Travel Technology"Very difficult" 2Q which results in a 102% decline in distribution revenue for the travel technology company

Amadeus posts 1H loss, kicks off additional cost-reduction plan

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Amadeus' additional cost reduction plan follows an earlier one in March.
Amadeus' additional cost reduction plan follows an earlier one in March.

Amadeus has kicked off further cost-cutting measures, which it expects will amount to annual savings of €250 million (US$294 million).

Announcing 1H and 2Q 2020 results – the first of the big two, publicly listed distribution and technology brands to do so – the company says the plan is designed to “strengthen its capabilities” going forward.

Amadeus had already announced a cost reduction plan of €300 million in March.

For 1H 2020, Amadeus reported a loss of €89 million, down 113% year-on-year.

The company says revenue declined by 55% to €1.3 billion and EBITDA declined 84% to €194 million.

For the six months travel agency bookings were down 79% and passengers boarded down 56% with Luis Maroto, president and CEO of Amadeus, describing the second quarter of 2020 as a “very difficult moment globally for the travel industry”.

In the second quarter, the distribution business reported travel agency bookings down 113% year-on-year but claims travel agency air bookings turned a corner in mid-June as the volume of cancellations seen in March, April and some of May began to slow.

Distribution revenue declined 102% in the second quarter making a loss of €16 million, and 73.0% overall to revenue of €442 million for the six first months of the year

Despite the uncertainty in the market, the company signed nine new contracts or renewals during the reporting period, including Air New Zealand.

Maroto said: “Since late May, we have begun to see an increasing number of flights being scheduled, and air traffic and bookings have been responding. However, the situation remains highly uncertain.”

He adds that the company has taken additional liquidity measures and now was €4 billion available including approximately €2.4 billion in cash.

Revenue in IT Solutions dropped 56% for the quarter to €275 million and 29% for the six months to revenue of €840 million.

The declines were mainly attributed to the dip in passengers boarded over the quarter which was down 94% to 31.3 million.

The €250 million saving in fixed costs is expected to come through an acceleration of digitalisation programs, speeding up integration of acquisitions and general process simplification.

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