Amadeus Earnings: Air Bookings Pick Up Pace Amid Growing Global Travel Recovery

The Global Distribution System industry maintained positive momentum in the third quarter, with narrow-moat Amadeus' air bookings rising 4.4%, ahead of narrow-moat Sabre's 3% growth. The firm's year-to-date growth reached 3.4%, approaching our full-year growth estimate of 4%, buoyed by a recovery in business travel. Beyond benefiting from stronger demand, we are encouraged by Amadeus' progress in New Distribution Capability, now reflected in over 60 carrier agreements (up from 32 last quarter)—a feature that we believe strengthens the firm's network effect and efficient scale by providing airlines with greater customizable content. However, growth was partially offset by a 5.5% decline in North American air bookings, attributed to a single direct connection, which we consider an isolated event, and low-margin business with minimal impact on revenue. Overall, third-quarter and year-to-date air distribution revenue, representing 51% of sales, grew by 8.8% and 10%, respectively, aligning closely with our fiscal 2024 growth estimate of 10.2%.