Amadeus Earnings: On Track to Deliver With Global Travel Demand Recovery on the Horizon

Narrow-moat Amadeus booked solid fiscal 2024 first-quarter results, highlighted by strong double-digit growth across its segments. Notably, its air distribution business (51% of sales) saw 12.6% growth, driven by a 2.8% lift in volume and a 9.5% bump in pricing as the operator continued to benefit from a higher mix of cross-border travel that boasts higher yield, though it is expected to moderate as the year progresses. We think this segment will grow in line with the reaffirmed guidance of a high-single-digit to low-teens sales increase outlook, with our forecast calling for 10% growth. Importantly, Amadeus announced a partnership with narrow-moat Expedia for new distribution capability, or NDC, content integration, following suit with its peer narrow-moat Booking Holdings. In our view, this win emphasizes the firm’s industry-leading position and its ability to capitalize on evolving industry standards as NDC is poised to expand the use of upgraded and customized content and ultimately help propel growth in its core segment. Air IT solutions (33% of sales) chalked up 17% top-line growth (tracking toward our 15% growth forecast for the year), mainly attributable to the strong air traffic growth in Asia-Pacific and Middle East and Africa, which grew 21% and 29.6%, respectively.