Sabre and Amadeus: We Expect Corporate Travel to Recover at Slightly Slower Pace; Valuations Reduced

Led by leisure, overall travel demand has remained resilient, supporting our long-held view that there is an ingrained human desire to travel. But we are less sanguine on near-term corporate travel after United Airlines CEO Scott Kirby said earlier this month that the United States is currently in a business recession, with COO Andrew Nocella adding that business travel demand has leveled off for the company. This was followed by Delta Air Lines' June 27 investor day presentation forecasting stable business demand into 2024. Further, the risk of softer economic growth during the next year remains, and numerous nontravel consumer-related companies point to strained demand, which we believe is emanating from persistent inflation, tightening credit availability, and a consumer saving rate of disposal income plummeting to 4.8% in the first quarter of 2023 versus the roughly 9% averaged in 2019.