Global distribution system operator Amadeus today reported 2004 net income of €208 million, a 30 percent increase from 2003. The Madrid-based company follows GDS operators Cendant and Sabre Holdings in reporting healthy full-year financial results. At the same time, major U.S. airlines are struggling to rebound from years of crippling losses and are looking to GDS operators for improved contractual terms as a means of lowering distribution costs.
"We are willing to have economic discussions," said Greg Webb, senior vice president of marketing for the Sabre Travel Network, speaking this week during a panel discussion hosted by Ultramar Travel Management. "We recognize that we need a new and different offering and we plan to lead the way we led with the Sabre Direct Connect Availability Three-Year agreements."
Amadeus already has communicated its vision of future airline-GDS economic arrangements and now is in the second phase of its value pricing initiative, which seeks to base fees charged to airlines on the type of booking
(BTNonline, Nov. 30, 2004). Cendant and Sabre each has been developing conceptually similar approaches and each in the meantime has produced solid earnings. Worldspan, too, has been exploring new economic models, following the end of federal GDS regulation last summer, but has not yet reported 2004 financial results.
Full-year results for Amadeus included a 5.4 percent increase in total booking revenue on a 7.6 percent increase in transaction volume. Full-year revenue increased 6.6 percent, and for the first time surpassed €2 billion.
The company--citing particularly strong growth in eastern Europe, Asia/Pacific, Africa and the Middle East--said 2004 hotel reservations increased 11.2 percent, while total online bookings jumped 53 percent and now represent more than 10 percent of total volume.
Amadeus' non-booking revenue rose 10.5 percent. On the e-commerce side, reservations in the E-Travel division grew 73 percent from 2003 levels, including 76 percent global growth for the Aergo online corporate booking tool. The company in 2004 also formed or expanded airline IT service agreements with such major international carriers as British Airways, Finnair, Qantas and South African Airways.
Despite such growth, Amadeus fell short of company and analyst earnings targets due in part to the acquisition of European online travel portal Opodo, according to European press reports. The company last month entered "exclusive negotiations" with venture capital firms BC Partners and Cinven, which intend to create a new private parent company. Amadeus airline owners Air France, Iberia and Lufthansa each indicated they want to retain some level of equity
(BTN, Jan. 17).
Sabre Holdings, meanwhile, last week reported a 75 percent increase in earnings per share for 2004. Sabre executives cited profitability turnaround at Travelocity, ongoing cost reductions, a one-point market share gain, a slower rate of channel shift to Internet outlets and a return of travel demand.
Total global bookings processed through the Sabre GDS in 2004 grew nearly 7 percent from 2003 levels, with most growth contributed by online channels. The company also claimed 250 new accounts for Travelocity Business in the fourth quarter alone, including such bigger companies as Aetna and General Dynamics.
Revenues also increased for Sabre Airline Solutions. Sabre chairman and CEO Sam Gilliland said the unit's fourth quarter was the best since the Electronic Data Systems transaction in July 2001
(BTN, March 26, 2001).
For 2005, Sabre projected 10 percent revenue growth. "We will continue to grow organically and be opportunistic in M&A activity," Gilliland said.
Meanwhile, Cendant this week reported full-year earnings per share growth of 27 percent and total revenue growth of 10 percent, despite slightly lower earnings in the travel distribution sector, partially a result of the Orbitz acquisition.
Ken Esterow, Cendant Travel Distribution Services executive vice president of supplier services, last week told
BTN that the company recognizes the plight of beleaguered airlines and is working to tailor new agreements. "We have addressed and continue to address the question of GDS pricing," he said. "The distribution landscape is one that has its challenges, but we are more optimistic than ever given our asset portfolio. We will embrace change and innovate, technologically and economically."