters of both 2010 and 2011.
Amadeus Asia-Pacific won the prestigious 2011 Airline IT Solutions Provider of the Year Award from Frost & Sullivan, which recognises innovative best practices in the aerospace and defence industry.