Amadeus is doing much better regarding pandemic recovery compared to its biggest competitor.
Amadeus is nearly recovered in terms of revenue compared to pre-pandemic levels. Executives shared those details during an earnings call on Tuesday, as well as information about the impact of conflicts in the Middle East and technical innovations the company is developing.
Revenue for the first nine months was €4.1 billion, a 23% increase from a year earlier and only about 3.7% below 2019.
The primary business for Amadeus is its distribution system, an intermediary between airlines and travel sellers. It also has a large business of providing software to airlines and a growing hotel software business.
There were still nearly 100 million fewer air bookings during the first nine months of 2023 than in 2019, but a number of factors — including inflation — have led to a higher revenue per booking.
The Asia-Pacific was its fastest growing region, with 68% growth. Western Europe was the most active region, with nearly 34% of passengers boarded.
Middle East Conflict Impact
Luis Maroto, president and CEO of Amadeus, shared some comments on how the latest conflicts in the Middle East have impacted business.
- “In October, we have seen our bookings evolution impacted by an increasing cancellation in several regions, namely northern Middle East, but also APAC and Western Europe, likely [because of] the Middle East geopolitical situation.”
- “It’s not big in terms of impact…but yes, in October, due to these cancellations, we have been below September.”
- “These cancellations started to happen for a couple of weeks, of course much more pronounced … three or four days after the event. And then things have been recovering. The beginning of November seems to be back to normal.”
- “Generally in the past in these situations, cancellations concentrate upfront, but it is early to tell how the conflict may develop.”
Next-Generation Airline Retailing
Amadeus recently revealed a new AI-powered retail system called Nevio, meant to make airline sales more like shopping on Amazon. It’s meant to help airlines more easily sell its own products as well as other travel products like hotels. For the customer, that means a simple app for tracking everything.
Two airlines — Finnair and Saudia — are piloting the technology. Amadeus has a goal to move its airline clients from the legacy system, called Altea.
Maroto shared some comments on what to expect with the product going forward regarding the pricing model and potential competition in the future.
- “It should be a transaction model, by all means; it could be based on passengers, based on number of orders. We are still seeing how things may evolve on that front. What we have is a couple of customers and trying to really evolve this model to see what is the best approach.”
- “We are never alone in any business we operate. There will be players; there will be new companies. Our goal is to really do something that is innovative, is well-structured, and can provide a good way to really move from some of the models we have today. By all means, there will be companies that will develop alternatives to what we have, as we have today in other parts of the business.”
Research and Development Spending
Investment in research and development grew 14.8% in the first nine months of 2023, according to Amadeus chief financial officer Till Streichert. It was focused on the following areas:
- Evolving airline software products, including Amadeus Nevio.
- Evolving software products for the hospitality industry
- Enhancing software products used by travel sellers, including developing ways to sell using a next-generation system that circumvents the traditional distribution system
- The partnership with Microsoft, including the ongoing migration to the cloud and pilots involving generative AI