Ladies and gentlemen, welcome to the Amadeus Third Quarter 2022 presentation webcast. The management of Amadeus will run you through the presentation, which will be followed by a question and answer session. You can ask a question on the phone by dialing zero one on your telephone keypad at any moment during the presentation. I am now pleased to hand over to you, Mr. Luis Maroto, President and CEO of Amadeus. Please, sir, go ahead.
Good afternoon. Welcome to our 2022 third quarter results presentation. Thank you very much for joining us today. I'm joined by Till. As usual, I will focus on our most important developments, and Till will elaborate on the key financial aspects. Let's start with slide four, where we have a summary of our financial performance in the quarter. In the third quarter of the year, as the airline industry further advanced in its recovery, Amadeus saw a strengthening operating and financial performance, with revenue, EBITDA, and adjusted profit evolutions continuing to improve versus past quarters. Group revenue in the quarter was close to 87% of its level in the quarter three of 2019, up 3.6 percentage points over last quarter, supported by revenue performance improvements across our segments.
Most notably, Hospitality & Other Solutions, with revenue now practically what it was in the third quarter of 2019. Air Distribution and Air IT Solutions are also progressing, having now reached 81% and 91% respectively of what they were in 2019. Our EBITDA in the quarter reached 80% of its pre-pandemic levels, improving 4 points over past quarter. This quarter-on-quarter improvement is calculated excluding the positive effect on EBITDA in the second quarter from the government grant received. Additionally, in the quarter, adjusted profit reached 68% of its 2019 level, advancing 5 points from the second quarter, excluding the grant effect as well. Our performance in the third quarter supported free cash flow generation of over EUR 320 million.
Our leverage continued to decrease and close at 1.6x last 12-month EBITDA at the end of the quarter, coming very close to our target leverage range of 1 x to 1.5 x. We are pleased to confirm that Amadeus expects to resume shareholder remuneration in 2023. In February of next year, the Amadeus board will determine a proposal pertaining to the 2022 financial results, which will be submitted to the general shareholder assembly for approval in June 2023. Finally, in our aim to capture the growth opportunities ahead, as you will see in the third quarter, we remain disciplined about our CapEx programs and our R&D continued to grow relative to last year and picked up relative to last quarter as per our plans. These efforts are dedicated to support new customer implementation projects to advance in our key strategic areas.
As you know, we are evolving our Hospitality Platform, investing in our airline IT offering capabilities in NDC, as well as celebrating our shift to the cloud, among other important projects. Let's turn to slide five on our overview of the quarter by segment. Starting with our distribution, in the third quarter, we signed 20 renewals or New Distribution Agreements, including with American Airlines, amounting to a total of 49 in the first nine months of the year. We continue to expand our NDC offering. We're pleased to announce that as of quarter four, Lufthansa Group Airlines NDC content will be available on the Amadeus Travel Platform . Through the quarter, we continued expanding our content and reach with additions such as low-cost carrier Flyr, Jamal Travel Agency , and corporation customers contracting for Cytric Solutions.
Moving on to our daily bookings evolution in quarter three, our gross daily bookings, which are our reported bookings before cancellations and working day difference, continued to improve in the quarter from the evolution we saw in quarter two, an improvement of months from July through October. In the first and second quarters of the year, the impact from cancellation and work days effects was not relevant. However, in the third quarter, the impact was broader. In July, there was a higher flight cancellation impact, which reduced in August and September, and a higher than usual working day effect as well. We have more work d ays effects in the quarter, which became larger in October. Working day differences across months or quarters many times offset each other or do not have a relevant impact in a quarter or a year.
However, in quarter four, I'm sorry, we expect a negative work day effect as well, making the quarter comparison a bit tougher. That being said, this recovery continues. We continue to see a lot of recovery still to happen. Airline industry capacity is not at 2019 levels yet. The airlines remain upbeat about the next quarters and are optimistic about corporate travel. Markets in Asia are opening up and important routes are being reinstated. Also, our bookings evolution in the quarter was supported by strong market share gains. Amadeus had a strong market share performance, even if region and country mix disturbed market share evolution. Amadeus gained market share globally and in most regions, particularly North America, our best performing region in the quarter. Although APAC remains one of the slower regions, it was the region with the largest recovery this quarter.
APAC is important for us. Our growth will be further supported by the progressive recovery of travel in this region. Please turn to slide six for an overview of Air IT Solutions. We have continued to expand our PSS customer base. In October, Bamboo Airways selected Amadeus as its next-generation technology partner and will implement the Amadeus Altéa PSS solution, as well as Revenue Management and Digital Experience . In the quarter, we continued to sign upselling agreements, including with Korean Air, All Nippon Airways, Mauritania Airlines, MIAT Mongolian Airlines, and Arajet. Additionally, in Airport IT, in North America, Palm Springs International Airport and Wilmington contracted for ACUS. Several other customer airports, such as Syracuse Hancock International Airport and Sacramento, contracted for additional solutions from our Airport IT portfolio.
With regards to our volumes performance in the third quarter of 2022, Passengers Boarded reached 84% of quarter three to twenty nineteen levels, representing a 6-point improvement from quarter two. As you can see, PV growth continued to improve each month during the quarter and into October. By regions, in the quarter, several regions saw large improvements in performance, most notably LATAM, Middle East and Africa, and APAC. North America was our best performing region, with +21% PV growth, driven by positive organic growth and by our airline migrations, most importantly Air Canada, which migrated at the end of 2019. On the implementation side, please note, our Russian carriers, S7, have migrated from our platform due to the geopolitical situation. Together, they carried circa 35 million PVs pre-COVID.
Now to recap our announced customers, we implemented Air India in quarter two of this year, which carried over 20 million PVs pre-COVID. We are working at present to migrate ITA Airways, Allegiant, Hawaiian Airlines, Etihad, and undisclosed carrier, Oman Air. These contracted customers together could carry an estimated 110 million PVs annually in our recovery scenario. Of this, we reasonably expect 70 million to be implemented by the end of 2023. We turn to slide seven for an update on our hospitality segment. The third quarter Hospitality & Other Solutions revenue reached over 99% of quarter three levels of 2019, improving 5 points over prior quarter. We saw continued strengthening of the hospitality industry in the third quarter, with global hotel weekly occupancies over 2019 levels through the quarter.
The quarter-on-quarter progress Amadeus had was enabled by consistently stronger revenue performance across our revenue lines, supported by volume growth as well by new customer implementations across our portfolio of hospitality solutions. We continued to expand our customer base in the quarter. Among others, Preferred Hotels & Resorts, with a portfolio of more than 700 hotels, resorts, and residences across more than 80 countries, issued exclusive endorsements for Amadeus Demand360, Agency360+, and sales and catering solution, with additional recommendations for GDS, Guest Management, and Service Optimization solutions. As you can see in the quarter, we continue to have good commercial and business results. Our financial performance and cash generations are getting stronger each quarter. We see the travel industry continuing to advance towards its recovery, and setting aside macro and geopolitical considerations in the short term, we are confident about our prospects for the future.
With this, I will now pass on to Till for further details on our financial performance.
Thank you, Luis. Hello, everyone. Please turn to slide nine for an overview of our revenue in the period. In the third quarter, our group revenue was 13.2% below 2019, advancing from prior quarter, driven by stronger growth rates across all our segments. In Air Distribution, revenue in the quarter was 19.3% below 2019, improving from -21.1% in Q2. This revenue performance was primarily driven by the bookings evolution Luis described and by a revenue per booking 12.6% higher than in 2019.
The higher revenue per booking in the third quarter of 2022 versus 2019 was achieved due to multiple effects, including various positive pricing impacts coming from a combination of inflation and yearly price adjustments, incremental deals, renewals, and others, positive FX effects, and other non-booking revenues outperforming the bookings evolution. These effects were partly offset by a still higher weight of local bookings than in 2019, produced by the relatively higher weight of domestic traffic over international traffic we still have. At this time of the year for 2022, we reasonably expect revenue per booking to continue to remain amply ahead of the revenue per booking, both in 2019 and 2021. With regards to Air IT Solutions, revenue in the quarter was 9.5% below 2019, advancing from -14.6% in Q2.
This result was driven by the PV volumes evolution, coupled with an 8.3% higher revenue per PV relative to 2019. The higher revenue per PV is caused by a proportion of Air IT revenues that are not linked to PVs, which reported healthier growth rates in the quarter than PVs and PV-linked revenues. Revenue per PV was also impacted by positive FX effects in the quarter as well, as well as by positive pricing impacts, inflationary or price adjustments, and upselling of incremental solutions, partially offset by mix effects. Quarterly volume seasonality considerations aside. As traffic continues to recover, we expect the revenue per PB each quarter to continue to generally trend downwards with respect to prior quarter as it has done in these times caused by a mathematical effect from the growing rate of transactional revenues.
There will also be positive effects to support this metrics evolution, such as inflationary price increases and upselling. Regarding Hospitality and Other Solutions, revenue in the third quarter was 0.8% below 2019, improving from -5.6% in Q2. At Hospitality, the quarter-on-quarter performance improvement versus 2019 was seen across its revenue lines as described by Luis. Revenue growth in the quarter was supported by positive FX effects within Hospitality and Hospitality IT. CRS, Sales & Event Management and Service Optimization revenues were the main drivers of the revenue performance improvement, supported by volume growth and customer implementations. Media and distribution had a strong performance improvement supported by growth rates in transactions, media clicks, hotel and car bookings, and business intelligence also progressed, supported by new customer implementation.
Please now turn to slide 10 for a review of our EBITDA evolution versus 2019. In the third quarter of 2022, our EBITDA amounted to EUR 450 million, 20.5% lower than in 2019 and 4 percentage points ahead of prior quarter's performance, excluding the EUR 51 million government grant received in the second quarter. The EBITDA performance versus 2019 resulted from the revenue evolution explained before. Lower cost of revenue than in 2019 by 13.9% linked to the evolution of our booking volumes and our hospitality business, and a 3.9% decrease in our combined personnel and other operating expenses cost line compared to 2019. To review our fixed costs evolution, we will focus on the change relative to 2021.
Please remember we completed our cost optimization program last year and thus there are no more associated implementation costs in the P&L in 2022, but we continue to remove these from the 2021 P&L for comparison purposes with 2022. Our P&L fixed costs in the third quarter of 2022 compared to the same quarter last year were 18% higher. Excluding negative FX effects, our P&L fixed costs grew by 11.5% in the quarter. This cost evolution resulted from an increase in R&D investment, as Luis described, and a non-R&D spend like travel and training among others, driven by the business expansion relative to prior year.
Taking together P&L fixed costs and CapEx in the first nine months of the year, we had 14.1% ex-FX growth excluding the Q2 grant, in line with the 10%-14% ex-FX fixed cost growth range expectation we gave for the year, which we reiterate once more. Below EBITDA in the third quarter of 2022 compared to 2021, D&A expense decreased slightly by 1.1%, resulting from higher amortization expense from internally developed assets, offset by a lower depreciation expense from a reduction in hardware investment. Net financial expense decreased by EUR 22 million due to a financial income of EUR 20 million, driven by the partial repurchase of 200 of the EUR 250 million outstanding notes with a maturity in September of 2028.
Also, interest expense was 2% lower as a consequence of lower average gross debt over the period. The income tax rate in the quarter was 24%, lower than in 2021, impacted by a reduction in income tax rates in France and non-recurring adjustments. Supported by the EBITDA evolution, adjusted profit amounted to EUR 220 million in the third quarter of 2022, 32% below its level in 2019. Please now turn to page 11 to review our cash flow evolution. I will start with CapEx. In the third quarter of 2022, our CapEx increased by EUR 47 million or 47.3% compared to the same quarter in 2021, driven by higher capitalized R&D investment.
R&D investment grew by 43.9% in the quarter versus 2021 and by 31.4% year to date in line with our expectations and focused on customer implementations, our hospitality platform, enhancing our airline IT solutions offering, our NDC related solutions and capabilities, and our partnership with Microsoft. With regards to free cash flow, excluding cost saving program implementation costs paid in the quarter, we generated over EUR 324 million. This equals to 88% of free cash flow generation in Q3 of 2019. We will still have some cash outs this year related to our cost optimization program completed last year, but the amounts outstanding going forward are very small.
Free cash flow in Q3 resulted mostly from our EBITDA generation and the cash flow and the cash inflow from change in working capital impacted positively by seasonal working capital dynamics. To recap on where we are at Amadeus, we are seeing positive profits being generated, strong cash flow generation approaching pre-COVID levels. We are practically at our pre-pandemic target leverage range, and we are expecting to resume shareholder remuneration, which is one more step back towards normality. Additionally, please note that at our next earnings call for Q4 in February next year, we plan to return back to providing you also with an outlook for the year 2023. With this, we've now finished the presentation, and we can take any questions you may have.
Ladies and gentlemen, the Q&A session starts now. If you wish to ask a question, please press zero one on your telephone keypad. Thank you. The first question comes from Adam Wood from Morgan Stanley . Please go ahead.
Hi. Good afternoon, Luis. Good afternoon, Till. I wanted to dig in a little bit on the data you've given us for October. You've said that if we normalize that for working days and cancellations, there would still be an improvement on September. Could you maybe just give us a feel for the mix of working day versus cancellation impact? Could you talk a little bit about what you think is driving the cancellations in October? I guess July was understandable, given what we were seeing in that month. It's maybe a little bit less obvious now. You know, given we're not seeing as maybe as big a recovery as people would have been hoping for, would you say that's more due to macro considerations, that people are more nervous about spending and businesses are more nervous about spending?
Do you see it as more of a capacity issue? On capacity, could you just talk a little bit about how that's been expanding through the year? Again, you know, are there any other reasons why you would be different from improvements in airline capacity? Are you seeing a bigger trend in terms of disintermediation or market share movements? If you could just outline a little bit what you see was contributing to that October number, that'd be really helpful, please. Thank you.
Let me start. Hi, Adam, trying to provide you how we see things overall, and then, Till, if you can explain the working days cancellation more of the details. It's quite difficult, as you can imagine, to really read in detail the numbers because you have, I mean, a number of facts, okay? We don't expect recovery to be completely linear. You always have, and this has happened, I mean, even pre-pandemic, you have better months than others. We try to look into the details of the underlying evolution. That's why working days is always an issue. Cancellations, we can talk about that. You have the mix of the recovery of leisure, you know, versus business. You have country mix.
I mean, when we go through the details of all the figures, we see a lot of impacts and some countries doing much better, some countries doing worse, but you cannot extract completely conclusions from one specific number. You have the supply disruptions that you know, and of course, we understand the situation of the macroeconomic environment. Quite difficult to extract complete conclusions. Of course, we try to really see more than just specific data than we see. Again, Till can explain that. What we see, and I can share with you also my conversations with airlines, is that the airlines are quite optimistic at this point, and the industry is optimistic. This is mainly because we still have recovery. I mean, the airline capacity is not at the 2019 levels.
What we have seen in the capacity. Capacity is fundamental for us because this is what drives, you know, at the end, volumes. We have seen some, you know, kind of continuous recovery, but again, similar to the bookings, some months more flattish than others. When you see the projections, everybody's expecting to really increase capacity from now to the summer of next year. There are a lot of, you know, external sources where we can see that. When I talk to customers, I mean, they feel optimistic about capacity expansion and about hiring people. Still, there are some frictions impacting capacity and volumes. They start to normalize, but are not yet fixed. There are some airlines running at lower schedules than originally hoped. There have been some cancellations, much less than in the past.
When you see load factors are pretty high, fares are still high, as you, we all know well. We also have the Asia that is opening and therefore should drive further capacity because airlines are opening routes. Overall, the industry is not seeing, you know, a demand issue, for the time being. Of course, we recognize the near-term, geopolitical and macroeconomic environment risk. Overall, the data and the, you know, the feeling and the projections, are positive. I mean, we don't see a weakening demand, you know, demand.
There are a number of, you know, specific points that I mentioned that, especially on the capacity projections, that make us feel still optimistic. Also looking at all the airline results, you see what they project, and this is public information on how they see the future of the big carriers. That's more about the overall macro. Again, without entering into the details. Still, if you would like to provide a bit more details, please.
Sure. Hi, Adam, and I'll give you a slightly longer answer to just cover the entire area of that question. Look, day-to-day metrics or excluding workday differences is a metrics that we obviously follow very closely internally. Days have got, in terms of booking behavior, obviously a different profile if you look at the week. Usually at the beginning of the week, the first few days are stronger, so this is relevant when you consider day-to-day differences. Usually between months or quarters, if you just compare it year-over-year, those differences are either not meaningful or they are actually leveling each other off.
However, given that we are comparing these days against 2019, where you've got basically three years and a leap year in, you have a shift in these workday comparisons, and this is why we are actually kind of talking about it. Now, if you think of October, to your question, what's stronger? Because we have been talking about an ex-working day metric and also a gross booking, which is basically excluding the cancellations. In October, we are seeing a stronger impact, basically the working day effect, but there's still a little bit of higher cancellations as well included. Again, not on a level when we talked about July, for example, where it was very prominent and evident, the supply-related issue, but it's still a little bit there.
I appreciate the detail. That's very helpful. Thank you.
Thank you. The next question comes from Alex Irving from Bernstein . Please go ahead.
Hi, good afternoon, gentlemen. Thanks for taking the questions. Three from me, please. The first on your Air IT contract. You talked about inflationary and price adjustments. Are those contractual or are they negotiated? And how much resistance have you faced increases from multiple sources? Second, on NDC, can you please provide some color on how adoption is going with the TMC customers, what progress you're seeing here, and how do you expect your share of TMC bookings served through NDC to evolve in the next 12 to 18 months? Then finally, please, on ONE Order. We understand airlines have been progressing work towards Order Management System s in recent months. Does that match your perception? And has the interest of your airline customers in Order Management System s changed post-pandemic? Thank you.
Okay, let me start with the last two. When we talk about NDC, the penetration is still low. We are in the process of implementing airlines. I mean, it takes years, as you can imagine, in all the new technologies and all new industry evolutions to really be a significant share. I mean, you can see that from previous areas such as e-ticketing. I mean, the years it took to really be implemented in the whole industry, so it's taking time. But as we have mentioned, we are—I mean, we keep signing contracts. We keep working with airlines and implementing them and be present for whatever happens in terms of implementation, but we will make it work, okay?
That's our goal, and therefore investing and working with the carriers and with the travel agencies to really implement this new capability. Still, overall volumes are low for the industry, but we expect at one point to really increase as a percentage of the total in the industry. With regards to ONE Order, yes, we are fully behind that. I mean, it's again, a natural evolution of the IT platform. And therefore, we are having discussions with our current customers, how our Altéa and also Navitaire platform can evolve to really allow for a better modular approach and a better way of dealing with the future.
Therefore, if we think about NDC as an evolution on the merchandising front, we see ONE Order as an evolution of all the back end and all the way that the airlines are, you know, dealing with the order somehow, that was mainly the PNR in the past. The passenger name record and how this is going to evolve. It's a natural evolution. Again, will be medium term, but as we try to advance and support our customers, we are working with them in this logic of ONE Order, and we will make the investments to evolve our different platforms.
On your first question, it was a little bit the transmission was interrupted. Let me just answer to what I understood your question was about in terms of Air IT price increases, whether they are commercial or contractual. By and large in Air IT, we've got as well a contractual mechanism to increase on an annual basis. That is following an index, which is ultimately as well linked to a global index in terms of workforce evolution, and has got a certain weighting, obviously representative of where our footprint is. It is also by and large a contractual mechanism.
Thank you very much. Very clear.
Thank you. The next question comes from Sven Merkt from Barclays . Please go ahead.
Good afternoon, and thank you for taking my questions. First, a question on costs. I know it's a bit early, but broadly speaking, at what kind of level do you expect OpEx to grow next year as of now? And given that a number of macro scenarios are possible for next year, how much flexibility do you have within your cost base in case demand should weaken? The second question is on the shareholder remuneration. Can you comment on if you intend to just reinstate a dividend or also consider buybacks? And how would you balance buybacks with the refinancing needs over the coming years? Are you planning to refinance most of your debt before it comes due, or you consider also to repaying some of it given the rising interest environment?
Okay. Let me just start off with the cost question. Look, we will provide you, when we speak next time in February, with guidance as what we expect in 2023 to happen. Therefore at this stage, I won't be very concrete or specific in relation to that. But of course, what you can assume in terms of the moving parts, in terms of our cost evolution is, we have invested this year, as we explained to you, into several into customer implementations. Of course, they either continue in 2023 or come to an end. Of course we invested as well into new projects, and they also carry forward into 2023. You will gonna have an element of that.
The second element I would call out is you of course need to factor in inflation, and make an assumption in that regard because that's a fact of life, which you see obviously all around. There, as I said before as well, we have the ability to also pass on a fair amount of inflation, through our commercial agreements at top line level. In terms of shareholder remuneration, first of all, our intent is to resume with that or in the form of a dividend, in the form of the dividend distribution. That's just to answer in terms of how we would do that.
In the way going forward, in terms of share buybacks, of course, as you know, in the past, Amadeus, we have done share buybacks as well when we were below our target leverage ratio. We are now very close to our target leverage ratio, and I expect this to be achieved, relatively soon. Yes, share buybacks would also be an element of one of our options that we would have in the future.
Very clear. Thank you very much.
Thank you. The next question comes from Nooshin Nejati from Deutsche Bank . Please go ahead.
Hi. Good afternoon. Nooshin Nejati from Deutsche Bank . two questions from me, please. How should we think about your revenue per booking going forward, and how sustainable this increase versus 2019 is? You know, given if you can give us a split between the FX impact and the price increase of some of your contracts, and if you can tell us if you're done with the price negotiations or there are still some in the pipeline. The other one is on the payment side. Your partnership with Uplift to offer buy now, pay later. Can you tell us who bears the risk over there? Are you using your balance sheet or to support this buy now, pay later, or it's all done by Uplift? Thank you so much.
Okay, let me make a start with the first question on revenue per PB. We obviously reported in the quarter strong growth relative to 2019 of 12.6%. Within that, I think you need to think of a few items. One is certainly we are benefiting there, and we've been talking about it from a positive foreign exchange rate effect. This is relating to our US dollar denominated revenue. The second item, which is obviously what we are benefiting from in terms of price increases, our annual inflation, new deals and renewals. This is mostly also went to your question, you know, are you still negotiating that or is that largely done?
We are basically at the last stage of that, and you can consider that the next exercise will be effective from the beginning of next year. As a third element, I've commented on that as well, we are still at the moment having a slight negative in terms of booking and customer mix in our numbers. Depending upon how booking mix will gonna evolve going forward, I would expect that there's also a slight positive on the assumption that the mix between domestic travel and international travel driving the booking classes that we have improves further. These are the three main items.
Okay. With regards to your question about payments, I mean, look, as you know, it's an area of strategy for us. We are expanding our agreements, our partnerships, and also developing internally. But if your question, if I understood properly, because we couldn't hear very well, it's all financial risk. No, we are not having any financial risk in our balance sheet with regards to our partnerships on that front.
Thank you.
Thank you. The next question comes from Charles Brennan from Jefferies . Please go ahead.
Great. Thanks for taking my question. I was wondering if you could just add some color to the diverging recovery between bookings and PBs. I guess the customer wins and Air IT contribute to that. You flagged up Air India as coming on board, but you say you're working to migrate airlines like ITA and Etihad. Have they contributed volumes during the quarter or is that still to come? Is there anything else to call out in terms of that divergent recovery?
Well, look, let me start if you want to jump in. I mean, look, as we compare with 2019 and due to the different things that happened, I mean, it becomes more difficult. The regional mix of the two businesses is not the same. Yes, you have market share on the one hand with the, again, different regional mix. Then you have migrations on the other hand. Then you have the timing, of course, between booking and TVs. You have the growth of the different airlines. Of course, in some cases such low-cost carriers have been growing faster, so it's normal that. Due to our footprint, we have, you know, we have a better performance on the TV front.
Look, there are a number of effects that make, you know, the two numbers a bit different in the way we operate the two businesses. As years move on with the migrations that we are having, we also have, as you know, Air India, and we'll have further migrations. Again, of course, you know, in the GDS, we'll try to really keep our market share gains, but the comparison becomes more difficult, especially when you deal with TVs versus bookings.
Are you able to give us any insight into how that's gonna trend going forward? It seems to accelerate the divergence in Q3. Should we expect that to continue going forwards or due to timing difference, you're expecting them to come back together?
I mean, look, as Till mentioned, I mean, we plan to provide you some guidance about the different ways we see 2023 with the full year results. There, we will try to provide you color about these metrics, yeah.
Perfect. Thank you.
Thank you. The next question comes from Guilherme Sampaio from Caixa BPI. Please go ahead.
Hello. Thank you for taking my question. Three, if I may. The first one, could you provide some details on the special and the performance in terms of progression of North America in this quarter on the GDS side compared to the remaining regions? If I'm not mistaken, there was a 9 percentage point derating in the run rate of growth compared to Q2. The second question is whether you could confirm that the working day impact in October should be compensated in November and December. The third one is if you could provide some color on how international versus domestic bookings are trending compared to 2019? Thanks.
I'll start with the second question. We had difficulties of understanding your first and the last one, so we may have to just come back to you and ask you to repeat. On the working day difference, in relation to the fourth quarter, look, we'll probably face a little bit of a tougher comparative with the fourth quarter as we approach it, because of the working day impact that we are foreseeing at the moment. You can see it in October. We've been giving you that number. There's probably a little bit of festivity and seasonality playing out, which is hard to forecast. I would just leave it with that there's probably in the fourth quarter a slightly harder comparative due to this working day difference if you consider the reported net bookings.
Okay, thank you. On the other two. In terms of progression on the GDS side, there was a special underperformance in North America comparing to the other regions. Okay? There was a 9 percentage points derating in the growth compared to what you reported in Q2. If you could provide some color on the reasons underlying this performance gap. The third question is related to the international versus domestic bookings comparing to 2019, how these are trending?
Just on your third question. Sorry. We've got difficulties to understand you. Apologies. Can you repeat your third question again?
Yes. International versus domestic bookings comparing to 2019.
Domestic.
How these are trending?
Good. On the third one, the trend actually is also there, continuing to strengthen. But we are, if you just think of local booking class and the regional and global booking class, we still have got a slight negative from a higher share of local bookings in the mix. Again, it's not big compared to 2019 but it's still there. And again, depending upon how the traffic evolution evolves, I would expect that this can turn into a positive going forward as international travel and therefore regional and global booking class gain a bit more share or return back to 2019 normality.
The other question was about quarter three in the U.S. Look, you have the evolution of the GDS and also the customer mix there. Still we are doing very well. Of course, again, one specific quarter may be impacted by different evolution of our customers and the fact of the evolution of the GDS industry in this specific region, as you were asking before.
Okay. Thank you very much.
Thank you. Ladies and gentlemen, just a reminder, in order to ask a question, please press zero one on your telephone keypad. Thank you. The next question comes from Victor Cheng from Bank of America. Please go ahead.
Hi. Thanks for taking my question. Two if I may. I guess first of all, can you provide us an update on the Microsoft partnership? Have you started realizing any savings from lower computing costs, or what other tangible benefits have you realized? Secondly, just follow up on the distribution market shares. Can you provide us some more color maybe on the end, any gains or losses that you have made specifically for this quarter? Thank you.
Hello. Let me start with market share. Again, we keep signing contracts. Overall, I mean, you know how we deal with this business, okay? That we try to overall keep increasing our share worldwide. It does not mean we win everything. Of course, this will not be the case, and it's impossible to do it that way. On a net basis, really keep increasing. Our commercial traction is strong. We will announce as we sign new contracts as we have done in the past, and we have announced some of them in the quarter. Keep working on always trying to really read the situation of the industry. The prospects are positive. Our commercial track record is strong worldwide.
This is why we mentioned the majority of the regions has been positive. Keep working on that. I mean, more than that is difficult to say. It's our objective to really keep that moving forward. The commercial team is working in keeping this performance and the track record we have shown.
In terms of Microsoft partnership and starting off with our cloud migration program, look, things are on track and we continue to work on this. In terms of benefits, as we, as we've spoken before, there are clearly a number of benefits, including also certain unitary or cost benefits. I'd just like to remind you that this is a multi-year migration. Of course, you would actually expect to see the benefits actually more towards the end of the migration, because during the migration, you still carry to some extent the cost of both in a way. That's the one comment. The second one is just as a reminder, obviously, and that is more on the side of of the commercial front.
On the commercial front, we have launched, as a result of the co-innovation program and effort with Microsoft, something we are excited about, which is Cytric Easy. It is one of those products that integrates booking and expense management functionality into the Teams surface. That's obviously something very attractive from a user point of view and equally from a reach that Microsoft can provide. We are positive and very encouraged by that.
Very clear. Thank you.
Thank you. The next question comes from Michael Briest from UBS . Please go ahead.
Yes, good afternoon. Just on the cost, Till, I think if I do my calculation, it looks like in Q3, fixed costs were up 18% year-on-year, and you're sticking with 10%-14% for the year. What's gonna cause that to drop down to 14% in Q4? Thinking about next year, you've obviously got 110 passenger systems to migrate. You've got Marriott ramping up. Can you say a little bit qualitatively about CapEx next year, whether it could stay within that 10%-14% corridor? Then a question on GDS margins, you know, good pricing power. Can you talk on the cost side? Because the volumes aren't increasing as much, so presumably the incentive fees won't go up. You had a very good margin in H1, so should we expect a good margin for the year? Thank you.
Let me just reiterate what I said before. We reiterate our cost guidance of 10%-14% for the full year. That implies that you would see a deceleration in terms of P&L fixed cost and CapEx growth versus the third quarter compared to 2021. I'd equally like to say that I expect that we are more on the higher side of the 10%-14%. I've said that before, and that is largely driven by things that happened throughout the year in relation to elevated inflation levels, energy costs, and so on. Other than that, everything in terms of our cost management for this year is in check and in control, and we are pleased with that.
Look, in terms of going into 2023, as I said before, we will want to give you more clarity and guidance when we speak in February, and therefore I would like to leave it at that. Then again, just to reiterate kind of the moving parts in it, you have to obviously consider the investments that we've done into projects that are multi-year projects, which we started this year. Then you've got an inflationary component into next year as well as the main ones. Our CapEx and R&D investment you can see is high. This is supporting obviously our projects from which we expect future growth. I would leave it at that. The GDS margin, second question. Yes.
Again, this is not a quarter to speak about margins, but directionally, the GDS business had benefited as well from greater cost savings during our cost saving initiative in 2021 that have also supported the margin and evolution in combination with the elevated pricing or the pricing, the price increases that we've gotten there. I would also expect that the margin evolution is solid, that we see in the GDS business.
Thank you. Luis, could I just ask quickly on capacity, you said it's still not back where it was. Could you give any sense of how much below 2019 levels capacity levels are today as an industry? Maybe not just your customers?
I look again, there are different sources about that. I think you can check that. If we look into OAG, which provides some estimation, but they change every week, I think they are talking today and look, I'm talking from memory about 12% below. But again, this changes every week, and there are some projections about the future, but again, there are different sources. You also can read what all the big carriers, the big guys in the U.S. or the big European airlines are giving this information. On an industry level, I would say not yet at the 90% level, below that, not very far from that.
As I mentioned previously, I mean, there has been some huge increase in the first part of the year, and then some bumps. The trend has been positive with some months that have been more similar to the previous month and then some months where there has been an increase. The curve is positive with some ups and downs. Moving forward, the projections have to keep you know, improving, especially as many airlines are opening new routes international, being the biggest impact, the Asian routes that have been opened by many carriers.
Thank you. That's helpful.
Thank you. Ladies and gentlemen, we have now reached the end of the results call. I now give back the word to Mr. Luis Maroto for the final remarks. Thank you.
Thank you very much again for joining the call, for your question, and looking forward to the next call, the beginning of next year. Thank you.