Renta 4 | Q3 figures have consolidated the trend towards a recovery of 2019 levels. The decline in revenues is close to one digit: -13% vs Q3’19 (-17% in Q2), EBITDA: -20%, also improves, +4pp vs Q2 (ex German government aid). That said, this recovery has been held back by disruptions in European airports and travel restrictions in Asia.
Recovery continues in Q4, at a slow pace
Reservations show a slight improvement in October (excluding the negative calendar impact), as do Embarked Passenger figures, although unit prices remain above 2019 levels. Furthermore, we highlight that demand is not showing signs of weakness. We expect Amadeus to close 2022e with a 19% drop in revenues and 26% in EBITDA vs 2019, with a notable improvement from Q2 (negative impact of Omicron in January and February).
Macro deterioration predicted in 2023e. Uncertain impact on the airline sector.
The more complicated macro backdrop should affect a sector as sensitive to the cycle as air transport is. In our view, the recovery will continue but at a slower pace. We have revised downward our estimates for Amadeus’ main figures. We believe it will recover 2019 levels in 2024e (previously 2023e).
Interesting options after predicted deleveraging
We calculated Amadeus’ net debt/EBITDA multiple will be at a minimum historic range in 2023e. We expect it to start paying a dividend again in July (prior approval from the AGM) and believe it could carry out a share buyback (offsetting the May 2020 share issue would be well received). Apart from that, the market could provide opportunities for corporate transactions after over two years without any acquisitions.
Conclusion: Hold. Target Price 58,5 euros/share (vs 63,50 euros/share previously).
We are revising downward our estimates to take into account a more complicated macro backdrop. The recent uptick in the shares limit its potential. We are also revising our recommendation downward from Overweight to Hold and T.P. to 58,5 euros/share vs 63,50.