February 28, 2020 / 7:38 AM / in a month

Amadeus tones down 2020 targets, flags coronavirus uncertainty

(Reuters) - Spanish travel technology firm Amadeus (AMA.MC) forecast slower 2020 core profit and revenue growth on Friday, citing lower air traffic growth projections, but stressing the outlook did not yet account for the still uncertain impact of the coronavirus outbreak.

Amadeus, which operates a global travel booking system and offers check-in services and other IT solutions for airlines, said it expected earnings before interest, tax, depreciation and amortization (EBITDA) and revenues to grow by mid to high single-digit percentage this year after double-digit growth in 2019.

The group said this year’s results will be largely dependent on how the epidemic plays out.

“The Coronavirus outbreak will impact our industry and our business in 2020, with a sequential rebound, if it replicates past episodes,” president and chief executive Luis Maroto said in a statement. He did not provide any estimates of the potential impact.

Amadeus based its current outlook on a December forecast from International Air Transport Association (IATA) that projected global air traffic growth to slow to 4.1% this year from last year’s forecast of 6.0%.

Last week, however, IATA said the coronavirus outbreak could depress global traffic this year by 4.7%, leading to an overall 0.6% decline in traffic.

Dozens of airlines have suspended their flights to China, among them some of Amadeus’ key end customers such as Lufthansa, British Airways and Air France-KLM.

Amadeus’ revenues in its both airline IT and distribution segments are tied to the number of bookings, as the company charges a fee for every reservation made on its platforms.

The company reported a 10% rise in 2019 EBITDA and a 12.8% increase in earnings, meeting its own guidance with the help of growth in its both businesses handling travel agents bookings and IT solutions for airlines, as well as last year’s acquisition of TravelClick.

Amadeus shares were down 3.8% in morning trading, roughly in line with Madrid's blue-chip index .IBEX.

Shares of its U.S. rival Sabre (SABR.O) plunged more than 17% on Wednesday, after the company said the coronavirus would have a $100-150 million impact on its Q1 sales.

(This story corrects Maroto’s title to president and chief executive instead of chairman and chief executive, paragraph 4)

Reporting by Anita Kobylinska; Editing by Tomasz Janowski

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