Amadeus IT Group, S.A.

Hello everyone, and welcome to our second quarter results presentation. Thank you very much for being with us today.

Till is here with me, and as useful, I will focus on our most important developments in this quarter until we elaborate on the key financial aspects. So, let’s just start with an overview of our results in the quarter.

In the second quarter of the year, our group revenue amounted to €624 million decreasing by 56% with respect to the second quarter of 2019 of unseen from the evolution we saw in the first quarter. This progress is driven by improvements in our volumes evolution, coupled with cost efficiency, supported EBITDA generation.

EBITDA grew in cost savings implementation costs expanded to €145 million in the quarter also comparing favorably to last quarter result. Free cash flow performance amounted to a €79 million cash outflow in the second quarter excluding cost saving program implementation costs paid, impacted by unexpected working capital effect.

For the first six months of the year, we have had a minus €47 million free cash flow results. Supported by further volume progress, some positive working capital dynamics, we expect free cash flow generation to continue to stress in the second half of the year, Till will explain later.

We had an adjusted profit loss of €24 million in the quarter, also demonstrating a positive trend from prior quarter. Finally, or cost optimization efforts continued to yield results and will accelerate our profitability and cash generation as volumes recover.

In aggregate to date in the year and compare to 2020, our total fixed cost reduction amount to €168 million. We will go to the next slide, Slide 5 for a market update.

Throughout the second quarter our volume performances continue to improve with acceleration in the month of June, the best performing month to date since the start of the pandemic. Our travel agency air bookings declined by 67.6% in the quarter compared to the same period in 2019 have unseen from the minus 79% reduction that we saw in the first quarter.

For the first six months of the year Amadeus air booking growth rates versus 2019 gradually improve its months with a step up in the month of June where our bookings declined by 58.7%. By regions, North America continued to be the best performing geography followed by our Eastern Europe region, which includes Russia.

All regions saw the improvement in volume performance in the second quarter versus the first quarter with the most notable advances taking place in North America followed by Western Europe. In the second quarter distribution revenue declined by 66.4% versus 2019 progressing with respect to this minus 77% revenue evolution in the first quarter.

Our passengers boarded contracted 67.7% in the quarter compared to the second quarter of 2019 representing an improvement over the minus 71% growth we saw in the first quarter. Monthly grow rates versus 2019 improved sequentially through the quarter most notably in June, where passengers boarded decline by 63.4%.

Our best performing regions were North America and Latin America. In the second quarter, led by North America across the board practically all regions reported improvements in the passengers’ boarded performance, relative to the first quarter’s evolution.

IT Solutions revenue contracted by 42.8% in the quarter versus again the period of 2019. These results are continued improvement over prior quarters were supported by revenues across our business portfolio, not directly linked to airline traffic or not driven by transactions, particularly in the area of Hospitality and Airport IT.

Most recently in the first half of July and compared to the same period in 2019, in relation to our bookies, we saw an evolution that remained very much in line with evolution in June, despite some changing mobility restrictions in different geographies. With respect to passengers boarded, we saw relevant uptick in the first half of July compared to June, as this was seen across regions led by Western Europe and North America.

To recap on volumes, I would like to say that we see clear demand unintentional to travel as travel restrictions on quarantine’s required months are lifted or loosened. We have seen some progress to date in volumes, and we are optimistic that the vaccination programs advanced across the world and travel protocols and rules of the world should translate into a more consistent on stronger recovery over time.

In addition to this, I will add that we continue to see commercial momentum in our conversations with existing and potential new customers and the business policies growth. Please turn to Slide 6, give you a business and corporate update for the quarter.

In the second quarter of the year in distribution, we signed 16 new contracts of renewals of distribution agreements with airlines, including Virgin Australia amounting to 37 signatures in the year-to-date. We continue to make good progress in relation to our NDC strategy through agreements signed on the airline front with United Airlines, Qantas, Qatar Airways, LOT, and Kenya Airways as well as on the travel agency side, with ticket.com in South East Asia and Seera Group and Sharaf Travel in the Middle East.

In relation to Airline IT, we have a number of developments. LOT Polish Airlines signed a renewal agreement covering a wide range of a state-of-the art solutions related to passenger services, airline operations, revenue management, merchandizing, passenger disruption management and digital experience.

Vistara, the Indian carrier, contracted for Amadeus Network Revenue Management. Nordica, a small Estonian airline, contracted and implemented the full Altéa PSS suite, as well as other solutions.

Air Burkina implemented the Altéa PSS and will implement Amadeus’ Digital Experience Suite. Uganda Airlines implemented Altéa DCS and additional solutions, while finally Breeze Airways in the U.S.

implemented Navitaire New Skies. In Hospitality and in Airport IT, we continued to renew contracts and to grow our respective customer bases.

Evolution in hospitality, commercial activity included Marriot, signing for an expansion of our partnership by adding Demand360 business intelligence solution. Also, Swire Properties Hotel Management, Siyam World and Millennium New York, signed for Amadeus Digital Media.

Shiji, a leading hotel information systems player in China, has partnered with Amadeus to add hotel accommodation options in China to the Amadeus Travel Platform. In Airport IT, Pristina International Airport will automate the check-in and bag drop processes with Amadeus’ solutions.

In the U.S., Syracuse Hancock International Airport contracted for ACUS. Also, Kansas City International Airport contracted for Amadeus Biometric Solutions and Pittsburg International Airport signed for the deployment of FIDS.

Finally, from a corporate update perspective, we welcome their bank commissions, the [indiscernible] on this month to close the investigation into our agreement with travel agent underlines open in November, 2018. I will now pass on to Till for further details on our financial performance.

Thank you, Luis. Hello everyone.

Please turn to Slide 8 for an overview of our revenue in the period, as Luis has explained, our group revenue declined by 56% in the second quarter of 2021 relative to 2019. This evolution represents an improvement over the first quarter performance and resulted from distribution revenue declined by 66.4% second quarter of 2019, this was driven by the lower volumes in 2019.

Distribution revenue per booking diluted, impacted by negative cancellation provision and local booking weight effects. These impacts were partially offset by contractions.

Other revenue lines, such as revenues from travel agency IT Solutions at softer rates than the travel agency bookings decline. IT Solutions revenue decreased by 42.8% versus 2019 driven by the lower PB volumes and in 2019.

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 note the following with respect to our unitary revenue metrics.

In the contraction, our quarterly distribution in IT Solutions unitary revenues that is Distribution revenue per booking and IT Solutions revenue per PB are distorted by the lower than usual volumes and by other factors, such as the revenue mix from different businesses. The different evolution of transactional versus non-transactional revenues or of revenues linked to air traffic versus non-air traffic linked revenues.

As volumes continue to advance towards 2019 levels. We expect our unitary revenues to trend to 2019 levels.

During this period, our unitary revenue metrics will continue quarter-on-quarter impacted by the effects mentioned. For 2021, we expect dilution and Distribution revenue per booking relative to 2019 levels, driven fundamentally by the booking effect.

We expect this Distribution revenue per booking dilution to likely be in the single digit percentage range. And we expect the revenue per PB, which remains abnormally higher at the moment to expand less in relation to 2019 in the following quarters than I did in the prior quarters.

As PBs continue to grow and non-transactional revenues or revenues not linked to air traffic are not impacted by this PB growth. Please turn now to page nine.

In the second quarter of 2021, our EBITDA excluding implementation costs amounted to €145.3 million a 75.3% contraction versus the same quarter in 2019. Resulting from the combination of the revenue decline just explained a 72% cost of revenue reduction, pretty much linked to the booking volumes evolution and the 19.4% decrease in our combined personnel and other operating expenses cost line supported by our cost efficiency plan.

Below EBITDA, in the second quarter D&A expense declined by 33.1% relative to 2020 resulting from less PPA amortization and no impairment losses accounted for in half one, partly offset by a small increase of 5.3% in ordinary D&A. Despite an increase in interest expense driven by the new financings in 2020, net financial expense declined slightly by €0.4 million compared to 2020 due to a reduction in exchange losses.

Income taxes adjusted for the tax impact from the cost saving program, implementation costs amounted to an income of €11.4 million. The group income tax rate was at 28.0%.

Supported by the EBITDA evolution, adjusted profits improved to a loss of €23.6 million in the second quarter of 2021. Turning to page 10, to review our cash flow evolution.

Let’s start this CapEx. In line with our cost optimization goals, CapEx declined by €50.3 million or 19% in the first half of the year versus the same period of 2020 on the back of a lower CapEx on intangible assets and a reduction in CapEx on property plant and equipment.

The decrease in CapEx on intangible assets over the first half of the year was mostly due to a lower capital – due to lower capitalization’s from software development resulting from a 23.4% decline in R&D expenditure, where we followed a selective approach and prioritized our investment into the most strategic projects. Free cash flow in the first half amounted to an outflow of €47 million excluding cost saving implementations cost paid.

This performance was mainly driven by our EBITDA evolution, the reduced CapEx amount relative to last year and the cash inflow from change in working capital. Free cash flow in the second quarter, deteriorated versus prior quarter as expected impacted through working capital by scheduled personnel related and interest payments in the second quarter, as well as timing differences between collections and payments versus revenues and expenses accounted for in the quarters.

We foresee that free cash flow generation will improve in the third and the fourth quarter of the year from the second quarter. And the second half of the year, we expect free cash flow to be positive, excluding implementation costs and based on further volume performance progress.

Please turn to page 11, to review our fixed cost optimization progress. In the first half of 2021, we achieved a fixed cost reduction relative to 2020, together in the P&L and in capital expenditure combined of €167.9 million.

As explained before our cost savings definition refers to the change in costs, excluding cost saving program, implementation costs and bad debt. This fixed cost reduction is according to our plans and it supports our confidence in achieving the €50 million and cost efficiency target.

We’ve set ourselves in 2021 – over 2020 and achieving the €550 million cost saving versus 2019. Going forward as per our plans in Q3 and Q4, we will allow for some discretionary costs to increase, compared to these quarters in 2020 related to salary increases, no more voluntary leave, leave programs as we had in the last year amongst others.

So please note that for the next quarter, you should expect higher P&L costs that – 2020 and broadly stable CapEx relative to Q3, 2020. With regards to the broadly €200 million of implementation costs related to our cost saving programs.

We estimated, when we launched them in the first half of 2021, we incurred into implementation costs amounting to €25.6 million, thus totaling to €194.8 million incurred to date. The balance to the expected total €200 million will be incurred throughout the remainder of 2021.

Finally, of these implementation costs €74.8 million were paid out in the first half, totaling to €108.9 million so far. The balance will be paid out through 2021 and early 2022.

With this, we’ve now finished the presentation and we are ready to take any questions you may have.

Hey Luis. Hey Till thanks – for the questions.

I’ve got two please. First was interesting to see the lot deal, maybe around that you could just talk more generally around what the appetite is and engagement you have with airlines around, not only renewing, but also that big broadening of the PSS and whether it’s LOT specifically or more generally it looks as if there’s a decent uplift there as they take a lot of the new products that, that you have on offer.

It’s been a – there’s been a big progress since the last couple of markets in terms of the breadth of that. Could you may be just remind us, how big given uplift do you think that could be for an airline that goes from reservation inventory to taking that much broader portfolio in terms of revenue per PB?

That’s the first one. And then just secondly, on NDC, I think we always have a lot of discussion around disruption that could cause and change, but it looks clearly as if there’s opportunities for you around IT Solutions without have NDC to bring a lot of value and help airlines and travel agents construct offers.

Could you maybe just talk a little bit again in the context of what you’re making with an existing airline with travel agents today, if you – if they took a broad NDC offering from you, again what kind of uplift you could get from that process? Thank you.

Okay. Hi Adam thanks for the questions.

Okay. With regards to renewals and negotiation of course, in any single renewal discussion that we have with all our customers we don’t limit the discussion to the current portfolio of solutions, but of course we are looking for [Technical Difficulty] for negotiation to really convince our customers to take a broader scope of solutions.

And this is the case of law, but I will say it’s often many, many cases. Okay.

It’s not just a LOT, but in many cases is there – it is an important milestone to really have this discussion. So overall, we feel confident that we have opportunity to up-sell it’s not the same for each airline for many reasons on the one hand, many airlines already taken an important part of our portfolio, and therefore the upside would be less.

Other airlines are coming from just the core PSS. And therefore there opportunities of up-selling at that moment, but I have reported before their airlines are taking our revenue management, our digital suite and other parts of our portfolio later.

And we continue pushing for that. When you talk about appetite, I mean, again, it’s very difficult to generalize, but I believe in general terms our customers are open of course, after working with us to really consider, additional functionalities that we can offer to them.

And again, I mean, as you can imagine this part of our goal to really keep up-selling and including more functionalities as part of our relationship with them. So, more than talking about the specific cases, I will say that general trend is positive and overall we see an increase of our up-selling capabilities with our careers.

With regards to NDC, I mean, again, difficult to really talk about the specific agreements we feel NDCs here to stay. As you know well, we have been engaging with airlines central agencies is to really allow this capability to be part of our negotiations on the market.

We continue signing deals with airlines. This is part of overall negotiations with them and it can be on any fact [ph] or NDC and therefore we are included NDC as part of the discussions.

And again integrating travel agencies remaining volume basis, improving our technology, allowing them to integrate in a way that can be valid for the airline industry and economically viable, and we are pretty pleased with this evolution, and we consider that we have the capability and the technology to remove this process for well. Therefore for us is good.

I mean, as you mentioned, it’s not just about the GDS space, so the distribution space, that also on the IT products. And we provide technology to really implement this technology on both sides.

Therefore yes, I mean, as far as we can provide this technology is an additional plus that we need to bring to the market and allow the airlines to really merchandise with their products in both the indirect channel and direct channels. So this should translate into more capabilities to sell more capabilities, to serve the travelers and in principle, on upside for airlines and an upside for the people that are providing this technology including us.

Thank you, Luis.

Next question or, there are no questions.

Yes. Hi, thank you for taking my questions.

So one quick follow-up on NDC, since you were already on that topic, what would you say is the customer penetration at this point? And do you think eventually everyone will go to NDC?

Is it that compelling or is that never really going to happen all the way? So that’s one.

Number two, can you just talk more about the reduction in R&D remind us again, what you’ve kind of taken out and maybe what you are prioritizing. And do you think that pushes out your hospitality plans at all?

And then third question, just from the competitive side, we didn’t hear that much from Travelport for a while, and then suddenly they seem to be coming out more aggressively as they kind of consolidate their customers onto a single platform. Do you see – are you seeing anything particular in terms of pricing or market pressure from them?

Okay, let me start with the last one. I always say, but that’s the reality of course, competition is there.

We respect them including Travelport and look, they will compete with us. They have done in the past.

This is our expectation. Yes, they have announced two things as you know, that they will engage with Amazon to really move to the cloud and then also move into the single platform.

But they also announced it will take some years to really go into that single platform. We know all these technology projects are complex, so it will take some time to really move there, but I will expect them to keep competing as they have done in the past.

We have less information, definitely as they are not a publicly quoted company any longer. So, we have less public information, but I will expect them to keep competing.

On the priorities of R&D, again, we have reviewed our portfolio. We are not reducing anything that we consider is fundamental or strategic for us hospitality being one of the cases.

So by no means we are pushing back hospitality. The same as NDC another areas that we consider are important, but we have also done a review of our portfolio.

And in some areas we have decided that, okay, this is not going to be so strategic moving forward, but again, it’s the normal portfolio review that we have done for many years and in this specific situation, we have taken a view of what will be fundamental for us in the future. And what are the changes that the industry may bring to us after this pandemic and therefore things that we consider are nice to have, but not so fundamental for us.

So, by no means as you mentioned, hospitality discussing but our hospitality business, where we feel quite confident and optimistic about our future. And with regards to NDC, I lost exactly.

What was the question? Yes.

This year NDC have to stay. Yes.

I mean, I think the NDC have to stay. Yes, as airlines going to move, look, NDC is providing new capabilities to the carriers that it depends how you want to use.

So of course, some carriers are more keen to move into that or faster. Of course, the bigger you are, the more capabilities you have to optimize the technology that NDC is offering.

So, some people are more keen of moving into that, but I will say we time NDC I’m probably with time will not be talking about NDC any longer. There will be new technologies that allows you to really met some days, but your product.

So look, NDC has been key out, for many years still the penetration of NDCs low. Okay.

Again, it depends what you call NDC, but the pure NDC integration and moving forever with, that worldwide is a still, I will expect this to increase in the years to come as technology evolves, standards are clearer and company like us provides the capability to integrate that in the proper way. So, I will expect this to increase what is going to be the speed per airline?

I think this is going to be independent of each airline, but I will say that technology that is allowing NDC in my view is here to stay, but it will take years. Okay.

It will take years to have the production and the penetration. Okay and worldwide.

Yes. Go ahead.

And Luis just to confirm, that is a value uplift for you as well from a pricing perspective a little bit or?

I mean, look it depends. Okay.

I cannot be very, very concrete about that. Okay.

So it depends on each negotiation is going to be different. We feel that NDC assignments could bring incremental volume.

Okay. In terms of, because look, one of the questions always is look how the indirect channel is going to offer a capability for the carriers to differentiate themselves and to really bring the offer.

Okay. You have always a direct channel and the indirect channel, I believe if NDC works in the proper way and allows the carriers to really merchandize their products and undifferentiated their products there is reason to believe that this cannot be done in the indirect channel.

I mean, as, this is not exactly the same, but similar to what we were talking about ancillaries. Okay.

Many careers at the beginning were posting for ancillary solutions in the direct channel, more than through travel agency. So the indirect place.

But then it become part of the alternative channels that, I think in NDC could be similar, if we do the right things, volumes that could be more outside of the channels should bring back to the channel because the capabilities will be there. So look, we don’t expect our assumption is that should be neutral, okay or positive for us in the medium term, not negative.

Okay, this is not our assumption. But then in terms of pricing, how you lead with that, I think it’s already difficult because look, we have individual negotiations, not just about NDC, but about the fact and as part of the overall negotiations, we are talking about these alternative technologies, look again, technology and the business model is not exactly the same.

Okay. And they are two different things, but as part of the rebate, we include now the capability to one of the volumes in NDC, and in 85 time, we did scarier.

The discussions are quite different, I will say, okay. For some carriers is neutral completely because they say, look for me, the technology is not changing the way I operate in terms of paying for the channels with other carriers they consider, we are talking all different things differently.

Okay. So it’s difficult to generalize, but if I talk about how we see that our sales, we are not assuming this will be the incremental to our P&L in the medium term.

Great. Thanks.

Yes, thank you. Good afternoon.

Two from me as well. Till just looking at the headcount trajectory, I think year-to-date, it’s down about 4% in terms of average employees, it’s down 2%.

So, we would expect in the second half that you’d see a cost benefit from that. I mean, firstly is that headcount now trough for the no more employees leaving.

And you talked about costs coming back in the second half. Can you sort of say, what it is that you’re spending on?

Because presumably the personnel costs will be lower. And then just around the, the airline IT install base, you’ve got 208 airlines contracted Luis, I mean appreciate there’s a bit of a status.

What airlines wait to see what happens is maybe a few bankruptcies. There’s a few small ones joining, but it doesn’t feel as though there’s really a dramatic change there.

Can you talk about what sort of level of engagement you have with non-customers that might drive that number up more meaningfully as we get into a recovery phase? Or is this still something, which might take quite some time to come to pass when are we going to see that number growing?

Thank you.

Well, let me start and then Till, you can cover the other part. I mean, look, of course we expect these numbers growing, it’s very difficult to really be very concrete.

As you can imagine, I tell about I mean, it’s our objective to really keep signing contracts with airlines. And we – are we engaging with them?

The answer is yes. Can we confirm when we will announce our contract?

The answer is no. But I really hope that this number will increase it’s our goal to really keep engaging and increasing, and it’s not about airlines waiting and see it’s about the process that it takes to lead for the airlines to take a final decision about moving and then their migration that they need to really face.

So, I will say, look we, have a healthy pipeline and of course we expect that some of these pipeline will become a reality. So more than that, it’s difficult to say.

What I can tell you is that we are engaging and engaged with customers as we speak. And I really hope that we will be able to really sign some of these contracts.

I mean maybe Luis, just a follow-up. Could you say quantum wise, are you in a lot more discussions today because of the crisis then say in 2019, when it was business as usual for you, your competitors and customers, is it actually more engagement today than in normal ones?

I mean look, there are more engagement? Yes.

There are more but as simple, of course, we have taken this opportunity of the crisis to really try to prove our value. And therefore there has been activity in approach in customers and showing them our value for two reasons.

I mean, first, because of course they were in a difficult situation as we were, but okay. Our model is very variable as, based on transactions and probably was the right time to really prove to them that they can verbalize their costs and not probably in fixed costs internally, especially in, when we talk about people, that are still keeping the systems in-house.

Okay. So, of course, we have approach their customers.

Of course, we are engaging with many of them as we did in the past. I would say probably open to listen.

But again, I mean I wouldn’t say that in 2019, we were not doing that. We have taken a little bit I would say a bit more aggressive – in talking to customers that are not our customers today, but nothing really new because of course the commercial team is chasing as many customers as possible around the world.

So that’s the reality, but again, how this is going to be translated into contracts. Then at the end, this is always difficult.

Just on the cost saving program. So in essence, we have to delivered according to our plan and you’ve seen we’ve achieved now in the first half 170 million of savings in total.

It’s true that a substantial part, obviously this year was expected to come from the manpower side. You had also last year, some manpower related savings, but they were more of short-term nature.

Like the voluntary leave programs that we benefit, that we benefited from last year. And this now has all turned into structural cost savings for this year.

So we’ve done well, we’ve done well on that side. Actually probably if you look at just the quarterly split again, Q1 was high compared to 2020 in terms of cost savings, but that’s what you would expect because we started to reduce costs only at the very end of Q1, 2020.

In Q2, we are actually a little ahead in terms of the cost savings that we wanted to achieve. And for Q3 and Q4, I expect that the increases that I’ve been talking about that they are coming from more on the discretionary side still which is an essence on the travel side, the training side, the consulting side.

I think the positions, the way I would describe it is, it does give us flexibility. We will be delivering, I’m confident about the 550 million structural cost savings for 2021.

And as we are tracking now in terms of overall cost savings we have got some flexibility in relation to the discretionary cost savings side.

Thank you.

Great. Good afternoon and thank you for taking my questions.

Restrictions for travel are slowly coming down in some markets, but we obviously have now all these new requirements, like test, proof of vaccination, passing the location forms, and the rules are also changing all the time and it remains clearly a major impediment for the return of travel. I know you talked to your cyber travel solution, but more broadly why don’t we see the industry adopting more tech solutions to address these pain points.

And what role could you pay here? And secondly, I was wondering if you could comment on your partnership with Hopper, I know they offer a cancel for any recent solution, but I was wondering if you could comment just how the business and financial agreement looks like of the partnership and how this might be integrated with your own offering?

Okay, look we are being active in trying to really support the travel recovery with our technology and also with some integration in what we call, safe travel where we are supporting the careers with our technology to integrate health information into the departure control and the boarding pass to really automate these processes. So, we are trying to do our best in dealing with that.

Again, I mean, look, what you mentioned is true, there are a lot of regulation and complexity around that. And we are trying to integrate the different certificates and validation to really support our customers as much as we can.

I mean, but I mean, as an industry there is collaboration definitely, there is a common interest or pushing for travel. But again, this is not at all preventing the restrictions without happening between governments.

So it’s difficult to really manage that. Okay.

But what I can tell you is that we are very active More in Europe or in the rest of the world as we are basically are at all levels to really try to support the discussions that we have with governments, with carriers about how we can simplify and improve the travel processes. And try to really is in the interest of everyone to try to recover travel.

I mean, one of the things I mentioned at the beginning or in my presentation is that there is clearly an interest of travel around the world. I mean, we see with the domestic traffic.

Okay. When you don’t have restrictions, the recovery of domestic traffic and you have see the latest figures from IATA are good, I mean, the recovering some countries is not very far from the figures of 2019.

So domestic traffic has recover, I would say quite quickly, but it’s still international is very low. So, of course, this has an impact and this is related to what you mentioned at the beginning, restrictions changing the fact of death certificates and so on and so forth.

So look, we are trying to do our best at all levels, but again, this is not exactly what is going to really change the picture. I think one important matter is what governments are really going to do.

And second question related to Hopper. Okay, look, this is a very small matter.

Okay. Very, very small.

We have deals around the world. I mean, I didn’t even mention that.

I mean, this is an app. Okay.

And I’m very often we have APIs and we have connectivity with very local providers around the world. So this is a very, very, very small, I mean, it’s not that we have a new business model.

I mean, we’ve worked with a lot of companies around the world, again as part of our open platform where people can really use our technology and partner with us, but this is a simply a small at this point.

Okay. Fair enough.

Thank you.

Hello. Thank you for taking my questions.

So two if I may. The first one, and I apologize if I missed your earlier comments, can you provide a bit more color on how the Delta is variant of the virus is impacting bookings?

And the second one, should we expect positive cash flow both in Q3 and Q4? Thank you.

Okay. Look, what we see, and again, I cannot say how this may impact, but what we have seen in July is that bookings were more or less in line with June.

Okay. Is through we were coming from continuous improvement in the majority of the regions and these Delta variant has impacted in the sense that, okay, the recovery has mainly not continued, but it has not gone down.

And again, I caveat, because I don’t know how things may evolve in the future, but this is what we have seen in July. Some movements, but region and per country, but again, domestic traffic keeps improving around the world and this is what we have seen.

So the overall pretty much in line in July with what we have seen in June. Okay.

So it’s still to be seen, but it does not seem to have a big impact or at least a negative impact of time being in the overall figures.

On cash flow, so just remember, so we are pleased with what we have achieved in terms of free cash flow, free cash flow outflow in this half of this year, which was excluding implementation cost €47 million. But remember that the second quarter carried also seasonally higher cash outflow, which obviously wait in the – on the second quarter.

Look, I wouldn’t want to be specific on exactly Q3 and Q4 separately. I do expect obviously that cash flow is improving progressively and for half two, I do expect with some recovery with some recovery assumed in terms of volumes that we are free cash flow positive, excluding implementation cost.

Now, you may ask the question. Okay.

What does recovery mean? And on that point to just clarify that, if you just think of what IATA is assuming for the second half as a direction curve of recovery, I think this is a good guidance to use.

Okay. Thank you very much.

Hi, thanks very much indeed, for taking my question. It’s a question, so let’s go back to the topic.

So, on NDC, my understanding was the – biggest carrier’s opportunity to have much more sort of flexible offerings and make those through the system to the travel agents. I just wondering how does that change the comparability of those offers as they’re actually seen by the travel agents, and the reason I’m asking the question is obviously American Airlines are suing Sabre for their new merchandising platform has offered to Delta.

I know that wasn’t NDC, but it looks as though the crux of the American Airlines lawsuit is the fact that Sabre can incentivize the travel agents to book a way towards Delta from America, not that’s the American view. And obviously one of the, sort of the great opportunities that NDC should offer you in the future is to be incentivized by the airlines to intern incentivize the travel agents on the ancillaries.

And I’m just wondering to what degree any law – any lack of comparability of offers actually changes that opportunity to up sell and get better revenues for yourself in the future?

I mean, it’s very difficult. I mean, look and I cannot judge and enter into whatever happens between Delta American, and Sabre.

I mean we will offer the capabilities, but it’s not an intention to try to promote one or the other. NDC suffering like today, you may have not within the sea, but with for families and airlines currently use alternative voice of showing their first and you have the ancillaries that you mentioned before.

So NDC – open more possibilities how you are going to compare, okay, you will have, as you have today the basic fare and then other fare, so there are kind of ancillaries that can be offered in the system. I would imagine this is quite similarly it will evolve, it will have more capabilities.

I mean, look again, I – from what I read and again look without entering into the intention, just because it’s more reading than the reality, what the American Airlines is arguing is that Sabre was promoting Sabre versus American Airlines and this was not what they had agreed, but again, I don’t know what they have agreed, and I don’t know what Sabre is doing, and he’s not our role to judge that. But I think NDC is yes, offering additional opportunities, how they comparison between offers is going to happen.

I would say, not very different from what happens today with more possibilities for the airlines to show alternatives as they do today with ancillary services. I mean more complexity technically.

Yes, of course. And this is why we are investing there to really try to provide that in the best way to travel agencies and also in the direct channels.

Okay. But just to clarify, do you think in the future, you will be incentivized by the airlines and be able to incentivize the travel agents for these separate ancillary services on top of the basic distribution fee?

Or do you think it’ll always be a basic distribution of fee?

I mean, look, I think we need to differentiate between how we offer that and what is the model of a business model with airlines? I mean, look again the fact that the pricing changes with regards to the sales is one thing.

And then we see how we deal with that. Another different thing is okay, if we will offer the same capabilities to the airlines, or we will try to really discriminate in the channel.

As you know one of our roles has been to be a neutral in the way we have operated in the past and therefore we have not on the distribution front, promoted one carrier against another one. I think it has been one of the roles of the GDSs in the past you’re asking me, are we going to change that?

I would say, not now, I cannot say forever because things may evolve in the industry. But today it’s not our goal to promote or to really try to sell one airline more because of the economies.

I mean, you could argue the same, they already, based on the booking fee, if you have different booking fees or different economy conditions per airlines that you try to really promote one airline versus the other. And this – we have not done that.

And it’s not our plan to do these, at least I will say in the short term. Again, how this industry is going to evolve in five years from now is difficult to see, but it’s not our objective to really discriminate one airline versus the other based on economics.

Thank you very much. Thanks.

Hi, Luis, hi, Till. Thanks for taking my questions too, if my way, if I may.

So just another question on the NDC side, I appreciate, there are lots of discussions on the distribution side and we continue to see moments on that. How should we think about the opportunity and maybe just looking from the IT Solutions side, is there opportunity for you to add more value to the PSS through NDC and hence, that’s a pricing potential on the PSS side, as you may be able to unlock more value through dynamic pricing and customize offerings and whatnot.

And secondly, and the question on the IT Solutions, I understand there’s a sizable piece that’s not PB related for the recovery – the revenue recovery quarter-on-quarter is lower than that in the distribution side. How much is that a function of late bookings in June?

So with PB super realized in Q3. And can you provide a bit more color on the revenue contraction and new businesses that you have alluded to in the slides and any color on the appetite for hospitality IT relative to airlines, please?

Okay, let me start and Till please jump in. For NDC offering, I mean, look NDC offers capabilities, but many of our solutions offers capabilities, okay.

And many of them are on the optimization of the operations of the airlines, of cost savings and are very important part of the solutions we are offering on IT are related to revenue opportunities for the airlines, NDC being one of them. So you need to differentiate between value that we offer with our solutions.

Okay. And clearly NDC technology will offer value.

And another thing is how much you charge for this value. Okay.

And as you know, there are competitors to us that of course are offering NDC solutions and again, they charge for that. So the normal way will be, this is an up-selling opportunity for us then if they are to give them any look based on the potential value on the airlines get – can you get an upside on pricing.

Look, of course, we will try as always the more value you offer, the better you can price your product reality. So, we will try to really look get incremental value from the capabilities that we offer to the airlines.

But again, I wouldn’t say this is different from other solutions that we are offering on the digital space or in other areas of our business. Okay.

So that’s about NDC. Second question is more….

On the revenue side, I’ll just take you through a little bit of the dynamics, first, I think first about the IT Solution side. I can cover as well as the distribution side also.

So just in terms of the second quarter, IT Solutions revenue was set at minus 43% and with that it declined at a softer pace than actually the just boarded which were at minus 68%. And I think that’s why I’ve tried to comment on in relation to what are the elements.

And of course there are elements that are actually not transactional, but you’ve got literally really three factors in that IT Solutions revenue buckets that, that drives this ratio. The one thing is that obviously our new business area and that includes largely hospitality, which at a later point in time, we will obviously also provide you with enhanced disclosure.

This has been obviously growing and holding a better during the during and therefore outperforming as well the PB, the PB volumes. The second element is we do have revenue lines that are just not transactional.

And therefore they gave us basically a floor respectively just support to all our revenue performance compared to all our PBs. And also we had certain airline IT transactional revenue growth underlying, and all of that together was basically establishing this relationship whereby you had revenue per passengers boarded in the past couple of quarters, actually being a lot higher than the historic levels that we had seen before.

On the distribution side perhaps just a few comments on the dynamics there. I had explained that also before we are at the moment in an environment where the recovery is a little more led by the domestic itineraries, domestic itineraries an extent drive also the booking mix between local regional and global bookings more towards the local bookings.

And while we have seen over the past quarters, again, a bit of a rebalancing also to the regional and global booking mix, there’s still a higher weight of the local booking mix in it, but in our distribution revenue per booking, we also have got non transactional elements, which basically have given us in the past support and going forward as a transactional volume to come back obviously the non-transactional part is and the effect of it is getting relatively smaller. And then it is a question really of the underlying business trend, what is the mix between local, regional bookings driven by the itineraries.

Got it. Thank you.

So thank you very much to everyone for your questions. Thank you for being with us today at the end of July.

And we’ll talk for the third quarter later. We’d like to wish you all a nice holiday season.

Thank you. Bye.