Ladies and gentlemen, thank you for standing by, and welcome to the Aena First Half 2020 Results Presentation. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session, during which to ask a question you will need to press star and one on your telephone keypad. I'm your operator for this conference. It's being recorded today, and I would now like to hand over the conference to your speaker, Emilio . Please go ahead.
Hi, good morning to everybody, and welcome to the First Half of 2020 Results Presentation. This presentation will be led by our Chairman and CEO, Mr. Maurici Lucena, by our CFO, José Leo, and myself, Emilio Rotondo. Now I'll give the floor to our Chairman, Mr. Lucena.
Hello, everybody. I want to stress many comments on the very exceptional situation. So I will start with slide four of my presentation. In this view graph, you can see that what I was just saying, that we are really facing as Aena an extremely challenging situation, and this is reflected very directly into the figures regarding passenger traffic and revenues and so on. But specifically, passenger traffic, including Spain, Luton, and Brazil, decreased in the first half of 2020 to a little bit more of 50 million passengers. In the Spanish network, the decrease was 66%; in Luton, 64%; and in Brazil, 47%. This traffic evolution has led to total consolidated revenues to decrease by 47%, our EBITDA by 82%, and we have produced, therefore, a net loss of EUR 171 million.
These are really figures that we could not expect at all before the outbreak of the coronavirus, and I think that they are self-explanatory of the situation, the very worrying situation. Operating cash flow decreased to a little bit more than EUR 300 million. The net financial debt decreased slightly to a little bit more than EUR 6.66 billion, and the ratio of net financial debt to EBITDA holds at 3.6. We can move now to slide five. You can see here that airport revenues fell by 60%, and I think that the next point is important. Commercial revenues fell by just 20.5%, and this is because, in accordance with IFRS 16, we have accounted for the minimum annual guaranteed rents accrued during the state of alarm period for an amount of almost EUR 200 million.
But having said that, I want to be very clear, and I guess that you all know this already, that these rents that we have accrued and we have taken into account for financial purposes, these rents, as I was saying, will be one of the RAB, one of the component parts of the ongoing negotiations that we are maintaining with the different commercial operators, which main basis I will explain in further detail on slide number seven. Now we can move to the next slide, slide six. I think that we have motives to be proud of the capacity that Aena has demonstrated in terms of cost and cash saving. Regarding the cost saving plan, the actual savings that we reached during the whole second quarter amounted to EUR 157 million, which means an average monthly saving of EUR 52 million, which was well above our initial estimate.
Regarding investments, which means cash, Aena temporarily halted its investment program, as you know, and the actual savings in this area amounted during the whole quarter to EUR 175 million, which was also above our initial targets. During June, as you all know as well, we have resumed our investment plan, and I think that we will be very precisely in line with our revised target in terms of investment, which will amount to a little bit more of EUR 350 million for the overall 2020, for the overall current year. Now we can move to slide seven, in which we take a closer look at the negotiations with the commercial operators. I want just to stress three main issues. Firstly, the negotiations will be carried out or are being carried out on a case-by-case basis.
So it means that we are not, of course, accepting any pressures in terms of the attempt to join forces by other parties, and we are currently carrying out these case-by-case negotiations with every commercial provider, every commercial operator. Secondly, the negotiations are taking into account different important factors: minimum annual guaranteed rents, the very famous MAGs, the duration of the contract, etc. And precisely, I connect this with the third factor I want to stress. And precisely, in order to maximize the value of these contracts for Aena, the current negotiations are envisaging various adaptations of the contractual terms to the post-COVID-19 reality in relation precisely to the MAG, to the duration of the contracts, etc. Now we can move to slide number eight. In relation with additional financing, we announced, or we have continuously announced the new loans that we were agreeing.
During this last quarter, Aena has signed loans for a total amount of a little bit more of EUR 2.32 billion with several financial institutions. I must say that we really, honestly, didn't have any difficulty in reaching these agreements with financial institutions because I guess that everybody trusts the solidity of the company. On the other hand, you know that the general shareholders' meeting is scheduled for the end of October. Finally, you know that the board has proposed to this general shareholders' meeting not to distribute a dividend on 2019 results. Now we are ready to move to slide number nine. This is another important novelty related to the very hard reality of the COVID situation.
In compliance with accounting standards, Aena has carried out valuations of its assets to determine whether there had been any impairment, and the main conclusions of these valuations are the following. First, neither the Spanish airport nor the Luton assets have to be impaired. And secondly, we have recognized impairment in three assets: in Murcia, in the so-called Murcia Region International Airport, EUR 47.7 million; in Brazil, EUR 72.9 million; and in Colombia, EUR 3.5 million. These impairments represent additional pre-tax losses for an amount of EUR 123 million. But as you know, and it's important to stress this reality, these impairments have no cash impact. Additionally, for the activity in Brazil, the consolidated accounts, not the P&L, the accounts, the Aena accounts also reflect a negative impact of a little bit more of EUR 130 million due to the conversion differences of the euro and the Brazilian real.
If you want more details on the assumptions that include these impairment tests, you can find these main assumptions used in note seven of the consolidated financial statements. Finally, in this slide, I want to stress that the 2027 recovery scenario is based on an extremely pessimistic view. By no means is our base case scenario. Of course, when you define and elaborate an impairment test, you use the most pessimistic view because you are supposed to introduce the maximum stress possible. This is why we have used this 2027 recovery scenario. In other words, the management of the company, and I personally, we don't attribute a high, low probability, excuse me, a high probability to this scenario. In other words, I personally attribute a very low probability to this 2027 recovery scenario. Now we can continue. I kindly ask you to move to slide number 10, Luton.
In Luton, we have had a similar evolution to the rest of the airports, and I want to underline four measures that we have taken to mitigate the very hard impact of the COVID situation. First, the closure of most operational areas in the terminal building during the worst days of the COVID. Second, adjustments to staff costs, other operating expenses, and the postponement of CapEx. Third, suspension of the dividend, and fourth, a request, a formal request of the activation of the force majeure procedure, and I'm happy to inform you that discussions are ongoing with the Luton Council, and when we have news in this respect, we will inform as soon as possible, and finally, concerning Luton, at the end of June, Luton did not comply with the maximum net debt/EBITDA ratio included as a covenant in almost every financial agreement of the airport.
In application of accounting rules, the long-term debt has been reclassified as current debt. However, I'm very confident that we will very soon obtain a waiver, and so we can again reclassify the debt. Now we move, please, to slide 11. Let's move to Brazil. In Brazil, Aena has taken very similar measures. Firstly, a significant reduction in opening hours, a review of the external service contracts, and the use of the liquidity relief measures established by the Brazilian authorities. Secondly, we are currently, I think, in productive conversations with ANAC, the Brazilian airport regulator, for an extraordinary revision to restore the economic financial balance of the concession contract. That would be everything that I wanted to underline concerning Brazil. Now we can move to slide 13.
The outlook for 2020, well, I think that it's not only Aena, but almost every peer in the airport business is now going through very serious difficulties in terms of our forecasts. The visibility remains very low. I would say that facts change almost every week, when not every day. So I think that the most prudent approach concerning the outlook for 2020 and for the coming years is to just reflect the international forecasting of many organizations, such as EUROCONTROL, IATA, ACI, and so on. And these international aeronautical organizations, they estimate that the decrease in the number of passengers in Europe for 2020 will be in a specific point in the range minus 45% to minus 70%. Specifically, in Spain, 2020 will be between minus 57% and 67%.
And more specifically, if we look at the IATA forecasts that this organization, this international organization, published back in mid-May, IATA considers that at the European level, recovery will be or would be slower than in the rest of the world, due mainly to economic weakness, and could not arrive, this recovery, until at least 2024. So just to make it clear, these are the ranges we have used within Aena for our asset valuation for the purposes of the impairment tests that I mentioned a few minutes ago. And concretely, this means that for the current year, for 2020, the traffic decline scenarios range, it is between minus 57% and minus 67% compared to 2019. For 2021, so next year, the traffic decline scenarios range of minus 50%, excuse me, and minus 25%.
And finally, the recovery to 2019 levels, let's call it the happy year, the gone happy year, 2019, this recovery is expected to take place sometime between 2024 and 2027. Again, this 2027 represents the worst-case scenario, which is, in my opinion, the appropriate when you elaborate an impairment test, but it's by no means our base scenario. And of course, it's not my personal view on the recovery that effectively will take place, in my opinion, very soon compared to 2027. I would not dare to estimate a specific year, but I'm sure that it will be sooner than 2027. And finally, the last slide, slide 14, in relation with Aena's covenants, I want to say it very clear as well. Aena, this is what our CFO, José Leo, reminds us continuously.
Aena has outstanding loans with the European Investment Bank, with ICO, the Spanish ICO, with Unicaja and FMS for a total amount of EUR 6.06 billion. And these loans include the following covenants: net financial debt/EBITDA must be less than or equal to seven. Secondly, EBITDA to finance expenses must be higher than or equal to three. Currently, at the end of June, these financial ratios for Aena, they are within the permitted range, although, honestly, it is possible, it is likely that at the end of the year, at the end of December, these ratios could be not in compliance. But the good news is that the company has already started a previous dialogue with financial entities, and I'm very confident that if this was the case, we could comfortably obtain the approval of a temporary waiver.
Finally, it is worth mentioning that according to a royal decree approved in June, Aena has the right, formally recognized, to recover the costs incurred as a consequence of the collaboration with the Spanish health authorities. And if these costs cannot be recovered within the framework of the current DORA 2017-2021, these costs could be recovered duly capitalized in any of the subsequent DORA periods. In this case, the rate will not be subject, or the charges will not be subject to the cap recognized by the law of 0% because this cap could be recognized that this royal decree could be removed. With this slide and this comment, I finish my presentation. Now we can move on to the Q&A session. Thank you.
Ladies and gentlemen, we will now begin the question and answer session. As a reminder, if you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. Please stand by while we compile the Q&A queue. This will only take a few moments. If you wish to cancel your request, please press the hash key. Once again, please press star and one if you wish to ask a question. And our first question comes from the line of Elodie Rall from JP Morgan. Please go ahead.
Hi, good morning, and thanks for taking my question. So my first question is on the commercial segment. I just wanted to understand why you did recognize the MAGs and the profit associated to the MAGs, given they might not materialize. I mean, you explained to us that at the moment it is in negotiation.
I just wanted to understand why you recognized that in the second quarter. And also, I wanted to understand if the negotiation regarding those MAGs are purely for the time of the state of alarm or if the negotiation will also change the agreement that you had for after and future years in those contracts. So that's my first question, please. My second question is on summer booking. I was interested to see what you're seeing for the remainder of the summer and if you are expecting any change given the new U.K. quarantine for Spanish travelers. And my last question is on guidance. I understand you're not giving any guidance. You provided us with insights from IATA and other international institutions, but 2027 is unrealistic. But what is your central scenario at Aena specifically? Is it 2024 to go back to the 2019 recovery?
What do you think is really realistic here? Thank you very much.
Thank you. This is Maurici Lucena speaking again. I will just cover the question that relates to our negotiations with the commercial operators, and the rest of the questions will be answered by our CFO, by José Leo. I think that the answer to your question concerning the commercial operators is very straightforward. We are negotiating with them not only the remuneration or the MAGs that affect the period of the state of alarm, the state of alarm period. We are negotiating with them the whole contract in the sense that we assume that the reality post-COVID, I think that so far is at least this is what we assume for the coming months, very far away from the previous situation.
One important factor that I did not mention in my previous intervention is that we expect that the commercial operators, within the context of these negotiations, they also show us their will to keep their contracts in place. And if they can assure us that they want to keep their contracts in place for a reasonable period of time, this automatically introduces more flexibility in terms of the past MAGs, the current MAGs, and the future MAGs. So in other words, we are negotiating the whole period of the contracts, not only the state of alarm. Thanks. And I now hand the floor over to José.
But if I can come back to the Q2 specifically, the second quarter, is it realistic to think that what you have registered will stay? I mean, why did you register the full amount?
I thought you said that you were likely to waive that for the state of alarm.
No, no. It's not that I forgot this very important question, but this question will be answered by José.
Okay.
Well, I recognize it's a little bit exotic. Let me be very open in that. Furthermore, you know our approach in quarter one was not to accrue for these minimum guarantee rents. The reality is that we have had a dialogue with the auditors. We have been reviewing very deeply the application of IFRS 16 to this particular rent. And the conclusion was a little bit counterintuitive. And you have to account for that, otherwise you can end up with a qualified opinion or whatever you call it when you are dealing with the.
Excuse me. We're experiencing some technical issues. The conference will re-begin as soon as possible.
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We do have our backup line connected. As advised, you can go ahead.
Can I carry on? Hello. Sorry, Elodie. I don't know when we dropped the line.
You were starting to explain why in Q2 you have accounted for the MAGs and not in Q1.
Okay. In the second half of the year, the accounting let's assume that all the contracts in place are renegotiated and agreed. The treatment of these new contracts from the IFRS 16 standpoint, once again, can be counterintuitive in the sense of moving our revenue recognition policy into a sort of linear approach. That is, as you can imagine, a little bit it's a little bit counterintuitive in the sense that it doesn't follow the cash. So we need to really think about it.
The IFRS 16 vagaries are probably, you are aware of that, or some of you listening today are aware of that, making the revenue recognition not necessarily consistent with the cash evolution. In summary, you can end up with the first years of the agreement having a better revenue figure than you would expect if you follow the cash, and the later part of the contract not showing the same level of revenues that you would expect if you follow the cash. For us, any renegotiation of the contracts will be driven by one very important point. We want to keep the value of the contract in place.
We will try to manage the different component parts to come to agreements where ultimately we will retain the value, substantially the value, and the tenants will have a better life from the point of view of the stress on their cash, and that's the objective, so that would be like reprofiling their revenues, but IFRS 16 could play against that from the accounting standpoint. That's one of the reasons we are not providing guidance.
If you look at cash, which really matters, to cut a long story short, if we come to an agreement with everybody, we will likely not get paid for the minimum guarantee rent over the state of alarm period, and we will reprofile the MAGs to allow the tenants to face a lesser level of stress over 2020 and 2021, and then the revenues ramping up, obviously, probably over a longer period of time than originally expected in the contract. I hope that helps. Obviously, it's complex. I don't want to get into the detail because that's commercially sensitive. But I think the framework, hopefully, is well understood. Yeah. Thanks. Okay. With regard to forward bookings, clearly, as the Chairman and CEO said, things are changing not every week, but every day. Our view over July and August was very promising.
I always said that anything involving a recovery over the summer above 30% of the 2019 traffic would be good news. We were heading for that. Over the last days in July, clearly, operations were above 50% of the 2019. I mean the last days of July. I don't mean the July month overall. The number of passengers were above 30% of the 2019 figures. That would be good in terms of the overall summer picture. Clearly, that is changing as a result of mainly the U.K. decision to require a quarantine period for everybody returning to the U.K. from Spain. Today, it is difficult to predict the impact of that.
We know that that decision is probably going to be removed over the coming 2-3 weeks, but still, we don't know how that uncertainty could scare, if you like, some of the travel plans of some of the passengers. I hope that helps. And in terms of guidance, we are doing our best, bearing in mind the current circumstances. First of all, there is not such a thing as a forecast for 2020 or 2021. What we used to call forecast doesn't apply nowadays. So what we can do is to manage prospects, ranges of prospects, and that's what we are doing. And we have our own numbers, but they are not something you can call definitive.
What we are doing is just pulling information from different sources, putting that information together, and making decisions as to which ranges of potential outcomes between optimistic and pessimistic outcomes, our outlooks, we can use and we believe are reasonable. Those are exactly the ones that the chairman described some half an hour ago. And that means that for 2020, ranges between minus 57% and minus 67% on 2019 make sense to us. What is the midpoint of the range? I don't know. Obviously, mathematically, I know, but I don't mean that. What I don't know is what is the most likely outcome. I don't know.
Can I just follow up?
If that makes sense to you before the new quarantine announced in the U.K., or if you think now there could be downside risks to that 67% high end, I mean, low end of the guidance for this year, given the new information from the U.K.?
Obviously, everything can get worse and worse, but today, even with that decision, I think we can still accommodate that inside the range.
Okay. Okay. Thanks very much.
Our following question comes from the line of Siobhan Lynch from Deutsche Bank. Please go ahead.
Hi. Thank you very much for taking my questions. Just three quick ones from me, please.
The first one, just to follow up on Elodie's question, could you give us any kind of information on the current trends you're seeing specifically on domestic travel, if that's performing particularly well, and if that could potentially offset some of the U.K. situation? And then, I guess, two questions on cost-saving expectations that are in relation to the second half of 2020. I see you made some quite material savings on other operating expenses and on subcontracted work in the first half. With the assets now, I guess, reopening, how much of those cost savings can you continue in the second half? And can you put any kind of ballpark range on that, please? And then, I guess, just looking to 2021 and thereafter, again, I appreciate that you don't have a clear view on traffic, as we just kind of discussed.
But if we were to say traffic was still, I guess, materially 20%-30% below 2019 levels or more next year, how much of those cost savings could you carry forward again then into 2021? Thank you very much.
Okay. With regard to domestic, domestic is doing well. It's doing fine. Actually, out of the total traffic that we can witness these days, 50% is domestic. So far, so good. But once again, we have to be very open and very upfront. The news about some difficulties in handling the outbreak in parts of Spain will likely also impact decisions made by nationals. But so far, it was good. It was good. It was really capturing 50% of the total. So that was very, very positive. With regard to OpEx in general, clearly, for us, I made a number of times the same point.
On an ongoing basis, our operating cost bill is largely fixed, so we have little flexibility. We have some, but not huge flexibility to deal with ups and downs in traffic, let's say, on a regular ongoing basis. We have proven that in case of a sudden and dramatic fall in traffic, we are able to react and to achieve really good savings. That's what has happened over the last three months, but honestly, as the traffic recovers, it's very difficult to keep in place a healthy operating leverage scenario because, to start with, we need to reopen infrastructure pieces. For instance, we opened yesterday Terminal 4, the satellite to Terminal 4 in Madrid-Barajas, Terminal 2 in Barcelona. When you reopen one of those, clearly, no matter how focused you are on efficiencies, the cost increases are more than proportionate than the traffic increases.
So that is likely to drag into 2020 and 2021. So from the operating leverage point of view, we will do our best. Clearly, we will keep a very close eye on cost. It's difficult to anticipate how well we can do, but there will be a loss to the operating leverage capacity, and there will be a loss of efficiency, so to speak, inevitably. So everything will be very dependent on volumes. Unless there is a new outbreak and things get really, really bad, obviously, that would be terrible news. But in that scenario, we would be able, once again, to react and to bring the cost bill down dramatically. But on an ongoing basis, today, it's very difficult to say how the costs will evolve in response to the different traffic scenarios, I have to say.
Our following question comes from the line of Stéphanie D'Ath from RBC. Please go ahead.
Good morning, and thanks for answering my questions. The first one is a follow-up on the operating expense, and in particular, the other operating expenses, which were down 64% in the second quarter. So you just said that you had a little bit of flexibility, but it looks to me like, at least on that line, you really managed to bring the cost down significantly during the second quarter. So could you maybe clarify a little bit what's viable with your third-party contractors and what is not, and how come you were able to decrease the amount in the second quarter by that much, especially as, I guess, we were expecting operating expenses inflation following the renegotiations in the contracts? Secondly, could you please let us know how advanced you are in your discussions on MAGs with the retailers and what the first outcome is?
I guess you must have already a bit of clarity. And could you confirm that you still kind of expect the state of alarm period MAGs to be waived? And how would that be then reported in the following quarter's account? So how would you be offsetting the revenues you booked currently because of your discussion with the accountant? And then thirdly, on your tariffs, obviously, the consultation has been delayed to October, as you mentioned. But could you maybe share with us your expectations on tariffs for 2021, and if you still believe that you could end the DORA II negotiations in time? Thank you so much.
Hello. I will answer your last question concerning the tariffs, the 2021 tariffs, and the elaboration of DORA II, the new DORA. Unfortunately, the visibility remains very low. Our plan is to be on track from the foreseen previous schedule.
Concerning 2021 tariffs, we will start our dialogue, which is we are obliged to have this dialogue by law with airlines. We will start regarding tariffs, this dialogue, in October. And of course, if these were ordinary times, in October, we would also be in an advanced phase of the discussions and dialogue with airlines and with other parties regarding DORA II because DORA II should be almost complete at the end of the first quarter, if I remember well. So I'm not worried so much concerning tariffs. I think we will apply the regular mechanisms, and we will have new tariffs approved that will take place that will begin to be active in March 2021. We will have them, as usual, approved at the end of the current year.
DORA II, which is, of course, more important because it covers many more years. I would say that at the present time, my intention and the intention of the regulator, the Spanish government, is to keep the foreseen schedule untouched. Of course, you have that there exist legal clauses that, in an extreme situation, would allow the regulator to start with DORA II a year later, but this is not, at the present time, the case. So we have said publicly that the main expansions and the main modifications of airports that were foreseen for DORA II remain in place, but it's obvious simultaneously that they could start a little bit later than previously foreseen, for example, to say something two years later. This is our impression nowadays.
Things, as José and myself have tried to stress, change very quickly on an almost daily basis, but I'm confident that we will comply with the foreseen schedule also for DORA II.
Well, with regard to OpEx, hopefully, Stéphanie, I understood correctly your question. I will try my best, and then if you have any doubt, please let me know. When looking at quarter two, clearly, we have delivered better than expected set of numbers in terms of operating costs. That means that we can really flex our cost bills down significantly in other operating expenses. Clearly, that hasn't been the case in stock cost or other type of costs. But focusing on the main source of costs, which is the third-party services, clearly, we have demonstrated that we can do a lot, and we can do it very quickly.
But what we tried to stress before is that in a different scenario, which is a recovery, you have to bring some of those contracts back in place. And when we discontinued some of those contracts, what we did was to force our suppliers to do a number of things, including to put their staff in what you can call a temporary layoff or furlough, definitely what we call an ERTE in Spain, a temporary layoff scheme. When you have to bring those contracts back to life, you have to be very careful. It's not that you can cherry-pick for every particular square meter a number of individuals, a number of level of service. No, clearly, there are quantum leaps. And those quantum leaps normally will be growing quicker than the traffic. You cannot accommodate the traffic and the cost every day, every time, every hour.
So that's the really challenging bit. Rest assured that we will focus on that. We will be extremely careful, and we will be extremely tight in unwinding those costs. But still, we will lose part of this leverage capacity, and we will lose some part of our efficiency. I think that's something that will happen to every business when coming back from the COVID deep dive, if you like. But in our case, we still remain the most efficient airport operator in Europe, in my view. So the resources will come back. The cost will grow again, but we will still deliver a significant level of efficiency, but not the level of efficiencies or the margins that we achieved in 2019. That's still some way away from us. Hopefully, that was what you tried to. Otherwise, let me know.
Yes. Yes. Thank you.
Then with regard to the discussions with the tenants, with the retailers, the discussions are ongoing. We haven't really reached many agreements. We have reached some, but it's early days. We will work very hard over the coming days and weeks. But if you like, let me describe for you the templates of the negotiation without giving up a great deal of detail because, obviously, it's commercially sensitive. What we tried to do is to help them to go through 2020 and 2021 without having to face the stress of paying for the current minimum guarantee rent scheme, which is based on time. Just you pay your rent for a particular period of time come hell or high water. That's not the case. We believe we need to somehow accommodate that minimum guarantee scheme to the reality of the traffic for a while. That while could be 2020, 2021.
And then the rents will ramp up. We'll come back to normal. We will extend the contract. We will ensure they are committed long-term. And if all that things happen, we will be ready to contemplate waiving, as one of the potential scenarios, the minimum guarantee rents over the state of alarm period. Clearly, that means that the cash over 2020 and 2021 that we will be receiving will be less than originally expected. And hopefully, the cash over the coming years will grow significantly, potentially dramatically. The issue here, and that's what I was trying to stress before, but honestly, I don't want to embroil you into the accounting discussion. The accounting and the IFRS 16 don't follow cash. Goes its way. And that can create some degree of disconnection between revenues and cash that we, frankly, don't like. As businessmen, we don't like it.
But obviously, we have to abide by the accounting rules. I'm sure many of you, analysts, research analysts, and investors, are more keen on cash than you are on revenues other than a must-be for dividend purposes. Hopefully, that helps.
Yes. Thank you very much.
The following question comes from the line of Cristian Nedelcu from UBS. Please go ahead.
Hi. Thank you very much for taking my questions. Three, if I may. Firstly, if we look at the retail segment, can you tell us what are the initiatives that you or the duty-free operators or the retail partners are currently taking in order to optimize the retail spend for the second half of this year?
Secondly, looking a bit at your cost, looking at your staff costs, what are the milestones that you are assessing there in order to decide if you need to reduce your staff costs versus today's level? So is that the total no-go going forward, or are there any scenarios where you would consider reducing the staff costs? And lastly, on the regulation, looking at the WACC, I mean, you have the formulas from the DGAC or the CNMC. Do you believe that, having in mind these last few months, there are arguments that support a higher WACC? The inputs in those calculations are in your favor or leading to a higher regulated WACC going forward? Thank you.
This is Maurici Lucena. I just want to make an introduction to the WACC issue, but then José Leo will elaborate a little bit more on that.
I just want to convey to you the following reflection. I think that the elaboration of the WACC concept for business such as airports and other regulated business, but specifically, especially airports, I would say that the conception has been modified after the outbreak of COVID-19. This used to be considered a very low-risky business. And I think that after the coronavirus, we all should admit that this is a riskier business, at least a little bit riskier than we all assumed previously. So I don't want to specify concrete levels of the WACC because José Leo will do that. I'm just saying that, of course, at least at a conceptual level, the WACC calculated in any situation previous to COVID-19 was and should be lower than at the present time. And I think that this is something that we all, actors of this industry, share.
José.
Thank you, Chairman.
It happens to be the case now that we have had to calculate our cost of capital to run the impairment test. So you can see in our notes to the financial statements, note seven, what our current estimate of the cost of capital is. Pretax, that is 8.35%. That compares to the 6.89% currently in place. That's our honest, professional, technically sound, and by the way, reviewed by a third party, by EY, as we describe in the accounts, and obviously as well reviewed by our auditors, KPMG. So today, we believe our cost of capital for the business is 8.35% pretax. And that means that, as the Chairman said, things are changing, and there is no doubt that the current circumstances are pointing out in that direction. I will move on to the other comments you made. Initiatives to enhance the commercial revenues.
Clearly, there are many. There are many in terms of improving the use of technology, making people's lives easier in terms of ordering for some particular goods and things like that over the coming months. But honestly speaking, those kind of things will never be able to fight the wave of the COVID and the changes in the psychology of the passenger. What we have to do over and above everything is to make sure that we provide a healthy and safe environment to passengers. And as long as we achieve that, people will feel that they can do their activities. Obviously, with the limitation now, which is the space, the productivity per square meter will be lower for everybody, operationally and commercially. But that's what we have to do.
On top of that, the commercial discussions on the contract negotiations are going to be critical because we are minded to allow the tenants to put in place new initiatives, probably to broaden the range of products they offer, or to bring more innovative ideas. So we expect those contracts to develop a collaborative approach and to help the revenues improve. But once again, the most important thing is to provide a safe and healthy environment for passengers. With regard to staff costs, we haven't changed our mind. When we faced the most dramatic part of the state of alarm lockdown, we were determined to keep our staff in place. And that's the view of the management today. So nothing has changed.
Thank you very much.
The following question comes from the line of José Arroyas from Santander.
Please go ahead. Hi. Good afternoon. It's three questions for me, please. First of all, it's on the COVID-19 costs that Aena expects to recoup. I was wondering, I'm sorry if I missed this, what is the exact amount of costs that we are talking about? And secondly, how Aena plans to recoup this? Is there an exact component in the tariff that could explicitly accommodate this? And could you tell us how airlines are going to react to this decision? Second question I had is on DORA II, on the growth projects that Aena was keen to execute. I think a few weeks ago, we had the Spanish Minister of Transport quoted in the press as saying that some of these growth initiatives might be pushed out to potentially DORA III.
I wanted to hear from you if you have developed your thoughts on this potential shifting of investments to DORA III. Last question, I'm sorry if this question is simple to everybody else. I was wondering why Aena decided to carry out an impairment test now only halfway through the year instead of at year-end, which is more common. Thank you.
Thank you, José. I will answer only the question related to DORA II and the eventual DORA III. I interpreted that the minister said that the foreseen huge projects for DORA II could be reviewed in terms of the timeline and could be postponed in the sense that it could be in the program and the plan of DORA II, but maybe, for example, postpone two years, for instance. Whether this is in the range of DORA II or DORA III , I think it's more a matter of this timeline.
But where we are now in our dialogue with the regulator in the very preliminary phases of DORA II is so far keeping on track our will to develop the main projects already announced publicly, but with a possible or likely postponement of, for instance, two years. This is all we can add at that moment, and I hope that whether this is within DORA II or DORA III does not add confusion because it's just a matter of when you start and when you finish the project that was planned, and now I hand it over to José.
Hi, José. First of all, I will tell you how much, what is the estimate of costs associated to the COVID-19 fight, so to speak, for 2019, sorry, for 2020, second half mainly, and 2021. 2020 would be something in the region of EUR 60 million.
2021 will be close to EUR 100 million. On top of that, there will be investments as well that, frankly, I don't recall now how much, but we can provide that figure over the coming hours to you. All that costs will be recovered through the mechanism developed in the royal decree. The point here is that the recovery of those costs won't be subject to any airport charges cap. The tariffs can go over and above 0% in terms of growth in order to recover these costs. That means that we need to wait and see how that plays out once we start the discussions with the airlines and the regulator because that can end up in different scenarios. Part of that can be recovered in 2021. I don't know if that's technically possible. I don't know, to be honest.
Part of that can be recovered over DORA II. I don't know. And then finally, I'm afraid I disagree with you, José, about the impairment test. It's the only way around. Impairment tests mandatorily by the International Accounting Standard 36 provides for the obligation to run an impairment test anytime a business appreciates that there are indications or signs of impairment. And you can see today in the front page of some papers, large, huge impairment tests being accounted for. So we are not unique. And I believe yesterday, some of our peers were also announcing that. I'm afraid you cannot wait. I mean, this is for the benefit of everybody, for the benefit of yourselves to start with, obviously.
Okay. Thank you. That was very clear.
Our following question comes from the line of Marcin Wojtal from Bank of America. Please go ahead. Yes.
Good afternoon, and thank you for taking my questions. Firstly, I wanted to ask you about the commercial incentives program of EUR 25 million that you're offering to airlines. Can you explain a little bit what was your rationale behind that? And do you think you could be offering do you think it could be in your commercial interest, perhaps, to offer similar programs also later into 2021 to help the traffic recovery? And question number two, and I wanted to come back, apologies, to the topic of MAG minimum rent. And apologies if that has been answered, but in terms of recognition of the MAG for Q3 and Q4, are you going to be applying the same principle as in Q2? So basically using roughly the pre-COVID MAG. Thank you.
Hello. This is Maurici Lucena.
I just will introduce the issue of the incentive, and José Leo will complete it. I just wanted to share with you my microeconomic view on this issue because the real origin of the incentive that we designed and that we put in motion was somehow, let's say, microeconomic conceptual view, which is the following. When you look closely from a microeconomic point of view, what really means the landing charges and what really means the passenger charge or charges, you could conclude that the passenger charges are a cost concept for the airlines in which they share the risk with the airport operator in the sense that the passenger charges, they were originally defined and designed by the regulators, and we should bear in mind that this is an economic regulation which is based on very solid microeconomic principles.
It is thought and it is designed to cover the financial expenses of what goes on within terminals. On the other hand, the landing charges, they could be considered a sort of more fixed cost for the airlines because they are designed to cover financially the runways and so on, so in this sense, we thought that in this very singular situation, the important thing was to try to incentive airlines to move their planes, to move their operations, and if this is your objective, then you should conclude that it is better to keep on sharing with them these, let's say, variable costs related to passenger charges, and you should reduce their fixed costs related to these landing charges, so this is, I fear, that maybe it's a little bit too conceptual and too theoretic, but this is honestly what we reflected.
Now José will explain the details, the specific details of the incentives.
I think on the back of that rationale, what we believe is that if we help the airlines to pay for the if we incentivize the airlines to add capacity, they will take care of themselves in order to fill the aircraft. We decided to do that, obviously, because under the current circumstances, to provide only incentives as long as they carry passengers would be some sort of putting all the risks on them. We decided to implement that over the coming months until the end of the winter season 2021. There are a number of tranches. Probably you are aware of them. Otherwise, we can provide you with that. They are all of them based on reaching certain thresholds in terms of the number of operations compared with previous years, with previous year, 2019.
Whether or not we will extend that into 2021, we don't know. We will need to assess that when this is about to come to an end. It will depend very much on the circumstances. I would say that as long as the COVID outbreak impact is still sizable, I don't think moving back to the previous scheme would be sensible. Probably the most sensible thing would be to keep this new scheme in place. But it's premature to make a decision on that. Then you mentioned the max for Q3 and Q4. Well, the short answer is I don't know, to be honest. Q3, first of all, the minimum guaranteed rents over the state of alarm are EUR 200 million. Nothing more, nothing less, because the state of alarm is already behind us. So that won't grow.
But what is possible is that we can end up, let's assume, that we agree on the restructuring of a particular contract. That will mean that, first of all, the minimum guaranteed rents for the period of time of the state of alarm could be waived. Secondly, the minimum guaranteed rents for the remaining of 2020 could be based on different parameters. They might not be absolute rents, but rather per passenger rents, for instance. That will mean that in cash terms, so to speak, the figures will be different. But ironically, we can end up in a situation where under IFRS 16, we still need to account for part of the rents in 2020 that might not be collected until, I don't know, 2022, 2023, 2024. Why?
Because the IFRS 16 rules tend to treat this kind of contract renegotiations under certain circumstances in a way that you have to distribute the revenues on a close to linear basis. So I don't want to complicate, to overcomplicate today's call on the back of these accounting things. But honestly, over the second half of the year, we need to assess how the accounting will deploy if we restructure the existing contract. In cash terms, it's pretty clear. It's extremely clear. And hopefully, you got that sense.
Okay. Well, thank you very much.
Our following question comes from the line of Andrew Lobbenberg from HSBC. Please go ahead.
Oh, hi there. I wanted to say, thanks so much for being as open and as honest as you can in trying to explain these really complicated things, particularly around the MAG.
So let me just say that to start, particularly in response to that last question. I mean, if you're saying that IFRS 16 requires you to smooth the value of the MAG over the total life of the contract, which I think is what I understand, surely that means that if you reach an agreement with your counterparties, then the 200 through the state of alarm will be forgiven. And presumably, the future payment for the next couple of years will be materially less than they would have been. And in the outer years, perhaps they'll be more similar to what they would have been. But in total, the amount of revenue coming in on the MAG would be lower. And even spread out over four years, five years, whatever it may be, the revenue will be materially less.
Particularly as you're correcting against Q2 when you applied the previous MAG, surely it would be logical for us to expect a fairly significant step down in the MAG payments relative to Q2. Does that sound fair? I've got another couple of questions, but can we talk about that first?
Yes. Let's start by that. First of all, in case of an agreement, chances are that if we waive the minimum guaranteed rents over the state of alarm period, let's assume that we waive the EUR 200 million in total. Okay? EUR 200 million in total. Still, those EUR 200 million hit won't be accounted for in 2020. They will be spread over the life of the contract. So probably that was your first question. With regard to your second question, hopefully not. Our objective here is to protect the value of the contract.
That means that, of course, that will involve extensions, changes in ranges of products, a number of different things, investment commitments from the part of the tenant, and to try to keep as much of the value in place, clearly with a different cash profile. But you are right, Andrew, that will require a negotiation. So you may end up, in some cases, giving up part of the value, giving up part of the revenues. But that's not the way we approach the negotiations. Hopefully, you understand what I mean and I'm not.
No, no. You're being really honest in trying to do it. But I mean, if you're trying to protect value, that's by extending the contract. But then if you're accounting that on a per-year basis, surely that depresses the revenue per year.
Yeah, you're right. That's correct.
Okay. Can I come to something?
Go ahead.
Can I come to something else on your prospective CapEx looking ahead to the DORA? Because I was really struck by the fact that you said you wanted to keep your programs but expected to delay them by, say, two years, and I was struck by that compared to what you're saying about the traffic forecast, looking at a range of 2024 to 2027 as the time period when you'll recover 2019 traffic. That is a 5-8 year period of zero growth, 5-8 year loss of traffic growth, and you're proposing to delay your CapEx projects by two years. I mean, if I were an airline, I would be screaming at you because you're just trying to spend CapEx to get the airport charges up. I don't understand how you can justify that CapEx program given the 5-8 year delay in traffic.
Okay.
This is Maurici Lucena again. Maybe I did not explain myself correctly. What I was trying to say is that at the present time, the visibility is very low. But when I try or the company tries to have, let's say, vision on what will our Spanish airport system need in the coming 10 years, I just say that probably, for example, the two most emblematic projects that were foreseen to expand in the next DORA, Madrid and Barcelona, at the present time, I would say that these expansions are needed. That's the only point I wanted to stress. Probably you are right that this does not have a perfect match with the forecast that we have used.
But of course, when you, for example, look at the profile of the forecast pre-coronavirus in Barcelona, in the Barcelona airport, the Barcelona airport last year, 2019, reached a little bit more of 52.5 million passengers. And its technical capacity limit, I know it's technical. It has a little bit of flexibility, is 55. So that's why I think that regardless of the specific view you have on the future evolution of traffic, the Barcelona airport is approaching its limit. And in my opinion, nowadays, it would be useful that it expands its capacity. Additionally, I think that we should take into account that in the coming years, terminals will need a little bit more space when they recover their previous levels of activities. I mean, ceteris paribus, for the same volume of traffic, you will need more space within terminals.
So this is, for me, an additional reason to be very prudent when you, for example, when some people conclude that what you thought was optimal just half a year ago, it's not optimal anymore. And I just say, I understand and I can agree that you can conclude that a postponement is necessary. But honestly, when I say two years, that's why I tried. But I think that I was not fortunate in the expression because I tried to emphasize, for instance, for example, when I referred to this two-year period of eventual postponement. But maybe José Leo wants to complete my explanation.
No, not really. I think that the only thing I can add is early days. It's too soon to make those decisions. I think that Chairman is sharing with you thoughts that ultimately we will need to discuss if and when we discuss the DORA II .
And around the table, there will be people with different views, of course, Andrew. And whatever decision is made should be capable of making the regulator happy enough to bless it.
Yeah. No, thank you both. It's interesting. Thank you.
Our following question comes from the line of Nicolas Mora from Morgan Stanley. Please go ahead.
Yes. Good afternoon, gentlemen. Just coming back very quickly on we've talked a lot about the MAGs. But I must be very stupid, but at the end of the day, and it might be for Leo, if you try to protect the value of a contract, but you extend it, at the end of the day, the value of the MAGs or the value of the fees you will get per annum will be lower.
And that's just logical because your travel retailers need to thrive in an environment where traffic is 10%, 15%, 20%, 25% lower, with most likely negative mix in the early years. So I just want to be clear that I understand your starting negotiating point is. Priority for you is to extend the contracts, but fundamentally, the value of each year will go down dramatically. That's the first point. Second question was just on very short-term CapEx. You flagged that Aena Spain would spend around EUR 350 million this year. Is there a significant catch-up to be expected next year, or will you be also cutting versus expectations of spending around EUR 600 million? And very last point on the OpEx.
Is there a way for us to understand the kind of the availability of OpEx savings in this gray period where traffic is recovering but we have a soft recovery? I mean, can you keep, I don't know, 25%-40% of the EUR 43 million you were saving on a monthly basis? Is there a way for us to understand and model this in this way?
Well, first of all, with regards to the MAGs, as I replied, I answered to Andrew, clearly, you can end up with a MAG per year or a revenue per year, which is lower. But our objective, when we approach the negotiations, what we will try to do is to get the value in place, including the value of the extension. And you can say that's very challenging. Of course, that's what life is about, facing challenges.
But when you get into a negotiation, you can end up achieving 100% of your goals, 90%, whatever. But the focus is in retaining the value, not only the value of the existing contract, but furthermore, the value of the extension. But you can attribute, I don't know, the percentage of likelihood of that to happen, whatever you think is appropriate. But chances are that there will be a reduction in the average. If you spread evenly the total revenue over the number of years, there are cases in which the revenue per year will go down. Don't forget, we are going through the deepest crisis probably in life for airports and the likes. Secondly, with regard to CapEx, clearly, we would like to catch up in 2021. We are minded to catch up in 2021 in terms of the CapEx commitments linked to DORA.
But everything will be clearly down to the traffic evolution, the reality around us in terms of the, I don't know, the COVID evolution, all that. But if things get better and better and we see progress over 2021, our intention is to deliver the DORA I CapEx program substantially in full. So that will be the idea. Finally, I'm afraid any potential figure I can share with you about level of efficiencies achieved in terms of OpEx as the traffic moves up, it would be difficult. And what we do is simply to follow that up very closely. But we monitor that almost on a weekly basis. But because as we open new facilities, we need to keep in mind that there will be costs popping up around us. So if I share something with you for the coming months, I will be probably, I don't know, naive.
Okay. If I may, just on the MAG, and a final one, just on the cash, so on the discrepancy between the accounting and the cash, usually these guys pay in January, February. Would I be wrong to believe that you will only receive a marginal fraction of what you are used to receive in terms of MAG in January and February 2021? We're talking very big amounts. We're talking big amounts of money that could be pushed out to, as you said, 2023, 2024, 2025.
Let's say, do you mean provided we reach agreements?
Exactly. Exactly.
Clearly. Absolutely. It's clear. The cash will show a very clear shape, which is based on less cash in the first two years and increasing level of cash linked to the minimum guaranteed rents and the royalties over the coming years.
That's clearly because this is all about helping the tenants to go through the difficult times in exchange for a longer-term commitment, increases in revenues, increases in MAGs potentially over the former ones, so on and so forth. It's not the piece of cake. It's a negotiation that will require both parties to work together in order to keep in place long-term commitments. But that's what the whole thing is about these days with the COVID-19.
Sure. So you're basically using your balance sheet versus their balance sheet?
You can put it that way.
Okay. Okay. Thank you very much.
Our following question comes from the line of Charles Maynadier from Kempen . Please go ahead.
Hi. Good afternoon, everyone. Thanks for taking my questions. I have three follow-ups.
On the regulation, so assuming there's a delay in the DORA II for, let's say, one or two years, do you have any visibility on what regulation framework would apply then? So would it be similar agreements, or would it be just an extension of the current DORA? And you mentioned the potentially higher WACC post-crisis. So could you benefit from that higher WACC potentially before DORA II officially starts? The second one is on the traffic recovery outlook between 2024 and 2027. Could you discuss your recovery assumptions per type of traffic? So domestic, Schengen, and international, for example. And then finally, definitely not a priority right now, but when do you plan on resuming dividend payments? Thanks.
Well, let me see. First of all, you mentioned the traffic 2024, 2027. What is the frankly, Charles, I had some difficulty in understanding.
But 2024, 2027, what is the evolution we expect in terms of the international traffic and so on and so forth? Is what you ask?
Yeah. Basically, if you would, let's say, over the next few years, give your recovery per type of traffic. So we have more granularity there.
That's a very long shot. Actually, remember, we are not really. What we are disclosing today is not our forecast. There is no such a thing available. It's just collecting information from different reliable sources and well-informed sources and picking up, obviously, after reviewing them, after analyzing them, taking a view as to what are the reasonable ranges of traffic evolution that we can use to value our own assets. But this is not our forecast. For us, the long-term forecast is now put on hold.
So any granularity about this 2024, 2027 recovery scenario would be clearly just, I would say, useless. Having said that, we don't believe there will be a major change or massive change. Once we come back on track, I think the proportion of traffic existing before the COVID, the different traffics will remain. We don't see any reasons to see a massive change on that. And we will work hard to get our long-haul share of traffic increasing and all that stuff, but it's too soon. Sorry. You said dividends. Well, the dividend policy remains in place. It's 80% of the net profit that remains in place. Having said that, we are now in a very exceptional situation. So policies are there to be applied sensibly.
And the board of directors decided that with the level of visibility and the level of uncertainty still in place, it wouldn't be sensible to distribute the dividend. That was their decision. They took into account all the different aspects. And hopefully, people agree that this is helping to protect the value of the investment rather than the other way around. What they will be deciding on 2021, I don't know. To start with, they will look at the policy. And that the policy means 80% of the net profit will be distributed. And then, if there are exceptional circumstances, they will take that into account. And I think I'm missing something, but I don't remember. Can you remind me, Charles? Please.
Yeah. Sure. On the regulation.
If there's a delay in the DORA II for one or two years, do you have any visibility as of today on what regulation framework would apply in these sort of transition years? Would it be singular agreements or just an extension of DORA I? Then you mentioned potentially higher WACC post-crisis that Aena could get. Could you benefit from that higher WACC before the DORA II officially starts? That's assuming a delay, obviously, yeah?
Clearly, as the chairman said, our focus is on delivering on time. I think everybody else around these DORA II discussions are on the same page now. Hopefully, we will all deliver on time. If there is a delay, frankly, I don't know because there has been no precedent so far. Actually, this was the first DORA, so I don't know.
In terms of the WACC, we don't play any games. You can see our current view of WACC is in the accounts. So 8.35, this is our cost of capital today. And that's it. We will discuss it. Obviously, in six months' time, this may change. In one year's time from now, this may change again. But this is our view. And that we would be putting forward if we would be called to the table now.
All right. Thanks.
Our following question comes from the line of Nicolò Pessina from Mediobanca. Please go ahead.
Well, all my questions have already been answered. Sorry. I didn't move out of the list. Thank you.
And the following question comes from the line of Sumit Mehrotra from Société Générale. Please go ahead.
Hi. Essentially, you tried to address this question by answering to Andrew on MAG levels.
I just wanted to, if I'm lucky, to know from you what we should think of the profitability levels in the commercial division in terms of if the evolution should be, how should that compare with the traffic growth levels now? So that's one. And then if you could remind me what specifically was the operating cash burn rate for Q2 and how do you plan this for H2? Thank you.
Well, your first question, probably you guessed it was difficult to answer. So I'm afraid you are not lucky enough. No, honestly, anything we can share with that. Clearly, the level of profitability, the margins over the coming months and, let's say, two years are not going to be what they used to be. That's for sure. But we have very little. We, ourselves, have very little visibility about that yet.
We are very confident that we will still remain a very efficient operator under the new circumstances. We are still very confident that as long as the traffic recovers to levels that are more or less in line with the 2021 view of life today, which is what I shared with you before, we will be back on profitability. And we are very confident about cash and our cash position. But clearly, everything's subject to traffic recovery, evolution of the COVID outbreaks, so on and so forth, as everybody else. And believe me, sharing with you any views on financials over the rest of the year would be just probably confusing you and speculating. Better off, we follow the figures and the evolution of traffic closely, and we share with you any news as soon as possible. Then you mentioned the second question. Sorry.
The operating cash burn rate per month for Q2 versus what you said? Over Q2, sorry, it was lower than we originally announced. As you can see, we spoke about EUR 130 million per year, sorry, per year, per month.
Now has been probably something in the region of 110. The team, we'll share that with you later, but probably in the region of EUR 110 million per month, so substantially better. For the second half of the year, we'll depend on the traffic recovery. Traffic will drive costs, and costs will drive cash. You have to make an assumption on traffic to make an assumption on cash burn. With any of the scenarios we are running today, we will be able to go ahead well into 2021, till the end of 2021, meeting all the maturities and clearly being in good shape without any trouble at all.
That's before considering any new financing that we may want to raise over time if we think it's appropriate.
Okay. Thank you.
Our following question comes from the line of Arthur Truslove from Credit Suisse. Please go ahead.
Hi. Arthur Truslove from Credit Suisse. So three questions from me, if I may. So firstly, just on the costs again. I mean, obviously, you've done pretty well exceeding the EUR 43 million per month saving that you had in mind. I mean, just to be clear, are you expecting the 2021 cost base to be materially lower than the 2019 as we stand at the moment, obviously factoring in material levels of uncertainty? Question two is just on the DORA, the second DORA.
And obviously, again, I appreciate there's a degree of uncertainty here, but as we stand today, are you expecting the regulated asset base to go up in the next DORA, or are you expecting it to remain about flat or indeed go down? So just interesting to hear your thoughts on that. And then finally, just returning to the real estate projects that obviously are ongoing at Madrid and Barcelona. Obviously, it says in your statements that those have been postponed somewhat. Interested to understand when you're likely to start moving those forward again and whether what's happened in this crisis has affected your plans, perhaps in terms of the sort of real estate that is going to be developed. Thank you very much.
Okay. So first of all, in terms of costs, frankly, I don't want to share any views on 2021.
The discussions we are having both in terms of, well, traffic and accounting and so on and so forth, I think I would better stop short of sharing information on 2021 if you allow me. Secondly, with regard to DORA, the RAB, honestly, I don't know whether the RAB will remain flat or will go up or down. It will depend very much on the kind of projects that the chairman was discussing before and whether or not we decide to go ahead with them, clearly not back on the basis of the previous schedule, but I don't know, maybe two years later, three years later, whatever. That will depend very much on the view about traffic. So you can end up with a DORA I that is delivering an increasing RAB or a DORA II which is delivering a decreasing RAB.
Both are scenarios that you cannot rule out at this stage, and frankly, it's that we don't know. I'm not trying to hide anything. We don't know yet, and finally, real estate, clearly, the real estate program has been affected big time by the COVID-19 crisis. We are now thinking, obviously, we are assessing what should be done going forward, and we are of the view initially that the logistics projects may well be progressing over the coming months because we see, and we have been advised by people that know about it, that there is a huge amount of interest on good logistics locations and good logistics facilities, precisely because of the COVID-19 impact on habits and what people do to procure some of the goods and services, so we may well, and this is not a commitment, but we may well kick off on the logistics projects over the coming months.
The rest of the projects and the asset classes, we'll need to wait to see a better, let's say, picture. Thank you. I think.
Thank you.
We have no further questions at this time. Please go ahead.
Okay then. Thank you, everybody, just for joining us in this presentation. And hopefully, we see you back in October. Have a good summer. Thank you. Bye.
That does conclude our conference for today. Thank you for participating. You may all disconnect.