Michael McCloskey of GreensKeeper Asset Management presents Amadeus IT Group (AMS.MC in Madrid; AMADY as a US-listed ADR), a €22 billion B2B technology provider to the travel and airline industry. The business operates three segments: Air IT Solutions, mission-critical airline operations software that accounts for 36% of revenue at 71% EBITDA margins, holds roughly 50% global market share across some 200 airlines, and runs on 7-to-10-year contracts with one-to-two-year implementations; Air Distribution, the global distribution system that channels fares to 60,000 travel agencies and 600,000 agents across 400 airlines at a 40-43% share and 50% margins, representing about half of revenue, ahead of Sabre at 30% and Travelport at 22%; and Hospitality, a scaling natural extension of the existing platform contributing 16% of revenue at 36% margins. Overall EBIT margins sit near 38%, and because Amadeus charges per passenger boarded, its revenue carries reduced cyclicality. Revenue and margins are at record levels, the company spent €1.4 billion on R&D and capex last year, migrated to Google Cloud, and struck a data deal with Google Flights.
McCloskey notes that the stock has de-rated from 22-23x to roughly 15x earnings on three fears he argues are overstated: AI disruption of airline IT, which he views as unlikely given 99.99% uptime requirements, latency, liability, and duty-of-care demands; NDC disintermediation of the GDS, where OTAs that attempted direct connections found them too complex and expensive and are returning to the GDS; and the impact of oil and an Iran war on travel volumes, which he argues leaves the tail value unaffected by a single weak year. He highlights the 10:1 look-to-book ratio with agents and Amadeus now charging for excess searches above 1,000 per booking, and contrasts Amadeus with Sabre, whose broken balance sheet generates no free cash flow, noting that Constellation Software has quietly built a 12.5% stake as a signal that the business model remains intact. In the Q&A, McCloskey addresses ongoing travel agency consolidation and the struggles of smaller agencies that still rely on the GDS for breadth, Amadeus’s relative strength in Asia and Europe versus Sabre’s in North America, the dynamic pricing (NDC) transition as a revenue opportunity rather than a threat, and Hospitality as a natural extension to which he remains indifferent and which is not core to the thesis.
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