Release Date: May 07, 2021
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Amadeus IT Group SA (XMAD:AMS, Financial) saw an improvement in air bookings and passenger boarded performances in March, making it the best-performing month since the start of the pandemic.
- The company achieved positive EBITDA of EUR 54 million in Q1 2021, supported by improving volumes and further fixed cost optimizations.
- Amadeus IT Group SA (XMAD:AMS) signed 21 new contracts or renewals of agreements with airlines, indicating strong commercial activity.
- The company has a strong liquidity position with EUR 3.8 billion available as of March 31, 2021.
- Amadeus IT Group SA (XMAD:AMS) continues to see progress in its cost reduction plans, achieving a fixed cost reduction of almost EUR 145 million in Q1 2021.
Negative Points
- Distribution revenue declined by 77% relative to Q1 2019, reflecting the significant impact of the pandemic on travel.
- Passengers boarded contracted by 71% compared to Q1 2019, indicating a slow recovery in air travel.
- IT solutions revenue in Q1 2021 contracted by 46%, driven by the decline in airline PB volumes.
- The company reported an adjusted profit loss of EUR 83 million in Q1 2021.
- Western Europe reported a deterioration in volume growth in Q1 2021 due to elevated COVID-19 cases and reintroduction of travel restrictions.
Q & A Highlights
Q: Can you expand on the integration of Altea and Navitaire? What are you trying to achieve with that?
A: (Luis Maroto Camino, CEO) We are optimizing the integration between Altea and Navitaire to better serve airline groups that use both systems. This integration aims to facilitate smoother operations and information handling at the group level, especially during disruptions or system changes.
Q: How much of the cost savings program is expected to be paid out in cash?
A: (Till Streichert, CFO) To date, we have paid out approximately EUR 77 million, with EUR 43 million in the first quarter. We expect to pay out the remaining EUR 120 million mostly within 2021, with a relatively even phasing of about EUR 40 million per quarter.
Q: Do you think the travel recovery is in line with your expectations, and is your cost savings plan sufficient to carry you forward?
A: (Luis Maroto Camino, CEO) The recovery has been slower than initially expected, but we remain committed to our EUR 550 million structural cost savings target. Discretionary costs will return as the situation improves, but we are confident in our ability to achieve the planned savings.
Q: Can you provide an update on the Microsoft partnership and the expected savings?
A: (Till Streichert, CFO) The migration to the cloud with Microsoft is progressing well, with a timeline of 3 to 5 years. The efficiencies gained from this migration will be reinvested into further growth.
Q: What impact will the mix of domestic versus international travel have on your average booking fee?
A: (Till Streichert, CFO) While a higher proportion of domestic travel, which incurs lower fees, will impact average booking fees, the overall effect is limited in a low-volume environment. As volumes recover, the impact will depend on the mix of domestic and international travel.
Q: How is the pipeline for new airline IT projects, especially with the focus on revenue quality?
A: (Luis Maroto Camino, CEO) Our airline IT projects address both revenue enhancement and cost optimization. We continue to see strong demand for solutions that help airlines improve their revenue quality and operational efficiency.
Q: Can you comment on the potential for M&A given the current leverage levels?
A: (Luis Maroto Camino, CEO) While our objective is to return to reasonable leverage levels, we will consider M&A opportunities that create value and fit our strategy. We will balance between opportunity and maintaining a healthy capital structure.
Q: What is the proportion of corporate travel in your revenues, and how do you see the long-term impact of reduced corporate travel?
A: (Till Streichert, CFO) In 2019, corporate travel accounted for 30% of bookings. While there is uncertainty about the long-term impact, we believe that overall travel volumes will recover, with leisure travel recovering faster than corporate travel.
Q: How is the hospitality business performing, and what is the timeline for achieving optimal scale?
A: (Luis Maroto Camino, CEO) The hospitality business has been more resilient and is performing well, especially in the U.S. We continue to grow our customer base and expect to achieve optimal scale in our key business lines over time.
Q: How do you see the recovery of corporate versus leisure travel, and what are the implications for your business?
A: (Luis Maroto Camino, CEO) Leisure travel is recovering faster than corporate travel. In the medium term, we expect corporate travel to return as the situation improves. The mix of domestic versus international travel has a more significant impact on our business than the mix of corporate versus leisure travel.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
