Hello, and welcome to the Groupe ADP 2021 nine-month revenue call. My name is Jess, and I'll be your coordinator for today's event. For the duration of the call, your lines will be on listen only. However, there will be the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question at any time. If at any point you require assistance, please press star zero on your telephone keypad, and you will be connected to an operator. I will now hand over to your host, Philippe Pascal, CFO, to begin today's call. Thank you.
Good morning, ladies and gentlemen. A short introduction and presentation before the Q&A. Perhaps to give you some elements that, in fact, when you see our figures, we can see that we are globally in line with our forecast in terms of traffic, but also in terms of revenue. Perhaps to give some elements in terms of traffic. We are, for the traffic group, in terms of recovery, at around 30% of the 2019 traffic level, 39.1% of the 2019 traffic level for the group and for Paris, we are globally at 31% of the level of the first 9 months traffic of 2019. In line with our forecast, you know that we give you some element and guidance in terms of traffic, and we can confirm our guidance at the end of the day.
That is, at the group level, between 40% and 50% of 2019 for the full year at the group level and for Paris Airport, between 30% and 40% of the 2019 airport traffic. When you see in the details of presentation, first of all, we can see in the 1st slide, the level of Paris airport traffic with a decrease compared to 2020, decrease of 5.5% and at the Paris level and for the group traffic, an increase of 14.5%. Slide two, we can see the details for all our platform around the world. We can see that we have a good recovery, for example, in Paris Orly, + 19% compared to 2020. Also, for New Delhi and Hyderabad, + 11% and 40% for New Delhi and Hyderabad.
We have also a strong recovery, in particular in Turkey with Antalya, +130% in Antalya and Milas Bodrum, +110%. We can see also a good performance in Jordan with +80%. The recovery is now in line with our forecast. In Paris, we can see slide three, that compared to the other European airport, we have a good performance, very close to Madrid, but higher than Fraport, Schiphol and London, with a recovery of 32% compared to 2019 in Paris. In details, we can see that we have a stable connecting rate for around 22% - 23%. A good performance in term of low-cost traffic with an increase of 4.4%. We can see that the recovery have a dilutive effect in term of international traffic, with more European traffic and domestic traffic.
We can see a decrease of 11%, that is in line with our forecast. Also a decrease in terms of load factor, due to the fact that we have a strong recovery in terms of movement, more than in terms of passenger. Slide four, we can see our revenue, with a good increase for around 12%, mainly due to TAV Airports and with a huge part of TAV Airports due to the integration of Almaty International Airport for EUR 57 million for this first nine months. A very strong impact of Almaty. A good impact due to the recovery of traffic in Jordan, but also in Paris through the retail activities. For the last slide five, we can see that we confirm all our guidance in terms of traffic, in terms of EBITDA and margin and in terms of net financial debt and EBITDA ratio.
I am now available for your question, so don't hesitate to ask all the question you have to ask. Thank you very much.
The first question comes from the line of Elodie Rall from JP Morgan. Please go ahead.
Thanks. Good morning, Yves. Maybe a couple of questions. First of all, on your guidance, you haven't revised it, but the midpoint of guidance does imply about traffic about Q4 at 46% of 2019 versus 51%. That's just ahead of November reopening with the U.S. Why not revising it a little bit upwards to be a bit more accurate? Do you expect traffic to actually come down versus Q3 over Q4? That's my first question. Second question would be on the regulatory review. At the moment, if you have any update on that and on tariffs and the negotiation. Third question, maybe on Schiphol. What is the process, if you could remind us of the process of the unwinding cross shareholder arrangements. Thank you very much.
Thank you, Elodie, for your question. For your first question about the traffic, we can confirm our guidance in Paris, but also for the group. In Paris, we expect between 30% and 40% with the opening of the U.S. destination, but also due to the strong dynamic at the beginning of October and November, we can probably reach the high part of the range. Between 35 and 40 in Paris. Globally, in line with our forecast, but in the higher part of the range. When you check our assumption to reach this level, we expect in October, November, and December, the traffic higher than 50% in Paris, between 50% and 55%. For that, we take account all the opening, in particular the U.S. traffic.
That it's a good traffic in terms of number of passengers, also high contributive traffic because it's international destinations with a good effect, not a strong effect, but a good effect in the retail side. Your second question about the regulation. You know we have two main issues in terms of regulation. The first issue, it's our tariff proposal and the question of the level of regulated WACC. The second question, it's a question of the cost allocation, the accounting method, that we expect some decision from the French regulator. For the moment, we don't have a strong update and news, because we prepare our proposal and we have just to start the process. We have to put on the table a proposal in mid-November, we have probably the 1st answer in mid-December.
It's a little bit early to give you some color about that. In term of cost allocation, for the moment, we wait. We don't have any news from the French regulator. All in all, we expect a final decision about the cost allocation principle at the mid of December, at the end of this year, but no news for the moment. Your third question about the process and the Schiphol issue. You know that at the end of November, we conclude, we have a termination in term of agreement with Schiphol. The process is very clear. We have two main step. The first step for Schiphol, it's to sell during the next 18 months, the share of ADP.
The second step after this first step, it's the fact that ADP have to sell the share of Schiphol directly to Schiphol at the end of the day. For the moment, we work a lot to prepare both operations, and we don't have any details to give you for the moment. Thank you for this question. Do you have another question?
The next question comes from the line of Ruxandra Haradau-Doser from Kepler Cheuvreux. Please go ahead.
Yes. Good morning. Thank you very much for taking my questions. Three, please. First, coming back to the tariffs. Your major peers plan significant increases in tariffs over the next years. Schiphol, more than 40% increase over the next three years. Tariffs in Heathrow and Frankfurt are likely to significantly increase as well. I understand you cannot give details at this stage, but how shall we think about the trend of your tariffs medium-term? Second, my understanding is that nowadays, the magnitude of the traffic waves at the airport has significantly intensified, with big traffic discrepancies between peak and off-peak hours and between different days of the week. With a likely higher share of leisure traffic going forward, how do you think about the peaks at the airport going forward? Implicitly, what will be the implications for your cost base?
Third, the Skytrax ranking of Charles de Gaulle has massively improved during this crisis from position 13 in 2019 to position 15 this year. Charles de Gaulle is now better ranked in terms of passenger satisfaction than Lufthansa's main hub. What has been the driver for this improvement, and do you expect the current ranking to be sustainable? Thank you very much.
Thank you, Ruxandra, for this question. Your first question about the tariff. Clearly, what is key for us it's to have a progressive increase in term of traffic, but with a strong moderation approach. As you know, the French regulation for the moment, so without a huge change linked by the French regulator, is a very good and performant regulation because we can assume a long-term approach, and we can increase our tariff with a moderate approach and at the same moment, improve our regulated ROCE to reach the cap that is the regulated WACC. When you see the other regulation, like Schiphol for the moment, we can see that the regulation in Schiphol, it's more volatile. When we have a strong CapEx plan, mechanically, you have a huge increase in term of tariff.
When we have a strong decrease in term of revenue, mechanically, we have the consequence, it's the possibility to increase the tariff. The same in Heathrow. For ADP, it's possible to manage the situation in other way, and to improve step-by-step our regulated ROCE to recover a strong position if we have a good regulated WACC and a high regulated WACC without a strong and very high tariff increase. You know that the position of ADP, it's a key position. We believe that the competitiveness of a platform, it's more linked by our infrastructure and at the end of the day, our CapEx plan than in term of tariff. We assume the fact that when we don't have a good dynamic, we can increase lightly our tariff, and we assume that.
All in all, when you check our tariff increase during the last 15 years, we increase our tariff between zero and 3% or 4% maximum. With this crisis, our strategy is to confirm the fact that we have a moderation in term of tariff, and we have to increase our tariff. We try to manage the situation and the recovery of the regulated ROCE in the other way, with OpEx control, with a CapEx control, but also with a strong management in term of infrastructure. The second point, it's the question of the quality of traffic, the mix of traffic and the management of this recovery.
In fact, for all the airlines, the key element it's to increase the traffic at the peak hour. The main reason is the fact that for the airlines, the traffic at the peak hour, it's strong traffic with huge, high contributive consequence for the airlines. That is very important for our clients. Our strategy is to accompany the recovery of the traffic, and to accompany our clients, all the airlines, to recover a strong financial position. At the same time, for environmental issue, but also for optimization in terms of infrastructure, you know that it's difficult for us to increase the traffic at the peak hour because we need to reopen some infrastructure and we need to develop and to increase the capacity of the airport. For the moment, we don't have these questions.
We know that it's possible to accompany the recovery of the traffic, to accompany at the peak hour with a strong impact in term of CapEx, with a strong impact in term of OpEx. You're right, in fact, probably for the end of this year, but also for the next year, we have to reopen infrastructure. It's manageable in term of OpEx. When you reopen infrastructure, we can reopen without a strong impact in term of OpEx. We learn a lot during the crisis, and we know that it's possible. The key element, it's not the OpEx. The key element, it's retail activities. When we reopen infrastructure, the consequence, it's to dilute the high contributive passenger in a lot of infrastructure. That is not efficient for our retail activities.
We have a strong discussion with all the airlines about that, because obviously it's very good to assume the fact that we can have a good contact rate. Obviously, we have to accompany the airline to recover a good position, including the peak hour. At the same time, it's not possible for us to have a strong and bad impact in terms of retail activities. For your third question, for Skytrax Awards, in fact, we have a strong improvement for Charles de Gaulle, also for Orly, also for all the platform of the group. It's not a conjuncture effect, it's a structural effect. It's in line with our policy, we work a lot during the last three or four years to improve this award. We know that we learn a lot in terms of drivers to improve this quality.
We change the manner to operate our platform. We change the atmosphere in the boarding gate. We improve the quality in the car park. We improve the quality in the checking area. We improve the quality in the security check activities and so on. We have a structural effect. We have a strong improvement. At the same time, it's a competition, and the improvement, it's a key element and a structural element, but all the airports try to improve the quality. We know that for the moment, we are in a good position to continue the story and the success story in this way. Thank you, Ruxandra Haradau-Doser, for this question.
The next question comes from the line of Cristian Nedelcu from UBS. Please go ahead.
Hi. Good morning. Thank you for taking my questions. Maybe the first one, coming back on the regulatory decision on the cost allocation. Maybe can you give us a bit of color? Sorry. What is the toolkit of actions that you have at disposal? Let's say the regulatory decision is a bad one, what can you effectively do in terms of CapEx, in terms of OpEx or other measures that you could use in that sense? The second one, could you offer a bit more color, you talk about the financial stabilization of the international assets and taking actions in some of the international assets. Can you elaborate a little bit on the latest situation there? The last one, could you give us an update? Where do you see your net debt position at the end of this year?
In particular, with the traffic guidance you have in place for 2022 and with the CapEx guidance you have in place, what is the range of free cash flow generation that you see for 2022? Thank you.
Thank you for your question. Your first question about the cost allocation. The cost allocation principle was fixed by the French state and was the consequence of the economic regulation agreement of ADP. At the end of the day, we have the definition of the regulated and non-regulated scope, it's at the end of the French state. In the cost allocation, it's the discussion between the French state and ADP. Now, the rule change. During the summer, we have a specific decision, and the French decision, in line with the judge, is now very clear. The rule have to be fixed by the French regulator. We wait the decision of the French regulator. We have a good discussion with the public consultation.
We know that, for example, the French regulator wants to fix the cost allocation with an accounting method, not with the economic method. That is, for us, a good news. We have to wait to know exactly what is the methodology. First point. If the methodology is, at the end of the day, it's not favorable for ADP, obviously, we can have a strong consequence in the regulated scope because we have to decrease, probably, our level of tariff. Bad consequence in the non-regulated scope because we can have a strong impact in term of non-regulated watching. That is probably a huge part of the issue. The good manner to manage this situation, if we have a strong impact, it's first to cut all the regulated CapEx, and second, to develop strongly our non-regulated activities.
It's not a good solution for French regulator because at the end of the day, if we decrease our CapEx plan in the regulated scope, we can accelerate the decrease of the tariff. At the same time, we can have more firepower to invest in the non-regulated scope. It's not rational for a public authority. We try to convince that the competitiveness of the platform is mainly due to the regulated CapEx, more than the tariff level. We try to convince that for all the party, for the French regulator, for the French state, for the airlines, but also for the airports, with a good balance in term of cost allocation and with a good appreciation of the tariff versus the CapEx, we can have a strong position with a good policy. Your second question about the stabilization of international asset.
For the international asset. We have a good recovery in TAV Airports. You know TAV Airports have a strong asset in term of tourism, for example, Antalya, first of all. Second element, TAV Airports manage the level of OpEx and have no financial issue. All in all is under control with TAV Airports. For GMR Airports. GMR Airports, the situation it's a little bit different because during the crisis, GMR have to continue to build extension and to develop the capacity of Delhi and Hyderabad. We have a strong CapEx plan. Now we have also a good recovery, and we expect a strong position of Delhi and Hyderabad in the next few months, but with an increase, a strong increase in term of debt.
Our priority is to deleverage GMR Airports, and we discuss a lot with our partner, that is GMR Infrastructure Limited. For the moment, it's manageable, and we don't have a strong issue about that because GMR Airports refinance a huge part of the debt and have some time to deleverage the company in the next few months. The main issue it's in Santiago and in Amman, it's the two main issue for the moment. We discuss a lot with the Chilean authority, with all our lenders, and we discuss a lot with the Jordanian Government. For the moment, we are confident to stabilize the situation. If we have to put some money on the table, it's not for JV, it's not for GMR, perhaps for Jordan, and perhaps, if at the end of the day it's necessary, for Santiago du Chili.
Your third question, it's a net debt position. For the moment, our guidance, very clear. We have to reach our target at the end of 2022. You know that when you see our guidance, we can see that we expect a strong increase in term of traffic in 2022. All this traffic increase can manage the situation of net debt in 2022. For the moment, I am sorry, but I can't give you more color about that. In fact, at the end of 2021, our multiple should be very high. Thank you for your question.
The next question comes from the line of Dario Maglione from Exane BNP Paribas. Please go ahead.
Hello, good morning. How much was the spend per pax in Q3? Seems quite low. Is that concerning? Question number two on the regulatory proposal to change the regulatory scope. In the worst case scenario, how much cost could be moved to the non-regulated side? Third question on the Schiphol cross-holding. How likely is that the ADP shares are floated on the market? Thanks.
Excuse me, I don't understand your third question. What is your question, the third question?
Yeah. Is it possible, or how likely is that Schiphol sell the ADP shares on the open market?
Yeah. To start with this question. You know, in the first step, Schiphol have to sell 8% of ADP. Schiphol have the choice to sell in the open market or to sell directly for the specific investors. It's at the end of Schiphol. We have for ADP, but also for the French state, veto rights and the permission rights. All in all, at the end of the day, if it's a good operation, we have to assume that we need a strong alignment between Schiphol, ADP, and the French government. The question of the open market, we don't know the answer because it's at the end of Schiphol. Probably, it's difficult for the moment to give you some color because it depends of the appetite of all the investors. Your first question about the sales per pax.
You know that we expect for the end of this year, sales per pax higher than 2019. Probably higher than EUR 20. When you see our performance during this year, we can see that we have a high sales per pax during the spring, we know that the recovery, with an acceleration in term of recovery due to the European flight more than the international flight, we can have a dilutive effect. That is okay, but for the moment, it's in line with our expectation. We know that we have enough room of maneuver to improve the situation in 2022, 2023, with two main pillars. First pillar is the recovery of the international flight. The second pillar, it's our new retail area.
You know that we are to reopen some infrastructure. We have to open the international junction of the terminal one with a strong retail area. We have also, in this second pillar, a good strategy to accompany the development of the retail activities through our luxury brands, through our JV. The retail team work a lot to prepare a new strategy to accelerate the recovery. Your second question about the regulated scope. The definition of the regulation, the regulated scope, regulated and non-regulated, it's at the hand of the French state. The regulator have to fix the cost allocation. For a huge part of the asset, for a huge part of the OpEx side, for all the part of revenue, it's very clear. When you have landing fees, it's regulated. When you have retail revenue, it's non-regulated.
For the revenue, we don't have to expect any change. For the asset, when you have a runway, it's obviously regulated. When we have retail shop, it's obviously non-regulated. The question is the allocation of the common infrastructure. For example, the corridor of all the terminal. This situation, we have, for the moment, good and strong rules, and for us, it's good rules. It's difficult for the moment to give you some element and some figures because we don't know that is the decision of the French regulator. We don't have any element about that. Perhaps it's a very good decision and very favorable for the airport. Perhaps not. It's our duty to give some air, to say clearly for the financial market that we don't know. Thank you for your questions.
The next question comes from the line of Marcin Wojtal from Bank of America. Please go ahead.
Yes. Good morning. Thank you so much for taking my questions. The first one is just on cost-cutting. I think in H1 results, you disclosed that you are targeting EUR 100 - EUR 150 of structural cost savings in Paris, and I believe this is not included in the chart for 9 months. Can you just confirm that this is obviously still the target of ADP? Second, just to clarify, in the statement today, you mentioned that you are pursuing some arbitrations on international assets. Have this already started, and are you referring to Santiago and Jordan, or there are arbitrations in some other assets? Maybe last question, just apologies, just to come back to that regulatory review by ART?
I think you mentioned in answer to one of the previous questions that you think the ART will be using an accounting principle to determine cost allocations, and you are currently using an economic principle. I think you suggested that could may even be positive. Can you maybe elaborate a little bit, just give us some color on what these principles imply? Thank you.
Thank you for your question. First of all, I can, for your first question, confirm that we are in line with our forecast to assume the fact that we can have a sustainable effect in term of OpEx in Paris between EUR 100 million-EUR 150 million. It's sustainable OpEx. It's at the end of the day when we have recover all the traffic. Before the recovery, in fact, we expect more cost-cutting effect. For the EUR 100 - EUR 150, it's just in Paris. It's just in the regulated and non-regulated scope, part in non-regulated to increase our non-regulated budget. It's mainly due to our social measure, like the decrease in term of number of people, first, for around EUR 60 million, EUR 60, EUR 65. The decrease of the remuneration of all the people in ADP for around EUR 20 million, EUR 25 million.
The other element, it's purchasing policy and other action plan. It's in Paris, so it's not just ADP mother company, but it's also our consolidated JV, like SDA. Your second question about the arbitration. You have two main discussion, and we wait for arbitration. The main issue is in Santiago. We have a strong discussion with the Chilean government, and the second element is in Delhi due to the force majeure during the crisis. After, we have some elements, but it's more little. We have a strong discussion in Jordan. Your third question about regulation. We have two main manner to allocate all the cost and the asset base. The first, it's the accounting method. We take the figures in our accounts, and we fix some key allocation, and we affect all the OpEx and the asset. The second method, it's an economic method.
We have, for example, some activities that we try to find and to have a good valuation of the positive externality of all the activities. It's not based with the accounting figure, it's based on the economic approach. For example, what is the contribution of the retail part to create positive externality in terms of quality of service, in terms of attractiveness for the airline activities, for example. For the moment, we know that the French regulator wants to choose the first method with the accounting method. At the same time, we don't know if the French regulator wants to change and color the accounting method with an economic approach. For example, take the accounting figure, but put some adaptation to say that for this kind of activities, we have a strong positive externality.
For example, for the retail scope, we know that if we have a good mix traffic, we have good efficiency in terms of retail, and we have to color our accounting approach with specific rules. It's a question, and we don't have the answer.
The next question comes from the line of Andrew Lobbenberg from HSBC. Please go ahead.
Hi there. Can I come back to regulation, but more about the principles? At the start of the presentation, you spoke about the difference between Amsterdam and Heathrow with very volatile airport charges, because they're trying to instantly or rapidly get ROCE back to WACC. Yourselves, you were thinking of a more step-by-step gradual approach. I just wanted to know how many steps you expect to take, how long a journey is it to get ROCE back to WACC in your vision? Second question would be around the recovery of Asian traffic. Obviously, it's going to be slow, but how slow do you expect it to be? When do you expect the Asian traffic to start recovering and when do you expect it to get more fully recovered?
A third question would be, you've given us this net debt EBITDA guidance of six to seven for the end of 2022. Wanted to check whether that included any receipts from the disposal of your Schiphol stake, or if you got some cash in at all for that would further improve the debt situation for end of 2022. Thanks.
Thank you for your question. Your first question. Mechanically, if we freeze the tariff during two or three years, we can observe a strong recovery in regulated ROCE. The key element for us, it's a cap fixed by the French regulator. If we have a cap at 6%, for example, we can wait three, four years to reach 6%, perhaps three years. If we have a cap at 2% or 3% for the level of regulated WACC, perhaps we can reach the cap in one or two years. Without tariff increase. When you manage a tariff increase, we manage a tariff increase to manage the speed of the recovery. All in all, the tariff increase, it's not a key element for us to recover our regulated ROCE.
The key element is to reduce the level of CapEx and to reduce our OpEx in a sustainable way. That is a key point. For the tariff increase, in fact, it's important for us to accelerate this recovery. When you see our figures, and we disclose the recovery of the traffic, we can see that in 2018 and 2019, we have a regulated ROCE higher than 5%. If we have the same traffic with a strong effect in terms of savings. At the end of the day, we can reach without tariff increase, regulated ROCE, higher than 5%. The key question in terms of regulation, it's not a question of tariff, it's a question of CapEx, and it's a question of level of regulated ROCE. Tariff is good.
If we now implement a tariff increase like Heathrow at 30%, mechanically, we reach in 2022 a very high level of regulated ROCE, and the French regulator fix a cap that is regulated WACC. As a consequence, it's a decrease in term of tariff. It's not possible to assume a strong increase like ISRO. Why we have a strong increase in the other airport? It's the fact that for the other airport, for Schiphol, for example, we have to assume a huge CapEx plan despite the crisis. For the other airports, it's possible for the other airport to have a compensation for the loss of profit during the crisis, but it's not possible in the French regulation. In the French regulation, we lose a huge part of our traffic and the huge part of our aeronautical fees, and it's not possible to have a compensation for this element.
We just have to manage the recovery. The second question about the traffic and the Asia traffic specifically. You know that, for us, the recovery of the Asia traffic will be probably during 2022, probably with a strong manner during the summer of 2022, summer or September, October. Before, it's more difficult. We have a recovery, but not so dynamic. In terms of net debt, we don't put in our model a strong effect in terms of disposal for Schiphol in 2022. As I say, Schiphol has 18 months to sell 8% of ADP, and after that, ADP has to sell the share of Schiphol. It's probably for us in 2023. If it's before, it's good news, but we are very cautious in our approach. In terms of net debt, we don't put the disposal of Schiphol in 2022. Thank you.
Thank you very much for all your question, and see you very soon and for our annual result in February with probably, I hope, good news. Thank you.
Thank you for joining today's call. You may now disconnect your lines.