With business travel recovery accelerating faster than most projected a few months ago, American Express Global Business Travel expects to ratchet up revenue generation and earnings. In what is likely its last quarterly earnings report before becoming a public company, GBT on Tuesday pointed to solid trends among large clients and for international travel.
“Smaller companies have generally been more agile and returned to travel more quickly. However, we are beginning to see a change,” said CEO Paul Abbott in prepared remarks. “Larger companies really accelerated. In April, global multinational recovery increased eight points versus the end of March” to exceed 60 percent of 2019 levels.
“You’ll see a similar dynamic in domestic and international travel,” he said. “Domestic recovery was up seven points in April and international recovery up 15 points versus March. So now for the first time, as of that last three-week period in April, international recovery is actually at the same level as domestic recovery.”
More companies reopening offices and more removals of Covid-19-related travel restrictions drove the trends, according to Abbott.
Overall, GBT’s transaction recovery during the quarter ending in March reached 46 percent of 2019 levels and revenue got back to 50 percent. By late April, GBT recorded transaction recovery of 72 percent, with the SME segment reaching 80 percent.
In the 12 months through April 2022, GBT claimed new customer wins valued at $3.9 billion, representing 10 percent of its 2019 pro forma total transaction value. New clients include Honda Motors Europe, Novum, Raytheon Technologies and the Ferrero Group.
Abbott said GBT since 2015 has been winning $2.50 in total transaction value for every $1 it loses.
First-quarter revenue was $350 million including Egencia, up 179 percent year over year. First-quarter adjusted earnings before interest, taxes, depreciation and amortization of negative $28 million, compared with negative $90 million a year earlier, was “in line with our plan” despite the negative impact of omicron early in the quarter, according to Abbott. He noted “cost discipline” as well as recovery trends.
According to CFO Martine Gerow, GBT completed “100 percent of the actions” behind its plan to permanently cut $235 million in costs and realized 80 percent of the savings. The rest will come as volumes recover.
She said GBT was “on track” to realize $109 million of total synergies from the Egencia acquisition ($75 million in revenue, the rest on the cost side).
Given strengthening business travel trends, GBT upped its 2022 guidance. It now expects to generate about $1.75 billion in revenue, $150 million higher than the company’s previous guidance. The adjusted EBITDA forecast of $75 million to $85 million is $68 million to $78 million higher.