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June 23, 1987

UNISYS BUMPED: BIG FOUR EUROPEAN AIRLINES DEFECT TO IBM

By CBR Staff Writer

In a blow that is little short of devastating for the 1100 mainframe side of Unisys Corp, four of its biggest customers worldwide have ganged up to defect to IBM. The four are Air France, Lufthansa, Scandinavian Airline System and Iberia, and they this week agreed to replace their individual Sperry 1100-based reservation systems with a single system, to be called Amadeus, based on IBM hardware and software. The Amadeus system, representing an initial investment of $300m, around half of which will go straight to IBM. The system is planned to be phased in over 15 months from mid-1989. Amadeus will be equally-owned – 25% each – by the four airlines, and will start with about 550 employees. The holding company will be based in Madrid, Spain, with a managing director nominated by SAS, and will have three subsidiaries – an operating company in Germany, a development company in France, and a marketing arm based in Spain. Marketing will be a key function, because as well as seat reservations, the system is planned to offer unbiased hotel and car rental reservations and other travel services. The four airlines joined forces to fight off the two giant US systems – American’s Sabre and United’s Apollo – which are attempting to muscle in on the European market. The major existing IBM users – British Airways, KLM, Swissair, Austrian – are expected to join forces on a rival system. The miserable irony for Unisys is that the four carriers only started talking because they were all Sperry 1100 users. Loss of four such important customers – presumably because the Burroughs-Sperry merger cast doubt on the long-term future of the 1100 line, blasts a gaping hole in the Unisys strategy of maintaining two incompatible mainframe lines. Many more such defections – the United Apollo system is 1100-based, but the airline is a test-bed for IBM 9370s – and the expense of maintaining the 1100 line will no longer be justified – as predators will be quick to emphasise.

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