Good afternoon. This is the Chorus Call Conference Operator. Welcome, and thank you for joining the ENAV Nine-Month 2024 Results Conference Call. As a reminder, all participants are in listen-only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Mr. Daniele Tutino, Head of Investor Relations. Please go ahead.
Good afternoon, everybody, and thank you for joining us today on our Nine-Month 2024 Results Conference Call. I am Daniele Tutino, Head of Investor Relations. Today, our CEO, Pasqualino Monti, will take you through our progress during the first nine months of 2024, and then our CFO, Luca Colman, will cover in more detail the financial results. And we will then welcome your questions. And with this, I will now hand over to our CEO, Pasqualino Monti.
Thanks, Daniele, and good afternoon, everybody. And thank you for taking the time to join us today. Let's start with the key points about our nine-month results and our recent progress. The first nine months of 2024 are showing, once again, the role of ENAV as a top player between the air navigation service providers, providing our service with the usual strong commitment and with safety remaining our top priority. We have delivered a solid performance in these months, and we are approaching the end of this year in line with our expectations. We are very satisfied with this robust set of results, waiting to welcome the next regulatory period that will confirm our strategic role in the air traffic management system, along with the new opportunities in the non-regulated market that we are ready to catch, as demonstrated by the role of ENAV in the international market.
As you may have seen, the traffic is progressing strongly month after month with the recent summer season, just behind us confirming the solid traffic path with a double-digit traffic growth in the nine months of 2024. Focusing on the last months, traffic performance guaranteed outstanding results with strong growth of service units at + 11.6% in June, + 9.3% in July, + 11.9% in August, and + 10.7% in September. In terms of regulation, we are now in a very crucial phase. The current third regulatory period is closing by the end of this year, and the new regulatory period, the fourth one, will begin in the next couple of months. The discussion with the regulator progressed very well. The Performance Plan 2025-2029 for en route was submitted to the EU Commission, and the final green light is expected in the next months.
We'll provide more clarity on the new regulatory period very soon. As already announced, we will present shortly to the financial community our Industrial Plan and the new dividend policy. We will keep you updated about the timing, precise timing, but it's expected within the first part of 2025, once we receive the green light by the regulator on the airport. Coming back to traffic, in the first nine months of the year, the number of flights managed by ENAV recorded an increase, which was up 9.3% compared to the nine months of 2023 for en route, and up 8.5% year-on-year for terminal traffic. This strong performance confirms once again the role of Italy as a top touristic destination.
This huge increase in traffic was also supported by our strong technological expertise, which allowed ENAV to be the only European service provider able to lower the limit of the Free Route Airspace across the entire Italian airspace. As you know, we have reduced the altitude from 9,000- 6,500 meters, almost two years in advance of the deadline of December 2025 set at the European level. This is another reason why our airspace is preferred by our customers as domestic flights will benefit even more in terms of fuel savings and lower CO2 emissions. And this determines benefits for the airlines themselves, optimizing flight times, planning, and operating costs. The strong increase in flights led to a strong growth of service units, with en route traffic exceeding nine million service units in the nine months of 2024, up 10.8% versus the nine months of 2023.
These results in Italy were higher than the average Eurocontrol member states, where the figure at the end of the nine months of 2024 was up 7% compared to 2023. Also, terminal traffic showed a strong growth, and it was up 10.7%, exceeding 800,000 service units. Now, let's move to the key figures for the nine months of 2024, with all figures confirming the positive trend already posted in previous quarters. Traffic performance continues to be the main driver of the strong increase at the top line. Total revenues were EUR 770.5 million, up 4.1% compared to the nine months of 2023, driven by the double-digit traffic increase and the performance of the core business. EBITDA stood at EUR 222.8 million, with a 28.9% margin, confirming the strong profitability of the service offered.
Below the line, EBIT stood at EUR 139.5 million, up 5.9% year-on-year, and at the bottom line, net result stood at EUR 89.6 million, increasing by 3.8% compared to the EUR 86.3 million of the nine months of 2023. CapEx are in line with last year, ending at EUR 54.5 million in the first nine months of 2024. Net debt accounted for EUR 332 million, EUR 10 million up versus full year 2023, reflecting the dividend payment in May. We are still confirming a solid leverage with the ratio net debt on EBITDA at 1.1 times. All these results translate into a very strong cash flow generation of EUR 130.6 million in the first nine months of 2024, with a strong increase versus the nine months of 2023, when it was EUR 96.6 million.
Before showing you more in depth all these results, let me now comment on the latest traffic figures and the positive mix through the first nine months of this year. As I was mentioning before, the traffic growth in the first nine months of the year has progressed very strongly. And this is not purely related to the summer season, but we are seeing a brilliant performance month after month. Starting from en route traffic, service units were around 9.1 million, up 10.8% year-on-year, driven by a solid increase in all the segments, mainly international and overflight traffic, which grew 16.2% and 10.5%. National traffic shows an almost stable trend with a slight increase of approximately 1%. In the chart on the left, you can easily recognize the typical seasonality of our business, with second and third quarter traffic being the highest contributors.
This year, en route third quarter traffic volumes were up 10.6% versus 2023, leveraged on the very strong volumes managed during the summer season. In terms of mix, in the pie chart, you can see national traffic accounts for 16%, international accounts for 40%, and overflight traffic, which is the most profitable, accounts for 44%. Here, the performance was driven by an increase of Europe-Asia connections and intra-European flights. In terms of carriers, in the nine months of 2024, the low-cost segment remained a very significant contributor to the volumes of air traffic in Italian airspace, with significant performance by Ryanair, Wizz Air, and EasyJet. Among the traditional carriers, increases were recorded among Middle Eastern companies such as Qatar Airways and Turkish Airlines, while between the main European companies, Lufthansa and the national carrier, ITA Airways, also posted significant results in terms of volumes produced.
This positive traffic trend is progressing with an impressive tenor, as confirmed by the volume of flight in October, which is up 7.7% compared to October 2023. And now let's see the performance of terminal traffic. Also, the terminal traffic had a very positive performance. Service units grew by 10.7% year-on-year, showing a generally positive trend throughout all three charging zones. More in detail, Zone 1 is up 24.5% with a so strong increase as its recovery in the post-pandemic period was slower than the other two zones. In comparison with the same period in 2023, there has been a significant recovery in both domestic air traffic and international air traffic, which also benefited from the traffic to non-EU destinations. Very good performance posted in the first nine months also for Zone 2 , up 8.1%, and Zone 3 , up 6.8%.
In terms of destination, the international component representing 68% of the total traffic increased by 14.2%, while the residual 32% related to the national traffic grew by 4.3%. The traffic growth was continuous and consistent in the third quarter as well, with terminal volume up 9.6% compared to the third quarter of 2023. And with these, I want to hand over to Luca to run through the nine months key group metrics.
Thank you, Pasqualino. Good afternoon, everybody. Let me now show you the solid performance in the first nine months of 2024 and how it is reflected into our key financial metrics. All figures are confirming the positive trend already posted in the previous quarters, and we are now tracking in line with our expectations. First of all, let's see the performance of revenues.
In the nine months of 2024, revenues stood at EUR 770.5 million, with an increase of 4.1%, driven by the strong traffic increase and the performance of the core business. As commented by Pasqualino, in the first nine months of 2024, both en route and terminal traffic had solid performance, and these translated into an increase of both en route and terminal revenues, which grew up respectively by 5.6% and 9.9% year-on-year. We have already commented on the good traffic performance and the several traffic drivers impacting our top line, so let me move on to the other components of our P&L. First of all, let's see the balance, which, as you know, is a significant element of our regulatory mechanism.
In the first nine months of 2023, it accounted for a negative EUR 44.6 million, while you can see now in the nine months of 2024, the balance at a negative EUR 59.5 million, due to the following elements. The first one is the balance accrued in the period of positive EUR 29.3 million, coming from a positive EUR 50.5 million balance related to inflation, which reflects the inflation increase compared to the forecast figure reported in the Performance Plan. Then we have a positive EUR 8.4 million balance coming from the recovery of higher interest rates accrued in the period compared to the one implemented in the Performance Plan always. Then we have a negative balance for EUR 14.4 million related to depreciation and grants, a negative EUR 8.8 million balance to the Traffic Risk Mechanism, having generated in the period a higher level of service units than the forecast figure.
A negative EUR 6.4 million balance for charging Zone 3 related to the Cost Recovery Mechanism. In the nine months 2024, we have also accounted for a balance reversal of EUR 82 million, mainly related to the second tranche of the balance accrued in 2020 and 2021, and cashing in throughout this year tariff and also some other minor balances related to the previous year's balance for a negative EUR 6.8 million. Another important element of our top line are the non-regulated revenues. In the right chart of the slide, you can see non-regulated revenues accounting for approximately EUR 26 million in the nine months of 2024, slightly decreased year-on-year.
As you have already pointed out, as we have already pointed out during the first half of 2024 conference call, in 2023, these revenues were boosted by the contribution from the activities performed in Qatar project that is related to the performance of air navigation support services we have given to the Qatar fleet.
In the first nine months of 2024, the development of not-regulated business is progressing according to our expectations, with a significant new contract, just like the consultancy for the redesign of Saudi airspace, the supply of a new Air Traffic Management System in Kosovo and Cambodia, the modernization and installation of systems at the Libyan airports, the control activities of radio systems installed at the airports in Kenya, Croatia, and Romania, the transition project to the Aeronautical Information Management in Egypt and the Dominican Republic, and various maintenance projects for software products supplied to the customers on a global scale. We are reconfirming the growth with a fourth quarter, which will show strong progresses in terms of revenue contribution as set in 2024 guidance. And now let's see the cost evolution during the nine months of 2024. Total. As set in 2024 guidance.
And now let's see the cost evolution during the nine months of 2024. Total personnel cost, which was up 4.1%. Such increase is related both to the contractual salary increase as per National Agreement and the actions put in place to manage the high level of traffic. Let's see these cost components more in detail. The increase in the fixed components of the remuneration accounts for EUR 8.8 million, and it is due to the contractual salary increase related to inflation applied from September 2023 and July 2024 as per the National Labor Agreement, and to the increase of the headcount for 58 average units at the group level. The variable remuneration was up for EUR 2.1 million year-on-year, mostly due to the overtime allowance for air traffic operators to manage the traffic peaks. Then social security contributions, which grew by EUR 4.9 million compared to the nine months of 2023.
The other operating expenses increased by 3.4%, mainly due to spare parts and other minor costs. Now let's see the below-the-line items. All these elements I've just commented lead to an EBITDA that stood at EUR 222.8 million in the nine months of 2024, slight increase compared to the nine months of 2023, when it was EUR 220 million. In brief, at operating level during the nine months of 2024, our EBITDA benefited from the strong traffic volume reported in the period, and it was partially offset by the increase of personnel costs to manage this high level of traffic and the contractual salary increase, mainly related to the inflation adjustment.
Going down, D&A decreased year-on-year by 2.8% and stood at EUR 82.4 million, while provisions and write-offs decreased by EUR 2.5 million, benefiting from the lower write-off of receivable compared to nine months 2023, and the release of the provision accrued at the end of 2023 due to the closing of some litigations. As a result of these moving parts, EBIT stood at EUR 139.5 million, up about EUR 8 million, and with a 6% improvement compared to the nine months of 2023. The net financial expenses accounted for EUR 247.2 million in the nine months, decreasing by 7% due to the higher financial income on deposits and to the balance actualization mechanism. That was partially offset by the slightly higher financial expenses on the bank debt. Tax amounted to EUR 42.6 million, up 13.3% year-on-year due to the higher taxable income and the impact of the deferred taxation.
The net income line stood at EUR 89.6 million, up 3.8% year-on-year, reflecting the standing performance of the period. Moving on the cash flow, let me now spend some words on our liquidity and financial position, which, as you can see, remains very strong. At the end of September 2024, we have EUR 301 million cash with additional enrolled credit lines for EUR 199 million, out of which 150 are committed, along with a loan commitment of residual EUR 80 million related to the EIB financing, signed in October 2023 for an original amount of EUR 160 million. Net financial debt stood at EUR 332 million, increased by about EUR 10 million compared with net debt at the end of 2023, mainly due to the payment of dividends for EUR 124.4 million in May 2024, and partially offset by the cash generation of the period.
All these results translate into very strong cash flow generation in the first nine months of 2024, with a strong increase versus the nine months of 2023, when it was EUR 96.6 million. In fact, in the nine months 2024, the free cash flow stood at EUR 130.6 million, driven by a net cash in from operations of EUR 187.7 million versus EUR 140.9 million in nine months 2023, which increased by EUR 46.8 million compared to the nine months 2023, mainly due to the higher cash in for the en route and terminal traffic. Then we have a cash out of EUR 57.3 million related to the capital investment. As a result of these changes, net debt and EBITDA ratio stood at 1.1 times, almost stable compared with the ratio at the end of 2023 that I remember is 1.07 times, and the remaining still solid and strong.
Before moving to your questions, let me now briefly remind you of our 2024 guidance as updated after the latest traffic trends we have seen in these months. So now looking at our guidance for the full year, we have delivered a solid performance in the first nine months of 2024, and we are tracking in line with our expectations. All these means we are comfortable at this stage in reconfirming our full-year guidance on our key metrics and upgrading the traffic outlook to 10.8% in line with the 11.1% year-on-year traffic forecast for Italy that was released by Eurocontrol in September. Thank you for your attention. And now I would let you move to your question.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star one on their touch-tone telephone.
To remove yourself from the question queue, please press star two. Please pick up the receiver when asking questions. Anyone who has a question may press star one at this time. We will pause for a moment as callers join the queue. Today's first question comes from Carlos Caburrasi with Kepler. Please go ahead.
Hi, Pasqualino, Luca, and Daniele. Thank you for the presentation and for taking my questions. Three from me. The first one, I've noticed that you have upgraded your 2024 en route outlook, but could you also provide some follow-up on the terminal service unit's expectations and possibly by charging zone? Second question, I was wondering if you could also provide us with your 2025 traffic expectations. And finally, with regards to the government's privatization strategy, do you have any visibility on the potential timing of the investment in the stake? Thank you.
What concerns 2024 outlook in terms of service units, well, the outlook that we have given is in service units. So the 10.8% service unit increase is our guidance and what we expect to have by the end of this year. I don't know if I answered your question, the first question, but I guess it was related to the service unit. The second one. It was. Okay.
It was for the terminal service units.
Oh, terminal, sorry. In the terminal, it's supposed to be a little bit different. At the moment, we haven't given. Okay. And now, we have a forecast that is very close to this value also for terminal, that we closed the first three quarters at 10.7% increase for what concerns terminal. We believe this could be a value that can be taken also by the end of the year.
Then the second point is 2025 traffic expectations. You know that Eurocontrol has released a new and updated, I would say, forecast just after closing the, sorry, the having sent the Performance Plan on en route. And for Italy, the forecast indicates of 4.8% in 2025 versus 2024 figures. So that could be something that more or less is what we are taking into consideration. But it's a number very close to this one. For what concerns the third point, we haven't any color to give about this information because nothing is known by the company at the moment.
Understood. Thank you.
Okay. You're welcome.
Thank you. The next question comes from John Campbell with Bank of America. Please go ahead.
Hi everyone. Thanks for taking my questions. A couple if I could. So I'd be interested to know what is your outlook for operating expenses in 2025?
So far in the first nine months of this year, they're 5.3% higher year-on-year. Do you think you'll be able to get some cost efficiency? So that's the first question. I'd also be interested to know if we could get more granularity given where we are in the year on your expectation for non-regulated revenue. I know you quote a double-digit increase, but any sort of quantitative guidance would be helpful. And then the other question I had related to the balance. If I understand correctly, you accrued EUR 50.5 million of inflation balance in the first nine months. I think it might be helpful for a lot of people. Can you remind us how you account for this inflation balance?
It looks to me like you're carrying over prior years into revenue, and maybe you could tell us how it will start when RP4 begins in 2025. Thank you.
I'm sorry to disturb you. The last question on the balance, the line was quite difficult. So you want to drill down on the, I would say, break down on the balance because it was not so clear the line.
Yeah, sure. So basically, you've accrued EUR 50.5 million of inflation balance in the first nine months. Can you maybe remind everyone how you treat this? Because it looks like you basically carry over prior years' inflation balance into revenue, and basically, how will that look in 2025 once you have RP4? Thank you.
So Luca, we'll answer the first question, and I will see you on the second one.
Okay.
I just give you also the answer to the last question that is about inflation. This will depend exactly from the balance, sorry, the inflation rate, the actual inflation rate that will be registered by the end of this year. So it should be a value very close to EUR 50 million-EUR 55 million, depending on the final. Now, this balance is calculated to the latest forecast given to Italy from the IMF, but the actual one would be the one that would be used at the end of the period. So you should consider something close to EUR 55 million if nothing changes, or maybe it will be less if the inflation, as it's happening now, is going down, and this will reflect the balance.
For what concerns the outlook, for what concerns the cost in 2025, you know that we are now in negotiation phase for RP4, and this is something that we haven't disclosed yet. So we will give you disclosure on this information when the process will be over and everything will be approved. So we will give some color, some more detailed information about our cost planning for the RP4. For what concerns the second question, I'll leave the floor to Pasqualino to give you the to non-regulated markets.
Okay. As already said, we are fully confirming the double-digit growth year-on-year on non-regulated markets. The last quarter of 2024 will show a strong progress in terms of revenue contribution, which will lead to a double-digit growth as originally said in the 2024 guidance. Since my appointment as CEO of ENAV, we have run a long way.
The market now recognized the ENAV brand as demonstrated by the recent achievements and the strength of our commercial footprint abroad. The high technological level of our offer is part of our story and DNA. This is the result of the strong competencies of all the companies that are part of our group that make ENAV the leading service provider in Europe and one of the leading in the world. We are now building on our backlog. We are reinforcing the group's position in the global market relating to non-regulated business services and leverage the current offering portfolio by introducing digital and innovative products and services for ANSPs and other aviation stakeholders. In the last months of 2023 and in the first part of 2024, we worked hard on this.
We have been awarded several times with significant contracts around the world in Saudi Arabia, Malaysia, Emirates, Fiji, Kosovo, Taiwan, in Kenya, in Australia, in South Africa, but also in Europe like Switzerland, Germany, Poland, Albania. In Italy, we are the only provider working with our military force, providing several services for them. Moreover, we signed many commercial agreements with some of the most important industries in the aviation field, such as Leonardo and Thales and others. We have signed an important contract for Sigonella Military Airport for EUR 12 million. And with reference to what I have just said, I can confirm that we have built and we will continue building on our backlog with a positive impact not only in the last quarter of 2024, but also in the future years.
This is the story we are writing, and these are the reasons why we are fully reconfirming the double-digit growth for non-regulated revenues by the end of 2024 with a strong increase in the next quarter.
Thank you for those answers. Could I come back just one follow-up?
Yes, please.
Could Luca perhaps maybe remind us basically how are you dealing with your inflation balance? Because the EUR 50.5 million in the first nine months looks to me very much like a carryover of previous years' inflation balance. And can you confirm if that is the case? And can you confirm how your inflation balance will look in 2025 once RP4 starts? Thank you.
Okay. Yes. The balance by the end of the one year is the carryover of the previous year plus the one calculated in the year.
So, 2024 balance—sorry, inflation balance—will be the sum of all this inflation, the RP3, I would say, inflation. For what concerns 2025, as all the figures are reset, the inflation is already in the cost base that is presented to the regulator. So no balance inflation is anymore calculated, actually, at least at the beginning of the period. Then, because the cost, as I said, already has inside the real nominal cost has already inside the inflation. Then, by the end of the year in 2025, if the inflation that is taken into consideration for Italy for 2025 in the regulation, so in the tariff, is different, the actual one is different from the planned one, we calculate the balance as happening in RP3. So at the starting point, zero inflation 2025 because all the costs have the inflation.
Then we start the calculation by the end of each year of the RP4. Is that clear?
Yes. Thank you, Luca. That's very helpful.
Okay. Great. Perfect.
Thank you. The next question comes from Luca Bacoccoli with Intesa Sanpaolo. Please go ahead.
Hi. Hello. Good afternoon, everyone. Can you hear me? Yeah, Luca. Oh, okay. Great. So three questions from my side. The first one is on the 2024 guidance. Despite the route service units guidance upgrade, the revenues guidance looks broadly unchanged to me. So I was wondering what are the, let's say, elements which are offsetting the volume effect related to the higher service units that you now are projecting for this full year vis-à-vis what you were expecting in March.
The second question regards the investment in nine months. It looks to me that the CapEx are lagging behind the target for the full year, which is EUR 120 million. Is it just because of a phasing effect, or are there some delays that you're experiencing? And finally, sorry, just coming back again to the non-regulated revenues, you mentioned that you expect a strong increase in the fourth quarter. You are leveraging on your backlog, but what's your visibility on the new contract that you expect to sign in less than two months for basically confirming and reiterating the guidance? Thank you.
Okay. On the back of the strong traffic performance of the nine months of 2024, we have updated the 2024 traffic guidance at 10.8% in line with the year-to-date traffic at September 2024. The last forecast released by Eurocontrol, which is at plus 11.1%.
As you may have seen, pyramid as follows. Total revenues and EBITDA are expected to grow with a mid-single-digit year-on-year increase. Non-regulated revenues are expected to grow with a double-digit year-on-year increase, and CapEx are expected to be at EUR 120 million. The traffic guidance increase is expected not to have a significant impact on revenues, and EBITDA growth for the following three main reasons. First of all, the traffic increase at 10.8% is above the 0.2% threshold dead band, and it means that ENAV benefits only for 30% of the impact of the deviation of planned and actual traffic, while 70% is reverted back to airlines through the balance.
At revenue level, second, at the revenue level, the benefits from the increase of traffic are compensated by the reduction of the inflation balance, whose positive impact is lower than expected when we set the guidance in March due to lower trend on inflation. Third, the benefits from the increase of traffic are partially offset by the additional self-costs to manage the higher level of traffic. So all in all, these are the three main reasons why the increase of traffic guidance is not reflected into an increase in revenues and EBITDA. Moving on to the non-regulated revenues, we are fully reconfirming the double-digit growth year-on-year. The last quarter of 2024 will show a strong progress in terms of revenues contribution, which will lead to a double-digit growth as originally set in the 2024 guidance. Hope to have clarified your question.
Yes. Thank you.
And that's the last one, please, on the CapEx.
Yeah. For what concerns the CapEx, it seems to be that there's a long way to get the 120, but you just have to think that the last quarter, every year, and the last quarter is the one where the CapEx and the cash CapEx also increase higher. So we believe that 120 is still a target that we will reach. Let me say we have also to consider then on this value the discount that we may have because this is the target that we give also inside to reach. We also have some discount on the bid that we have that actually are not considered in this, but the amount of CapEx and the project that are below this 120 are totally confirmed.
So by the end of the year, this means that by the end of the year, there could be some million less thanks to the discount that we may have for thanks to the bid that we do to get the service that we need, the project that we need, but just the only difference that we may have by the end of the year. So a value very close to 120, maybe just a couple of millions less. Did I clarify?
Okay. Yep. Thank you.
Okay. Good. Thank you.
Thank you. As a reminder, if you wish to register for a question, please press star and one on your telephone. The next question is from Alexandra Arcova with Equita. Please go ahead.
Hi. Good afternoon. Thank you for taking my questions. I have three, if I may. The first one is on the bonus-malus incentive.
So maybe if you can provide us some details on how the summer season went and what is the amount of bonus you expect to get this year? The second one is on the applied tariff for 2025. So although we know that, of course, the new regulation will be approved in the coming months, but from January 1st, you will apply the proposed tariff. So maybe you can provide the level of the tariff and maybe what is the amount of balance you expect to use in 2025 tariff? And the last one is on free cash flow. So after the improvement we saw in the nine months, should we expect to see a further improvement in the full year?
So if maybe EUR 160-170 million of free cash flow in the full year is a reasonable figure considering that you will cash in now in the last quarter part of the summer season traffic. Thank you.
As you may have seen, the traffic is progressing strongly month after month with the recent summer season just behind us, confirming the solid traffic path with double-digit traffic growth in the nine months of 2024. We are currently facing an outstanding level of traffic. And during the summer season, there were some delays due to some pressure on capacity. This increase in the level of traffic has led to some delays on the European network and consequently on the Italian airspace. Anyway, ENAV remains the top player in terms of quality in Europe, continuing to be the leader between the top Eurocontrol members.
There are currently some discussions with the regulator on how to consider this huge impact of traffic on the punctuality target as it was set taking into consideration a much lower level of traffic. So the final calculation of the bonus on quality could be impacted by the evolution of this discussion, but now it is too early to figure it out. We will probably be able to give you some more color on it in the following months. For what concerns instead the tariff applied in 2025, that is still a process ongoing with a larger committee that is supposed to be, I guess, next week. The figure will be well defined.
I can tell you that the tariff planned at the moment is around EUR 74 for the next year for the en route, but it's something that will be, I mean, definitely decided in a couple of weeks. But this is the color of the tariff for the next year for the en route. For what concerns free cash? Sorry?
Sorry. And the balance included in this proposal of 74?
We haven't disclosed yet. You know that the volume is quite important. We still have to decide better. We need to wait the end of the larger committee to give more disclosure on this point. But the value is for sure part of the inflation calculated in 2023 years that we go in 2025 tariff. That's the two most important balances.
And the second one is the traffic that is around 150 million traffic coming from 2020, 2021, sorry, traffic downturn. These are two main balances. Then there are several other balances that in some way with a positive or negative impact, but we need to wait the end of the meeting to give more disclosure on this. But these are the two most important ones. For what concerns the free cash flow, also for this, we expect to have a little bit higher cash flow by the end of this year compared to the last year, but still something that has to be confirmed by these last three months of cash in.
Okay. Thank you. Brilliant.
Thank you. The next question comes from Marco Limite with Barclays. Please go ahead.
Hi. Good afternoon. Thanks for taking my questions. I've got two.
The first one is on your current guidance of mid-single-digit EBITDA growth. So you have delivered 200, yeah, EUR 220 million, I think, of EBITDA this year, which is flattish in Q3. So all the growth is coming basically from Q4. Yeah. Just what's explanation for that? And then the second question, which is a bit more technical, but if I look, just wondering what the balance related to depreciation means in practical terms. Just I'm not familiar with that. Thank you.
Depreciation. Sorry. I didn't get the last question. What about the balance
related to depreciation?
Oh, depreciation. Yeah. Oh, depreciation. Sorry. Okay.
Yeah, yeah. Thank you.
I go directly to this one.
You know that all the depreciation, in a simple word, all the depreciation that is calculated in the tariff, that is planned in the tariff, it works more or less in a cost recovery system. So if by the end of the period, the depreciation, so the CapEx, actually, the depreciation is lower than the one planned in tariff, we have to give back the difference. Same thing with the grant. So all the grant and contribution that is given to the company has to be given back. So if you add these two items, you have the balance that we are giving back is 14, I guess, if I remember well. Million coming from the, yeah, EUR 14.4 million negative balance of depreciation again in grant because we are giving back, as I explained it before. The first point was related to, oh yeah, the fourth quarter.
As you may have seen, the traffic is progressing strongly, as we have said before, month after month, and this is definitely a good thing, and we expect also to have the last period, quarter, very, very strong. We just had today, this morning, the result of October, result of traffic, and it's a 9.8% increase for what concerns en route versus October in 2023, so still very, very strong, so as we have already delivered solid performance in these months, we believe that this performance can be taken also in the last part of the year.
For this reason, for the traffic reason, and also for the balance calculation, we believe that in terms of revenue and EBITDA, we're expecting a solid performance in the fourth quarter, which, as I said, will also benefit from the several components, including the year and the balance that you know that is calculated only by the end. Some balance are calculated only at the end of the year. Yeah. That's it. So traffic that will remain high, and the balance calculation should allow us to get to the target, to the outlook that we have given.
Makes sense. Thank you.
You're welcome.
Thank you. The next question is from Nicolò Pessina with Mediobanca. Please go ahead.
Yes. Good afternoon, everyone.
Following up on the question on the bonus, I would like to ask if you can give us an idea of the level of the quality indicator in the first 10 months, how many minutes of delay per flight? I understand that there are some issues regarding delays, specifically given the strong traffic growth in summer. So I was wondering where we are with the quality indicator. Second question on the evolution of the workforce over the next couple of years, maybe given this strong traffic increase and the outlook provided by Eurocontrol, how many new hirings are you planning for 2025 and 2026, and how many people will retire from the role of air traffic controller? Last question on the M&A strategy.
I'm wondering if you have had the opportunity to look at any airport in the past few months, as you mentioned during the Capital Markets Day at the beginning of the year.
No, sorry, but we're in the position just to understand the first question. The second and the third line was not so clear. So the first one, that's okay, is on the, I would say, level of the bonus-malus. The second one is the third one. Could you please recap for us? Sorry. There's a problem with the line. So can you speak loudly if it's possible?
The second one is about new hirings and air traffic controllers retiring in 2025, 2026. If you can give us any visibility about the increase of the workforce that you plan over the next couple of years, and if you are looking at any airport for potential acquisitions.
The second one, sorry, is on the hirings and retirement. That's okay. The third one is the strategy. I'm so sorry about that.
Are you looking at any airport for potential acquisition?
Okay. Okay. Okay. Yes. Thank you very much. The first one. Okay. Now we are not in the position to quantify the amount of the delays as we are currently in talks with the regulator to address the specific nature of some delays. For what concerns the second one, the second question, hiring, now, as you know, Nicolò, we are always in a negotiation phase with the regulator. So it's something that we will disclose right after the closing, the regulation. But the flavor I can give you, the color I can give to you, to the figures, is we are replacing the people that are going out as the traffic is increasing.
And we don't have the issue in terms of covering the knowledge and the experience of the controllers, the old controllers that are going to retire. We are under a very important training phase in this moment, and new people are coming in. They are in the figure that we are negotiating with the regulator. So we don't see at the moment any particular pressure on these. We will definitely give to the market and to you some more information with the business plan that we will present right after the negotiation will be closed, and we will have the investor date. For what concerns the third question? Third question, airports? Sure. We are not interested in managing airports. I hope it's quite clear. Okay.
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The next question is a follow-up from John Campbell with Bank of America. Please go ahead.
Hi. Yes. Two more questions. Could you remind us which traffic forecasts ENAV have used in their RP4 submission to the regulator, please? Number one, which version of Eurocontrol, basically. And then the second question comes from an investor who was asking, basically, what is happening to Terminal Zone 3 in RP4? Is that going to a similar system to Terminal Zone 1 and 2? And if that is the case, maybe can you tell us what impact that will have, if any? Thank you.
For what concerns the second question, let me see. This will happen, I guess, as a company, and I will be happy to manage it as they will go and perform up like Terminal Zone 1 and 2.
So for us, everything goes on performance allows the company to perform and to have a benefit also if we perform well. So other than have a cost recovery system, the company looks positive, this potential change. I guess you should wait some more weeks to have a final view on this point. For what concerns, instead, the first question about the traffic, let me see. Our traffic, the forecast that we have used in the Performance Plan was a traffic that was planned in not really in line, but considering the previous forecast of Eurocontrol that was published in February 2024, the new forecast was published by Eurocontrol after it was in October, so when the Performance Plan was already sent.
Let me say that in general terms, more or less, the forecast that we have planned at the moment is close, not exactly the same, but it's close to the base scenario of the new forecast delivered by Eurocontrol. Not exactly the same as a little bit different every year, but more or less, you should consider something between the base scenario, yes, and the high scenario, but very close to the new base scenario.
Great. Thank you.
Y ou're welcome.
As a final reminder, if you would like to join the question queue, please press star and one now. Gentlemen, there are no more questions registered at this time. Do you perhaps have any closing comments?
So I guess that there are no more questions. So thanks a lot to everyone for joining us today. The Investor Relations department obviously remains available for.
That there are no more questions. So thanks a lot to everyone for joining us today. The Investor Relations department obviously remains available for a follow-up. Thank you very much. Good evening.
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