Welcome to the Amadeus Q3 2023 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 star one on your telephone keypad at any moment during the presentation. I'm now pleased to hand you over to Mr. Luis Maroto, President and CEO of Amadeus. Please go ahead, sir. Thank you.
Good afternoon. Welcome to our third quarter results presentation. So thank you for joining us today. I'm joined by team. As usual, I will start with an overview of our most important developments and deal with our update on the key financial updates. Please turn to slide four to start with the overview of our results. For the first nine months of 2023, Amadeus continued to deliver steady financial performance. Group revenue increased by 23%, EBITDA grew 34%, and adjusted profit expanded by 68%, supporting a 50% increase in free cash flow generation compared to prior year. Our strong free cash flow generation resulted in net financial debt amounting to EUR 2.1 billion on September thirtieth, representing 1.1 x last twelve-month EBITDA.
As you know, shareholder remuneration is important for us, and having received our dividend earlier in the year, as well as announcing our share buyback program completed in September, we are pleased to announce a new share repurchase program to acquire a maximum of 8.8 million Amadeus shares, equivalent to 1.95% of Amadeus' capital, representing a maximum investment of EUR 625 million. In terms of our views for the near term, although we are monitoring the macroeconomic and geopolitical situation very closely, based on the trading conditions we are seeing today, I would like to confirm our outlook for 2023.
I will add, in terms of free cash flow, in 2023, we will deliver beyond the high end of the range we have for the year, and this is with and without the positive India tax impact deal we'll refer to later. The midterm, we remain optimistic about the growth opportunities that lay ahead for Amadeus. We continue to be highly focused on our investment plans. Industry initiatives such as NDC and offers and orders are a great opportunity for us to bring value to our customers and to expand our leadership. We have unique expertise in travel, technology, and a much track record of delivery, as well as the ability and conviction to invest for the future. Let's review the key developments at each of our reported segments, starting with Air Distribution.
In the first quarter, we signed 11 new contracts or renewals of distribution agreements, taking the total to 47 for the first nine months of the year. We are pleased to announce that Air India has extended its partnership with Amadeus to now also include local domestic content for travel sellers at points of sale in India through Amadeus. In addition, Air India's NDC content will be integrated into the Amadeus Travel Platform, with the content being made available to travel sellers in 2024. India is an important market for Amadeus, and we look forward to continuing our close collaboration with the nation's flag carrier, which recently adopted the full Amadeus Altéa Passenger Service System suite. We continue to progress with our NDC strategy.
In the third quarter, we launched our distribution agreements with several additional carriers to include their NDC content, enriching our content offering and bringing travel sellers more diverse and personalized offers from these carriers on the Amadeus Travel Platform. We have also continued to upsell distribution technology to a number of our travel agency and corporate customers. We are working with Microsoft and Accenture to develop generative AI-powered integrations for corporate travel, such as Digital Travel Assistant, to streamline tasks for corporate travelers within Cytric Easy, our travel and expense management tool embedded in Microsoft Teams. The new Digital Travel Assistant will leverage Microsoft technologies to assist corporate travelers with elements of their journey.
With regards to our volume evolution, over the past nine-month period, we have seen a progressive strengthening of global air traffic growth, including through the third quarter, although in this case, at a milder pace than in prior, prior quarters of the year. Also, in terms of global air traffic mix, as in the past quarters, the growth of international traffic remains below historical levels. In the first nine months of the year, Amadeus bookings grew by 16% relative to prior year. Asia Pac was our fastest-growing region, where our bookings expanded by 75%, followed by Western Europe, which grew by 16%, while in North America and Western Europe were our largest regions.
In October, we have seen our bookings evolution being impacted by an increase in cancellation in several regions, namely NORAM, Middle East, but also APAC and Western Europe, likely linked to the Middle East geopolitical situation. Generally, in the past, in these situations, cancellations concentrate upfront, but it is early to tell how the conflict may develop. In the past few days, we have seen our booking evolution coming closer to the levels pre the geopolitical event. We turn to slide six now for our review of Airline IT Solutions. In the third quarter, we disclosed that Vietnam Airlines, carrying 25 million passengers annually, is the name of the new Altéa PS S contract we announced last quarter. In this quarter, we successfully migrated Allegiant Air and Bamboo Airways to New Skies, and Altéa respectively, completing the list of large migrations we have planned for this year....
Also, several airline customers signed for additional solutions or implemented new solutions, such as EVA Air, Thai Airways, Mauritania Air, and Kuwait Airways. Following Finnair, our first customer for Amadeus Nevio, we were pleased to recently announce that Amadeus and Saudia will work together on Saudia's transition from the Amadeus Altéa PSS, based on today's existing standards, to Amadeus Nevio, built around new offer and order principles. We're very pleased to recently introduce Amadeus Nevio in the marketplace. With this, we are leading the way for the retailing transformation of the airline industry. It is a traveler-centric retailing platform offering next-generation retailing capabilities to airlines, including, but beyond, offers and orders , backed by fully flexible, future-proof, cloud-native solutions and the latest advances in AI.
As we have discussed in the past, this is an industry evolution that will require years of focus and dedication, but we are very well positioned to drive this transformation and to support the industry's transition. This industry evolution will further drive the penetration of NDC. We believe we have the most advanced NDC technology in the industry, and that we will play a key role in scaling NDC adoption. Regarding airport IT, we continue to expand our customer base with the signature of several new agreements, and we continue to sign upselling agreements with players such as John F. Kennedy International Airport, Ontario International Airport, Salt Lake City International Airport, and Aéroports de Paris , to name a few.
In relation to our volumes in the first nine months of the year, Amadeus passengers boarded increased by 30% in the same period of 2022, driven by continued progress in the travel industry and new customer implementations. We had net positive, non-organic effects as a result of customer implementations, the main ones being Etihad, ITA, Hawaiian Airlines, Bamboo, and Air Algérie in 2023, and Air India in 2022, partly offset by airline customers ceasing or suspending operations or migrating from our platform, including the migration of Russian carriers in 2022. In the nine months, Asia-Pac was our best-performing region, delivering 68% growth, and Western Europe was our largest region, accounting for a third from Amadeus passenger boarded. With respect to October, our PB evolution continued to improve over past quarter. We turn to slide seven for an update on our hospitality segment.
Our hospitality and other solutions segment continued to advance well through the third quarter, supported by new customer implementations, and volume expansion. As a result, our revenues in this segment grew by 18% in the first nine months of 2023 relative to prior year. Both hospitality, which generates a majority of the revenues in this segment, and payments delivered a strong growth versus prior year. We also saw continued interest during the period from customers for our solutions across our portfolio. For example, we extended our business intelligence solutions partnership with Hilton. Langham Hospitality Group added our digital media solution. Both Pan Pacific Hotels Group and H- Hotels will implement Amadeus business intelligence solutions. Also, the Department of Culture and Tourism of Abu Dhabi signed for Amadeus media and business intelligence solutions for destinations.
With this, I will now pass on to Till for further details on our financial performance in the quarter.
Thank you, Luis. Hello, everyone. Please turn now to slide nine. Before starting with a review of our financial evolution, let me, let me remind you that as we did in our first half results presentation, for purposes of comparability between 2023 and 2022, we are excluding non-recurring elements impacting our performance on the P&L. These are, firstly, in 2023, the impacts from changes in our tax provision, mainly due to the positive resolution of certain proceedings with the Indian tax authorities, which resulted in an increase in adjusted profit of EUR 22.6 million in the second quarter of 2023. And secondly, in 2022, the government grant we received in the second quarter, which increased EBITDA by EUR 51.2 million and adjusted profit by EUR 38.9 million.
Further details on these effects and the full reconciliation to the reported figures can be found in the January to September 2023 management review. Now to review our revenue evolution. In the first nine months of 2023, our group revenue grew 23.2% versus the same period of 2022, supported by strong revenue growth across our segments. In air distribution, revenue in the first nine months of the year was 25.9% above 2022, primarily driven by the booking evolution Luis described, and by a revenue per booking, which was 8.8% higher than in 2022, fundamentally driven by lower weight of local bookings in the first three quarters of 2023 compared to 2022, and pricing effects, including impacts from inflation and yearly price adjustments, renewals, and new agreements.
With regards to Airline IT Solutions, revenue in the first nine months of the year was 22% higher than in 2022, driven by the PB volumes evolution, coupled with a 6% lower revenue per PB. The decrease in the revenue per PB in the period was primarily driven by a proportion of Airline IT revenues not linked to passengers boarded growing at a softer rates than the passengers boarded, more than offsetting positive pricing impacts from the Altéa and Navitaire customer mix, inflationary or price adjustments, and from upselling of incremental solutions. To briefly recap on the implementation front, we have now implemented Etihad Airways, ITA Airways, Hawaiian Airlines, Allegiant Air, and Bamboo Airways, completing the list of large migrations we had planned for 2023.
Regarding hospitality and other solutions, revenue in the first nine months of the year was 17.8% above 2022, driven by strong performances of both hospitality and payments on the back of customer implementations and volume expansion. Within hospitality, hospitality IT revenues increased, supported by customer implementations and higher reservation volumes, mainly in Sales & Event Management , Service Optimizatio n, and Amadeus CRS. Media and distribution revenues continue to grow healthily, backed by an increase in media transactions and bookings, and business intelligence revenue expanded, driven by customer implementations. Within payments, all its revenue lines reported strong growth rates, supported by higher payment transactions and customer implementations. In the third quarter, hospitality and other solutions revenue increased by 8% versus prior year, impacted by a large foreign exchange effect.
Let me remind you that 70%-80% of the revenue in this segment is generated in U.S. dollar. Excluding FX, the segment's revenue grew by 15% in the quarter versus the third quarter of 2022, supported by an increase in transactions in customer implementations at both hospitality and payments. Please now turn to slide 10 for a review of our EBITDA evolution. In the first nine months of 2023, our EBITDA was 33.8% higher than in 2022. EBITDA margin expanded by 3.1 percentage points to 39%. Our EBITDA performance resulted from the revenue evolution explained before, a higher cost of revenue, and an increase in our combined personnel and other operating expenses cost lines.
Cost of revenue grew by 25.5% in the nine-month period versus 2022, resulting from volume expansion across our businesses and several factors impacting air distribution variable costs, including customer and country mixes. In the third quarter, cost of revenue growth over prior year was low, was slower at 9.7%. This evolution was lowered by a larger positive FX impact and some effects that fluctuate quarter on quarter. For next quarter, with respects, with respect to the cost of revenue evolution, we expect a lower positive FX impact and to not benefit from these quarterly, quarterly fluctuating effects. Our P&L fixed costs in the first nine months of 2023 compared to last year were 12% higher, excluding the government grant in the second quarter of 2022.
This cost evolution resulted from increased resources, particularly in our development activities to support our R&D investment, coupled with a higher unitary cost resulting from our global salary increase. Growth in non-personnel related spend, like travel and training, among others, driven by the business expansion relative to prior year, and higher transaction processing and cloud costs caused by the volume expansion and the progressive migration of our solutions to the public cloud. As a reminder, as we said, we expect our P&L fixed cost growth in 2023 to range between 10%-14% over 2022, excluding the EUR 51.2 million government grant received in 2022, and fixed cost growth in H2 to have a similar growth or similar growth pattern to what we've seen in H1.
To review the evolution below the EBITDA line briefly, in the first nine months of 2023 compared to 2022, D&A expense decreased slightly by 1.7%, with a lower depreciation expense from a reduction in hardware investment, largely driven by our shift to the cloud, offsetting higher amortization expense from internally developed assets. Net financial expense also declined in the period by 40.7%, driven by exchange gains and a reduction in other financial expenses. Interest expense was 4.9% below prior year as a result of a lower gross debt, partly offset by a higher cost of debt relative to last year. Income taxes increased by 60.7% in the nine-month period versus prior year, largely driven by higher taxable income.
And finally, resulting from all these effects, adjusted profit grew 67.6% in the first nine months of 2023 versus 2022. Please turn now to page 11 to review our R&D investment and CapEx. R&D investment grew 14.8% in the first nine months of 2023 versus 2022, and was focused on, firstly, the evolution of our portfolio for airlines, including Amadeus Nevio. Secondly, of our hospitality platform, and certainly enhancing as well our solutions for travel sellers... and corporations, delivering a full end-to-end integration of our content via NDC connectivity. And fourthly, our partnership with Microsoft, including our migration to cloud, and of course, bespoke and consulting services provided to our customers and customer implementations.
In the first nine months of 2023, our CapEx increased by EUR 60.2 million, or 15% compared to the same period in 2022, mainly driven by higher capitalized R&D investment and represented 11.3% of revenue. Please turn to slide 12 for a review of our free cash flow generation and leverage. With regards to free cash flow, we generated EUR 940.5 million in the first nine months of the year. 49.8% higher than prior year, driven by the increase in EBITDA, by an improving change in working capital and higher CapEx and taxes. Please note that in the second quarter of 2023, we collected EUR 42.8 million from the Indian tax authorities, linked to the positive resolution of the proceedings I mentioned before.
Excluding this collection, we generated EUR 897.7 million free cash flow in the first nine months of the year. Relative to prior year, and excluding the government grant and cost-saving program, implementation costs paid in 2022, as well as the collection of this Indian tax, of this, from the Indian tax authorities, our free cash flow was 48.6% higher than in 2022. Net debt amounted to EUR 2.121 billion at the end of, at the end of September, with leverage amounting to 1.1x net debt to EBITDA. With this, we have now finished the presentation and are ready to take any questions you may have.
Ladies and gentlemen, the Q&A session starts now. If you wish to ask a question, please press star one on your telephone keypads. Thank you. Our first question comes from the line of Sven Merkt of Barclays. Please go ahead.
Great. Good afternoon, thank you for taking my questions. Firstly, can you please comment on the growth outlook in hospitality? This has come now down to 15% growth on a constant FX basis. Is this in line with your expectations? And considering that you signed a number of larger deals over, you know, the last couple of quarters or years, should we expect a reacceleration of growth in that segment, or will growth now stabilize in the, the low double digits mid-teens from here? And then the second question is just on capital allocation going forward. Is it fair to say that, you know, the M&A opportunities out there are a little bit more limited now, and that you will most likely will allocate a higher proportion to buybacks going forward? Thank you.
Well, thanks for the questions. I will start with hospitality, and Till, if you cover the capital allocation. So look, hospitality, as you know, was less impacted by COVID. So in terms of recovery, we had, you know, less recovery, but still, we were enjoying for also the recovery and the strength of the industry. So yes, this 15% was in line with our expectations. And moving forward, we expect to really be healthy growing. As you know, this is one of the areas where we expect a growth in the future, but of course, we will not be talking about, you know, 30, 40% that we have seen in some quarters in the past. So I would say this 15% is a figure in line with what we were expecting for this unit.
Look, in terms of capital allocation, obviously, we are looking at that at the time, and we always said M&A is a priority for us to continue to grow the business. And you can imagine we are continuing to scan the market and look at opportunities. But of course, in the meantime, as we've also said before, when our leverage reaches the lower end of our target range, 1-1.5 times, we of course said that we would consider share buybacks, respectively, extraordinary shareholder remuneration. And obviously, these criteria we've met earlier this year. But again, going forward, as I said, M&A is a priority to us to continue driving growth.
Okay. Thank you. That's clear. Can I ask a follow-up question on the cloud transition? Can you just comment how this is progressing, and if you still believe that this project will be completed by the end of next year? How much temporary costs are currently in the P&L that will drop away once the transition is completed?
I mean, you gave a date that I believe we have not provided. What you said end of next year. I mean, we said this is an ongoing project, is moving according to original plans. We said this is a project that will last between three and five years. And therefore, we keep according to the original plan. It's moving well. It's not going to happen from, you know, it's not a one-off in the sense that before the final date, we are not migrating. We keep migrating applications so on an ongoing basis, and therefore, we already seen cloud costs related to our migration, and the project will continue, but according to the original plan. Okay, so no, no, no real news, just the fact that-...
As we have spoken to you, we'll have more costs on the P&L impacting more our EBITDA, and less investment in our CapEx. This is something that has happened, you know, for the last years already.
Just adding to what Luis has started on the cost side, we obviously have got two components at the moment. We've got migration costs that we are incurring, and you can say this is a bit of double cost. We've got the Capacity on Demand, which is a variable cost of consumption of workloads that we are moving over into cloud.
It is true, we have not given you the exact breakdown of that, but what we did say, and this is as a reminder, that in the cost growth for this year, these two elements together, the migration cost and also the beginning Capacity on Demand cost coming into our numbers, represent about 3-4 percentage points of the cost growth range of 10%-14% that we set out for the year.
Okay, thank you.
Thank you. Our next question comes from the line of Laura Metayer of Morgan Stanley. Please go ahead.
Good afternoon. Three questions, please. Number one, on NDC, one of your peers recently said that the economics of NDC agreements look similar to the previous ones, with the exception of Europe, as Europe has some of the highest booking fees in the world. Could you please comment on whether you are seeing the same thing? Question two, so you said international traffic will rate remains below historic levels. What do you think is preventing international air traffic volumes to come back? Is it purely due to capacity issues? And last question, please, did you see a continued improvement in air bookings recovery in October? Thank you.
Okay. So, NDC economics, I mean, we have already mentioned in previous calls, you have a range of agreements. I will not explain region by region. I mean, looking in Europe, as you know, we had already some private channel agreements in the past, in other parts of the world, different models. So I couldn't conclude that the fees are lower. I mean, it depends on each agreement that you may have.
I'm not, of course, denying what others may have as an impact, but for us, as we said, our goal keeps being the same, that NDC, on a net basis, because we talk on a net basis, will be neutral, and hopefully we will be able to really get incremental fees as part of this NDC migration. With regards to international traffic, look, it's a matter of mix, it's a matter of how the recovery was happening at the beginning. I mean, you see the figures, even the public one from IATA. Domestic has recovered faster, but you need to also understand that the first country to recover was the U.S., which is much more domestic. International has taken more time.
Asia has been coming back, so this is helping in the international traffic, but still overall, overall, I'm not talking about the GDS part, but overall, for things, domestic has been recovering faster. Yes, could be part of that. I mean, there are a number of, of effects, lack of supply in some cases, but this is being fixed as we speak. Capacity that needs to be rebuilt, for some of the international routes after, the COVID situation. So there, there may be the, the country mix. So there are a number of effects that may impact this recovery, but hopefully at one point, this should, this should be back.
With regards to air bookings, I already mentioned, I mean, look, just to elaborate a bit more, on the October or even the Israeli impact, I mean, our, our purely impact to Israel is extremely, extremely low, okay? It's even below 1% if we just talk about Israel. But when we talk about, you know, the overall impact, it's not just about, about Israel, okay? Because therefore, will be very small. It's about the reaction in the rest of the countries with regards to whatever happens, okay? These events, and the concern about potential terrorist attacks or the concern about, what is going to happen next.
So what we see, and this is not the first time, we saw in the case of Ukraine, or we have seen in previous terrorist situations, is at the beginning, there is an upfront cancellation, mainly much more international than domestic. So people are concerned about traveling outside of their home market. That's a natural reaction, and this is what we have seen, especially high in the days after the seventh of October.
As I mentioned at the beginning, North America was very high in terms of cancellation, but it was across the board. And after that, things start to normalize, depending on the evolution of the events, of course. What we have seen is this progressive evolution, improvement on the cancellation rates, and therefore, improvement in the net bookings. From now on, difficult to really assess what is the situation. If things become stable, hopefully the situation will normalize. If things become complex, of course, the situation will be back.
Thank you.
Our next question comes from the line of Michael Briest of UBS. Please go ahead.
Yes, good afternoon. Two from me as well. Just on the GDS business, what proportion of your airline customers now are NDC-enabled? So theoretically, what percentage of bookings could go through NDC if everything switched to that path? And then I think, IATA said in the summer that NDC volumes reached 10% of sort of total. Can you sort of comment on that in relation to your own volume? And then the second question's on Nevio and the Saudi contract. Is this the start of a, you know, multi-year migration of all of your Altea customers, do you think, to the new platform? And can you maybe sort of talk about the challenges of a migration for the Saudi and others potentially afterwards, and what the economics would look like? Is this gonna lead to a higher revenue per passenger in theory? Thank you.
Okay, let me start with the last one. I mean, look, this will take years. This is a transition, as any evolution that happens, in the industry. Of course, the airlines will expect that, this evolution will allow them to really retail better and provide a better solution to the traveler, and therefore being able, in theory, to really get, you know, incremental revenues as a result of that, on top of, a better service to the traveler. So of course, our goal will be to really provide better technology, provide better service, support the airline industry, and at the end, yes, it's a matter, as always, of, negotiation.
But in the medium term, expect to really get incremental revenues for Amadeus if we are able to provide, you know, all the solutions that will be required for the future. Because we are talking about, you know, about offer and order, about, you know, data capabilities, about payment delivery, servicing. I mean, it's a range of functionalities that if you want to provide an end-to-end solution will be required. So when you talk about how this will play out in terms of migration, it depends on the airline goals, it depends on the airline needs.
Probably, I mean, in years from now, years from now, the majority of the airlines will move into that logic because it, it will allow them to really, optimize better, the service provider to the, to the traveler. But it is still, I mean, it's very early to really have a conclusion about, what will be, the final economics. As we are talking to customers, and we have announced a couple of customers to move into this journey with different streams and different deliveries, on a staged-gate approach. You were also talking about volumes of NDC. In the years to come, yes, there will be definitely an increase. We are growing, but still, the volumes are small.
As we mentioned before, things are growing, in our case, but still from a low base. And therefore, as a percentage of the total, the volumes are smaller. As you know, but we expect in 2024 to be increasing that. I mean, as you know, this is a journey, in my view, and this is a journey. It will take time. And what we are providing, in our view, is a solution that is solid, is sophisticated. It integrates the different versions of NDC. There are many standard versions outside used by the airlines, so we are going through an integration in the meantime. And yes, there will be some movements of volume, some people connecting here and there.
We really feel that in the medium term, our solution is, is good, is solid. And this is not so easy, to really do, in my personal view, as you have, you know, the integration, as I mentioned, of many versions. You have the impact versus NDC, you have disruptions that may happen, you have number of transactions that increase quite a lot with NDC versus EDIFACT because of the possibilities, of doing different way we were managing the pricing in the past. So all that need to be taken into account, and I think as the industry evolves, this will become a reality, and therefore, we, we feel, optimistic about our capability to provide the right service. We keep signing, contracts, with airlines that we have been, announcing to you.
I mean, I don't know exactly the percentage, but we have around 30 airlines that are today enable, you know, NDC on the EDS. We are implementing in many markets, so this is, this is the way we are, we are today evolving, okay? It's between 20-30 airlines out of 70 airlines that have been certified by IATA. So moving in the right direction, but as I said, this is a, this is a journey.
Thank you. But just-
I know you have,
Sorry, as Luis was just asking-
Yes, go ahead.
About 10% that IATA references NDC volumes in June. Is that something that is consistent with your data flows, or would you say they're going through other channels, direct connects or other aggregates?
I mean, look, again, again, what is called NDC, everybody's calling different. So, I mean, I have read many, many, many figures coming from airlines. Some of them are really based on NDC, some others are based on some direct connects that are not completely NDC-enabled. I mean, look, I, I'm not here to really challenge whatever is, is given in terms of numbers. We don't have all the data of the airlines, as you know, because this is an industry figure. Some airlines are more advanced than others, so I'm not able to really challenge this 10%, to be honest. I mean, this is a figure provided by IATA. Should be right, but how they are computing these numbers, which airlines are included or not, that's always something to debate. Okay?
Okay. Thank you.
Our next question comes from the line of Victor Cheng of Bank of America. Please go ahead.
H i, Luis, and hi, Till. Congrats on solid quarter. And a couple questions from my side. Just going back on the bookings evolution, I think you gave us some good color on, you know, recovery and the impact in the Middle East. But can you maybe quantify a bit on the impact you talk about, you know, in other regions, in North America and APAC, where you see a lot of cancellations? Are those, like, international flights not flying into Middle East or flying through Middle East? And I guess in October numbers, has that deteriorated versus September? How should we quantify that impact? And then second question on revenue per booking. I think, you know, one of your peers reported weaker bookings recovery, but higher revenue per booking.
I believe maybe some of it was due to, due to FX effects. But how should we think about revenue per booking going forward, as the mix, international mix tailwind is diminishing? And then lastly, on the cost side, I think Q3 fixed cost was a bit on the lower end of your full year range guidance. Should we expect Q4 to trend similarly, or has some of the costs been pushed into Q4, given obviously your full year range implies a very wide, range for Q4? Thank you.
Okay, let me start with the volumes. I mean, no, it was not really flights to Israel. I mean, we have seen that it was more general, that people at one point canceled international flights. That was the reality. So again, I think we were doing very well until the seventh, then these cancellations started to happen for a couple of weeks, but of course, much more pronounced in the figures we have, the three or four days after the event, and then things have been recovering. And as I mentioned, the beginning of November seems to be back to normal. But yes, in October, due to this fact, we have been below the figure of September.
I mean, it's not big in terms of impact, but it has got some points of impact, this cancellation, that are going back to normality. Are these in November going to catch up? Could be, because people have delayed their decisions or cancel flight, but this is what we need to see. Again, progressive improvement, but the latest data we have, which is, you know, the last days of November, are mainly going back to the situation, before, you know, the seventh of October. But yes, in October, due to these cancellations, we have been below September.
On your second question, in terms of just revenue per booking. So yes, you are right. Revenue per booking in the third quarter was a little softer relative to the previous quarter, unless you said there was an FX effect, which has impacted that. Slightly diminishing positive booking mix effect, but again, that was expected. And also you've got an effect of, you know, some revenue lines that grew at a slightly softer rate than actually the bookings increase was. So that altogether, but again, we are still positive in terms of the revenue per booking evolution, in line with what we expected going forward. Look, it will gonna come down, firstly, obviously, to booking mix, customer mix a bit, but of course, then also kind of the pricing side.
As you know, we have the ability to also pass on a certain amount of inflation, which is a drive on an annual basis, and of course, then the result of the deals that we are signing, and the pricing effect of that. In terms of fixed costs, yes, so third quarter, a little lower, but, but again, the fourth quarter and, and therefore also the second half, I would expect comes out kind of similar, or close to what we had in terms of growth for half one, which was 12.7%. And really, the growth in the fourth quarter, I expect to come from resources that we fired throughout the third quarter. Slightly more Capacity on Demand cost as we continue to ramp up.
This is probably a scene that we're gonna see quarter-on-quarter, but again, not material, a slight increase in non-labor related costs. I expect as well a little less of an FX impact. All this together, I would think on a full- year basis, should bring us to the, yeah, similar to what we had in half one, more or less, and also with that, fully in line within our full- year range of the 10%-40% that we said before.
Got it. Thank you.
Our next question comes from the line of Charles Brennan of Jefferies. Please go ahead.
Great. Thanks for taking my question. I was wondering if I could ask a forward-looking one. You've obviously given us some color on October and November, but I was wondering if you can give us any early thoughts on next year. It feels like most of the airline statements I've been reading, they've been cutting capacity growth for 2024. Are you assuming that next year is less buoyant in terms of market recovery than this year? And similarly, can you say anything on the cost development into next year? It sounds like you've been hiring into Q4. Do we have to think about that cost annualizing into 2024, and is there anything you can say there? Thank you.
Hello. Okay, certainly, we'll provide you guidance in February to really talk about 2024. What I can share with you, which is more general, is that we are still, and look, you see the majority of the airlines still are in capacity, okay? There could be some adjustments in some of them, but for us, it's important, the capacity and the majority of the airlines are increasing capacity next year compared to this year, which is normal in the way they plan, because you receive, you know, the planes. It's also stated that the majority of the problems that have happened in terms of supply should be finally fixed in 2024. So there are some data points to be still optimistic.
I mean, if you see again, the capacity projections still today for next year, plus talking to the airlines, I mean, the majority of them are really optimistic about, well, whatever may happen next year. We should also have still some recovery, but probably less than we have seen, because at one point, the recovery compared to 2029 is already happening in many parts of the business. So putting all together, we are still optimistic for next year. However, saying that, I mean, we mentioned about the geopolitical situation. I'm not going to mention the current macroeconomic environment, so difficult, really, we are today preparing and analyzing our projections for next year, and we'll provide you guidance at the end of February.
But we are not pessimistic about the medium-term outlook for this industry, including next year, with the caveats that I mentioned before.
Perfect. Thank you.
Our next question comes from the line of Alex Irving of Bernstein. Please go ahead.
Two on Nevio and one on distribution. So first, how significant is the competition today in your assessment for order management systems? Do you basically have this market to yourself for now? Second, is the commercial model for Nevio still going to be a fee per passenger boarded, or are you planning to use a different basis of charging? And if so, what is it? And then third, on distribution, your unit revenue looks to be stabilizing close to EUR 6 versus 5 pre-pandemic. Are contract mix impact the driver here? Well, specifically, how much of your bookings are being done through full content agreements, and how does that compare to pre-pandemic, please?
A bit early to really talk on Nevio in terms of business model. I mean, in principle, yes, should be transaction model by all means, based on—I mean, it could be based on passengers, based on number of orders. We are still, you know, seeing how things may evolve on that front, so it's a bit early, okay? What we have is a couple of customers and trying to really evolve this model to see what is the best approach. But overall, will be transaction.
So in principle, with the customers we have today, I mean, we are trying to really do in a way that is, you know, transparent, simple, they understand well, they can estimate their costs, but it's a bit early to really talk about the, you know, a complete financial model. In terms of being alone or not, I mean, we are never alone in any business we operate, okay? There will be players, there will be new companies. This is part of our game, as it happens on the PSS, and it will happen with the all the functionalities that we provide.
Our goal is to really do something that is innovative, is well structured, and can provide a good way to really move from some of the models we have today and the way up to, in Altea, to a logic of offer and order. So there will be competition. Yes, by all means, there will be companies that will develop alternatives to what we have, as we have today in other parts of the business, okay? I mean, it's not just the Altea part, but as you know, there are competition for our revenue management, there are competition for our loyalty products. There are companies that they will deal with digital capabilities, so we don't expect this to reduce.
But of course, what we are trying to do is to be innovative, to be ahead of the game, and to provide a solution that can be proven reliable, scalable, and successful in the future.
In relation to the booking to the booking fee evolution, let me just reiterate again. What drives it the most is, of course, the booking mix, as a primary one. But of course, beyond that, of course, you've got customer mix effects, and again, they result from renewals that we've got or also new deals that we do sign. And it's true, where we have certain changes in terms of just the contractual nature of with our customers in terms of full content agreement or customers moving off that, that does have or did have, in certain instances, an impact also on on pricing and revenue per booking. But I would just subsume that under the category of customer mixes in the end, impacting pricing.
Then as a third category, as I said, you do have kind of the inflationary dynamics that are playing into it. And all of that together gives you, in the end, the drivers of the booking fee.
Thank you very much.
Thank you. Our next question comes on the line of Toby Ogg of J.P. Morgan. Please go ahead.
Yes, hi, and thank you for the questions. Couple, couple from me. So firstly, just, just thinking about the evolution of the P&L fixed cost growth components, as we've talked about for 2023, we've got the 10%-14% growth ex the grant, within which you've got the cost growth of 7%-10%, which is linked to things like R&D implementations and inflation, and then you've got the cost growth of 3%-4% from cloud costs.... As we think about the evolution of these different costs into 2024, what, what are the elements, Till, we should, we should expect to repeat? And what are the elements that are more specific to 2023? And are there any reasons to think that the magnitude of these different components could change?
Then, secondly, just on Air IT, if we look at the Q3, you're now tracking at 100% of the 2019 level on the PB side. So as we're thinking about the different factors that will be featuring in the revenue per PB side into 2024, is it fair to assume that the headwind from the revenue per PB from volume recovery is now behind us? And what are the other factors we should be thinking about for revenue per PB beyond 2023? Thank you.
Let me start with the last one first. So just in terms of Air IT dynamics to volumes, we are now very close, and this is very pleasing, obviously. And therefore, also the elements that we've been talking for quite some time on to explain the decline in the revenue per passenger boarded. So the element of what's basically transactional and what's nontransactional is now obviously diminishing. Respectively, I expect it to disappear soon. And therefore, this, as you said, headwind, I expect to be behind us in the not-too-distant future, absolutely. Just in terms of the dynamics that belong to it, of course, we have the platform mix.
As you know, our Navitaire platform and the Altea platform attract different fees. So this is one element which is always important to consider. Of course, beyond that, we continue to see the opportunity and also progress on that when it comes to upselling, which should support the evolution going forward. Of course, then we've got the general pricing dynamics that play into it when we sign new deals and so on and so on. Therefore, a bit early to say how things are going to play out in 2024, and we'll come back to that when we speak about kind of the guidance or the outlook for 2024 in February. But these are the components that you need to consider.
In terms of P&L fixed cost, again, same, same statement to start off with, a bit early. We'll come back to that in February next year. But the components of the cost dynamics, we will gonna have still migration costs in relation to cloud. We will have slightly growing Capacity on Demand cost as we continue to offload into public cloud. And we would have, as you said before, on our, let's say, non-cloud related cost, similar dynamics from an inflationary point of view. Also, of course, the annualization effect of the resources that we've hired this year. And all this together flows into our cost envelope for next year. But again, too early to speak about that. We'll come back to that in February and give you a fuller picture.
That's great. Thank you.
Our next question comes from the line of Nicolas David of ODDO BHF. Please go ahead.
Yes, good afternoon. Thank you for taking my question. I have, two, actually. The first one is regarding APAC. The region has recovered very strongly, again, in Q3, notably in terms of PBs. Now that we have seen this recovery, do you think that we are now in a more normative level of volume, and going forward, the growth will be more driven by the, the structural growth of the market more than the recovery? Or do you think there's still some potential for recovery, specifically this market? And still regarding APAC, this is one of the, maybe the only region where, your recovery in terms of PBs is not stronger than, than, bookings compared to 2019. What should we read there?
Is it linked to the market itself, or is it more linked to your performance, commercially speaking? And what should we see there in terms of evolution, notably, regarding PB evolution? Do you have room to, commercially speaking, be more aggressive? And my last question is on Air IT. Again, could you give us some color regarding the phasing of onboarding of Vietnam Airlines? And also, could you characterize what was the level of non-organic addition during Q3 this year? Was it a low level compared to historically or a nice level? Thank you.
Okay, let me start to see if we got all the questions. I mean, starting with the last one, with Vietnam, we have not disclosed the timing. In this case, we cannot, but you should assume something, you know, similar to what we have between one and two years. Okay? But not, we have not disclosed the specific dates for this airline yet. In terms of the APAC recovery, yes, the majority of the markets or many of them have recovered. We still feel that there could be a bit more recovery from some countries that have not recovered at the same level. So still there could be some aside from that, yes, but at one point, we'll not be talking about recovery, but more of normalized situation.
But some countries are still below levels. And the same, I may mention, I mean, the traffic has recovered quite strongly worldwide, but as I mentioned before, business travel is well behind 2019 still today compared to leisure, and international is below domestic. So hopefully, unless this is structural for the medium term, hopefully some of that may bring, you know, additional volumes. You can call, you know, further recovery from COVID or just the normal evolution of the situation of the events. But these three effects that are below 2019, a little bit of Asia back in some countries, the business travel, plus the international traffic would give additional recovery. But after that, yes, we are talking about normality in terms of volumes. Another question, I don't know if I cover.
Mainly, I think I cover what you-
Yeah.
Different aspects.
That covered most of it. I mean, I'd want to explain the difference between PBs and bookings evolution in APAC compared to the rest of the business you have. It's only region where, yeah, Air IT is not stronger compared to 2019 versus your booking business, your distribution business. Is it something specific to you, or is it because low cost-
No, no, there's nothing special. No, no, a matter of mix. I mean, as you know, there are always movements that are different between, you know, PBs and bookings in the sense of advance and inventory and recovery. So usually, you know, you have faster recovery in bookings than PBs at the beginning. So this, this, there is nothing really specific because in Asia Pac, I mean, our growth in terms of PBs is strong. Overall, we have the big customers there, as you know well, on the PB front, so nothing really specific to mention or to highlight.
Okay, that makes sense. Thank you very much. That's helpful. Thank you.
Our next question comes from the line of Fernando Abril-Martorell of Alantra Partners. Please go ahead.
Hello. Thank you very much for taking my questions. Three, first, on CapEx, so growth has slowed down a lot in Q3, so, I was wondering, what do you expect CapEx growth to be in Q4? Then second, on working capital as well, very strong working capital in Q3. I was wondering again, what were the reasons behind this and what do you expect in Q4? And last, on CRS, Marriott, I don't know if you have any update on when do you expect revenues from Marriott starting to flow into your P&L. Thank you.
Let me cover the last one, quickly. Look, we have not disclosed that. Again, unfortunately, this is... I mean, we have not spoken about the specific migration dates. I mean, I repeat myself, that's the only thing I can disclose, but mainly the project is moving ahead. It's going according to our plans. It's doing well. Of course, these are not projects without, you know, complexity and issues, but in principle, again, the project is doing well, so it should. Yeah, we will try to disclose to you at the right moment when you can expect that, but unfortunately, I cannot do that now. I mean, it's not active with the customer, and we cannot discuss dates.
Look, let me just remind you on the CapEx side. I mean, also in the third quarter, there was a positive FX effect, which I don't expect to repeat in the fourth quarter. So again, I mean, just if you consider what we said at the beginning of the year in terms of guidance, CapEx to grow slower than what we had in the year before, we are fully on track with that, and this is what I expect on a full year basis for CapEx. Working capital, strong performance of cash flow in the third quarter. Again, here we have been benefiting from, just, I mean, if you look at it, gross margin, gross margin, we laid better gross margin in the end. We had a little better collection as well.
But again, let me remind you as well, if you look, for example, at the cash tax line, it follows normal seasonality, and we should look at that kind of in relation to prior years. It's a good guidance. And then you can also kind of estimate what you would expect for the fourth quarter from that. That's what I can say for working capital with respect to the cash flow in the third quarter and going forward.
Okay. Thank you very much.
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 to everyone for attending the call. I'm looking forward to the next one, which is at the end of February, if I don't see some of you before. Thank you very much. Bye.