Daily airline bookings through the Amadeus global distribution system this month have been trending down between 75 percent and 80 percent year over year. This is an improvement from the abysmal trends the company's GDS unit experienced in the second quarter, in which cancellations outstripped new bookings and revenue went into negative territory.
"We endured the toughest trading quarter in our history," Amadeus president and CEO Luis Maroto told investors Friday during the company's second-quarter earnings call.
Typically the biggest earner for the Spain-based travel distribution and IT company, its GDS unit bled money during the unprecedented quarter, which was savaged by Covid-19's effects on travel demand.
For the quarter, Amadeus reported negative GDS revenue of €15.9 million. By contrast, its GDS business brought in €797.1 million in revenue for the second quarter of 2019.
"The number of cancellations in the period have exceeded the number of gross bookings," CFO Ana de Pro told investors. "As you know, a cancellation implies a negative revenue, as we return the booking fee [to the airline], and also a negative cost, as we are returned the incentive [from the agency]."
Amadeus' other major business unit, IT solutions, saw revenue fall 56 percent year over year to €275.4 million for the three months ending June 30. Companywide, revenue plunged 82 percent year over year to €259.5 million.
Amadeus reported net agency air bookings were negative in April and May, as cancellations outpaced new bookings. "In June, we started to see positive Amadeus air travel agency net bookings daily, as the higher level of cancellations we saw in March, April and part of May, started to slow down, and as gross bookings started to improve in response to more air passenger seats being made available," according to the company's earnings report.
"We can say that we have seen an improvement in the quarter and in July, but it is still early to tell whether we have a trend or not," Maroto said during the earnings call.
Maroto said the company's approximately €4 billion in liquidity is enough to weather beyond 2021 a prolonged downturn in which air traffic remains 80 percent below 2019 levels. Meanwhile, Amadeus said it is enacting additional cost cuts, including operational efficiency measures and "a workforce reduction," according to its earnings report.
Asked by an analyst if Amadeus would be willing to spend cash to win new travel agency business, Maroto said it would. "Cash is important," he said. "Of course, we need to protect our cash as much as we can. But at the same time, when it makes sense, we can work with our customers to see how we can support them and see how we can get additional business for the medium term."