GDS News: Amadeus Profits Up 22%; Travelport Narrows Its Loss

Amadeus reported a profit increase of 22.1% for the first quarter, to €167.9 million ($217.4 million).

Travelport, meanwhile, halved its first-quarter loss to $12 million on revenue of $550 million, up from $530 million.

Luis Maroto, Amadeus’ chief executive officer, said the company’s 8.5% revenue growth was driven by three factors – increased market share, the successful execution of recent migrations to its airline IT platform and overall industry growth.

Based on estimates of travel agency air bookings, Amadeus calculated that its worldwide market share was up slightly less than one percentage point – from 37.3% in first quarter 2011 to 38.2% this year.

Amadeus-Expedia agreement
Maroto also lauded two “landmark” deals signed in the U.S.

Amadeus signed a multi-year technology and distribution agreement with Expedia in North America. Amadeus has handled some of Expedia’s business in Europe, but this is the first agreement to funnel bookings through Amadeus in North America.

Maroto said there was no minimum volume commitment, and Expedia would determine how bookings were managed.

Breakthrough pact with SW
Southwest awarded Amadeus a contract to manage its international flights through its Altéa passenger services system. (Southwest is getting into the international arena with its acquisition of AirTran, which flies to Mexico and the Caribbean, and Southwest has hinted that it has plans to fly even farther afield.)

The deal represents a major breakthrough for Amadeus: It is the first with a North American carrier, and Southwest chief Gary Kelly has said that the deal opens the door for Amadeus to win the carrier’s domestic business down the road.

Travelport’s diversification
At Travelport, chief financial officer Philip Emery noted progress in the company’s “diversification away from segment-based revenue.” He was referring to Travelport’s strategy of providing “extraordinary” products that its travel agency customers are willing to pay for because of resulting increases in productivity.

Travelport also is developing non-air products such as Travelport Rooms and More, which is aggregating large amounts of non-GDS hotel content.

Incentive growth flat lines
Emery said that although the volume of agency incentives was up 5% in the quarter, “the underlying rate is flat, (and) that is an important trend.” He said Travelport expects “low single-digit growth in incentives for the rest of the year.”

Chief executive officer Gordon Wilson cited a number of high points in the quarter – substantial increases in European rail content; a new agreement to provide the Chinese GDS TravelSky with hotel content, and an agreement to host Japan’s Axess GDS.

Middle East, N. Africa woes
Both Amadeus and Travelport said business upheaval in the Middle East and North Africa due to last year’s Arab Spring was abating.

Amadeus’ air bookings were up 17.8% in the region. At Travelport, Wilson said the company has an “embryonic network in place in North Africa as the region stabilizes.”