Amadeus Earnings: Gradual Air Booking Volume Improvement Continues, Along With Margin Expansion

Narrow-moat Amadeus reported first-quarter air bookings at 75% of 2019’s level versus 72% last quarter (narrow-moat Sabre’s volumes increased to 61% from 58%), led by Asia-Pacific (16% of total air volumes) improving 8 percentage points from last quarter to 69% of prepandemic marks. That said, Amadeus’ European (30%) and North American (28%) air volumes have not improved since the first half of 2022 from the roughly two thirds and over 100%, respectively, of 2019’s levels, putting into question the rate of corporate travel recovery. That said, Amadeus noted April and May air recovery has continued. Taking it all together, we plan to reduce our 2023 air booking as a percent of 2019’s level to around 80% from 83%. But we plan to slightly increase our air revenue per booking growth forecast for this year to a mid-single-digit percentage lift from low-single-digits, due to a higher overall mix of international volumes. As a result, we don’t expect a material change to our total sales growth estimate of 21%, which sits within management’s reiterated 20%-23% guidance for this year. Thus, we plan to largely maintain our EUR 63 per share fair value estimate, rendering shares fairly valued.