Amadeus IT Group, S.A.

Good afternoon ladies and gentlemen and welcome to our first quarter 2021 results presentation and thanks a lot for joining us today. Till is with me and I will focus as usual on our most important developments in the quarter and Till will elaborate in the key financial aspects.

I will begin today's presentation with a market overview and the evolution of our volumes over quarter one. So, I'm on slide four.

As you know we started the first quarter with the resurgence of the pandemic and more travel restrictions imposed in many parts of the world. IATA global traffic evolution relative to 2019 slightly deteriorated in January with minus 72% and February minus 74.7% compared to the growth rates we have seen over the fourth quarter.

However, mirroring the evolution of the pandemic in the month of March we saw an important uptick in global RPK evolution relative to prior months growing at minus 67% when compared to March 2019. We had improvements in our air bookings as well as in passenger boarded performances making March the best-performing month since the start of the pandemic.

Current daily trading data also shows an improvement in April over March beyond any Easter holiday effects. In terms of Amadeus travel agency air bookings this declined by 79% in the first quarter of the year compared to the first quarter of 2019 a small improvement from the fourth quarter's performance.

In the month of January, we saw volume growth deteriorate with respect to December driven by the heightened COVID-19 incidents across regions. However, in February and March we saw continued improvement in bookings growth performance in most regions led by North America, Central Eastern, and Southern Europe mostly by Russia.

Furthermore, in April our daily booking data is showing an improvement in bookings performance compared to March led by NORAM and LatAm, but also with a good uptick in Western Europe. Driven by the volume evolution in the first quarter our distribution revenue declined by 77% relative to the first quarter of 2019 or by 58% relative to 2020.

With regards to our passengers boarded our volumes continue to perform in line with IATA reported traffic, but by slightly ahead. Compared to the first quarter of 2019 Amadeus passengers boarded contracted by 71%, an improvement over the 72.4%.

Passengers boarded reduction we saw in the fourth quarter of 2020. All regions except Western Europe reported better passengers boarded performance, most notably in North America followed by Central Eastern and Southern Europe, and also by Middle East and Africa.

Western Europe volume growth deteriorated in the first quarter versus the fourth quarter impacted by the elevated COVID cases and the reintroduction of travel restrictions. Into April here as well our daily data points to continued progress and performance improving over March.

IT solutions revenue in the first quarter contracted by 46% outperforming our passengers boarded growth supported by revenues which saw resiliency in the period as they are not directly linked to airline traffic or not driven by transactions particularly in the area of hospitality and airport IT. To recap on the volumes, overall, the evolution we are seeing we are optimistic of how things are developing.

The sentiment in the industry is more positive. As the vaccination rollout programs advanced not free of setbacks, we expect to see the degree of immunity evolving in the next months.

Domestic travel in some markets has surpassed 2019 levels. Airlines are communicating improving expectations on corporate travel, travel bubbles, and corridors are opening and the industry is moving to support safe travel.

Recently, on April 2021, we saw IATA update its global air traffic growth forecast for the year to minus 57% versus 2019 compared to the minus 62% to minus 67% in a scenario of framework IATA published in February taking a more positive view on this year. On to slide five to briefly recap on our financial performance.

As a result of these volumes dynamics in the first quarter of the year, we compare the same period in 2020. Amadeus Group revenue declined by 51.4%.

We achieved positive EBITDA in the period of €54 million and had an adjusted profit loss amounting to €83 million. Amadeus' financial performance was supported by improving volumes and further fixed cost optimizations.

We have made good progress with our cost reduction plans. In the first quarter of the year and compared to the first quarter of 2020 our P&L fixed cost declined by €93 million or by 20.4% excluding the implementation costs and bad debt.

CapEx also part of our fixed cost reduction plan declined by €51 million or by 33%. Therefore, in aggregate we have had a fixed for reduction of almost €145 million in the quarter in line with our plans.

We had positive free cash flow in the first quarter of €31.4 million or negative EUR 11.9 million including cost implementation -- cost saving implementation costs. Finally, liquidity available remains strong and increased to €3.8 billion as of March 31 supported by cash short-term investments and undrawn revolving credit facility.

Please turn to slide six, so I may share an update on our recent commercial developments. We saw commercial activity progressing well in the quarter.

And in distribution, we signed 21 new contracts or renewals of agreements with airlines. On the travel agency side, China's Trip.com parent to Ctrip Skyscanner and Qunar will adopt one of our travel agency IT solutions, Amadeus custom search solution to improve international airline content as functionality.

Additionally, Taiwan's largest online agency ezTravel is implementing an Amadeus travel API which gives online travel agency access to new airline content and first via NDC connectivity. In airline IT, Qantas contracted our airport companion app.

Air Arabia contracted Amadeus Altea departure control customer management and flight management. And Fiji Airways implemented segment revenue management system.

In hospitality and in airport IT, we continue to renew contracts and to grow our respective customer bases. The Park Hotels and Q Hotels contracted Amadeus iHotelier Central Reservation System.

Lore Group signed for Amadeus' digital media. Langham Hospitality Group signed for Amadeus sales and event management and Amadeus service optimization and HEI Hotels signed for our Demand360 BI solution.

In airport IT, we introduced Japan's first end-to-end biometric boarding process in partnership with Narita Airport and NEC. Also, Finavia in Finland and Cambodia Airports contracted for Amadeus Flow our new integrated cloud solution for passenger handling.

Additionally, during the quarter, we launched a new solution aiming to support the recovery of travel. Air Europa is the first airline to pilot Traveler ID's health capability which allows passengers to certify they have the required health documentation at check in without having to leave the airline's website or app.

This new Amadeus solution is fully integrated into the airline's IT system and aims to strengthen passenger confidence, by allowing a more touchless travel experience at using the need to interact with that airline staff. Finally, from a corporate perspective, I'd like to highlight as you may have seen that Bill Connelly, who has been on Amadeus' Board since the summer of 2019 and currently serves as by Vice Chairman of the Board will succeed Jose Antonio Tazon as Chairman of the Board after our AGM in June.

This change is part of a global Board renewal and succession plan, which commenced back in 2017. I would like to express my heartfelt gratitude on behalf of Amadeus to Jose Antonio for his distinguished and long-standing service to the company.

And we also warmly welcome William Connelly as Chairman. I know William will bring his own creativity, enthusiasm of many past experiences to this new role.

Before I pass on to Till I would like to recap on our areas of focus and goals coming out of COVID. Please turn to slide 7.

Certainly, our central technology which we may -- we have consistently evolved over the years with unparalleled debt of investment. As you know, we are accelerating our shift to the public cloud with Microsoft.

We are excited to leverage Microsoft's AI and other tools and we have initiated work with Microsoft to co-innovate. I must add customer reaction to our partnership with Microsoft has been very positive.

Microsoft is viewed as a highly valuable B2B player and is already a provider to many of our existing and potential customers. On airline IT through Altea and Navitaire, we cover the entire market spectrum from low-cost carriers to full-service carriers with technological offerings, catering to its segment's specific requirements through well invested and broad portfolio of solutions.

We are uniquely placed to serve groups, combining both types of carriers. We are investing in expanding the functionality breadth of Navitaire, as well as into next-gen capabilities to Altea and working to announce the interoperability of both.

Additionally, we are growing our platform's capabilities to offer increased openness and self-visibility. We are seeing great engagement across the industry to deliver NDC.

Important too is IATA's ONE Order standard and we are investing in this technological evolution as well to serve our customers' evolving needs. With regards to travel agency distribution, we are fully committed to NDC and expect to continue to sign agreements with airlines and travel agencies.

We are confident that our ability to integrate NDC in a seamless and fully integrated manner will bring share gains. Our scale and customer proximity will also further enhance our value proposition, particularly in those segments and geographies where our presence has been smaller in the past.

In hospitality, we see important potential for Amadeus. We have the broadest base of solutions in the industry and we cover the entire customer segment spectrum.

We are clear global leaders in group and even IT, as well as in business intelligence and media solutions. We have a unique cloud-native next-generation CRS and PMS offering, both integrated and modular with full attribute-based selling capabilities, which for many hoteliers is where the future of hotel retailing lies.

There is a clear opportunity for us to continue attracting customers in the marketplace and we also have a good cross-sell opportunity given the number of touch points. We have a strong penetration in NORAM, the largest hospitality market and see a large growth opportunity in continuing to drive growth in international markets.

With respect to airport IT, we see an attractive opportunity as well albeit at a more granular pace. Our platform is highly integrated to over 200 airline systems, removing the need for costly individual connectivity, allowing deployment of flexible service that can be scaled up or down.

With our cloud-based model, airports can become free of legacy online infrastructure and as a single-open platform on innovations like biometric, shared across our expanding ecosystem of airports. With intelligence at the core of the platform, reaching size can be added from across our travel ecosystem.

Our state-of-the-art offering delivers an automated and increasingly touchless experience setting the trend of the future. In payments, our aspiration is to be the global leader in travel payments by offering innovative data-driven on frictionless solutions.

We believe we have important competitive advantages in this space and expect to continue to increase our penetration of the sector to through our merchant hub offering and also to further diversify into travel adjacent verticals. We expect as well continued progress in our B2B wallet penetration for air and on air content and to further expand geographically.

Now to conclude, I will say that we don't know how long the recovery of travel is going to take, but we are confident that travel will come back. As that happens, our goal at Amadeus is growth, growth that will come from demand to travel which has advanced historically at a faster pace than global GDP and growth from a continued market share expansion across our portfolio of businesses supported by the quality of our technology and our consistent approach to our investments.

I will now pass on to Till for further details on our financial performance. Thank you.

Thank you, Luis and hello everyone. Now please turn to slide 9 for an overview of our revenue in the period.

As Luis has explained our group revenue declined by 51.4% in the first quarter of 2021, relative to the same quarter last year. This evolution resulted from distribution revenue declining by 57.9%.

This was driven by the decrease in volumes. Further, though the underlying air booking average pricing declined, impacted by a higher weight of local bookings, this effect was more than offset by a positive cancellation provision effect and contractions in other revenue lines, such as revenues from travel agency IT solutions at softer rates than the travel agency bookings declining.

IT solutions revenue decreased by 46.1%, driven by the airline PB volumes decline. IT solutions revenue outperformed passengers' boarded growth, supported by non-transactional revenues and revenue streams not directly linked to airline traffic, mostly in hospitality and airport IT.

Please turn now to slide 10. In the first quarter of 2021, our EBITDA excluding implementation costs amounted to €53.7 million an 84.6% contraction versus the same quarter in 2020, resulting from the combination of the revenue decline just explained; a 63.7% cost of revenue reduction very much linked to the booking volume evolution; and a 21% decrease in our combined personnel and other operating expenses cost line, supported by our cost savings plan.

Below EBITDA, D&A expense declined by 14.8% due to less PPA amortization and less ordinary D&A. Net financial expense increased by €20.9 million, primarily caused by the higher gross debt and cost of debt, resulting from the new financings taken out in 2020.

Income taxes amounted to an income of €37.5 million. The group income tax rate was 28%.

The combination of a contraction in operating results, a higher financial expense and tax income, resulted in a loss of €83.1 million in adjusted profit in the first quarter of 2021. Turning now to page 11, to review our cash flow evolution.

Let's start with CapEx. In line with our cost-saving program goals, in the first quarter of 2021, CapEx declined by €47.7 million or 31.3% versus the same period of 2020 on the back of a lower CapEx for intangible assets by €42.3 million or 30.7% less and a reduction in CapEx for property plant and equipment by €5.1 million or 36.9% less.

The decrease in CapEx for intangible assets was mainly driven by lower capitalization from software development resulting from a 28.7% decline in R&D expenditure where we followed a selective approach in the context of COVID-19 prioritizing investment into most strategic projects. Moving on to our free cash flow.

In the first quarter of 2021 Amadeus free cash flow amounted to an inflow of €31.4 million or an outflow of €11.9 million including the cost-saving implementation costs paid in the quarter. Free cash flow was mostly impacted by our EBITDA reduction a reduced CapEx amount relative to last year and the cash flow from -- and the cash inflow from change in working capital.

Free cash flow in Q1 benefited from no interest paid in the quarter following our debt payment schedule and secondly timing differences in collections and payments. Please note that in the second quarter of 2021 we expect free cash flow to deteriorate with respect to Q1 impacted by quarterly seasonality which you will also have seen in prior years for instance due to employee-related payments and also due to timing differences in collection and payments.

As a result, we estimate a change in working capital in Q2 ranging between minus €100 million to minus €120 million. Additionally, we will have about €30 million quarterly interest payments from Q2 to Q4, 2021.

I would add however that compared to Q2 in Q3, we expect free cash flow to improve. Please turn to Page 12 to review our progress on our planned fixed cost optimization.

In the first quarter of 2021, we achieved a fixed cost reduction relative to 2020 together in the P&L and capital expenditure combined of €143.4 million. As explained before our cost savings definition refers to the change in costs excluding cost-saving program implementation costs and bad debt.

As Luis was saying the fixed cost reduction is according to our plans and it supports our confidence in achieving the €50 million cost efficiencies in 2021 over 2020 in order to achieve €550 million cost savings versus 2019. For 2021 during the year the quarterly phasing will be directionally as follows: Q1 showing the highest year-over-year savings as our cost savings program was launched with the beginning of the pandemic towards the end of March last year.

Hence the prior year Q1 was still showing a kind of normal cost run rate. Going forward, excluding bad debt and implementation costs in Q2 2021 we expect similar to lower costs than in Q2 2020.

And as per our plans in Q3 and Q4 we will allow for some costs to increase compared to these quarters in 2020 making us confident in our ability to achieve the additional €50 million fixed cost savings target for the year. I would add that on the discretionary cost side the trend we are seeing is a bit better than what we had originally forecasted.

With regards to the broadly €200 million of implementation costs related to our cost-saving programs we estimated at the beginning of - we estimated at the beginning of it in the first quarter of 2021 we incurred implementation costs amounting to €18.3 million thus totaling to €187.4 million incurred to date. The balance to the expected total €200 million of implementation costs paid will be incurred throughout the remainder of 2021.

Finally of these implementation costs €43.3 million were paid out in the first quarter totaling to €77.4 million so far. The balance will be paid out through 2021 and early 2022.

And with this we have now finished the presentation and are ready to take any questions you may have.

Hi, thank you. Just two questions from myself.

Number one, Luis, if I heard you correctly you were mentioning the integration of Altea and Navitaire earlier today. Can you expand on that a little bit?

What are you -- I guess how much are you integrating those two platforms? And what are you trying to achieve with that?

And then second question for Till, on the cost savings on how much is actually paid out in cash. You mentioned that the balance of the payments to happen throughout 2021 and into 2022.

Could we be assuming roughly €30 million to €40 million per quarter or so in cash payments and for the program cost? Thank you.

Okay. With regards to the integration, I mean this is not new.

We have been always working in how the two platforms can optimize the fact that some airline growths are far in different airlines using different systems. And what we always want to do is when we have -- I mean imagine whatever disruption or there is a change from one system to the other, it can happen in a better way and information can be handled at group level.

So again, it's not new, but we continue evolving into optimizing that in a better way for -- especially for the groups of airlines. There are many groups around the world as you know that they have full-service carriers and low-cost carriers.

And in some cases using both systems. So for us it's important to provide a good integration between the two systems that has been about during the last years.

Taking the question in terms of cost-saving payout and cash flow. So.

to date, we've paid out €77 million roundabout with about €43 million in the first quarter. So, you've got in essence as a balance kind of about €120 million left.

Again, the majority I expect to be paid out in this fiscal year so in 2021 with maybe a little bit less for 2022. So, you can assume kind of a relatively even phasing more or less on the payout of that kind of call it about €40 million roundabout in the quarters to come.

Okay. Thank you.

We cannot hear you, Stacy. I don't know if you are muted or...

Is this better? Can you hear me?

Hello?

Yes. Yes, we can.

Sorry. So a few quick questions from me.

Do you think that the travel recovery is in line with your expectations to the degree that your cost savings plan is definitively sufficient to carry you indefinitely forward? That's one.

Secondly, as always I'm interested in your pipeline on the hospitality side. And perhaps if you've seen any change in the competitive environment there or perhaps your relative positioning?

And then third question, just around the Microsoft partnership. Can you remind us of the timing for that and sort of savings that you expect to achieve from that over time?

Let me start with the first two and then Till, if you can handle the third one. I mean last year I mean how we have seen the industry evolving, I mean look last year we were a bit more optimistic about the recovery.

We thought it would be faster when we were thinking about that in October of last year. So the situation was worse at the beginning of the year.

Then we adjusted our expectations based on IATA and the situation that was happening there and especially now with the latest release. In terms of cost savings, mainly no, it's what Till has explained we keep the commitment of the €550 million structural costs.

It is true and Till also mentioned that for the part that we expect to come back, which is related to things like travel or discretionary cost that should come back. Of course, this will depend on how things evolve.

Again, our assumption today is that the recovery will happen especially in the second half and therefore that's why we expect some of these costs that in the first quarter and last year was not happening, but this was already part of our equation with a net of the €550 million. We were assuming that part of this cost will come back and they were not in the first quarter.

So that's why we expect to achieve the structural cost as we have committed. And in terms of discretionary cost, some of them will come back.

Of course, if the situation is not improving as we expect then these discretionary cost will not come back as expected. But today our assumption based on the projections and based on the latest information of the industry is that the recovery should happen.

And therefore, we will stick to the numbers that we have provided. Second question about hospitality.

I mean, again as you mentioned, you always ask and I always answer similarly. I mean of course, we have a pipeline.

We expect to really be able to keep the momentum of this business and to sign additional contracts. And we keep engaging conversations with customers.

But again, difficult to really tell you more than that. I think it's a healthy pipeline.

We are optimistic about this business. And hopefully, we will keep signing and enlarging our hotel portfolio of customers in our different products.

More than that I mean it's difficult to really provide you with more information about the discussions that we are having today with customers. And with regards to savings and Microsoft, Till, would you like to talk about that?

Yes. Just quickly on the Microsoft deal.

So we are progressing well in terms of going ahead. Just as a reminder the time line of the whole implementation of the Microsoft deal, so the yes part the actual migration to cloud, we said three to five years.

And we also -- look there are efficiencies that we are benefiting from due to this migration. Those efficiencies as we said before we would like to reinvest into further growth.

So that's our plan on that end.

That’s great. Thank you.

Hey, good afternoon. Thanks for taking my questions, Luis and Till.

I'll go for three as well, please. Maybe just first of all, you mentioned on the GDS side that the cancel -- the change in the cancellation provision helped offset some mix impact on the price per booking there.

Could you maybe just give us an order of magnitude and any idea of what that price per booking would have been absent that cancellation change? And then if we just think a little bit longer term, we have a lot of discussions with investors around the airlines using this as an opportunity to renegotiate.

I know a lot of what's changing in GDS is tech-driven and not business-driven. But I guess the airlines won't ignore the opportunity to try to change things.

In the negotiations, you've had so far is there anything that makes you think that when we come out of this the price per booking in GDS will be materially different from where it is now? And then maybe just finally, a little housekeeping one.

How much government benefits support was still in the first quarter of this year that may fall out in following quarters? Thank you.

Let me take the first one. Absolutely, the GDS one in terms of the cancellation provision.

So you did see in fact a positive evolution on the distribution revenue per booking of 7.8%. Now as I said, there was a positive benefit from the cancellation provision movement.

Remember, last year we obviously built it up because we were seeing in essence the start of the pandemic coming. However, even if you exclude this cancellation provision positive in it, we would have still seen a positive evolution in our revenue per booking.

Hence it would have expanded. The reason or the drivers for this expansion in our revenue per booking is in essence a positive impact from non-booking revenue, which declined at a slower pace versus booking and that was driven by subscription-based revenues that we've got in there as well.

The second one that helped us on that line was an increase in non-air booking pricing. There's a little bit of mix shift in there.

And then of course, you had the negative, which is pretty much in line with the market, which is coming from the higher weight of local bookings. Net-net excluding the cancellation provision we would have still seen or we are still seeing a positive evolution on that at the moment.

Let me take the second one, Adam. I mean, look, we don't expect medium term a fundamental change.

Of course, short term yes, because of mix where you see more local and domestic bookings. Of course, this has an impact definitely.

But if you were thinking or you were talking about the negotiations on the fees of the different areas. I mean of course, you have different negotiations with different airlines as we have always had during many years.

But I don't expect a significant savings coming from that as we have seen in the last 10 years, okay? So not really coming from that.

And the mix effect is the one that could impact us depending on how the evolution comes. And the third question?

The third question on benefits from government support. In essence, we still have got a number of schemes in place that support us on -- it's basically research credit that assist us on the tax line that is why you see them as basically an income coming through.

So those have been in place previously and they are still in place in the first quarter in essence in this year. So no change, if you compare that from a say year-over-year comparison.

But again as Till said, this is coming from many, many years. I mean this is -- all these research tax that we got mainly in France it's not new at all related to the pandemic.

What we had in the pandemic last year was some delays of payments in social securities, but this is over now as we pay these amounts the majority of that in the last quarter of last year. You correct me if I am wrong.

So there's nothing new coming from subsidies from government related to COVID or something like that at this point no.

Thank you very much.

Hi. Thank you very much indeed for taking my question.

I just have a few quick ones if I may. Just on the back of your response to the last -- the first of the last questions from Adam.

Can you give us a sense of what proportion of the distribution revenues are subscription based and not transaction-based please?

Okay. Do you want to first go with your other question?

Okay. Sorry, the other questions are if you -- Luis you spoke a moment ago about the potential to essentially have on a common platform Navitaire and Altea.

And you mentioned that many of your customers essentially are operating both a low-cost carrier model and the network carrier or full-service model. I just wondered to what degree are you facilitating the airlines to move and make much greater use of Navitaire in place of Altea, and therefore, effectively you're opening the door to PB price deflation as the market recovers.

I mean you may have no choice in that regard, but I just wonder whether that's likely to be a significant headwind in the future. And then just finally two very, very quick ones if I may.

You mentioned in the press release the 198 airline IT customers active but 208 signed. I just wondered if the remaining 10 how significant they are in size and then they feed through onto the platform?

And then very finally market share. Clearly you are slightly disadvantaged at the moment because of your very high weighting of bookings in the European market.

So on a global basis, you probably lost share if that's the measure. But I just wondered if you could comment regionally about your view on the share gains or the share performance that you will have had in the different key regions that you operate in?

Thank you.

Let me make a couple of comments and then Till you cover the rest more about the sales. I mean, look I did not explain well what I was referring to with Navitaire and Altea.

We will not have a common platform. I mean, we have two different platforms with two different solutions with two different segment of customers.

What we are trying to facilitate is the groups of airlines where there are some capabilities that could be better integrated between the two platforms, which is not at all the same as having the same functionalities in the different platforms. There are some coordination and some links between both of them that can facilitate for the airline groups to really work in a better way, but it's not at all our intention to really have two platforms that are similar because they have different segments, different capabilities and we will not move into that logic.

So we don't expect really that customers are using Navitaire instead of Altea. I mean they can do that depending on their needs.

But what we have seen is probably a bit the contrary. Airlines that are becoming, low-cost carriers are becoming a bit more sophisticated and need more functionalities.

And of course we need to really improve the capabilities of Navitaire. But at one point Navitaire will not be able to really solve the needs of complex airlines because of that we have Altea.

And with regards to the mix of regions, I mean it's not just regions you have within the regions also impacts. I mean we can take an example like firstly, of course, the weight of Russia is important.

So it's -- I mean there is a lot of mix. It is completely true.

The biggest one is the North America evolution because this is by far the best region in terms of performance or short-term. Clearly you are right.

We are impacted by that. But we don't see -- and of course then you have the mix of online versus off-line, the corporate evolution.

So today it's quite difficult to really have a full understanding of how things are evolving, okay, because it depends a lot on the evolution of domestic business non-business. All I can tell you is that we have good track commercially.

And there is not at all any loss of share okay related to commercial underlying performance. But, of course, you have all these mix effects mainly being the biggest one the North America evolution versus the rest of the world that we expect when Europe recovers to really be on the other side but still there is a big difference between the two regions.

Just a brief answer on your question. Look just quick I don't have the exact figure in terms of the split at hand.

But what I can tell you is that our revenue per air booking declined by a single-digit percentage relative to prior year, but I don't have the exact split in terms of that at hand.

That’s it. Thanks very much.

Thank you.

Thanks. Two for me.

Just in terms of the recovery, I think you alluded to IATA's forecast that they're expecting next year domestic activity to be back a little above 2019, but international to still be around two-thirds of those levels. And we're talking about the bookings fee here in relation to distribution.

Clearly home and away bookings are not quite same as the domestic and international, but they're pretty closely related. Can you just give us any feel for if IATA is right that next year domestic has recovered but international is still 30% plus down what that would do to your average booking fee on distribution?

And then just Luis on the pipeline in airline IT, I think the Wall Street Journal published something about 90 airlines new low-cost carriers starting up. Could you talk about your expectations for new signings on Navitaire, or how well do you think you're positioned to win some of these new carriers?

And then actually just in line with that as a third follow-on. What's your willingness to consider M&A now?

Do you feel that the worse is clearly past us and you could be opportunistic, or do you want to see some more proof point? Thanks.

Let me take the first one then in terms of the -- just the recovery in the domestic and international part. Look I won't give you an exact figure but let me talk to a few trends in that.

I mean first of all I think we are pretty positive and optimistic on the recovery of the domestic travel that we see right now. That is obviously great.

Now if international traffic is still basically lagging a bit behind due to simply change in or it takes longer until travel restrictions are lifted, it's true. You are going to have a certain impact simply from -- there's a certain correlation between the domestic travel and basically the way we -- the local bookings.

But remember we are charging based on point of sale. So local bookings, regional and global bookings.

The key point I would like to make is -- and you can do that also mathematically. In a situation where volumes are actually relatively low, the change in unitary pricing for mix effect is actually fairly limited, because the greater portion of the impact is in truth purely coming from the volume side.

So in that regard, yes, it's true. A local booking incurs a lower revenue per unit.

But at the same time the effect of it, in terms of volume and price/mix, in an environment where overall volumes are depressed is fairly limited.

Sure, Till. But for next year if domestic is 100% of 2019, I mean, we're not dealing with a low-volume environment.

It's not so much now, than next year.

True. If you assume, that out of a sudden the volumes are coming back and you've got a shift from your historic mix, which was 40% domestic and 60% international to 100% domestic then of course the price effect is greater.

But the question is, -- this is a -- I don't expect this to be a likely scenario, because if you look at the IATA forecast, it equally -- the recovery on the international travel, I think will equally going to come through.

Okay. Look, let me talk about, a low-cost carriers.

It's -- I mean, of course, we try to get as much as we can. Of course, we will have competitors.

But as you know, we have a very strong solution with Navitaire. We have been able to get customers in the past.

We will not get all of them, but we are pursuing as much as we can, any new company or any low-cost carrier that appear everywhere. So hopefully, we will see some additional customers coming to our platform.

I mean, it's difficult. We feel well positioned with a very good solution.

But it's very difficult to really be more concrete about that. And with regards to M&A look, we are always looking into possibilities to accelerate or to enlarge via M&A our strategy.

It is true that, okay, with the current dynamic, we have not pursued that for sometime because of course, we were very focused on cost. We continue analyzing opportunities.

And we need to balance between of course being very, very careful on the cash front. And at the same time seeing, if there are good opportunities at the right price and that fit with our strategy.

I mean, the reality is that, independently of the fact that, okay, we haven't found anything concrete, that we'll tell you today. I mean, prices are pretty high, as we speak despite the crisis.

As you know the multiples and the company's values are high. So we will -- if we go ahead with any of M&A, we need to really be sure that, we can create value.

And pay the right price for that. So M&A will be part of our future strategy and growth.

The answer is, yes. But then, we need to see the right company, at the right price, and as we have done in the past.

So nothing different from the past and we will see what is available.

Okay. Thank you.

Hello. Thank you for taking my questions.

So three, if I may. The first one, can you comment on, your new businesses, in terms of trading, namely the part that's more U.S.

exposed? The second one more related, [Indiscernible] recovery, what's your expectation in that in the €100 million to €120 million working capital improvement, you mentioned for the second quarter, or asking another way, do you expect a materially different bookings catch-up in Western Europe versus the U.S.

as we have -- we see progress in vaccination? And third one, in terms of recovery of corporate versus leisure business, how are you seeing things on both sides?

And over the long-term what do you see as potentially declining mix in terms of opportunity for you, are perhaps having?

Okay. Let me take -- start with the first one.

I don't know if I got all the questions the sound was not very good here. But okay, look with Hospitality business the new businesses the different areas, that we consider new businesses are doing better than our air business, because it's two reasons.

I mean, it has been more resilient. We talk about airports, we talk about hospitality.

Secondly, I mean the hospitality being the biggest one is more weighted in the U.S. than other parts of our businesses.

So both effects and both factors have played in favor. And therefore, the impact of the pandemic has been much lower in the new businesses than what we have got in the more air-related piece.

And again, we expect this to continue. This business had an underlying growth, before pandemic that was faster than the rest of the company.

And with a combination of faster growth and less impact of the pandemic they should represent at least for the coming years, a higher weight over the total company.

Let me take the second question, in relation to working capital. Let me just clarify.

In fact what I was saying earlier is that, I do foresee in the second quarter working capital outflow of €100 million to €120 million. That is just to remind you, very much in line with seasonal working capital movement that you have seen also in prior years, that relates to employee-related payments that typically fall into the second quarter and also some differences between collections and payments that I forecast for this quarter to come.

Of course, it does include as well the implementation cost, payouts, that we are having in the second quarter. So I just wanted to explain that, after the first quarter where we had in essence, including the implementation cost payments a cash outflow of about minus €12 million, that the second quarter will be more negative, okay?

That was just the context that I wanted to provide.

And I couldn't get the third question, if you don't mind to repeat it, please?

Yeah. [Indiscernible] related to the second one.

I meant to be -- to say outflow of working capital. But the question is a significant part of your working capital is of course related to bookings.

And if we see a good outflow working capital in the second quarter, we're probably going to see a step up in bookings. And my question related to this would be, if we can expect a materially different ramp-up in bookings, in Western Europe versus what happened in the U.S.

Or are you seeing a similar pattern in both areas? And the fourth -- and the third question, was related to, corporate versus leisure.

How are you seeing the recovery in both sides? And over the long-term, what implications you have a different mix, from the one we had in 2019 to your business?

Okay. Let me come back to the working capital question.

Here you need to distinguish between two different or two opposing trends, literally. If you look at the trading-related working capital, in actual fact, I do expect as the business resumes a positive working capital movement, a working capital inflow because that's the way our payments and our collections work, okay?

So that is point one. Positive, if the business evolves positively, okay?

Nonetheless, I am guiding and I am saying that we are going to have payments to be done in the second quarter, which result ultimately into the negative working capital movement. And again, this is very much in line with what you could see in prior year's second quarter.

Does that answer your question?

Yes. Thank you.

As you were mentioning about corporate and leisure, I mean look, the first recovery has been much more on leisure. We see some recovery also on the business side.

So short term, I mean again, we expect leisure to be faster than corporate. But at one point, as the situation improves, we also expect corporate to really come back.

And if we think about the medium term, I mean as you know, the important piece is more related to – in case of our figures, it's more related to the mix effect of domestic versus international has an impact in our P&L more than really a leisure versus business, which overall, I mean as you know that's not the way we price our volumes in distribution and in airline IT. It's quite similar in the way we have our PBCs independently of the kind of booking that we have.

So of course, you have then the cost related to that P&L-wise. But the pure mix of business versus leisure in general terms should not have an impact on our economics okay?

It's not related to the mix effect of regions. It is a general statement because of course you have different regions around the world, different conditions, different pieces in the equation but overall that's the case.

Okay, Luid. Thank you very much.

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

The first one on the airline side. I think there's a lot of focus around the market at the moment on airlines in cost-cutting mode, naturally given the distress of the sector.

But from what you've touched on clearly, there's a lot of focus on structurally higher revenue quality going forward. So I'd love to understand, your pipeline of airline IT projects, whether they be NDC-related or other revenue-focused projects.

Is that pipeline value higher or lower than it was 12 months ago? Then the second question on the hospitality side, remembering all the way back to 2016, which feels a long, long time ago.

You dwelled on network effects as you build scale in the hospitality side of your business. Could you please update us on how far away you are from achieving optimal scale in your key business lines within that area with a view to ultimately I suppose maximizing functionality for your customers?

Okay. Let me start with airlines.

I mean look when we develop solutions, we try to address both. There are some of our functionalities, especially when we talk about merchandising capabilities or NDC that are more related to the possibility of the airline to really increase their revenues.

But we also have a lot of functionalities in many areas of our portfolio that are related to optimizing and automate the way the airlines are handling the costs side. So we try to have a value proposition that can address both areas because we cover the spectrum of solutions for the airlines.

So this is what we offer. Of course, part of our portfolio again, not just on the BFS but many of our different solutions are addressing both needs.

I mean and – okay, we can go through – I don't think it's the time to really go through the details of each of our solutions but we address both. In terms of hospitality, well it depends.

Our size is pretty big already for that business. It's not a small business but it depends on the products.

In some products, it's much more mature than others. So we have enough scale in many of them.

We are still – for the top 10 – for the top 10 CRS, we expect to get more scale. This is more of our newest product.

Also for the PMS part, where we have already customers, but we expect to really get more volume, more customers and more scale for some other parts of our functionalities. I mean the scale is big enough.

So I will not talk generally, but hospitality again, as we said I mean our expectation is that this business should grow in the years to come. And again the maturity of our solutions is not exactly the same.

We have many solutions on that front. Some of them are more mature than others.

But we expect all of them to really keep growing in the years to come.

Thank, Luis. And just on the CRS point that you make there, do you have any latest thinking as to when that scale is actually optimized in terms of time line?

No, it's not a matter of optimization. It's a matter of getting additional customers more for the high end than what we have today.

So hopefully, we will be able to really get incremental customers on top of what we have today. So it is of course, our goal to really provide that on top of the fact that we have a CRS solution more for the midsize or independent properties.

Thank you.

Hi, good afternoon. Thanks for taking my question.

I have two clarifications actually. Luis, I think you said in your prepared remarks, you were confident in the group's ability to gain share as the industry continues to upgrade to NDC.

I was just wondering what part of the business you were talking about. Is it mostly on the distribution side or on the IT solutions side?

And perhaps, if you've got any proof points that you could share with us on this. And my second question or clarification is on your answer to the M&A question, because I was under the impression that in the past you had this very strict net financial gearing target of 1.0 times to 1.5 times net debt to EBITDA and obviously, we're going to be quite far from that for a few months.

So just wondering has the pandemic changed that target and we could have M&A in say the next 12 months.

Look in terms of NDC, I mean, it's important for both of our businesses, okay, for airline IT and it is for distribution. Our confidence to gain share is not just based on NDC.

It's our goal in the different businesses. NDC is an important trend, where we all need to be for the future improvement of this industry, and we have been investing.

We believe we have good capabilities today. We are reaching agreements with airlines.

And therefore, we feel that if -- okay, this should give us another angle to really increase our share on top of the rest of the angles which are related to the content the service the additional functionalities that we have in other areas. So I will say, yes, our goal to really keep increasing our competitive position is there.

And NDC is an element that is relevant today, but it's not the only one. And again, it's not just for distribution, which will be important it's also for our IT solutions that we need to provide this capability.

With regards to the capital structure, no, it's not that we are changing the objective. It's not that we are planning to really move differently.

Related to the question, I mean, is the fact that we have the right opportunity at the right place. Hopefully, we will recover this ratio faster than expected due to the evolution of the industry.

But I mean look if we find the right opportunity and we can justify that in terms of value creation, we are not going to wait until we reach that level to really go ahead with any M&A. But it does not mean that we are going to enter into an M&A that is going to bring us to whatever levels of leverage.

So we need to find the right balance between opportunity and leverage. But of course, our objective is to come back to rational and reasonable levels as soon as possible of course.

So it's not that we are planning to change this target. Of course, we'll need to have a discussion at one point more related to that at Board level, but our objective today is to come back to leverage levels as soon as possible, but if there is an opportunity related to that of course we will need to consider.

That's the point, but it's not related to the fact that we plan to really spend that money, I mean, look it's like we have done in the past there is no change with that.

Got it. Thank you very much.

Yes. Hi, everyone.

Good afternoon and thank you to taking my questions. Most have been asked, but two quick follow-up.

Will it possible to remind the proportion of corporate travel in your revenues in 2019 on the proportion of domestic versus international flights? And we see a lot of corporates now communicating on economy of costs related to corporate travel.

Some speak about minus 30%, minus 50% in the long-term. Does it question the long-term growth of the air traffic, or does it question the proportion of international and corporate travel in your mix?

Thank you.

Let me talk at high level and then Till if you can sort the figures. I mean, look it's difficult to really project what may happen.

I mean, if you see the history always when there is a crisis, and I know this is a bit different, but you can see in all the crisis that we have had, I mean, business travel recovers slower than leisure travel. And every time this happens we always think that corporate travel will not come back.

Long-term I believe it will, but okay, let's see. I may be wrong here, but I believe people will continue traveling and coming back, but leisure by all means will recover faster as we have seen in the past.

Again, what is important is the total volume. So if leisure grows faster than corporate, okay, at the end what counts is the volume and volume should come back at one point.

And then we'll need to see the mix, but again, I mean, look when we see figures in some countries it was more related to domestic, okay. But in domestic when we see the recovery that has happened in some parts of the world, I mean, it's both corporate and leisure okay despite what I said before.

But it cannot be just the figures we see in domestic that was just coming from the leisure piece. I mean, the business part is also part of the recovery in the US, in China and in markets that are big domestic and we have seen a recovery, because in the rest of the world still the figures are pretty low.

Yes. Just adding a few figures to that, look in 2019, so pre COVID-19, we had 40% domestic and 60% international traffic.

Last year that ratio actually flipped to 60% international and 40% domestic.

60% domestic.

Sorry. So 60% domestic and 40% international exactly.

And now in the first quarter there was a slight increase again of the domestic side. If you now think of the channel and the bookings 30% of the bookings in 2019 were coming through the corporate travel agencies.

In the first quarter this has dropped a little bit to about 20%, but I think the important thing what sometimes is not that appreciated is that actually the TMC volumes or the corporate travel agency volumes have got the highest proportion of domestic travel in there, which is an interesting one to note. Thank you.

So, thanks a lot again for joining our call, and looking forward to the next one for the half year results at the end of July. Thank you very much.