February 28, 2020 / 6:31 PM / a month ago

Amadeus faces declines in bookings due to coronavirus 'health shock'

(Reuters) - Amadeus IT Group SA’s (AMA.MC) daily bookings by travel agents have declined by 10-15% due to cancellations in the wake of the coronavirus “health shock,” the president and chief executive of the Spanish travel technology firm said on Friday.

FILE PHOTO: Luis Maroto, CEO of Amadeus IT Holding, attends their annual shareholders meeting in Madrid, Spain, June 24, 2016. REUTERS/Andrea Comas/File Photo

Passenger bookings in its airline IT business declined 7-10% in the first three weeks of February, compared with the same period last year, the company said.

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

President and CEO Luis Maroto said the company’s internal 2020 estimate is 1% traffic growth globally, as it does not operate inside mainland China.

Last week the International Air Transport Association said the coronavirus outbreak could depress global air traffic this year by 4.7%, leading to an overall 0.6% decline in global traffic, mainly dragged down by the Asia-Pacific region.

Earlier on Friday, Amadeus forecast slower 2020 core profit and revenue growth, citing lower air traffic growth projections. It said the outlook did not reflect uncertainties surrounding the coronavirus outbreak.

Amadeus, owner of the largest global distribution system which accounts for over 40% of worldwide booking volumes by travel agents, said it expected earnings before interest, tax, depreciation and amortization (EBITDA) and revenue to have percentage growth in the mid-to-high single digits this year after double-digit growth in 2019.

This year’s results, however, will be largely dependent on how the epidemic plays out, it said.

“The coronavirus outbreak will impact our industry and our business in 2020, with a sequential rebound, if it replicates past episodes,” Maroto said in a statement.

“We experience a high number of cancellations due to a health shock,” he told investors on a conference call, referring to the coronavirus.

Amadeus based its outlook on a December forecast from IATA that initially projected global air traffic growth of 4.1% this year, roughly in line with 2019.

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

The company reported a 10% rise in 2019 EBITDA and a 12.8% increase in revenue, meeting its own guidance helped by growth in its businesses handling travel agent bookings and IT solutions for airlines, as well as last year’s acquisition of TravelClick.

Amadeus shares closed 3.3% higher at 63.50 euros in Madrid.

($1 = 0.9201 euro)

Reporting by Anita Kobylinska in Gdansk; Editing by Tomasz Janowski and Matthew Lewis

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