Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the ENAV nine months 2026 results presentation. 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 Stefano Gamberini, Head of Investor Relations of ENAV. Please go ahead, sir.
Thank you very much. Good afternoon, everyone, and thank you for joining ENAV's nine months 2026 results presentation. Our CEO, Igor De Biasio, and our CFO, Luca Colman, will take you through the key highlights and financial performance of the period. We will then be pleased to take your questions during the Q&A session. Please, Igor.
Thank you, Stefano, and good afternoon, everyone, also from my side. Let's start with the key highlights of the nine months of this year. First of all, traffic performance remained exceptionally strong, and route traffic continued to accelerate throughout the year, reaching its highest growth level during the peak summer season. Despite the ongoing geopolitical uncertainties, traffic grew by 8.4% in the third quarter, accelerating to over 9% in August, and bringing nine-month growth to a robust 7.2%. These figures confirm the strategic importance of Italian airspace, benefiting both from Italy's attractiveness as a destination and from increased overflight demand driven by the reshaping of traffic flows across Europe, partly due to the ongoing geopolitical tensions. Domestic traffic also showed encouraging momentum, accelerating to 8.6% growth in the third quarter. Most importantly, we achieved these results while maintaining one of the best punctuality performances in Europe.
Despite the significant increase in traffic volumes, en route delays remain extremely low at just 0.03 minutes per flight over the first nine months, demonstrating our ability to efficiently manage airspace and adapt capacity to growing demand while maintaining best-in-class punctuality. Turning to our financial performance, we delivered another strong set of results. Supported by robust growth in regulated revenues, EBITDA rose 18% to EUR 213 million in the first nine months. In addition, our disciplined financial management led to a 37% rise in net profit to EUR 91 million. Furthermore, the main achievements during the first nine months of the year are: in March, we completed the acquisition of AIView Group, a leading provider of drone-based services for critical infrastructure. In July, we sold ENAV North Atlantic, including our 8.6% stake in Aireon, generating proceeds of $66 million and further strengthening our capital structure.
In October, we signed an MOU with Fujairah International Airport to explore a long-term strategic partnership in Middle East. This agreement marks another step forward in the execution of our international growth strategy, strengthening our presence in the United Arab Emirates, where we continue to see attractive long-term opportunities. As regards the data transmission network disruption that occurred on 16th October, I want to highlight that the event provided a clear demonstration of ENAV's operational strength. By promptly switching to the satellite emergency network, we were able to initially ensure 50% of normal operational capacity, rapidly increased to around 75% despite the primary and secondary network outage, while maintaining the 100% safety standards.
As regards our FY 2026 guidance, supported by the strong performance delivered year to date and the continued positive traffic momentum, we have upgraded our EBITDA growth guidance to 8%-10%, up from the previous 6%-8% range communicated to the market previously. I will hand over to our CFO, Luca Colman, to take you through the operational and financial highlights. Luca, please go ahead.
Thank you, Igor De Biasio, and good afternoon from my side as well. The first nine months delivered a very strong traffic performance, confirming Italy as the best-performing market among the main European comparators, with the traffic up 7.2% year- on- year versus 0.3% for Europe. En route traffic was primarily driven by overflight and international traffic, which grew by 8.3% and 7.0% respectively. National traffic also gained momentum in the third, accelerating to 8.6% and bringing nine-month growth to 3.6%. Terminal traffic increased by 4.8% in the first nine months, supported by a strong third-quarter performance of 6.9%, driven by the recovery in national traffic, up 6.6%, while international traffic remained robust, growing by 7.1%. Let's move now to the economic results, starting with revenues. Consolidated revenues grew by 8.6% year- on- year not regulated activity.
Net regulatory revenues increased by EUR 56 million, primarily driven by the strong en route traffic growth, coupled with the rebound in the terminal traffic during the third quarter. Notably, zone one returned to middle single-digit growth after growing at only around 1% in the first half, below the performance plan level. The Balance N-2 of the period worsened by EUR 2 million, mainly because en route exceeded the performance plan traffic by more than 200 basis points. The change in N-2 balance had a positive impact of almost EUR 14 million, reflecting the lower regulatory balance released in 2026 compared with the previous year. Non-regulated revenues increased by almost EUR 10 million, including the positive contribution from the consolidation of AIView of EUR 2.7 million. Moving to costs on slide five, OpEx increased by 5.7%, mainly reflecting personnel expenses supporting higher traffic volumes and the renewal labor agreement.
The consolidation of AIView Group accounted around 0.2% to the total cost growth. Personnel costs increased by 6.4%, driven by two main factors. The first one is the growth in the fixed component, primarily reflecting contractual wage adjustment associated with the labor agreement renewal and inflation-related mechanisms. Higher variable cost is the second part, mainly attributable to the efforts required for the strong increase in traffic volumes. Other costs increased mainly due to business development activities and the contractual price adjustments. These trends were partially offset by higher cost capitalizations. Moving on slide six on EBITDA dynamics. EBITDA increased by 18% to EUR 213 million, confirming the strong operating leverage of our regulated business. The improvement was primarily driven by the net regulatory revenues, which benefited from the sustained growth in traffic volumes, partially offset by the Balance N-2 for the period.
Non-regulated activities also delivered a positive contribution, although to a lesser extent, confirming the gradual expansion of our commercial business. Overall, the strong EBITDA performance highlights that the group's growth continues to be mainly supported by the resilience of the core ATM business and the favorable traffic environment. Moving now to slide seven on the profit and loss statement. Moving to financial management, the net financial result improved significantly compared to the first nine months of the last year. The improvement was mainly driven by lower interest expenses, benefiting from a reduction in the average cost of debt, which decreased to around 2.9%, together with a lower level of bank debt. Net profit reached EUR 91.2 million, an increase of EUR 24.5 million compared with the first nine months of 2025. Let's move to cash flow and net debt on slide eight.
Operating cash flow remained very strong at EUR 271 million, increasing by almost EUR 20 million compared with the first nine months of 2025. Capital expenditures amounted to EUR 62.7 million, reflecting the group's continued investment program. As a result, net debt decreased to EUR 54 million at the end of September, despite the EUR 157 million dividend payment and acquisition of AIView Group, while also benefiting from the proceeds received from the disposal of the Aireon stake. Free cash flow improved by 20% year- on- year to EUR 237 million, further confirming the strong underlying cash generation of our business. Let's now move to the full-year guidance. As regards our full-year outlook, the strong performance delivered in the first nine months and the positive traffic trends observed throughout the peak summer season give us increased confidence for the remainder of the year.
We now expect en route traffic growth to be around 7% for the full year, compared with our previous assumption of slightly below 6%. As a result, supported by the strong performance delivered year to date and the continued positive traffic momentum, we have upgraded our EBITDA growth guidance to 8%-10%, up from the previous 6%-8% range communicated to the market. We confirm our expectation of strong cash generation, with free cash flow expected to reach approximately EUR 290 million for the full year. In non-regulated activities, some projects originally expected to contribute this year have been delayed due to the geopolitical situation in the Middle East. As a result, we think that our revenue could be somewhat below our initial target of EUR 62 million. Now, hand over to our CEO for the closing remarks.
Thank you, Luca. First of all, en route traffic remained very strong during the first nine months of the year, accelerating to 8.4% in the third quarter. This performance also reflects ENAV's ability to efficiently adapt capacity to evolving traffic flows, particularly during the peak summer season, while maintaining high service quality. Secondly, we believe our unique positioning within the European air traffic management sector is further confirmed by the latest EUROCONTROL forecast published in October. EUROCONTROL upgraded its expected en route traffic growth for Italy over the 2025-2029 period from a 4% CAGR to 4.7%, while leaving the outlook for the overall European network broadly unchanged at around 3.5%. This reinforces our confidence in the structural growth prospects of the Italian market.
Finally, despite the ongoing uncertainty caused by the conflict in the Middle East and the potential impact of jet fuel price volatility, the resilience of traffic in the first half of the year, together with the encouraging trends seen during the peak summer season, gives us confidence to remain cautiously optimistic about the full-year traffic outlook. As we look ahead, the strength of our business and the solid traffic momentum give us increasing confidence in our outlook. We are therefore upgrading our full-year 2026 EBITDA growth guidance . We will present our new industrial plan during the first half of 2027. Thank you, and now we are ready to take your questions.
Excuse me, this is the Chorus Call conference operator. We will now begin the question-answer section. Anyone who wishes to ask a question may press star and one on your touch-tone telephone. To remove yourself from the question queue, please press star and two. Pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Samuel Goldstone of UBS. Please go ahead.
Thank you. Samuel Goldstone, UBS, filling in for Amal Patel. Three questions, if you will allow me. First, in the context of the EBITDA upgrade, what is the reason for the free cash flow guidance remaining unchanged? Second, given the strong underlying traffic trends and the absence of any meaningful M&A, how should we think about shareholder returns in FY 2026 and beyond? And third, are you able to provide any more concrete details on a date for the Capital Markets Day or any color on the potential agenda? Thank you.
Thank you for the question. Luca and myself try to answer to all of you, I let Luca answer to part of the question, then I conclude.
For what concerns the EBITDA, we upgrade our EBITDA, but in the same time, we prefer to maintain the cash flow, the guidance of the cash flow, the free cash flow to the original level, because at the end of the period, we always have some adjustment of the cash flow relating to some situation that we have just at the end of the year. The last quarter is affected of this. We do not think that it will affect in any case the free, sorry, the guidance, the free cash flow guidance, but we prefer do not touch it. We may be around 300 if everything will go, I mean, better, but right now, we confirm 290 at the moment with also waiting for the last few months, traffic months, and impact on the free cash flow.
On the-
Right.
No, I-
No, I finished. I am just waiting. I mean, moving to your-
Ready to the Capital Markets Day, so we will arrange it for sure in the first half of 2027. Ready to M&A operation and what is our strategy and what we are expecting for the future, I confirm the EUR 350 million as a power for M&A. We are very committed in understanding exactly which are the potential targets in sectors very suit to us. In terms of ATM, AIM, where we, I would say, definitely know this market, and we are fully committed to use this power to enlarge our non-regulated market.
Thank you.
The next question is from Aleksandra Arsova of Equita. Please go ahead.
Hi, good afternoon. Thank you for taking my questions. As a follow-up question on your strategic opportunities, you mentioned before the potential enlargement of the strategic partnership with this airport authority in the Emirates. Maybe can you provide some more color on what is the idea behind this partnership? Connected to this one, recently there were some newspaper articles mentioning that you may be interested in pursuing M&A in the regulated business even outside Italy. Again, maybe some color or if you can elaborate on this. Thank you.
Yeah, thank you. Related to, let's say, non-organic growth, there are two main strategies or two main pillars that we can try to follow. One is related to, let's say, the foreign regulated market, and the Fujairah MOU is related to this kind of pillar, and I'll tell you more. The other one is growing in the non-regulated market, so with M&A. As I said, we are looking at ATM, AIM, so companies that can be combined with IDS or with Techno Sky in order to enlarge our portfolio and enlarge our geographies. As well as M&A in terms of companies that can enlarge our capability to monitor strategic infrastructure that we are already doing with AIView and with D-Flight in terms of drone services that can be combined, for example, with satellite services.
These are the ways we believe we can grow in M&A for non-regulated market. Regulated market outside Italy is the way we can grow. Fujairah Airport, the authority of Fujairah, signed with us an MOU in order to try to understand exactly what can we do together in the Middle East market. So not only United Arab Emirates, which could mean consultancies, but also managing the air traffic control at Fujairah Airport, but also trying to participate to other tenders in the Middle East area. These are the main pillars of this acquisition.
Okay, thank you. If I may, what could be the potential size of this kind of contracts in the regulated business? If you expect them to be, let's say, to have a RAB-based model, to be concessions, or just a service contract with an external authority?
Okay. A final answer will be provided in the new industrial plan, but I want only to tell you this. It is not only a matter of Middle East. There are different regions in the world that let companies like us trying to participate to tenders in order to manage air traffic control or other different possible cooperation. We are not just discussing about Middle East. We are looking at everywhere in the world which opportunities we could have in order to use our capabilities and our learning curve to manage other air traffic control in the world outside Italy. But in the industrial plan, you will see exactly our targets and where we want to arrive.
Okay, thank you.
Thank you.
The next question is from Luca Bacoccoli of Intesa Sanpaolo. Please go ahead.
Good afternoon, everyone. Few questions from my side. The first one is on traffic. You mentioned EUROCONTROL October update, which points to 4.6% growth for the en route service next year. My question is if you see this forecast as realistic, or on the contrary, too optimistic given the widespread capacity cuts announced by many airlines across Europe. Still on traffic, the updated guidance, sorry, forecast for 2026 is 7.6% still from EUROCONTROL. You are a bit below this level, 7% now. Is there any reason behind this, let's say, prudent target? Then on AIView Group, I was wondering what is the contribution in the nine months EBITDA, and what is the amount that you are factoring in the full year guidance? Finally, just a follow-up on the shareholder remuneration. Maybe I missed the answer.
I was wondering if the upgraded guidance can support a better dividend. I know that this is an AGM decision, but maybe you can share with us your thoughts on this topic. Thank you.
Thank you for the questions. Also in this case, we'll divide and split the answers with Luca. Related to traffic, yes, EUROCONTROL estimates 7.6%. In reality, we believe it's better to imagine 7% or around 7%. This is what we believe is more realistic, let's say. EUROCONTROL every time gives a band, so let's say that we believe that 7% is more realistic and concrete. Then we are hoping to then see better results, but as far what we see now, I would prefer to believe in 7%, just to be realistic and pragmatic. Related to the future, what I believe is that as EUROCONTROL is saying, but it's also our perspective, Italy is more and more central in the European air traffic. We are growing much more the other countries. If I look at the numbers compared to the COVID period, we are making past 30% and more.
Germany is more or less flat. We are bringing people to Italy or on Italy, and so it's also our capability to also help other countries and solving other delays, bringing flights to Italy or over Italy. So, future is bright, but we really believe that 7% is the correct percentage for 2026. I just let Luca tell you about AIView. Related to dividend policy, after six months of my experience in ENAV, there is no reason to change. Neither increasing, not declining. I will confirm that this dividend policy is the best one for ENAV and for all the community. Okay, related to 2027, I also let Luca tell you something more.
Yeah, okay. Talking about the traffic in 2027, EUROCONTROL forecasts at 4.6 is something we believe this could be a right size. Also because EUROCONTROL just published a couple weeks ago the forecast. So they already factorize all these, the possible impact of the fuel costs and everything for the next year. We mainly believe what also Igor said before, our capability to manage traffic when there are problems, next to our neighbor countries. You should imagine, I mean, we imagine an increase of traffic during the spring and the summer more than in the winter. So we do not believe to have a much higher traffic during the winter period, much more in the summer. So 4.6 is a good average for the next year at the moment for us.
For what concerns AIView Group, the impact in full year will be around EUR 5 million revenues and EUR 1.5 million EBITDA contribution more or less.
Okay. Thank you.
You are welcome.
The next question is from Max Dolbey of Green Street. Please, go ahead.
Hi, everyone. Thanks for the call. Two questions from me, please. Firstly, a follow-up on traffic. You mentioned the reshaping of traffic flows around Europe since the start of the war, and we saw EUROCONTROL cutting the near-term forecast for most of Europe, except Spain, Italy, and Greece. I am trying to understand if you think this shift to Southern Europe is just temporary because of the war, or if you think it is something more permanent. Secondly, over the last year or so, we have seen press reports about the treasury potentially reducing its stake by as much as 15% in ENAV. It appears this has been delayed. Do you have any information about the potential timeline? Thanks very much.
Thank you for the two questions. Related to the future and the traffic, I believe, also looking at EUROCONTROL forecast, that it will be mainly permanent. Related to the percentage of the Ministry of Economy and Finance in the company, we have no news about that.
Okay. Thank you.
Thank you.
The next question is from Marco Limite of Barclays. Please, go ahead.
Hi, good afternoon. Thanks for taking my question. I have got just one on capital allocation. As of nine months, you have got about EUR 50 million of net debt. Now, implied in your free cash flow guidance for the full year, let's say you expect about EUR 50 million of free cash flow in Q4, which means that by year-end, net debt goes to zero, probably. You are sort of talking about potential EUR 350 million firepower for M&A. That would take leverage pro forma to 1x net debt EBITDA. The question to you is, are you happy about the 1x net debt EBITDA sort of leverage, or would you be open to actually increase that leverage to support maybe more return to shareholders in the future? Thank you.
Thank you for the question. I believe this is a point to be carefully addressed. You will find all the answers in the new industrial plan that I confirm will be ready in the first half of 2027.
Makes sense. Thank you.
Thank you.
The next question is from Francesco Sala of Banca Akros. Please, go ahead.
Yes. Good evening. Thank you for the opportunity of the questions. I got two. The first one is on the increase in cost in Q3. I wonder how should we split this increase, considering that there is a seasonal effect and an underlying effect. The second, always on cost, how should we think about cost in Q4 and maybe also into 2027, whether this is what we are going to see in 2026 is the new starting point for 2027, or there is a kind of a different trajectory? Thank you.
Thank you for the questions. Related to 2026, I am proud to tell you that compared to our expectations, the operational costs are 100% under our attention and under our estimations. We are growing proportionally more than the growth of our costs, both for personnel and also external costs. All is completely under control, and also the results of the year amounts are so strong because of that, so the attention costs. Related to the future, in industrial plan, we will give you all the details until 2029, for sure. We are evaluating all the actions in the actual plan that should give us the chances to take the costs up to EUR 840 million in 2029. I can tell you that this year we are pretty below our expectations, and we are all the actions under control and under execution.
Thank you.
As a reminder, if you wish to register for a question, please press star and one on your telephone. Once again, if you wish to ask a question, please press star and one on your telephone. The next question is a follow-up from Luca Bacoccoli of Intesa Sanpaolo. Please go ahead.
Thank you, guys, for coming back. On the free cash flow generation, you guided for this EUR 290 million in 2026. Is there any chance to have an indication on 2027? Thank you.
No, Luca, in this moment, we will give the guidance together with the guidance of the year. The free cash flow guidance for 2027, when we give the guidance also for the EBITDA. You may have to wait the new industrial plan and/or the 2026 fiscal year result.
Okay. Makes sense. Thank you.
Once again, if you wish to ask a question, please press star and one on your telephone. For any further questions, please press star and one on your telephone. Management, there are no more questions registered at this time.
Thank you, everybody, for being part of this call, for your questions, and we will be happy to tell you about the full year results three months from now.
Great. Bye.
Bye.
Have a nice evening.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones.