Amadeus IT Group, S.A.

Luis Maroto - President and CEO Ana de Pro - CFO

Stacy Pollard - JP Morgan Cazenove Adam Wood - Morgan Stanley John King - Bank of America Merrill Lynch Michael Briest - UBS Investment Bank Neil Glynn - Credit Suisse Alexander Tout - Deutsche Bank Juan Ramón Correas - Banco Santander Gerardus Vos - Barclays Capital Alexandre Faure - Exane BNP Paribas Alberto Sánchez - Fidentiis

Good afternoon, ladies and gentlemen, and welcome to our 2017 first quarter results presentation. Thank you very much for being with us today.

Ana is here with me. And as always, she will take care of the financial performance.

So let me start with the following slides. As you can see, we have experienced a stronger start to the year.

In the first three months, we experienced a double-digit growth rate expansion, where revenue and EBITDA increased by 11.7% and 12% respectively. Adjusted profit and EPS grew over 19%.

Our free cash flow increased by 7.9% in the quarter. Our leverage, quarter end was 1.1 times to EBITDA.

Our positive evolution in the quarter, supported by timing of Easter was achieved on the back of successful operating performances in both Distribution and IT Solutions. Our results were further enhanced by the consolidation of Navitaire from late January 2016.

And by up positive ForEx impact on revenues and EBITDA. ForEx had a negative impact on cost and was dilutive on margins.

In Distribution, our volumes in the quarter outpaced industry growth. Amadeus TA our volumes grew 9.3%, supported by 0.9 percentage point enhancements of our competitive position.

This positive evolution, couple with an expansionary average revenue per booking generated double-digit growth in Distribution revenue, which increased by 11.4% in the quarter. In IT Solutions, we had a 12.3% revenue increase.

Our growth in IT solutions was driven by underlying growth in Airline IT solutions, the consolidation of Navitaire and continued expansion of our new businesses. Before I elaborate on our most recent business development, I would like to emphasize, as I generally do, that we have been and remain highly focused on our technology, which we believe is a key success factor to our business.

In the first quarter, R&D represented 13.9% of our revenue and it was dedicated supporting our mid- to long-term growth through efforts for future customer implementations, such as the ones related to Southwest, Japan Airlines and Malaysia; product evolution and portfolio expansion, such as revenue optimization and merchandizing solutions for airlines or search engines for travel agents; investment in new business such as our development of an IT platform for the hospitality industry; and central technology projects, such as finalizing our transition to open systems and our continued shift to cloud-based architecture, as well as for system performance optimization. Let's turn to Page 5.

In Distribution, we continue to secure and expand content for our subscribers by signing or renewing content agreements with 12 careers in the quarter including Air Berlin. As you know, more effective retailing and merchandizing is key for airlines.

At quarter end, 70% of our bookings processed through Amadeus could carry an attached ancillary service and 127 airlines had contracted Amadeus Airline Ancillary Services for the indirect channel including Emirates. Additionally, Amadeus Fare Families had 53 contracted customers at March 31.

Subscribers to Amadeus' inventory can now access over 90 low-cost carriers and hybrid carriers' content worldwide. Bookings of low-cost carriers or hybrid carriers through Amadeus continue to grow in the quarter, expanding 12.2%.

In Airline IT, we had new signings for full Altéasuite, including Bolivianade Aviaciónand Island Air. During the first quarter, we implemented Singapore Airlines to our new-generation Altéa Revenue Management solution and Swiss from the Lufthansa Group has started using Amadeus Passenger Recovery.

We announced the launch of the new Amadeus Altéa NDC solution with Finnair, which is currently on piloting mode with the Skyscanner. We're also pleased to announce our powering of the new Aircanada.com featuring an enhanced booking flow and improved search options for travelers among others.

Finally, in our new business areas, we continue to make good progress. With respect to Hospitality IT, where as you know, we are working with IHG in the development of our new-generation GRS, we are advancing very well.

IHG and Amadeus plan to initiate a progressive roll out in the fourth quarter of 2017 with the aim to complete it by the end of 2018. We are also progressing in the development of our next-generation Property Management System.

Both the GRS and the PMS modules, which will also work as a standalone solutions will be fully integrated in the same platform. Finally, in Airport IT, we are pleased to announce that Adelaide Airport will become the first fully automated and cloud-based airport management system in Australasia, by implementing Amadeus Solutions, including Airport Operational Database, Airport Fixed Resource Management and Flight Information Display System.

Please turn to Page 6 for performance in Distribution. Travel agency air bookings industry grew strongly in the quarter with a 6.7% expansion.

Industry performance was positively impacted by a higher number of working days in the period, mostly during the timing of Easter. For some color by region, I will add Latin America was the fastest growing region in the first three months of 2017 as most countries, except Venezuela, showed signs of recovery from last year's difficulties.

Volumes in Central, Eastern and Southern Europe also recovered, to a lesser extent, from the weak performance in 2016. Asia-Pac continued its robust growth trend, supported by the performance of several markets, such as India, South Korea, Japan and Australia.

And finally, travel agency air bookings in Western Europe and North America grew healthily in the quarter while performance in Middle East and Africa were slightly more moderate. For Amadeus, our travel agency air bookings outperformed the industry, driven by enhancements of our competitive position of 0.9%.

All regions performed positively for us. Latin America was our best performing region, benefiting from both a strong industry growth and enhancements of our competitive position.

Volumes in North America and Asia-Pac grew as well quite strongly in the first quarter, respectively increasing their weights over our total travel agency bookings. Bookings in Europe, Middle East and Africa also performed solidly in the quarter.

If we move to IT Solutions, we had a strong volume growth in the quarter as well with total passengers boarded in Airline IT increasing by 24.6%. This positive evolution was the result of organic passenger boarded growth of 6.9%.

The latest migrations that we have undertaken, including as you know, China Airlines, Swiss, Brussels and Ukraine to Altéa as well as Viva Group to New Skies. And the inclusion of Navitaire's passenger boarded since late January 2016.

The weight of Asia-Pac and North America in our Airline IT mix has continued to span and will continue to do so in 2017 with the upcoming migrations of JAL, Malaysia and Southwest, the domestic passenger business. At Airline IT upselling activity continue to progress well with new customers in the quarter for Altéa Departure Control System, Revenue Accounting, Revenue Management, Standalone Solutions, e-Commerce, and Amadeus Anytime Merchandising.

We had new implementations in the quarter as well across our portfolio and growth in this space was supported by underlying organic growth. Our new business unit areas also continue to grow.

We today have circa 250 customers for our Airport IT Solutions. Hospitality IT continues to grow steadily, where we service close to 25,000 catering venues.

In Payments, our customer base also continue to expand. We have more than 850 customers with contracted services from our portfolio and the volume of payment transactions processed by us in the first quarter of 2017 delivered a double-digit growth rate.

And with that, I pass now to Ana.

Thank you, Luis. Hello, everyone.

We are now in Page #9. As Luis have just described, we have started the year with a strong first quarter.

Group revenue grew 11.7%, supported by a positive performance in Distribution and IT Solutions, the contribution of Navitaire, which we consolidated in late January 2016 and a positive foreign exchange impact on revenues. Distribution revenue grew by 11.4%, underpinned by a strong booking, as we have just explained, and expansive average revenue per booking, driven by a positive booking mix impact, both coming from a higher weight of global bookings and a declining weight of non-air bookings, which have a lower average fee.

Also, revenue from our search solutions provided to meta-search engines and online travel agencies and some solutions for corporations continues its positive trend in the quarter. Revenue in IT Solutions increased by 12.3%, backed by underlying Airline IT growth, the consolidation of Navitaire and continued expansion in our new businesses.

Our Airline IT expanded, supported by higher PB volumes. Average revenue per PB declined, impacted by the higher weight of low-cost and hybrid carriers in our customer base, as well as a decrease in revenues from services, which may fluctuate between quarters, depending on the timing of the projects undertaken.

Also, some revenue lines such as e-Commerce or Standalone Solutions or Direct Distribution revenues, they're evolving positively did not grow at the high pace at which the passengers boarded did. When we take a look at our EBITDA in the first quarter of 2017, it amounted to €502.8 million representing a 12% increase in the first three months of the year.

EBITDA margin was 14.2% broadly stable relative to the previous year. Foreign exchange fluctuations had a positive impact on revenue and EBITDA in absolute terms, a negative impact on cost and a dilutive impact on the EBITDA margin.

If we were to exclude the ForEx effects, revenue and EBITDA grew double-digit and the EBITDA margin was expansive. Let me give you some color on our operating costs.

Total operating costs excluding D&A grew 11.4% in the quarter. Cost of revenues grew 13.5% significantly impacted by negative foreign exchange effects and it represented 26.7% of the revenue is slightly ahead of the last year.

The increase was driven by a higher air booking volumes and a higher unitary distribution cost, which was driven primarily to the competitive pressure. Fixed cost including personnel and other OpEx grew by 9.9% as a result of 5% increase in our work force, a higher manpower unit cost and growth in non-manpower expenses impacted by the consolidation of Navitaire.

The ForEx had a negative impact and a reduction in the capitalization ratio, which fluctuate depending on the project mix also contributed to the increasing fixed costs. Below the EBITDA line, D&A increased by 9.3% in particular the ordinary D&A was 21% higher than last year due to previously capitalized R&D costs, which has started to be amortized in the period as we put into [exploitation the axis that are rate] [ph] to them and the consolidation of Navitaire and higher depreciation charges.

The net financial expenses on the other hand declined by 50.4% as a result of lower average cost of debt impacted positively by the refinancing of the notes €750 million that mature back in July 2016, and a lower amount of average gross debt outstanding. In the first quarter, our income taxes increased by 4.6%, helped by lower income tax rate compared to last year, which was driven by several factors including the reduction in the corporate tax rate in France.

The combination of growth in operating results plus growth in D&A and taxes, a lower financial expenses resulted in 19.6% increase in the adjusted profit for the period. And therefore, our EPS was €0.67, 19.3% higher than in 2016.

And now, if we turn to Page 11, you can see that we have continued, as Luis has stated, investing in the R&D, which for us is key. Our investment increased 4.5% to €174.4 million in the first quarter, which is 13.9% of the revenues for the period.

The spend is basically centered in three main categories. The largest is the product evolution and portfolio expansion including our new businesses, which represent more or less 50% of the total R&D investment.

During the quarter, we continue investing in solutions for merchandising and personalization among others and expanding the resources devoted to our new business especially in the areas of hospitality and airport. The second category is customer implementations, which account for approximately 20%-30% of the total R&D investment.

And the third one is internal technological projects, which amounted 20%-24% of this R&D investment. During the quarter, the airports and transversal projects normalized.

As we are finalizing the shift towards open system and the company airports are focused on cloud-based architecture and continued enhancement of our overall infrastructure and processes. CapEx is very linked to our R&D investment, as you know more or less 70% of our CapEx is capitalized R&D, and this is only done when there is significant visibility for future value generation.

Other than capitalized R&D, 15% to 20% of our CapEx generally relates to tangible assets, mainly in relations to the data center in Erding, and finally also the contractual relationships on payments to travel agencies in the form of signing bonuses, which may be capitalized under certain circumstances, especially what we have currently on the booking levels. CapEx increased by 9% in the period to €155.1 million, which represent 12.4% of the revenue.

The growth in CapEx was driven by the capitalized R&D investment as well as higher signing bonuses pay to travel agencies in the period, from a relatively low base in the first quarter of 2016. CapEx in property, plant, and equipment declined in the period relative to last year.

And if we talk about the free cash flow generation and leverage in the first quarter we generated €285.5 million and increased 7.9% over the previous period supported by the EBITDA growth and the lower taxes and interest paid. But on the other hand, we had working capital outflow of €35.6 million negatively impacted by the timing of Easter by certain ForEx adjustments, which were invoiced by IATA and advanced payments to travel agencies.

The net debt amounted to $1.9 billion at the end of March with leverage amounting to 1.1 times net debt-to-EBITDA. And with this, we have finished our presentation for the first quarter.

And we are ready to take any questions, you may have.

Hi, thank you very much. Two questions from me.

First of all, I kind of ask every quarter, but can you talk us through your progress in CRS and PMS, in particular, how you envisage that coming together in cross selling for example? I know it's early, but are there any signs that IHG might consider your PMS solutions as well so something like that?

And then, have you seen any advantage in your own hospitality business from the disruption of a major competitor? I know it's a multi-point question.

Second question is just can you remind us of the timing of GDS renegotiations for KLM, Air France and AIG? I think they were 2017, 2018.

And have you heard any airlines talking about moving away from full content agreements. And then, I guess, kind of the same question on the IT Solutions side, do you have any large Altéa or Navitaire contract renewals coming up in the next 12 months?

Okay. So let me try to cover the hotel.

I mean, I don't know what else I can tell you, Stacy, but things continue evolving as we have planned in the past. Both the CRS as you know with the IHG and the PMS opportunity in our view are pretty big.

Also, I have mentioned in the my presentation that they will be two independent products, but they will work together and will be aligned. And their big advantage is of having an overall offer that is fully integrated.

Probabilities of IHG or other customers, of course, we are trying to really get as many customers possible, but it is not feasible that I provide you with further details of conversations with customers. The only thing I can tell you is that we feel very optimistic about the prospects of this industry.

And we feel optimistic about what we are doing and the evolution of the different projects that we have in our hands. So really, this is an area of growth potential.

And in my view, we are doing the right steps to really address this opportunity. But of course, it will take some time.

In terms of negotiation of the GDS, Ana, in terms of dates I believe we…

We have said that IAT [ph] is due to renewal in 2017, while Air France KLM is due for renewal in 2018.

Okay. And just to address that upfront, I mean, we talk to them.

We negotiate with them. Each airline, as we have explained, has - they may have different views of how they want to really address the future, how they want to have their own direct distribution, indirect distribution, relationship with different channels.

Nothing new compared to what we have in discussion in the last year. This has happened in the last 10 years.

Changes in the way the airlines are approaching the market, some of them, some of them are following exactly the same path. Some of them want to really evolve the way they deal with their travelers, how they are going to merchandize and service their products.

And again, this is happening in the airlines that we are talking today. And therefore, some airlines are much more keen of growth [ph] having full content agreements and trying to really post their content through all the channels in a similar way.

Some airlines may want to differentiate depending on the channels and depending on the customers they are addressing. And this is, again, not new.

And at the end, they only impact, as you know is related much more to this intermediation. This intermediation has happened in our industry for the last 10 years.

We have not seen an increase of this intermediation. In the last year, you have the figures.

The first quarter, of course, we need to consider the impact of system [ph]. But you see this intermediation has been extremely low.

Of course, this is quite exceptional again, because bookings are usually stronger due to Easter. And of course, the airlines - some airlines have increased the direct sales, some airlines have decreased.

We are talking about the aggregation of everything. But we don't expect this intermediation to increase compared to the previous years, independently of what the airlines decide to do.

But, yes, there will be some airlines more - pushing more for direct distribution and some airlines less. And the third question…?

The renewals of Altéa, as you know that we have started with this activity some 10 years ago, so the ones that we had for the previous years have been done. We don't disclose that for commercial purposes, with commercial contracts that we have with the airlines.

We don't have much ahead of us in the next coming years and it will be beyond 2020, when we really will have stronger volumes of Altéa carriers that sign in the past years to be renewed.

And just to confirm, was Navitaire on similar sort of 10 or 15 year contracts? Is that the average for them too?

They have different average compared to us. But they also have long-term contracts.

And the one that was more relevant was Ryanair, which we announced recently, that has been renewed.

Okay. Thank you.

Hi, good afternoon, Luis. Good afternoon and congratulations on a good start of the year.

I've got a couple, please. Just first of all on the NDC deal with Finnair, could you maybe go into little bit more detail on exactly what you've done there for Finnair, so maybe how the booking prices looked before with travel agents and how it would look now, how that's different to them adopting Fare Families or ancillaries from you?

And maybe, what's the payment model that you roll that out to other airlines? Is that a one-off implementation project or is there a repeatable solution that you can sell to other airlines, and it is more of a software deal than a services deal?

And then, maybe just on the GDS side, we saw some pretty big share gains in the first quarter, you've obviously gained share pretty consistently, but that's better than normal. Were there any big deal wins there that we should be aware of or was it just continued strong execution across the board there?

Thank you.

Okay. Let me take on the last one.

Yes, the quarter has been strong on competitive positioning enhancement. So you've seen that is 0.9 percentage points that we have gained in the quarter.

And it's' partially related to what you've seen also in the work - in the working capital outflows. So we had signing bonuses and advance payment, because we had renewals and new customers coming in which has supported this growth and deal win.

There is no one big deal win, which means the overall winning, so it's not as when we had the Expedia, for example, which, of course, was a very large deal or the inclusion of the TOPAS booking. It's more related to many different travel agencies in all of the geographies that have been either renewed in the contracts or increasing the share that they have with us and some wins, which support this, plus the normal geographical mix, customer mix, which are the engines behind the growth of our market share, consistent positive evolution throughout the years.

Okay. So with regards to the first question about Finnair, I mean, as you know the referrals between metas and the airlines, and the way this works is not ideal.

Okay, there are a lot of - high rate of lost. We have been working a lot on NDC with many airlines around the world, which is mainly a way to really improve the connectivity, and in this case, with one of our Altéa customers, in this case Finnair.

Now, we are improving the connectivity. And therefore, the bookings of Finnair will be directed on the Skyscanner.

And this should improve the connectivity and improve the user experience. So this is something that we are piloting.

Again, it's supporting the XML based messaging standard, which is not new at all as I have mentioned before and we have been working with airlines about that. And it's proving again that way we are dealing with this new technology.

And as you know, we are very much involved with the IATA about NDC and about all the technologies that are coming into play. We don't think this is going to have any relevant impact in terms of this intermediation - not this intermediation, as many of these bookings are already using the airline direct channel.

The only thing we are doing is supporting the technology to optimize the airlines in the different channels and in the different strategies. In terms of the business model, well, I mean, it depends a lot.

As you can imagine, what is used by the airlines, but they are different models. But, of course, it's quite similar to the way we work in general.

That means that, okay, we'll have fees, and we'll have charges for services if needed or developments needed, I mean it's quite similar to the way we work with any airline. Okay.

It wouldn't be crazy to assume. This should be a transaction-based business model in there and they could be add-ons and services that you filled around, but the core value proposition should be transactional?

That's completely right, yes.

That's it. Thank you, Luis.

Yes, good afternoon. Thanks for taking the questions.

I had three. The first one was something you may referenced, I think in the script regarding the termination, I guess, [to the TPF] [ph] migration.

Maybe, if you could just go back over there, that you tell in terms of whether that allows you to release some resources in the technology department? Or what you might be how to do with the once given that winding down as the project, whether that potential margin tailwind for you?

The second question was on the gross margin. I guess, I think incentive gross margin was slightly down year-on-year.

Any particular driver for that, I guess, I was slight surprised given the services revenue, sound like it was a bit weaker. Is that down to just maybe the GDS mix, or anyway just some comments around the reasons for the gross margin?

And then the third one. On North America from a GDS perspective, obviously very good to see the growth coming back, I just wanted to - I guess the source of that growth, I think, historically there has been majority coming through the OTA channel.

I just want to, whether you're making any progress there in terms of breaking into the corporate market, or the offline market, or any outlook on that front? Thanks.

Okay. Let me take some of the answers.

On the TPF migration, this has been a project which have last four or many years. And if you - I think that is the - since the time of the IPO, you get all of our management reviews.

When you look at the line of investments is always there. And therefore, it's not something that is going to happen in one single-day, it has been happening along the period.

Therefore, you should not be expecting an improvement on the margins or reduction in cost, or reduction in personnel, or reduction in any big way, because of the completion of this project. Because, of course, it has been done throughout many years part of the savings have been that we've enabled to grow a lot in terms of the volumes we process, in terms of the things that we are able to do in terms of the capacity of our technology without increasing in cost.

So it's rather than being a more cost [Technical Difficulty] and sometimes of course, we had cost reductions, because we stop paying the licenses that we had from previous providers and things like that, but no. There is no significant impact that you may be expecting in 2018, because of the competition of the TPS [ph] commissioning.

Gross margin coming down, yes, we have acknowledged that incentives in unitary terms have grown, this is partially because of the mix, because you also say that we're growing in NORAM, which is true, where the profitability of that market we have many times explained that is lower, because we have lower booking fees with high concentration of online travel agencies, which also have high volume, high incentive and pressure from competition. So yes, that's true.

We have always tried to explain that in terms of growth, we are looking for absolute growth, so the fact that some markets, or some type of customers, or some type of segment, or more or less profitable does not impetus from trying to grow as much as we can in all of those areas. And then, yes, we try to fight, keep the profitability on a like-for-like basis, and there is where the pressure on incentive, we have suffered a bit, where we are able to try to contain it, by producing more technology.

And that's why tools like enhancing the search technology for travel agencies are doing this. And we see extra capabilities that Luis was mentioning, et cetera, is our key focus in order to try to provide to the travel agency channels, technology that allow us to not have strong pressure on incentives.

But overall the Distribution business has done really very well in this first quarter and we are quite happy with evolution.

I mean, regarding the question about the corporate. Yes, you are right.

We are not in the U.S. with, I mean, strong on the corporate side, we have some small ones with TMCs.

And, I mean, of course, we will love to do that. And we talk regularly to all of them about opportunities in North America.

And we love to have that. When you said about prospects, yes, it's in our mind that we will try to enter that space, where our market share on that space in the U.S.

is below. What we have in the rest of the world.

And therefore, it's an objective for us to really grow there, but more than that difficult to say.

Okay. Thank you.

Thank you. Good afternoon.

Luis, I think, you said in your opening comments that you got 127 airlines now on the ancillary services and 70% of air bookings can be sort of carry ancillaries. Can you actually say what proportion of your volumes do include ancillary sale.

And is there anything that's being done to the way the incentives for agents and yourselves are being setup that will help increased that rate? And then Ana, I noticed in the cash flows there was €44 million outflow related to an extraordinary item.

Didn't seems to be anything in the P&L, can you just say what that is? And also you leverage now is down at 1.1 towards the low end of the range.

What is the sort of outlook for acquisitions and possibly buyback like in the second half, what would trigger you making a decision to announce the buyback? Thanks.

Okay. So let me try to start with more of the answers.

Is true that 70% of our bookings can carry ancillaries, is still this percentage of the ones that carry ancillary is not the totality, it's still growing. We've started.

Here adoption is a mass, so of course travel agencies need to take this part on the other side of this double-sided business models. It's not only - it's not enough that the airlines do how the information available.

The travel agency tunnels need to adaptive, and then bookings need to start happening. But we are quite confident that this adoption ratio is growing fast.

And therefore as travel agencies, of course, no other customers and they are quite good in selling as per the request of the travelers, we are pretty convinced that there is going to be a growth in the ancillary sold by indirect channel in the next coming year. The evolution has been quite positively, it has taken a time to takeoff, in terms of adoption and it will take a little bit of time in terms of effective sales.

But the fact that 70% of the bookings can carry that, it's a very good starting point. And I'm sure that the growth of sales will improve in the next year.

In terms of the outflow of the €44 million is related to taxes. That we operate in many different countries, we have planes.

We always accrue that on the P&L. So there is no negative impact related to that.

And in this specific case, in order to avoid the interest that are charged on the claim that we have on taxes. We have put the money into escrow account to stop getting the interest on top of the claim.

And we will wait for the result of the legal case, and of course we win, we will recover this amount of money. And we will have a positive impact, because it has been approved on the accrued on the P&L.

And it not in this term, it has been done in the past that's why you have mismatch between the cash on the P&L. And leverage on the M&A that our preference use of capital is to try to make the business grow faster.

So we are of course investing in the organic things that we have in terms of new solutions, the implementations all the three aspects that I have explained, which basically our investments on R&D and for CapEx are allocated to. And we are also quite active and trying to find any M&A opportunity, we have been increasing this in recent years with two very large, the Navitaire and new market.

But also with incrementing our stake on Isol [ph] and adding other companies like Iteso [ph] that bring positive. So that's our main goal.

But yet, we also have that capital structure of 1 and 1.5. And we generate cash, if so these opportunities in the future of M&A or additional enhancement of our technology plus the cash generation continue to deliver it we will have to analyze shareholders remuneration.

Thanks. Can I just ask on the tax rate for the quarter, it was a couple of points below last year.

Do you think that sustainable for the year or you're sticking with 28%.

No. I think it will be lower than that.

So, near Q1 rate?

More or less.

Thank you.

Good afternoon, everybody. If I could ask two questions.

The first one just following on from that ancillary revenue question, I think, you've said before that you expect that ultimately near to 100% of bookings will - should ultimately be at least able to carry ancillary services. Just interested in terms of whether you can provide any regional colors.

Is it a question how to - you having built the business hours pretty well within Europe and then markets like APAC to follow, or how should we think about that? And then the second question on the IT Solutions side, as the airline migration pipeline slows into 2018.

At that point assuming you don't have any pickup. Do you run with a lower headcount then, or do you invest those resources to drive an uptick on PSS activities?

Okay. In terms of the percentage of bookings usually what happens is that the online travel agencies are the first to adopt, or the big travel agencies are the first to adopt.

And then, of course, you have - what would you can say the long tail, which is all of the smaller travel agencies, the national is in every market, and that's why adoption takes longer time. The managers targeting the big players, the volumes of course is start to growing fast, but until you reach the 100%, you will have to do this work country by country, travel agency by travel agency.

And that will take a little bit of time.

When using [ph] our resources, I mean, of course, our goal is to keep the company growing, okay. And to find opportunities in many areas, so yes, I mean, if there are less migration or less customers there will be a reduction of the resource they gave to that.

A specific people that today is dealing with Southwest, with JAL, but it doesn't mean the overall, our investment on the technology front will be less. It depends of course on the prospects of other areas of the company.

And upselling opportunities and finding new projects, on investing on the right bets, but as a company the investment in technology with changes that are happening are important and going back to the previous call and find out about TPF, yes, there is a big milestone to really get out of TPF completely. But now we need to move into the new technologies that are moving extremely fast as you know.

So the company will always require a need investments on core technology and investments to redevelop products and solutions. But of course depending on the number of customers, dedication of resources to specific customer's project will evolve that for sure.

Understood. Thank you.

Yes. Hi, guys.

Thanks for taking the questions. First one, very low disintermediation in the quarter, could you maybe talk a little bit about what you think was driving that.

Was that perhaps an upswing in business travel and your views on how sustainable that's likely to be? Second one just on the Easter boost that you referred in the first quarter.

Could you quantify that and should we kind of expect the reverse of that on the trend, right in the second quarter, so perhaps GDS bookings growing sort of low-single-digit more in the second quarter? And then just finally, you mentioned that FX was negative of the EBITDA level.

What - did you have negative effects on gross margin, so gross margin have been flat or expanding - excluding the FX effect? Thanks.

Okay. Let me try to take you on the three questions.

In terms of ForEx it has been negative in margin, not in absolute terms. So in absolute terms, it has been positive.

But in margin, as cost has grown faster than revenues, because of the ForEx, then there is a dilution on percentage wise on revenues. And yes, it has a strong impact on the gross margin that before, I think it was John asking for, of course, the fact that incentives, which is part of the cost, have an impact on ForEx that has a negative impact on the gross - on the percentage of gross margin and revenues as well, so both are not in absolute terms.

In absolute terms it has been positive. Now, of course, we will have a lower month of April, because of the seasonality of the Easter holiday, which is exactly the opposite.

And then you will have the advantage that you no longer lose the leap year effect which is one day in February. But overall than the line is very difficult for us to estimate how much is that impact, because you never know exactly what is doing underlying.

But the trends of the underlying are quite strong is this year 2017, so even with change of the seasonality between quarters. The underlying is strong, but yes, second quarter won't be as a strong most likely, at the first one because of the impact.

And now in terms of this intermediation it has also been impacted by the seasonality, because this intermediation you're measuring it by looking bookings versus PB, and the seasonality of bookings and PB do not match 100%. And therefore is very difficult to assess that, but as you know, for those carriers where we are the Altéa provider and when we are as well.

The e-Commerce provider and we have GDS presence, we can see quite well on a like-for-like basis. And disintermediation has remained in the big service carriers more or less stable.

So basically what impacts more the mix of disintermediation is the growth in local's carriers, which continue to be a stronger than the growth of the full service carrier and usually more disintermediated than the second one. And then the mix by regions, because some regions are more disintermediated than other and seems like that rather than there is a fewer shift from the indirect channel to the direct channel, which would be the pure disintermediation that is quite stable is more matter of mix and seasonality as well.

Hello, good afternoon, Luis, Ana. Thank you for taking my questions.

It's actually three questions, which are follow-ups from previous questions. Ana, you have talked about M&A a little bit, I know this you haven't done anything substantially in terms of acquisition in the last 12 months or 15 months following very active 2015.

And the question is, if you are seeing any change in the environment in terms of M&A, I mean, are the price is moving up, or it's just that you are preparing many things or you don't find the right opportunity to acquire? That will be the first question.

The second one in terms of Hotel IT, if I understand correctly. You have two focuses now, on the one side, obviously execute and execute well the GRS for InterContinental.

And on the other side, to try to sign more clients for in Hotel IT, and that could be both in the GRS or it could be a large customer in the PMS. I'd like, if you could comment that a little bit, please?

And thirdly, in the tax rate going from 29.5% to 26% is a very substantial reduction. And my question would be if 26%-27% would be a fair estimate for tax rate not only for this year, but for the mid-term?

Thank you.

Okay. Let me start with last one.

The 26%-27% is rate that we expect for this year 2017, is based on several impacts, the reduction of taxes in France and some things like that. Do you have a political environment in different countries, which has also different - so we will have to wait for different elections happening and what that will imply in the taxes in different geography to see, what will happen in the coming years.

Probably, this level of the 27% should be more or less sustainable, but in all honesty, we will have to see all the different market and remember that we're operating almost every geography. How this taxes will evolve in the future.

Okay. Let me take the other two.

M&A, I mean, of course, we have a lot of activity there looking for opportunities, because we have always said that is a good way to really enlarge our portfolio, and grow on top of our internal investments. It's a matter finding the right targets at the right price, and yes, prices are pretty high that's the reality.

But this is always the case, I mean, it could be with higher now, I mean, it depends on the evolution. As you know on the competitors, we try to really deal with one acquisition who is there, how much money people are ready to really bear that, of course, with low interest rates there is a competition in terms of price.

But it doesn't mean there are no good targets, there are good companies in the world that innovate that put people well into our portfolio. But of course they need to be on sale, and they need to fit well, and they justify that the price we pay make sense for the company.

So it's not that we are stopping any acquisition. It's true that we had a very active year.

We also have to focus on executing, on integrating these companies. But again, I mean, the teams are looking for alternatives and opportunities as we speak.

And I do not know that's something different. Okay.

That's about the M&A piece. The hotel, and really if I cover before, yes, you are completely right that our focus in these two areas.

We need to execute well the projects that we have especially for the new areas, both on the PMS and the CRS. And this is our focus today and in parallel selling not just in these areas, but also in our sales and catering, that is growing very nicely where we have the products ready and finished and we continue expanding our portfolio and our customer base.

So as I said, the focus is exactly that, selling to customers, execute in the case of sales and catering is purely sales and growth. In the case of the CRS and PMS, of course, we need to be sure about our commitments, because signing customers makes sense, but at the same time we need to deliver our commitments with - and in this case with IHG, before we can - not sign, because we can always sign contracts, but then deliver on top of what we have today.

So it's a matter of timing, delivery, focus, but of course, sales will be an important piece of the equation as we work in the three areas. And I feel we cover…

Thank you very much.

Yes.

Yes, thank you very much, Luis.

Hi, Ana. Hi, Luis.

I've got two questions please. Just the first few on kind of Southwest, if you perhaps could give us a bit of kind of guidance, how to kind of model this in kind of Q2 and kind of beyond.

And then, secondly, I was earlier today on the call from IHG and I was a little bit surprised how aggressive they talked about the relationship, indicating that the current relationship was not sustainable with GDS and that they are prepared to take short-term pain to get the right long-term relationship. I think they indicated today, would expect an update on this relationship by the first half and kind of July kind of numbers.

Now, I appreciated, I want to make kind of comments on individual kind of contracts, but that seems to be quite slightly different stance to what you said earlier to the question to Stacy. So I was wondering if you could clarify it a bit.

Thank you.

Okay. Let me start strongly that one.

I don't think it's contrary to what I said. We talked to IHG about alternatives trying to fulfill their business needs.

And of course, the decision at the end if they - and they need to renegotiate the contract or - the way we reach an agreement or not. And the kind of agreement we have, I mean, there is full content or full content and they want take a different path.

Of course, it's mainly - first it's their decision, but it's also our decision, because this is a negotiation and there are two sides. So I didn't say that things are going to be with any airline.

I mean, there will always be negotiations and the output of this negotiations may be whatever. I didn't say that - we are going to close agreements and best agreements with all the airlines.

In Airline IT or Distribution, this is part of the evolution of the business. Everything I said is that, okay, this is not new at all.

It have happened in the last 10 years. And airlines, low-cost carriers, full service carriers are following different strategies.

With some of them we continue talking. There are different models, different initiatives going on in the world, different airlines, different profiles, different objectives and what we do as a company is trying to really understand the airline needs and support them as much as we can.

That's what we will do. Whatever finally is the commercial strategy of IHG is not our decision.

What we will do is support their commercial strategy in the conditions that makes sense for both companies.

And in terms of…

And would you expect this to be closed by the midyear as they're anticipating.

Thank I cannot say. I mean, as you can imagine, it could be tomorrow the teams talk or it could be we delay or it could be that for whatever reasons the negotiations don't continue.

I mean, it's like in any contract. So if they say, that is there, because they may think that our decision will be taken at that date, but this is not what we can tell you about that.

We will continue talking to them.

Okay. Understood.

And as I always say, look, IHG is a very important customer to us on both Distribution and IT, and we have a relationship with them. And it's just not the distribution piece.

We are always talking about IT Solutions, areas that we can improve, modules that they can take. Sometimes they decide totally work with somebody else and sometimes with us.

And our goal, of course, is to get the maximum and cope with them, that we can, of course.

Thanks.

Because these are very - a relevant group for us. Yes, Ana.

And in terms of guidance on the Southwest, I'm afraid that, no. If I give you any guidance, I would be giving you commercial sensitive information.

That there are large airlines that they have a big number of PBs; they will be implemented in the second quarter of the year. And therefore, you are going to be seeing growth in both in revenues and in PBs related to these contracts.

Again, they will produce dilution, as I was commenting on the first quarter. Whenever our PBs grow extremely strongly many of the captions of the revenues do not grow at the same speed.

And therefore, mathematically they produce a dilution on the revenue per PB metric. But basically, what we hope is to have a good migration and to get them onboard and be able to show what using our technology enables them to improve the way they serve their customers.

More than that, I'm afraid I cannot provide you.

Hey, Ana, and could you at least help me with from what dates it will come in? Will it start form kind of the first of April or what is the kind of…?

That one I can tell you, because they have done it publically. So it will be at the beginning of May.

Beginning of May, okay, thank you.

Hi, good afternoon. Thanks for squeezing me in.

Just two questions, one on the Distribution side. I understand, Ana, you commented that the market share gains were relatively broad-based across regions.

However, in the press release you seem to single out Latin America. I wanted to know how we should be thinking of LatAm for the Distribution business here, do you think sort of growth level double-digitish we saw in Q1, could sustainable over the year would be my first question.

Secondly, on Airline IT, you mentioned that Singapore Airlines is now live on revenue management. I was just wondering if you could update us on any commercial traction for revenue management, and how we should be thinking of this module compared maybe to revenue accounting to passenger recovery.

Is it fair to assume that this is a more relevant module for you pricing-wise? Thank you very much.

Okay. It's true that Latin America has been one of the regions that has better performed in the first quarter and that's related to the fact that the base of comparison was weaker last year.

The whole continent was underperforming in the macro environment. And therefore, that hand an impact on the volumes.

And except for Venezuela, most of the countries are recovering. And that puts a boost.

Of course, we take a fair part of that with the current market share that we have. And on top of that, the fact that we have increased our market share.

And yes, it has also been in that region as well and increase on market share. We have the double benefit of a low base [ph] growth, boosted by additional market share.

Now, in terms of all of the upsell on the Airline IT, the fact that we get customers to start using our products and customers, which are well seen as examples by other carriers and that we can demonstrate that by using our solutions they enhance the way that they can operate, where there is by saving more costs or giving better services to the travelers or being able to increase revenues, which is the case that is the revenue management is targeting. It helps us doing additional sales and upsell.

So when you look at the way our customer acquisition, usually it's driven, it takes time to start getting the sales. And once the pipeline starts growing, we have an acceleration kind of a hokasty [ph] kind of approach.

So the fact that we have customers taking merchandizing, customers taking revenue management, customers taking disruption management means that we are seeing uptick and that we are quite happy with the upsell and cross sell that we will be seeing later on. Now, in terms of pricing, each solution has its own pricing and then it will depend on the individual negotiations and how that is sold and what kind of solutions they are taking.

And therefore, I cannot give you I'm afraid a metric which is measured by transactions, multiplied by the RC [ph]. You can get the increase on revenue.

And that's why we give you guidance on that. We will be able to maintain a high single digit growth on this space by the combination of new customers, new solutions, sale, cross sale, organic growth and LOC [ph].

That's how we are trying to help you to understand the evolution of the revenues, because on a one-by-one basis, it's becoming more and more difficult.

Understood. Thank you, Ana.

Hi, good afternoon to everyone. Just a follow-up on the calendar effect, I wonder whether you could provide us with a four month accumulated growth rate figures for bookings and PBs, just to get an indication on what to expect.

Many thanks.

So, I'm afraid we cannot provide you the numbers of April. I mean, there is a - on quarterly basis, you have all the seasonality published since we became public back in 2010.

You can try to do a little bit of an assessment. But it's not an easy one, not even for us.

It's difficult to predict the impact of the bookings and the Easter and seasonality, and you have many other festivities in other areas. So there is always one year where you have the Chinese New Year or the Ramadan or the Easter or things like that that - per quarter the seasonality is difficult to measure.

But we do our estimations. And what we can say is that we believe [that the line] [ph] is strong.

And, of course, second quarter will not be that strong. But year to date, the second quarter is still going to be - it looks like a good year, this 2017.

Okay. So thank you very much again for attending the call and for your questions.

And we'll talk again at the end of July. Thanks.