Full Year 2020 Aena SME SA Earnings Call Madrid Feb 24, 2021 (Thomson StreetEvents) — Edited Transcript of Aena SME SA earnings conference call or presentation Wednesday, February 24, 2021 at 12:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Emilio Rotondo Aena S.M.E., S.A. – Deputy CFO * Jose Leo Vizcaino Aena S.M.E., S.A. – Economic & Financial Director and CFO * Maurici Lucena Betriu Aena S.M.E., S.A. – Chairman & CEO ================================================================================ Conference Call Participants ================================================================================ * Andrew Lobbenberg HSBC, Research Division – Head of the European Transport Team * Arthur David Truslove Crédit Suisse AG, Research Division – Research Analyst * Charles Maynadier Kempen & Co. N.V., Research Division – Analyst * Cristian Nedelcu UBS Investment Bank, Research Division – Associate Director and Aerospace & Defense Analyst * Dario Maglione Exane BNP Paribas, Research Division – Research Analyst * Elodie Rall JPMorgan Chase & Co, Research Division – Research Analyst * Jenny Ping Citigroup Inc., Research Division – Director * Johannes Braun Stifel Europe, Research Division – Director * José Manuel Arroyas Grupo Santander, Research Division – Equity Analyst * Luis Prieto Kepler Cheuvreux, Research Division – Head of Construction and Building Materials * Marcin Karol Wojtal BofA Securities, Research Division – Analyst * Nicolas J. Mora Morgan Stanley, Research Division – Equity Analyst * Siobhan Lynch Deutsche Bank AG, Research Division – Research Analyst * Stephanie Fabienne D’Ath RBC Capital Markets, Research Division – Analyst ================================================================================ Presentation ——————————————————————————– Operator [1] ——————————————————————————– Ladies and gentlemen, thank you for standing by, and welcome to the Aena Annual 2020 Results Presentation. (Operator Instructions) I must advise you that this conference is being recorded today on Wednesday, 24th of February 2021. And now, I would like to hand the conference over to your first speaker today, Emilio Rotondo. Please go ahead. ——————————————————————————– Emilio Rotondo, Aena S.M.E., S.A. – Deputy CFO [2] ——————————————————————————– Thank you. Good morning to everybody, and welcome to Full Year 2020 Results Presentation. This — in this occasion, it will be led by Aena’s Chairman and CEO, Maurici Lucena; also CFO, Mr. Jose Leo; and myself. Although the presentation, as usual, is quite long, we will focus mainly on the key highlights, and then we’ll go to the Q&A session. Let me give the floor to Mr. Lucena. Thank you. ——————————————————————————– Maurici Lucena Betriu, Aena S.M.E., S.A. – Chairman & CEO [3] ——————————————————————————– Thank you, Emilio. Good morning, everybody. It’s a pleasure to have the opportunity to present to you the results of Aena corresponding to 2020. And of course, we’ll have plenty of time to discuss any other issues that may interest you. I will start with Slide #4. This Slide #4 summarizes the evolution of the activity of Aena in 2020. Starting with passenger traffic. Passenger traffic, including Spain, London Luton and Brazil, decreased to 89.3 million passengers. In the Spanish network, the decrease was 72.4%; in Luton minus 69.6%; and in Brazil, the decline was 44%. So as you may easily conclude, it’s been a very tough year for Aena, for every airport in the world. But of course, we have introduced many measures to contain the very deep damage to the financial statements of — to the financial health of the company. Regarding total consolidated revenue, it fell to EUR 2.2 billion. This revenue includes — and this is very important. In application of IFRS 16, the revenues associated to the minimum annual guaranteed rents, the famous MAGs. I think that we will have time during the Q&A to try to answer any confusion that may arise for this, let’s say, separation of the cash and the revenues. And we will try to explain this very clearly, especially our CFO. And for the time being, it’s just important to take into account that we have registered the whole MAGs in 2020 because we have a contractual right to receive these rents, and this is why we have counted them as revenues. Concerning EBITDA for the period, it stood at a little bit more of EUR 700 million. This figure includes the impairments of both Brazil and Murcia. We’ll have time to descend to the details of these impairments in the following viewgraphs. And the consolidated net result closed in minus EUR 126.8 million. Excluding the effect of the mentioned impairments, net losses for the period would have been minus EUR 51 million. On the other hand, operating cash flow has ended with a decrease of 93.1% compared to more than EUR 2 billion in 2019. This is a natural consequence of the deep damage to the company related to the pandemia. And finally, the consolidated net financial debt of the Aena Group has increased to EUR 7 billion. This figure compares to EUR 6.7 billion at the end of 2019. And this represents, in the end, an increase in the ratio of net financial debt-to-EBITDA for the consolidated group to 9.8x compared to the, let’s say, more usual 2.4x in 2019. I say — I refer to normality within the activity of Aena. As you can conclude, of course, the problem is not the amount of debt which has not changed significantly. The problem is with the drop of the EBITDA. But of course, this now has been a usual trend in the whole airport industry. And finally, let me highlight that the financial ratios included in the contracts with financial covenants are linked to the EBITDA and debt of Aena individually. It means Aena SME, not the consolidated. And this means that the net debt-to-EBITDA ratio of Aena SME has closed in 8.1x compared to 2.3x in 2019. If we move to the following slide, Slide #5. On this slide, you can see that the traffic and its recovery, it’s difficult to assess. There are no signs at present of recovery in traffic in the short-term. Of course, we are confident that traffic will really improve in the second part of the current year in 2020. But of course, as it’s been the case since the beginning of COVID-19, the visibility remains very low. And you have had the opportunity to see how, almost from the beginning, all the airlines, all the airports, operators. We have been — let’s say, in retrospect, we have been too optimistic, but it is true that the analysis at every moment was completed with good faith. It’s just that the pandemia has really overcome every optimistic forecast. And that is why since the summer of 2020, we decided not to convey an official forecast — an official Aena’s forecast because we thought it was better not to introduce more confusion to the market and then mention the wide range of forecast by the international aeronautic associations. Well, in short, it is not possible at present to anticipate when the recovery will start. But I would like to insist that we are confident that, and I’m sure it will be the case, that the second part of the current year will be significantly better than this first part. Concerning aeronautical revenues, we recorded a decrease of almost EUR 2 billion, which represented a decrease of 67.1%. And in the area of commercial and real estate, the revenues decreased by EUR 209 million. The fall of this business, as I said a few minutes ago, has been positively impacted by the application of IFRS 16. Because we have recorded a revenue of more than EUR 600 million associated to the MAGs, to the famous MAGs, given that Aena, I think this is indisputable, has a contractual right to receive these revenues. But we — I will elaborate a little bit more on this issue later on. On view — on the next viewgraph on Slide #6, I would like to stress 6 important topics. Topic number one, the cost saving plan. I think that we must recognize in retrospect the very hard effort that the company has made during the — at least the 9 months — the last 9 months of 2020. We accumulated during these 9 months savings that amounted to more than EUR 400 million, which is, believe me, quite a lot for a business like Aena’s business because you know that we have a considerable amount of fixed costs. So I’m really proud of the company’s response in this cost saving plan because this means that we have been able to accumulate savings of EUR 45 million per month, which, let me insist on that, is quite a lot. And this saving plan has been based on the continuous adjustment to the evolution of traffic and cost-cutting measures. Topic number two on this slide. It refers to investments. Aena, as you know, temporarily halted its investment program, which led to savings of EUR 175 million during the second quarter of 2020. Since June, this investment has resumed its rhythm. And it means that, in total, the amount of investment carried out by Aena amounted — in the whole 2020 amounted to, I was saying, EUR 435.7 million. Topic number three, financing. At present — at the present time, Aena has cash and credit facilities totaling more than EUR 2 billion. And in addition to this more than EUR 2 billion, we have the possibility to appeal to almost 400 — almost to EUR 850 million of euro commercial paper that can be issued at any time. Topic number four, it concerns the covenants, the financial ratios. In December 2020, temporary waivers were obtained by Aena. And it means that until at least June 2022, we have these waivers active with the European Investment Bank; the ICO, it means the Instituto de Crédito Oficial, FMS and Unicaja. Topic number four (sic) [five] of this viewgraph. It concerns airport charges. We had the last week the resolution of the CNMC, La Comisión Nacional de los Mercados y la Competencia. It issued a resolution which implies that the proposal of Aena concerning charges has been approved, and it means that airport charges will not change from last year — compared to last year. And finally, on this slide, topic number six, DORA 2, the — our regulatory framework that covers 2022 to 2025. The consultation process with the airlines is ongoing. And in mid-March, Aena will submit its final proposal. So at least, we hope that we have at least some visibility that comes from this new regulatory framework that you know that drives very important part of our activity through the following 5 years. On the next slide, viewgraph #7. Here, we will try to convey the main highlights concerning the negotiations of commercial contracts, which, at present, is a very, let’s say, hot issue. And let me explain it very clearly. We knew in 22nd December 2020 that a Royal Decree was approved by the Spanish government. It was a decree related to urgent measures that affected the tourism sector and the mobility sector as a whole. And based on the many aspects — based on the myriad of aspects of this Royal Decree, Aena created — built a proposal, and this proposal was sent to our commercial partners, to our commercial subcontractors in January — the second — in the second part of January of the current year, 2021. And this commercial partners cover duty-free activities, specialty shops, food and beverage, vending machines, financial services and advertising. And let me explain the details briefly of this proposal — the proposal sent by Aena. This proposal, I would like to highlight, firstly, that from the 1st of January 2020 to March 14, 2020, the MAGs that we propose to apply in accordance — will be in accordance with the original contracts. This is very obvious. At that moment, the pandemia was not — fortunately, at that time, was not a concern. The activity in the airports, at least in Spain, was very vibrant. So the change — the proposed change affects the next periods. From March 15, 2020 to June 20, 2020, the State of Alarm period, the MAGs that we proposed to apply are 0%. And later on, from June 21, 2020, to September 8, 2021, a percentage of 50% of the prorated MAGs we proposed to apply, except a very, let’s say, small exception in advertising in which a MAG per passenger will be applied. As — so it means that, as of September 9, 2021, we propose that the original conditions of the contract will resume. This is, in summary, the details of the — or the main details of Aena’s proposal. And so far, 72 out of 123 operators — commercial operators have accepted this proposal. This represents almost 53% of the total agreements, and it represents considerably less or lower percentage of the MAGs affected of the revenues — the potential revenues affected because these 72 commercial operators — they cover only 13.2% of the MAGs. For purposes of illustration, let me explain the following. Should this proposal have been accepted by all commercial operators, the amount of MAGs of minimum rents invoiced in the activities affected would go from the current total of more than EUR 620 million to EUR 179.5 million. It seems to me that these figures are, I would say, crystal clear proof of the aim of Aena to mitigate the financial — the very hard financial impact for our partners, for our commercial operators. If we move to the next slide, Slide #8. On this slide, I would like to focus on the impairment tests. Due to the deep impact of the pandemia, Aena, as many, many companies in the world, has carried out valuations of its main assets. As a result of these valuations, the conclusions of the analysis are as follows. First, the Spanish airport network has not suffered impairments. This means that we feel very comfortable with the valuations that we have registered in our books. There is, secondly, no impairment either for Luton Airport. Thirdly, we have registered or recorded — we have recorded an impairment of the assets of the Murcia International Airport for the amount of a little bit more of EUR 45 million. And finally, for the assets in Brazil, an impairment of EUR 64.6 million has been recorded. These impairments, in total, amount to EUR 108.8 million. That, as you know — I would like to underline this. That, of course, they don’t have any impact on cash. Also, I would like to call your attention to the fact that in the cumulative conversion differences section in the statement of financial position, Aena has recognized negative difference on foreign currency that amounts to EUR 145.6 million. And of course, this negative difference is due to the adverse movements of the Brazilian real against the euro. And last but not least, on Slide #9, we give you a little bit of color related to the Luton Airport. Regarding traffic, in 2020, traffic in Luton reached 5.5 million passengers, which represents an almost drop of 70% of traffic. And on covenants, I would like to stress that in June 2020 the company exceeded the financial ratios as it was natural when you follow the evolution of the traffic. And these financial ratios were part of the financing contracts. However, at that time, we obtained temporary waivers from the financial institutions. How I see things at present? Well, I think that it is likely that in the next 12 months, Aena will fail to comply with the mentioned financial ratios. Therefore, we are negotiating. We are keeping at it, negotiating with the financial institutions the extension of these exemptions until June 2021 and December 2021. In any case, Luton’s management and, of course, Aena’s management, we expect that a result of the negotiation is underway with the financial institutions. The exemptions that we need will be extending — will be extended successively and successfully. And for my part, this is all I wanted to convey to you. Thank you for your attention. ——————————————————————————– Emilio Rotondo, Aena S.M.E., S.A. – Deputy CFO [4] ——————————————————————————– Thank you very much. We now move into the Q&A session. Operator, please. ================================================================================ Questions and Answers ——————————————————————————– Operator [1] ——————————————————————————– (Operator Instructions) So we do have a couple of questions in the line already. Your first question comes from the line of Cristian Nedelcu of UBS. ——————————————————————————– Cristian Nedelcu, UBS Investment Bank, Research Division – Associate Director and Aerospace & Defense Analyst [2] ——————————————————————————– Three, if I may. Firstly, in terms of the MAG negotiations for 2020 and ’21. Could you give us a bit more color on the time line that you would expect to reach a final agreement there? And effectively, the possible scenarios. If you don’t have agreement with the travel retailers, how do you see things evolving from here? Secondly, looking a bit — from memory, I think this year, you are supposed to organize a new tender for the car rental contract as well as some of the specialty shops that was supposed to be rolled over. So some of the specialty shop contracts that were ending this year. Could you give us a bit of an update on the time line there? You still target tenders this year? And what are your expectations in terms of the conditions that you can obtain in these new tenders? And lastly, on CapEx. I mean, we were seeing everywhere forecast on a slow recovery in traffic over the next years. I guess my question is, is there any reason why you would need to invest more than the current run rate, more than EUR 450 million of CapEx per year for the next regulatory period? Is there anything specific — any investment in particular that would increase that number? ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [3] ——————————————————————————– This is Jose Leo here. Before answering your question on the MAGs, I would like to make a very brief introductory statement. I read this morning some of you writing that the reason why we are accounting for the MAGs is somehow that this is helping us in terms of reporting better financial numbers or indeed being better prepared to deal with the covenant discussions. That’s not the case. Simply, that’s not true. Let me bring you back for a while to the discussions on this particular accounting that we have been — let’s say, been very transparent about it in front of yourselves. We have struggled a bit with this way of accounting for the MAGs. I personally, I think, mentioned sometimes that I found it a little bit exotic because it is making the cash and the revenues to go different ways. And that’s not helpful at all for anyone trying to make sense of the numbers and indeed for the business to be able to talk through those numbers. The reason why we are accounting this way is because IFRS 16 mandatorily is taking us to that position. We have been in discussions with our auditors for months trying to get our heads around and to find an alternative solution, but the answer was no, no way. Of course, then you have to run your IFRS 9 analysis to see whether there is any meaningful or material credit risks attached to those revenues. And the conclusion is that there were no major issues on that regard, so — in that regard. So ultimately — so rest assured that the reason why we are accounting for the MAGs this way is because we have no alternative. And we are being so transparent and so insistent and so, let’s say, sometimes really, I don’t know, almost singly focused on that because we are conscious of how this can create trouble to your ability to analyze the numbers and indeed to take views on the business. With that in mind, the MAGs recorded, of course, are subject to the commercial discussions. You asked about the time line. Frankly, we put forward a proposal after months of going, let’s say, through different discussions and realizing that the art of the possible was something different from what we have in mind initially. And that this is our proposal. It’s a very generous one. It’s very clear that all the SMEs, all the small operators are agreeing to the proposal. The big ones, the 2025 larger operators are, let’s say, reacting it or dragging their feet. That’s understandable. But we have to protect ourselves. We have to protect our investors, our shareholders, and that’s what we are trying to do. The proposal is really generous. So the deal is on the table. It is somehow a take it or leave it situation. If there is no agreement with some of them, we will build and we will try and collect the revenues, and we will, of course, make use of the set of guarantees and securities, and I don’t know — these kind of protections we have in place. I will answer to your question on CapEx, and then I will hand you over to Emilio for the second question. The CapEx — definitely, for DORA 2, the CapEx is going to be very close to — this is our expectation today, very close to the EUR 450 million or EUR 500 million per year, if that’s what you are asking for because all the largest projects are going to be postponed slightly in time for obvious reasons. Different thing is 2021. In 2021, our expectation is to invest to the tune of EUR 830 million, EUR 840 million. And so how — this is about catching up with the DORA 1 commitment. ——————————————————————————– Emilio Rotondo, Aena S.M.E., S.A. – Deputy CFO [4] ——————————————————————————– Cristian, on your second question, the call rental contracts end in October 2022. As you know, this contract that have been the first to be negotiated and to have an agreement with them back in December 2020. And with — in fact, variablizing the minimum annual guarantee to a minimum annual guarantee per pax during 2021. In terms of other contracts, mostly, we have used the possibility of extensions but we also have seen new tenders. For example, in car rental, there has been a new tender launch. I don’t remember when, but I think it was at the start of 2021. And was very — the result was very positive, and there was a high interest from different competitors. ——————————————————————————– Operator [5] ——————————————————————————– Your next question today comes from the line of Siobhan Lynch of Deutsche Bank. ——————————————————————————– Siobhan Lynch, Deutsche Bank AG, Research Division – Research Analyst [6] ——————————————————————————– I have 3, if possible. The first is just on the MAGs. So I understand that the current negotiations and the discounts are out to September 2021, as you said, and this is in accordance with the decree. But my question is just, beyond September, are tenants happy to be going back to 100%, I guess, effective MAGs payment? Has there been any kind of difficulty on negotiating that? And also, what is kind of stopping you from going to a MAGs per pax metric? And then my second question. So I know that 13% of the MAG contracts are covered in the agreements you’ve signed so far. What are the bigger retailers unhappy about in the negotiations? Is it the size of the discount, the length of the discount? Anything you could give on that. And then my final question is just on the route back to paying a dividend. So I think Bloomberg consensus has you at positive EPS in 2021. Obviously, less than 2019, but positive nonetheless. So any thoughts on what this would mean to return to dividend payments? Would you consider reinstating the old payout ratio? Or is the focus this year on preserving liquidity and the business? ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [7] ——————————————————————————– Okay. Well, with regard to the MAGs negotiations, to be frank, probably the — one of the issues is, I mean for those who are rejecting or at least not agreeing to the deal so far, is the idea of getting back to the standard contractual arrangements after September 2021. But frankly, we believe that the proposal we made is fair. This is about sharing risks, sharing difficulties rather than one-sided solution. We believe that leaving on the table EUR 800 million of revenues is a good contribution. Clearly, the retailers or the travel retailers, which are more reluctant to the agreement, are the largest ones. And I understand that they are trying to protect their investors as well. But I would say, the value of their investors is at least as important as the value of — or the other way around, the value of our shareholders is at least as important as theirs, and they are participated by large institutions. So they are not precisely people that cannot face these discussions in a balanced way. But frankly, probably the main issue is exactly that, to commit to get back to normal and not prolonging in any shape or form the current solution. We believe that moving to a per pax, let’s say, revenue forever would damage something that we value highly, which is the protection of the MAGs. I’m sure some of you valued that very highly in the past. We are giving up part of that protection, but not — we don’t believe it’s sensible to do it forever, at least now. And then with regard to dividends, well, the payout policy would expire soon, probably next year. But frankly, I don’t find any reason to change that dramatically. The problem is that now our minds are not focused on that short-term because, clearly, we are in losses. But I don’t feel that — if everything comes back to normal, I expect Aena to keep being very attractive, let’s say, company from the dividend distribution standpoint and the payout policy. That’s my view. ——————————————————————————– Operator [8] ——————————————————————————– Your next question today comes from the line of Elodie Rall of JPMorgan. ——————————————————————————– Elodie Rall, JPMorgan Chase & Co, Research Division – Research Analyst [9] ——————————————————————————– I will have 3, if I may. So first of all, if we can just come back to the MAG, sorry about that, but you did offer to give us a bit of — a bit more color on the cash impact versus the P&L impact. And my question would be mostly on what we should expect on 2021 cash, if any, from the outcome of the 2020 negotiation on the MAGs? Sorry, if I’m not completely clear on that. My second question is on traffic expectations. I mean you seem quite confident that traffic will recover in H2. That’s your word. So could you quantify a little bit? Do you see scope, example, for traffic to recover to 50% or more of 2019 level, for example? What makes you so confident? And also, what is your view on the Spanish government to attempting to implement a vaccine passport to save the summer season? And my last question is on the progress on the negotiation on DORA 2. It seems to grow quite fast. Could you give us a little bit of color about what we should expect with regard to CapEx, WACC and tariff for the DORA 2 proposal? ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [10] ——————————————————————————– Okay. Very comprehensive. In terms of the MAGs for — well, we have been giving — let’s say, trying to give clarity on the numbers and the impact on cash because we believe that’s probably the main reason for concern. Having said that, we cannot quantify the specific impact on cash because that will depend on the position of the different retailers in terms of agreeing or otherwise to the proposal. Clearly, for those who agree, we will be billing and collecting roughly 40% of the total. For those who will not agree, we will work hard to collect 100%. That’s the position theoretically. But then the potential outcomes are different. That’s the reason why… ——————————————————————————– Elodie Rall, JPMorgan Chase & Co, Research Division – Research Analyst [11] ——————————————————————————– Can I just ask? ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [12] ——————————————————————————– Yes. ——————————————————————————– Elodie Rall, JPMorgan Chase & Co, Research Division – Research Analyst [13] ——————————————————————————– Can I just ask? So it means if 100% of the MAGs are agreeing on the proposal, does it mean that on 2021 cash we’re going to see a decrease of EUR 440 million? ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [14] ——————————————————————————– Exactly, exactly. That’s the 2020 figure — the 2020 MAGs. Then you have the 2021 MAGs that will only affect 2022 because, as you know — but in terms of cash for 2021, all is driven by the 2020 MAGs revenue and the EUR 440 million. In summary, by March, we would be expecting to collect EUR 620 million. If everybody agrees, we would be collecting EUR 180 million. That’s all. ——————————————————————————– Elodie Rall, JPMorgan Chase & Co, Research Division – Research Analyst [15] ——————————————————————————– Okay. And you haven’t provided for that yet? ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [16] ——————————————————————————– We haven’t — no, because, once again, this is accounting, believe me. I know you are thinking in terms of common sense. I’m really — I would like to be able to run these accounts on common sense. Once you account for that, then you have to go through the IFRS 9 financial asset impairment accounting standard. And that accounting standard applies based on a number of parameters of prospective — giving you an idea of the prospective forward-looking credit risks attached to each and every one of them. Well, more than 95% of our MAGs are linked to 24, 25 retailers. They are all large and they are in good shape. I mean, as in good shape, I mean, relatively — taking into account the current situation. So that’s it. Well, traffic expectations, I think we need to go a little bit faster, if I may. Traffic expectations, as the Chairman and CEO said, we are working on the basis of the different scenarios provided by different institutions. We believe that the 2021 traffic is likely to move in a range between minus 50% and minus 65% of the 2019. Well, we believe that we are taking from those institutions that this is a potential range of traffic in 2021, minus 50% to minus 65% of the 2019 figures. And that’s the view overall. With that in mind, we know now that quarter 1 and quarter 2 are not looking good, but we are optimistic, I wouldn’t say confident, optimistic, but we might be wrong, that the new news coming up in terms of vaccines, I don’t know, countries which are critical to us starting to relax the measures are giving us so optimism about the ability of facing a recovery in the second half of the year. But frankly, these days, there is no such a thing as a traffic forecast expert anymore, okay? The Spanish government vaccine passport — we are in favor of any initiatives that can make mobility easier, definitely in favor. We, of course, are — as airport operators are consulted by the Spanish government as other peers are doing with their governments, and we are always very fond of any initiative helping people move around. DORA 2, well, the progress, the consultation process has taken place, is about to be closed. Has been, in my view, very positive, very engaging. I’m afraid we cannot comment on the details, WACC or indeed the tariff final outcome because we don’t know. What we will be doing is to submit our proposal in a couple of weeks’ time, a little bit more. And then it’s up to the regulator to make a final decision. But clearly, in terms of CapEx, I think there is a consensus, generally speaking, between airlines and ourselves that the CapEx program should be commensurate with the current situation. So definitely, the EUR 1 billion CapEx per year originally expected is not anymore on the table. So it’s probably half of that. ——————————————————————————– Operator [17] ——————————————————————————– Your next question today comes from the line of Luis Prieto of Kepler. ——————————————————————————– Luis Prieto, Kepler Cheuvreux, Research Division – Head of Construction and Building Materials [18] ——————————————————————————– I had a couple of questions. First of all, coming back to the MAGs argument. I appreciate that there’s a theoretical protection provided by the mechanism. But the current situation has put that protection under extreme question. Wouldn’t it make sense to change the model or to adjust it and make that part of a proposal to the tenants? And I would assume that would have been the case in your case-by-case approach initially after changing to the broad-based proposal that you made. And the second question, I know it’s very difficult, and you’ve already sort of answered this. But regarding DORA 2, would it be fair to assume that your proposal could include a traffic outlook, relatively similar to where the big institutions — the big associations are heading to in terms of 2023, 2024 recovery of 2019 traffic levels? Or is it going to be completely different from that? ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [19] ——————————————————————————– Well, with regard to the MAGs, I accept your point. This is a very valid view. But we have been thinking through that. And we believe that — I don’t know. We believe that the robustness of our contractual arrangements are worth defending. Bearing in mind that we are putting on the table a significant, a very, very material amount of cash by way of discounts. So we believe that is good enough to make our tenants, our retail operators to go through the most difficult time and then getting back to their commitments. We might be wrong. I mean this is a decision made after a very long and deep reflection. Don’t forget, the largest players are the ones who are, let’s say, more reluctant. So — and we believe there is a balance to be taken into account there because they are not smaller businesses that are, frankly, struggling more. And that ironically are taking up the proposal. Then with regard to DORA 2, definitely, I’m not going to share with you any views on that. But I can tell you, of course, our DORA 2 proposal should be, and there is no other way around, in the range of the views that a number of different institutions have now. So it’s not out of kilter with that, of course. ——————————————————————————– Operator [20] ——————————————————————————– Your next question today comes from the line of Stephanie D’Ath of RBC. ——————————————————————————– Stephanie Fabienne D’Ath, RBC Capital Markets, Research Division – Analyst [21] ——————————————————————————– The first one would be on your commentary that you saw some positive news, obviously, on main countries traveling to Spain. And I think probably the U.K. mentioning they would reopen travel from 17th of May. It’s very positive for you given U.K. passengers account for a significant part of your traffic. Could you maybe comment how much feasibility you have on summer bookings and this would tell you get that visibility from the airline? My second question is on the MAG. Just to make sure there is no condition that comes with the waiver in terms of recouping any of those MAG discounts at the end of the contract, right? Because I know that in the past, at least some discussions had with investors had the hope that whatever cash impact we would be losing in the near term, you would basically get back in the longer term. And then maybe on cash generation for this year. Thank you so much for sharing your traffic range for 2021 being probably between 35% to 50% of 2019 traffic. Are you optimistic that you will be able to see cash breakeven or generate a little bit of cash with that kind of traffic? And that’s it for me. ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [22] ——————————————————————————– Sorry, with regard to the bookings, frankly, it’s early to say because, as I said before, our expectations or our wishes or whatever you call it, that the second half of the year would be better than the first half, means that we are still away from that. Yesterday, we learned that one airline as soon as the U.K. Prime Minister announced some changes, the bookings of one of the low-cost carriers went up by 600%. So definitely, it’s difficult to say. These airlines can make decisions 2, 3 days ahead of the travel. So there is no point in looking at that today, as we used to do 1, 2 years ago — 2 years ago, to be more precise. Then with regard to the MAGs, clearly, we are in a different world. We — 1 year ago or less than that, we expected to be able to protect the value of the contracts. That’s impossible today. So we are just, let’s say, making an offer to deal with the current difficult times. And then we will move on and we will never get that back other than by the fact that our tenants will be happier and will be engaging and committed, but nothing else. And in terms of 2021 is — let me — just in a couple of headlines. First of all, our aspiration and our determination that is challenging, but we are going to work hard towards that, is to make sure that under any of this potential range of traffic scenarios for 2021, which are not our forecast, it’s just the range of scenarios, we remain neutral at operating cash flow levels, at least, obviously, or better than that or positive. That’s our aim. So — and it’s not easy. It’s a challenging bit. That will mean that the — at the level of free cash flows, the only impact — the only “would be the investment, the CapEx.” That is sizable, bearing in mind that we are catching up on DORA 1. But that’s the goal, and we are of the view that this is feasible, but not easy. ——————————————————————————– Operator [23] ——————————————————————————– Your next question today comes from the line of José Arroyas of Santander. ——————————————————————————– José Manuel Arroyas, Grupo Santander, Research Division – Equity Analyst [24] ——————————————————————————– A couple of questions from me. On DORA 2 and your comment describing the negotiations as good and engaging, I just want to make sure that the possibility that DORA 1 may be extended for another year, which I believe was on the table until only recently, is no longer considered. And if that were, and DORA 1 would be extended for another year, what would that mean for 2022? And on second question is on the commercial incentive schemes for airlines. I mean there has been political pressure in Spain, at least, there is noise in the parliament that politicians want Aena to provide more meaningful discounts for the summer period. How final is the commercial incentive scheme that Aena is announcing today? And if that could be revised going forward, if needed? ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [25] ——————————————————————————– Okay. With regard to DORA 2, first of all, I didn’t mention negotiations. This is consultation. There is no negotiation per se. The possibility of extending DORA 1 was discussed, was thought through even by ourselves at the point in time. I think everybody ended up realizing that, that will be — first of all, would involve a discussion on a number of things like CapEx, other points that would make still the process complicated. So what was the point to engage in this kind of discussions just for 1 year? Secondly, there were people thinking that, yes, of course, you have to extend, but the cost of capital should be revisited. In that case, what’s the point, once again? So to cut a long story short, everybody, both sides of the table, I believe, now ended up engaging on the 2 — DORA 2 discussions and we left the potential extension behind us. With regard to the… ——————————————————————————– Maurici Lucena Betriu, Aena S.M.E., S.A. – Chairman & CEO [26] ——————————————————————————– This is Maurici Lucena. Just to complement the explanation of our CFO, what Jose has said is completely true, and this is our impression. But formally — and this — I feel obliged to stress that formally the last word corresponds to the regulator. And — but regardless of the final decision of the regulator, we — which we, as Jose Leo said, which we are confident that will be, let’s say, normal DORA 2 without extension of DORA 1. Regardless of this final decision, Aena compulsory needs to present its DORA 2 proposal. And only after our presentation — our proposal presentation, should the government, if it consider this — if they consider this adequate, they then could extend. So in other words, regardless of the extension or nonextension, Aena has the obligation to present a DORA 2 proposal in mid-March. But I completely agree with Jose Leo’s opinion, which is that after some hesitations by probably, I think, some airlines, we are now all aligned in the sense that at least it would be good to have visibility — part of visibility coming from this DORA 2, which, on the other hand, I would say, is a very reasonable DORA. And I think that — I don’t want to talk instead of the airlines, but my impression is that airlines, in general terms, consider our proposal. In the consultations we went through a reasonable one in its main aspects. Jose, I don’t know if you want to — okay. ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [27] ——————————————————————————– With regard to the incentive scheme for airlines, we think this is a good and attractive one. So there are no plans to revisit it, at least for the coming season unless, I don’t know, things change dramatically for the worst. ——————————————————————————– Operator [28] ——————————————————————————– Ladies and gentlemen, your next question comes from the line of Johannes Braun from Stifel Europe. ——————————————————————————– Johannes Braun, Stifel Europe, Research Division – Director [29] ——————————————————————————– Sorry again, on the MAG, first one. Question is when would you need the clarity to — regarding the disputes in order to cash in the amount for 2020? I think, normally, you cash it in, in Q1 or at the end of Q1. And then what happens to the commercial partners that will not have accepted the offer by then? Would you be willing to talk with them on a bilateral basis or would you simply leave a 100% of the MAG to them? That’s the first question. Second question, on this year’s fees. Obviously, headline fees will be flat, as you said. But what about the recovery of the COVID-19 cost? I think you mentioned in earlier calls that you can recover those. And also what about the impact on the P and the K factor? And then the third question, the EUR 400 million cost savings that you have realized last year, did any of this be sustainable beyond the crisis or would you expect that to return as traffic comes back? ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [30] ——————————————————————————– One question. When you spoke about the headline fee, you mean for 2022 or… ——————————————————————————– Johannes Braun, Stifel Europe, Research Division – Director [31] ——————————————————————————– For this year, for 2021. ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [32] ——————————————————————————– Well, okay. Well — sorry, 2021 is down, is flat. And the K factor, I don’t recall now the figure exactly, but my team would — can tell me, but ultimately is — now it’s not relevant. It’s just flat considering altogether. With regard to the COVID-associated costs, we have the right to recover them, not necessarily this year or the year after, it will depend. But we have that entitlement and we are pretty sure that it will be — they will be accommodated over the coming years. So we are relaxed about it. So with regard to the MAGs, well, the plan is very simple. If there is no agreement, we — actually, the invoices were already issued. Come in the day when the amounts are due, we will proceed according to our standards and rules. We have a significant amount of protections usually as part of our procedures, not 100%, I’m afraid, but — and indeed, we will build — we have built on a 100% basis to those who didn’t agree to the proposal. Savings, well beyond COVID, that will be DORA 2, and DORA 2 will come with a number of other things and features and quality standards, whatever. So I would struggle to tell you. Of course, we are — we will be as efficient as we can. But frankly, the savings we have achieved over the COVID crisis or we are achieving are somehow driven by running the business in a very, very steer way. You cannot do that forever when you are trying to run attractive well — and well-equipped operations and airports with high-quality standards. ——————————————————————————– Emilio Rotondo, Aena S.M.E., S.A. – Deputy CFO [33] ——————————————————————————– Johannes, just to clarify. This is Emilio. On the fees you were asking, maybe you’re mixing that — you have to remember that 2020, oh, let’s say, K factor or P factor or COVID expenses will be included in the tariff of 2022. So let’s say in tariff of 2021, what is included are the factors of 2019. ——————————————————————————– Johannes Braun, Stifel Europe, Research Division – Director [34] ——————————————————————————– Right. We have 2 years delay. Yes, correct. ——————————————————————————– Emilio Rotondo, Aena S.M.E., S.A. – Deputy CFO [35] ——————————————————————————– Yes. ——————————————————————————– Operator [36] ——————————————————————————– Your next question today comes from the line of Andrew Lobbenberg of HSBC. ——————————————————————————– Andrew Lobbenberg, HSBC, Research Division – Head of the European Transport Team [37] ——————————————————————————– Thanks for all your efforts at clarifying the confusing situation on the MAGs. Can I ask about the DORA? It’s obviously not a normal environment. And I see you’re very clearly ambitious to set a 5-year pathway on CapEx and charges. Are you envisioning any additional flexibilities in the structure of the DORA to cope with the extreme uncertainty that we face at the moment? Second question, with your MAG offer to your partners, can you explain what drove your decision of the turning point of September to go back to normal? Was there anything in the Royal Decree or was that just a commercial decision on your part? And then a final question again on the MAG. I’m so sorry. Can I just make sure that I understand how the P&L and the cash move? Let’s work on the sort of working assumption just for modeling that everybody accepts. And then it’s an EUR 800 million offer. And you say EUR 440 million relates to 2020, and, therefore, by my math, something like EUR 360 million relates to ’21 in the first 9 months of that. So when do we lose those bits of cash? And equally, how does it play out in the P&L? ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [38] ——————————————————————————– Okay. First of all, flexibilities in DORA 2 — additional flexibilities, frankly, I don’t think so, nothing material. Nothing that you should be surprised of. So with regard to the MAG, sorry, Andrew, I forgot your second question. ——————————————————————————– Andrew Lobbenberg, HSBC, Research Division – Head of the European Transport Team [39] ——————————————————————————– Second question was why September ’21 to go back to in particular MAG? ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [40] ——————————————————————————– Okay. Okay. I think that’s driven by the Royal Decree, which sets the time period to which it applies the second State of Alarm or state of emergency, plus 4 months, if I recall correctly. So the State of Alarm, the current one will finish on the 9th of May and then adding 4 months more. That’s it. With P&L and cash, let me try to explain cash first, which, believe it or not, is the easiest part. If everybody agrees to the plan, we will be collecting, I would say, in March, but clearly, that would say, March, April, we would be collecting EUR 180 million in cash out of the EUR 620 million we were entitled to. You can see there a minor difference between the EUR 635 million of total MAGs and the EUR 620 million I’m talking to — I’m talking about which are the ones affected by the proposal we made some 1 month ago. But bear with me, that’s not critical. So we would be collecting EUR 180 million in cash in total. That’s all. Nothing else. Full stop. Instead of EUR 620 million, which we don’t believe are the amount we are going to collect. Then in 2021, we would be accounting for the same revenues, but I will come back to P&L. And then on, let’s say, in March 2022, we will be collecting the final amount, which is — which applies — which basically would be big numbers, EUR 600 million roughly of potential MAGs, less EUR 250 million or I don’t remember the figure now, that will be collected in 2022. The rest will be gone. So in total, we will be collecting between the 2 years, let’s say, EUR 450 million instead of — or less than EUR 500 million instead of EUR 1.2 billion that we were entitled to collect, obviously, in a different world. In terms of P&L, it’s even more cumbersome. Because once you get to an agreement, let’s say, we agree with World Duty Free for the sake of argument. Clearly it’s sake of argument, nothing else. If we agree with World Duty Free on this deal, we will have a hit. We will have a loss. That loss, let’s say, is EUR 200 million. Once again, it’s for the sake of argument and not. Instead of taking that to P&L at that very moment, in that very year, as per IFRS 16, we have to spread that in equal amounts over the years of the contract. So we have a contract still running for 4 years. And we agree with World Duty Free on next week to this deal. Next week we will be accounting for just a portion of the loss. The rest of the loss would be spread over the coming 4 years. And I’m not going to talk you through the an additional yet more complicated point, which is the Spanish accounting, which affects Aena’s single company, the parent company accounts. Obviously, the key points are the consolidated — the consolidation accounts, could change this treatment. The Spanish rules could change that treatment for local purposes. Unfortunately, those accounts are those that are relevant to our covenant calculation. But bear with me, I will try to be — we will try to be very transparent. We don’t want to mess up all this. We are, just the other way around, trying to be transparent. Hopefully, this helps, probably not as much as you need, but… ——————————————————————————– Operator [41] ——————————————————————————– Your next question today comes from Arthur Truslove of Crédit Suisse. ——————————————————————————– Arthur David Truslove, Crédit Suisse AG, Research Division – Research Analyst [42] ——————————————————————————– First question for me. In terms of the COVID costs and if you like, K factor that you accrued through 2020, are you just able to tell us how much those are? And therefore, what the sort of impact in million euros will be on the 2022 tariffs? And also what you’re expecting in 2021 in that regard? Second question has sort of already been touched on. You’ve done really well in saving EUR 45 million per month. Obviously, we’ve not had much traffic activity in the first quarter of 2021. How long do you expect that EUR 43 million, EUR 45 million per month saving to continue for? And what sort of level of activity would it require for that to materially change? And then my final one. I know last year, there was a bit of discussion around tenders within the real estate projects that you’re working on. I just wondered how they were all progressing. ——————————————————————————– Emilio Rotondo, Aena S.M.E., S.A. – Deputy CFO [43] ——————————————————————————– Okay. Regarding your first question on the K factor, last year or in 2020 ended with an amount of EUR 132 million, which is roughly EUR 1.74 per pax, okay? And regarding the COVID expenses, will be roughly EUR 60 million, including both the — let’s say, the pure expenses and also the CapEx that has been invested during this period. As you have mentioned, all this amount would be included in the future tariffs, okay, according to the Royal Decree announced in last summer. For next year, the K factor would be just difficult to do any analysis as it would depend on the traffic. But in terms of COVID-19 expenses, we are budgeting around EUR 90 million to EUR 100 million for 2021. Of course, it would also depend also on traffic and on the different measures to be taken by the government. ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [44] ——————————————————————————– Well, I will answer — first of all, when Emilio mentioned EUR 130 million of K factor, this time around K factor is going the opposite direction. This is concentration, not dilution. So that will bring the tariff down rather than — in the past, we were used to experience dilution in the yield. Those EUR 130 million are concentration — are a concentration of yield. With regard to the EUR 43 million, EUR 45 million per month savings, clearly, that’s challenging. It’s challenging because we achieved that making a number of very difficult decisions. Literally, I would speak of a shakeup of our supply chain. But as I said before, our objective is to be able to run the business with — at the worst zero or neutral operating cash flows, even in the, let’s say, low end of the range of traffic that I mentioned before. So I don’t know if that will involve EUR 43 million or EUR 45 million per month, but not very far from that, of course. With regard to the real estate projects, yes, we are working towards putting that in the market probably so. Once again, as ever, I try to manage your expectations. This is a first phase that will be based on — very focused on logistics, which is the business that, we believe, is still very attractive, probably even more than before. This is not going to be like, I don’t know, hitting the ground running. It will take time to get the revenues and the value. So we are excited about the possibility because this is just making good use of land and that’s the right decision. But this is not going to transform Aena’s profit and loss account. ——————————————————————————– Operator [45] ——————————————————————————– Your next question today comes from the line of Dario Maglione of Exane BNP Paribas. ——————————————————————————– Dario Maglione, Exane BNP Paribas, Research Division – Research Analyst [46] ——————————————————————————– Thanks for being so transparent about the MAG. I just want to clarify one point on the MAG. You mentioned in the presentation that a 100% reduction of MAG could be appliable if Aena is forced to close some of the airports. Can you explain this point again? I mean does it apply to the future or to last year? And is there a risk that the MAG discount increases because of this? Second question on tariffs for next year. If you apply the current low, tariff could increase significantly because of the K factor. My understanding is K factor still applies despite this current exceptional 2 percentage, but will also the cap of 0% apply then? So a scenario where tariffs next year drop because of the K factor and then cannot increase because there is a low cap of 0%, and so they stay quite low for the whole dollar. Last question that was on traffic, but I think had been answered here already. So I’ll just keep to the first 2 questions. ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [47] ——————————————————————————– Well, the — as part of our offer, what we are saying is if there is any part of our facilities, which is closed by our decision, because we believe that organizationally or from the management standpoint, we believe, should be closed, we offer 100% discount. We believe that it’s not — it wouldn’t be right to charge anything, even 50% to the retailers, if that particular area is closed by our decision. And that applies definitely. There are no many. I don’t believe this is — we closed some areas for a period of time, but that period of time was coinciding with the State of Alarm. And so the 100% discount applies anyway. Beyond that point, we have bits and pieces from time-to-time, but not a great deal. It’s not going to be hundreds of millions. Okay… ——————————————————————————– Dario Maglione, Exane BNP Paribas, Research Division – Research Analyst [48] ——————————————————————————– So this one is already been include in your estimate of the discount? ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [49] ——————————————————————————– Absolutely. Yes. In terms of tariffs, well, you are right. Everything you said is right for ’22. So it’s a bit of a, let’s say, salad of different factors. But ultimately, what really is key is the maximum revenue per pax that will be approved for DORA 2. So don’t believe that the impact of the K factor could blocked permanently the targets for the rest of the DORA 2. I don’t want to elaborate any more on that because this is part of the discussions of DORA 2, as you can imagine. ——————————————————————————– Operator [50] ——————————————————————————– Your next question today comes from the line of Marcin Wojtal of Bank of America. ——————————————————————————– Marcin Karol Wojtal, BofA Securities, Research Division – Analyst [51] ——————————————————————————– The first one is on your cost — on your efficiency programs. I mean would you be able to share some thoughts as to how much of that EUR 400 million of savings could be maintained in the medium term? Have you identified some areas to just run the company in a more efficient way and perhaps some of that could be retained, let’s say, in 3 to 4 years when traffic recovers? So that’s number one. And number two, I was just wondering, is there any mechanism you think for you to request compensation for the revenue lost due to COVID? I think that the Royal Decree from 2014, it states that Aena could be eligible for some sort of compensation if there are unforeseen circumstances that cause a significant divergence of traffic versus forecast. But I’m just wondering, is there any way explicitly or implicitly to include some sort of catch-up effect for COVID in the DORA 2 discussion perhaps or any other way to get compensation for the revenue loss? ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [52] ——————————————————————————– Well, with regard to savings, frankly, the way we reach that level of savings was very, very tough, as I said before. So the short answer, I don’t believe these savings makes sense to be achieved the long run. That would damage the quality of the service. I want to remind you that before the COVID, we were the most efficient airport operator, I believe, in Europe, and I still believe that, that will be the case. So you can always say, I want more, but unless you are damaging the very fabric of the business. So the answer is no. Long term, these savings make no sense. They are — they were achieved through a very particular situation. With regard to your point, yes, there is a mechanism. Well, there is a provision, an article that provides for that. But there is no specific mechanism to calculate that or to indeed to run the process. We are thinking through it. ——————————————————————————– Operator [53] ——————————————————————————– Your next question today comes from the line of Jenny Ping of Citi. ——————————————————————————– Jenny Ping, Citigroup Inc., Research Division – Director [54] ——————————————————————————– Nice easy one. They’ve all been answered. ——————————————————————————– Operator [55] ——————————————————————————– (Operator Instructions) We do have 2 questions at the moment. Your next question comes from Nicolas Mora of Morgan Stanley. ——————————————————————————– Nicolas J. Mora, Morgan Stanley, Research Division – Equity Analyst [56] ——————————————————————————– Just a quick one on the MAGs. I mean we understand so you — the cut-off for the agreement is September ’21. Based on the Royal Decree, I mean a new Royal Decree could come up. I mean whatever your expectations on traffic are, traffic should still be down versus ’19 from September ’21 onwards. So on our side, we do understand some of your clients asking for further cuts. Why don’t you, I mean, reach out an agreement with them and agree to share some of the pain of the shortfall in traffic post September? Is this something you’re just not agreeing to? Or this is something which could be on the table, especially for your large customer, which do also have a bit of power like the Dufry, D’aria and so on? That’s the main question. ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [57] ——————————————————————————– Well, of course, any deal can be considered good or bad depending on your — this deal is not perfect. Maybe there is another deal which is better than this. We ended up putting this deal on the table. Of course, they want more. Definitely, we would like to be offering less. But that’s life. I mean we can’t give up 100%. I don’t know. I suppose, for our shareholders the reflection would be why the World Duty Free shareholder is more important than me. I don’t know. So this is a deal that we put on the table, and that’s it. Of course, you can always speculate. But if you start blinking and speculating, of course, they will say, well, let’s wait and see because these guys are going to come back. No, no. That’s not the case. ——————————————————————————– Nicolas J. Mora, Morgan Stanley, Research Division – Equity Analyst [58] ——————————————————————————– Okay. So I mean the point is mostly — I mean, you talked about fair sharing of risk upside and downside. You understand that by not granting any further discounts post September ’21 you are protecting yourself from any risk on the traffic, but the risk is all dumped on your client. ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [59] ——————————————————————————– Do you believe, Nicolas, EUR 800 million is not a good way of sharing the risks? ——————————————————————————– Nicolas J. Mora, Morgan Stanley, Research Division – Equity Analyst [60] ——————————————————————————– No. That — the 50% cut is versus traffic, which should be down 70%. So I mean, the risk is fairly balanced, I agree. But I’m not sure I understand why there is a — outside of the Royal Decree limits, there is a commitment from you not to open the door to something viable post September ’21. ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [61] ——————————————————————————– Would you put an agreement on the table to then say, but I can change. If you do that, of course, the other side would say, yes, definitely. This is not — we have put forward — we know we are taking risks. We know this is — there is no final answer to all the questions. But this is the deal we believe is commensurate with the risk attached to their business, to our business, with the effort we should share. And they are also big players, large institutions with strong muscles. So that’s our position today. It took a while to get to this point, believe me. Maybe it’s not the most attractive deal for them, but it’s not the most attractive deal for us either. Okay. I think we have one more. ——————————————————————————– Operator [62] ——————————————————————————– Yes. We do have one more question. This comes from the line of Charles Maynadier of Kempen. ——————————————————————————– Charles Maynadier, Kempen & Co. N.V., Research Division – Analyst [63] ——————————————————————————– Just a few follow-ups, if I may. Just the last one on the MAG, apologies to come back on that one. But assuming there’s no agreement with the bigger retailers for your current proposal, could you go to court, and then last for quite some time? So how comfortable are you with going down that route? And how protected are you from a legal point of view, if that happens? And then a small follow-up on the — sorry. I have 2 more. ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [64] ——————————————————————————– Please, Charles, quick. ——————————————————————————– Charles Maynadier, Kempen & Co. N.V., Research Division – Analyst [65] ——————————————————————————– Yes. Yes. On the tariff for DORA 2, so tariffs can be flat at best according to low. We know that. But could you confirm that they could also increase on the back of the COVID-19 health costs? And then the last one is on your strategy on M&A. So obviously, not a priority at this stage, but will be keen to hear your thoughts on whether you’re still committed to your international expansion pillar that you presented in 2018? Or has COVID-19 changed that? And would you, for example, rather return more cash to shareholders in the medium-term instead of doing M&A? ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [66] ——————————————————————————– Well, with regard to the MAG, yes, we feel very strongly. We feel our case is very robust. So we will proceed as we have said. We will protect our rights. Of course, this is a process that evolves risks. We are taking that risks for the good of the business and our shareholders in our view. Secondly, yes, the tariffs will be flat until the end of 2025, not for 2026, which is — well, will be flat, I mean, they should be flat by law in 2026, which is the last year of DORA 2. This cap will disappear, legally speaking. And then yes, we can add the COVID costs on top of the flat tariff, if that’s the case. And then, finally, we remain in the business of acquiring good opportunities across the world. So if there is any good opportunity, and we don’t believe — at the end of the day, making the decision that we believe will generate more value long term. I hope that answers your questions. And I don’t know without any further ado… ——————————————————————————– Charles Maynadier, Kempen & Co. N.V., Research Division – Analyst [67] ——————————————————————————– Is there anything in the pipeline? ——————————————————————————– Jose Leo Vizcaino, Aena S.M.E., S.A. – Economic & Financial Director and CFO [68] ——————————————————————————– Well, you are asking me to share with you some things that — no, frankly, I don’t want to share any information with you at this stage. We keep vigilant. We remain vigilant. Thank you. Have a good day, all of you, and thank you for the — for being in the call. Anything — well, Emilio is telling me to say goodbye. Thank you. Bye-bye. Cheers. ——————————————————————————– Emilio Rotondo, Aena S.M.E., S.A. – Deputy CFO [69] ——————————————————————————– Thank you very much. Bye. ——————————————————————————– Operator [70] ——————————————————————————– That does conclude our conference for today. Thank you all for participating. You may now disconnect.
