Ladies and gentlemen, thank you for standing by. I'm Hayley, your Chorus Call operator. Welcome, and thank you for joining the conference call of Fraport AG. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. If you would like to ask a question, you may press star followed by one on your touch-tone telephone. Please press the star key followed by zero for operator assistance. May I now hand you over to your host today, Christoph Nanke, SVP, Head of Finance and IR. Please go ahead.
Thank you, Hayley, and also welcome from my side. I have with me at the table Dr. Matthias Zieschang, our CFO. He will guide you through the presentation, and then, as always, there is time for your questions. So.
Yeah, thank you, Christoph. Good afternoon, ladies and gentlemen, to our presentation on the first half fiscal year 2020 here from Frankfurt. Today, we are looking at financial figures which are by far not comparable to figures we have seen before. The coronavirus pandemic has impacted global air traffic and our group to an unprecedented extent. With the exception of Xi'an in China and Saint Petersburg in Russia, all our group airports recorded passenger drops of more than 90% over the course of the second quarter. These days, we are seeing first signs of a recovery in Frankfurt and abroad, but as infection rates can spike again, this situation remains very fragile. An update on the situation of our group airports I will provide you in a minute, but let's focus on our current financial situation first.
Stage one, group revenue, excluding for the effects of IFRIC 12, dropped by almost 50% to just under EUR 800 million. The Q2 standalone figure was down even steeper by roughly 75% to a level of EUR 200 million. On the other side, we showed stringent cost discipline not only in Frankfurt but also abroad, which resulted in reduced staff and non-staff costs during these challenging times. As a result of the short time work in Frankfurt and the clear cost-cutting focus across the group, we were able to reduce our group OpEx by just under 40% in the second quarter, despite our fixed cost business nature. Hence, we were able to keep EBITDA positive at EUR 23 million after the first half year of 2020, despite an underlying revenue reduction of some EUR 720 million.
While depreciation and amortization remained unchanged, also our result from investments accounted for using the equity method was clearly impacted by the COVID-19 pandemic and turned negative from plus EUR 16 million in the past year to minus EUR 46 million in the period under review. Therefore, despite an improvement in our interest and other financial result, our total financial result was down from EUR -64 million to EUR -99 million. Our group EBIT and group result thus performed clearly negative and stood at EUR -309 million and EUR 231 million respectively after the first six months of the year. After consideration of the negative result from minorities, our achievable group result was at EUR -211 million, and our EPS stood at EUR -2.29. On Slide five, you find a detailed look at the financials of our group segments.
The drop in passenger traffic in Frankfurt of -63% also left its marks in the three Frankfurt segments. It becomes evident that all revenue streams and all operational results were clearly impacted. Still, what is also apparent is that not all revenue streams are declining in the same magnitude. Some revenues, especially in the aviation and ground handling segments, are not only related to passengers but also linked to movements and maximum takeoff weights, which did not decline in the same magnitude as passenger numbers. Also, in retail and real estate, based on fixed rental contracts and the application of minimum annual guarantees, some revenue streams decoupled from the passenger performance and developed somewhat better.
As a result of the MAGs applied, our retail revenue per passenger stood at EUR 4.36 in H1, an all-time high, however, as said, resulting from the application of the MAGs and comparably low passenger numbers. In Q2, thus, the result was even stronger at EUR 12.17, again on the basis of only 1 million passengers having been handled. In total, revenue across the three Frankfurt segments was clearly down by about 45%. Despite the countermeasures initiated, this sharp loss in revenue was so high that we were not able to offset it. The EBITDA of the three segments, therefore, turned negative post the second quarter to EUR -30 million or to EUR -89 million for the second quarter standalone.
In our operational international business, you see that the revenue decline turned out to be a bit steeper than in Frankfurt at -53% when adjusted for IFRIC 12. Despite this comparably steeper drop in revenue, lower OpEx in international activities due to countermeasures and less concession charges were sufficient to provide for a positive H1 EBITDA of the segment. More details of the individual airport performances are shown on the next slide. On Slide six, you see the performances of our major airport investments, with the exception of the highly seasonal airport investments in Bulgaria. So, Fraport Twin Star and in Greece, all investments recorded positive EBITDA figures after the first half of the year.
Even during the trough in the second quarter, when the fully consolidated airports of Lima and Slovenia remained almost entirely closed, the EBITDA loss of the international activity segment was only minor at EUR -18 million, also helped by positive EBITDA contribution of the Frankfurt services that the segment is also accounting for. This figure compares to the EBITDA loss I just mentioned in Frankfurt of some EUR 89 million. Also, for the third quarter, the prospects for the international activity segment look attractive in so far that we expect the EBITDA to be positive here again. I will come back to the business and traffic update in a minute. With regard to our investments in Turkey and our minority-owned airports in Saint Petersburg and Xi'an, we recorded negative net results weighing on our group financial result, while the EBITDA figures remained positive.
Our group cash flow and indebtedness are shown on slide number seven. In line with our negative Q2 EBITDA performance, also our group operational cash flow turned negative in the second quarter to a level of EUR -1 89 million or EUR -115 million when adjusted for working capital changes. This harsh drop also brought down our cumulated operational cash flow, leading to a total cash outflow from operations of some EUR 97 million in the first half of 2020. Due to continued cash outflows for our CapEx programs in Frankfurt as well as in Greece, Brazil, and Lima, our free cash flow was negative in H1 at EUR -653 million.
For the second quarter standalone, the negative free cash flow figure stood at EUR -457 million, very much in line with our guidance for the monthly cash burn of the group of about EUR 150 million per month we provided you a quarter ago. Going forward, we expect this cash burn situation to improve again as the traffic recovery will positively impact revenue and thus operational cash flow while we keep cash outflows at low levels. While the clearly negative free cash flow is by far not what we expected for the group at the beginning of the year, it is worth to highlight that we also expected a negative free cash flow for this year even without the COVID-19 pandemic on the back of our four CapEx programs in the group.
While the group net debt figure after the first half of the year stood at more than EUR 4.7 billion, we expect our net debt to increase to up to around EUR 5.5 billion by year-end or up to some EUR 500 million higher when compared to our pre-corona expectations. Please note here that the before-mentioned guidance, as well as all other projections we are giving, are always backed by our current traffic expectations for Frankfurt and our group airports.
Here, we expect a conservative traffic recovery going forward rather than severe traffic disruptions from a big second COVID-19 wave and correlating travel restrictions. In line with a higher group net debt and the decline in equity, also, our gearing ratio recorded a clear increase in H1, which we also expect to continue for the full year. On Slide eight, you can see the ingredients of our current group cash position.
As we highlighted before, our net debt figure stood at about EUR 4.7 billion at the end of H1 this year. This figure was made up by a gross financial debt of EUR 6.3 billion and a group liquidity of roughly EUR 1.6 billion. The EUR 1.6 billion group liquidity can be found in our interim report as cash and cash equivalents of just under EUR 1.1 billion, and some EUR 500 million we invested in securities accounted as current and non-current financial assets. On top of those EUR 1.6 billion, we had unused credit lines of EUR 80 million from our project finance in Brazil and some EUR 500 million revolving credit facilities in Frankfurt.
Adding those undrawn credit facilities to our current cash position, this sums up to a cash reserve of more than EUR 2.1 billion , as at the reporting date, an increase of around EUR 450 million when compared to December 31, 2019, despite the current negative business environment. As we also highlighted during our Q1 presentation, we don't plan to stop our financing activities here in order to prepare the group for an even longer period of time. Therefore, at the start of July, we issued our second corporate bond in the history of Fraport at a nominal value of EUR 800 million . The bond placement has been the biggest issue of an unrated company in the past two years and was well oversubscribed. The terms and conditions of the new bond stood at a fixed rate of 1.6% for our four-year tranche and 2.1% for our seven-year tranche.
Including for the new bond, we have now secured some EUR 2.1 billion over the past couple of months, for which we pay an average interest rate of some 1.2%. Our current cash position, including for unused credit lines, thus stands at a comfortable level of just under EUR 3 billion. Our repayment profile is shown on slide number nine. Here, you still need to add the new EUR 800 million bond and the corresponding EUR 300 million repayment in the fiscal year 2024, and another EUR 500 million repayment for the second tranche in the year 2027. For the current year, the repayment amount is split into around EUR 124 million scheduled repayments in Frankfurt and Greece and some EUR 77 million repayments of revolving credit facilities. Thus, the repayments for this and the next years are easily manageable, taking our current cash position into consideration.
Even in a very negative traffic scenario, so no recovery at all, we feel well equipped now to bridge the financial year 2021 with our existing cash reserves. Moving on from our group financials, I would like to come to our business update now, looking at the market environment first on Slide 11. With our last publication in May, we basically reported a full shutdown of all global flight activities. Fortunately, in the meantime, we have seen at least a partial lifting of travel restrictions and travel warnings. On June 15, the travel warnings for flights within the EU have been removed, and shortly thereafter, all entry restrictions for Germany from EU, Schengen, and associated countries, as well as the U.K., have been removed.
Since the beginning of July, also, the entry restrictions from a couple of third countries have been removed so that unrestricted travel is possible from Canada, New Zealand, and Thailand, for example. Apart from those countries, there are still travel warnings and entry restrictions in place, which still weigh heavily on the traffic recovery these days, especially to the U.S., China, or Turkey. Not only the necessity to go into quarantine once coming back from countries designated as risk areas, but also the uncertainty about the development of infection rates and possible restrictions while traveling abroad are still hindering people from flying. In order to prevent people from going into quarantine when flying back to Germany from a third country with entry restrictions, we have opened a test center at Frankfurt Airport already at the end of June, where people can be tested upon arrival.
Now, the tests may become mandatory in Germany for passengers arriving from designated risk areas. The capacities have been increased further since last week. Now, looking at the situation at some of our group airports abroad, starting with Peru. Lima Airport was closed for around four months. This was by far the longest shutdown we saw in our portfolio. Only recently, on July 15, the airport has been reopened for domestic flights again. We expect international traffic to restart in September at the earliest or even in October. In Brazil, international flights are allowed to and from Porto Alegre again. In practice, however, international traffic continues to stand still due to entry restrictions for foreigners. Just before the start of the peak summer season, our touristic airports in Greece, Bulgaria, and Antalya have opened up again for international traffic.
However, Turkey is still designated as a risk area for Germany, which is a key market for the Turkish tourism industry. You see, despite some relief in European travel restrictions overall, the environment is still tense, and there remains a high uncertainty about the shape of the recovery at the different sites we operate. On S lide 12, you find the traffic performances in June and the year-to-date figures for our group airports. After my introductory words on travel warnings, quarantine requirements, and temporary airport closures, it is not surprising that passenger numbers at all airports were massively impacted in June and in Q2 as a whole. The only exception was Xi'an in China again, which has been recovering from its trough in January and February, with the latest data of around - 30% over 2019.
Looking at the cumulated figures, it becomes clear that the second quarter had an extremely negative impact on the year-to-date development. In Frankfurt, we recorded passenger figures which were down by around 64%. The international airports realized traffic declines between -50% and -84% after six months. In July, we saw a first improvement of our passenger figures on continental flights to and from Frankfurt, which were down by around 75%, while intercontinental traffic was still at less than 10% of 2019 levels. Overall, on the basis of our traffic results in the first half of the year, for the full year 2020, we expect low traffic levels to continue, reaching around 30%-40% of 2019 levels in Frankfurt and up to around 40% at our major international airports.
But to be clear again, this is our estimate as of today, without any material impact from a second wave of infections. On my next slide, I would like to give you some more details about the recent developments at our Frankfurt site. On the upper chart, left-hand side, you find the supply side based on offered seats from and to Frankfurt Airport. You see that on continental routes, only around 29% of the previous year's levels is offered again. On intercontinental routes, the level has been even lower at only 21% recently. On the right-hand side, you see the analysis of the seat load factor, which we divided again into continental and intercontinental seats.
In light of the continued travel warnings and entry restrictions in many third countries, it is no surprise that the load factors on continental routes are by far higher than those on intercontinental flights, reaching 71% last week. However, for some weeks now, overall, we have seen a positive trend in the development of the seat load factors. The lower chart on the left-hand side shows you the deviation in daily passengers compared to 2019. What you see is that, on the one hand, daily passengers have been increasing over the last weeks from basically zero to around 50,000 passengers per day recently. On the other hand, also last year, over the summer season, passenger numbers were reaching an all-time high of up to 240,000 passengers per day.
For this reason, compared to 2019 figures, we have still realized a decline of around 80% in July, which, as discussed before, is mainly driven by the still very low demand for intercontinental flights. However, over the last weekend, we saw a slightly accelerated development with passenger numbers reaching more than 60,000 per day. Looking at the bar chart on the right-hand side, which is derived from the current summer flight schedule of our main carrier, Lufthansa, you see that compared to 2019, around 50% of the international and even 75% of continental destinations are restored again. Obviously, these routes are not as highly frequented as last year, but still, this development shows the importance of Frankfurt Airport for Lufthansa to ramp up its global network and connectivity via Frankfurt Airport again. Following up on this point, I'm moving on to Slide 14.
To further strengthen the position of Frankfurt Airport in the market, together with Lufthansa, we have decided to found a joint venture called FraAlliance, which intensifies our strategic partnership. Taking this step jointly, we will improve the operational procedures in Terminal 1, increase efficiencies, and discuss potentials to adapt the infrastructure of the site. We are pleased that after a quiet, lengthy period of discussion, we have come to this agreement and are looking forward to getting the joint venture started. On a second note, we are also pleased to see that Lufthansa Express has extended its partnership with Deutsche Bahn to offer more train-to-flight connections via Frankfurt Airport. This development once more underpins the unique strategic location of Frankfurt Airport in the middle of Germany and the importance of the airport for Lufthansa in the current situation.
As some domestic feeder flights might not be profitable for a network carrier, the step taken is a financially as well as environmentally reasonable step. With more than 120 codeshare high-speed train services per day, Lufthansa and Deutsche Bahn are increasing the connectivity and the catchment area of Frankfurt Airport, including for passengers from Switzerland by means of a train service. Looking at this development, Frankfurt Airport is clearly benefiting from its central location and intermodal connectivity, which is unique in Germany. On Slide 15, I would like to proceed to our international group airports and give you some more detailed insight into recent traffic developments here. Looking at the bar charts, you find the weekly traffic developments separated into international and domestic passengers for most sites and the respective relative deviation over the same calendar week in 2019.
While unsurprisingly, the traffic numbers for Lima are still at a minimum level, given the fact that only domestic traffic has restarted recently, we are happy to see promising developments in Greece and Bulgaria in particular. Coming from around - 90% and even higher declines before the summer season, we have now reached levels of - 62% and - 78%, respectively, here. In Greece, we even saw a higher level of average daily passengers than in Frankfurt over the last two weeks. Looking at the development in Antalya on the bottom of the slide, it becomes clear that traffic is still heavily impacted from the designation of Turkey as a risk area for German travelers. In Brazil, when following the news on infection rates, it is also not surprising that the traffic levels are still minimal on domestic routes. Also, they have slightly improved since the middle of July.
International flights are still non-existent, as you can see on the slide. Quite encouraging are the developments in Saint Petersburg, where domestic passenger numbers were previous year's levels in the last week, and in Xi'an, where overall traffic declined by - 23% when compared to 2019, coming from -32% in June still. Taking a general look at all the recent developments in Frankfurt and abroad, we are confident to see some accelerated recovery at our group airports in Europe over the peak summer season. Moving on to the next slide and switching from the traffic development as our main revenue driver to our cost side to give you an update on the measures we are taking to preserve cash not only these days but also in the medium term.
As you already know from our last publication, we have two main levers that we are working on, which is OpEx on the one side and CapEx on the other side. Starting with OpEx on Slide 17, what are we doing to save operational expenses these days? You already know that since the end of March, we have been applying short-time work for around 80% of our staff in Frankfurt, and based on our agreements with the unions, we will continue with this at least until the end of February next year to reduce our personnel expenses. Also, our international subsidiaries have materially reduced their cost for personnel, also because they are more flexible in hiring seasonal staff, so that in Q2, in total, we have realized a reduction of close to 40% within Fraport Group.
In the medium term, there's no doubt that we need to restructure our organization and to reduce the number of staff significantly in order to make our business model as profitable as it was before the crisis. Therefore, over the next years, we will prepare our company for the new normal of around 15%-20% lower passenger numbers in Frankfurt in 2022 or 2023, which means that we need to cut around 3,000-4,000 jobs at the site. Details of the job-cutting program are still under discussions with the Workers' Council, but the before-mentioned staff figure will mean the sustainable reduction of minimum EUR 200 million of staff cost per annum. In addition to that, we have been adopting the usage of our infrastructure in order to save costs for electricity, heating, and cooling, maintenance, etc.
In fact, we have Terminal 2 already for several months now and are currently only using three out of the four runways in Frankfurt these days. Also, in the future, we will strongly link the usage of our infrastructure to the actual traffic development so that we will keep all cost components at a minimum level. Last but not least, we are cutting all costs that are not necessarily needed to keep the airport operational, and we have adopted our processes in a way that even the top management, so myself, needs to approve all of us. The same is valid and true for our international subsidiaries that have also contributed a material portion to our cost savings in the last quarter. All in all, we saved more than 40% on the non-staff items in Q2, and we will continue with our strict cost management.
However, it is clear that once traffic is ramping up again, also our cost base will increase incrementally again, while it is our clear target to improve our EBITDA margin when traffic increase is gathering pace again. Now, coming to the investment programs in the group, on the left-hand side of S lide 18, you see our short-term outlook for our current CapEx programs. As we already cut the budgets with our Q1 publication, there's no material change in the outlook for 2020, which stands at roughly EUR 1.1 billion. This reflects our strategy not to interfere into any ongoing projects, but only to cancel or shift future projects that have not been started yet.
Therefore, we still plan to decrease our maintenance level over the next decade to around EUR 200 million-EUR 250 million per annum, which will bring us total savings of around EUR 1 billion over the next seven years compared to our previous midterm budget. The more stretched CapEx outlook for Terminal 3 is not coming from any cuts in the budget, but rather from unavailability of workers at the site in times of Corona and the shift of investments into coming years. Overall, this will lead to a postponement of the completion and opening of Terminal 3 into 2024 or 2025. Like this, the remaining investments will be stretched over time, and the annual budgets will therefore decrease to a level of around EUR 400 million-EUR 500 million. In Lima, you know that the construction program consists of two projects: the construction of the second runway and a new terminal.
While we continue to work on the runway construction, the terminal project has been put under review with the aim to postpone it into the future. As there's still uncertainty about possible down payments for the runway this year, we keep our budget for 2020 at EUR 100 million-EUR 200 million. The same is the case for Greece, where we stick to our budget of EUR 100 million in 2020. In Brazil, we now lowered our budget to EUR 100 million after the first half year. As of 2022, as the construction programs in Greece as well as in Brazil are completed, we will see reduced CapEx at maintenance levels of around EUR 10 million for each site. All in all, the new CapEx outlook significantly lowers our cash-out profile next year term.
Subject to the development and decision-taking in Lima, this will mean cash-outs of about EUR 1 billion in the year 2021 and less than EUR 1 billion thereafter, which will clearly improve our free cash flow profile. Having said this, I'd like to conclude my presentation with our outlook chart on slide number 20. The picture shown is more or less unchanged to our past presentation. The coronavirus will clearly impact our group-wide traffic in financial figures on a full-year basis. For Frankfurt, you also know from our past publications and the shareholder meeting in May that we expect passenger traffic to be down in the area of -60% to -70% on a full-year basis. The traffic visibility we are having is pointing towards a continued recovery of capacities over the third and fourth quarter of this year.
The situation, however, remains to be characterized by an increased uncertainty if those capacities will be fully utilized or whether we continue to see a high number of flight cancellations. The same uncertainty we are having when we go through our portfolio. As described before, international traffic at some airports is still very restricted, and intercontinental traffic remains to be characterized by stringent bilateral travel restrictions. Having said this, we expect all financials to be clearly impacted by the downturn in traffic this year, and meanwhile, also expect our group EBIT to be negative on a full-year basis. However, based on our current assumptions in Q3, we expect a positive EBITDA on the consolidated group level. Being conscious of time and knowing that you will also have good questions, I'd like to conclude my presentation here and switch over to the Q&A session.
Thank you first of all for your attention so far.
Ladies and gentlemen, at this time, we'll begin the question and answer session. Anyone who wishes to ask a question may press star, followed by one, on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star, followed by two. If you are using speaker equipment today, please lift the handset before making your selections. Anyone who has a question may press star, followed by one, at this time. The first question is from Ruxandra Haradau-Döser. Please go ahead.
Good afternoon. Congratulations on the cost management during these difficult times. Three questions, please. First, we are seeing external activities with a solid performance during this crisis. CapEx programs in Greece and Brazil are now ending, and the CapEx in Lima is under review.
Once traffic noticeably recovers, do you consider a partial IPO of external activities as an option to reduce net debt and crystallize the value of the airport but still keep the control over the assets? Second, what was the share of transfer traffic at Frankfurt Airport in June and July? And third, considering your expectations in terms of traffic breakdown and non-aviation performance, at what level of traffic in Frankfurt do you expect to reach break-even on operating cash flow? These are the questions. Thanks.
Yeah, Mrs. Haradau-Döser, thank you very much for the questions. First question, partial IPO. This is not an issue for us because knowing the current situation to sell any assets, this doesn't make sense. And so again, this is not an issue. Transfer share as of today is about 50%, so not different, more or less not different to the past.
And the third question was, what was it? EBITDA break-even? When do we achieve EBITDA break-even? Was it correct? So let me say we made and make relatively precise calculations when do we achieve EBITDA break-even, for example, at the Frankfurt site, including, of course, the three segments or at Bulgaria or Greece and so on. And of course, we have different break-even numbers, and we make the, let me say, the main driver, of course, are the number of passengers. And for example, at Frankfurt Airport, we have calculated that at a daily number of about 60,000 passengers per day, we expect EBITDA break-even. So we are now close to EBITDA, or let me say in July, we are a little bit below EBITDA break-even here at the Frankfurt site. And now in the first days of August, last weekend, we showed more than 60,000 passengers per day.
So I would expect that now, because August is running better than July, that in Q3 for the Frankfurt site, there should be an EBITDA break-even again. Let me say all the three segments consolidated. Outside Frankfurt, it's different. Let me say, as a rough guess, you can say roughly we need one-third of the pre-corona passenger numbers per day or per month or per year. So to achieve and realize EBITDA break-even, it's a little bit different because we have different business models. I can give you the number. So in Bulgaria, the break-even due to very variable cost items is relatively low. Here we expect at a level of 25% of the passengers on always compared to pre-corona basis break-even. In Slovenia, it's higher. It's about 40% passenger numbers as EBITDA break-even number.
In Greece, it's between 25%-30%, depending also a little bit from the spending behavior in the shops. In Brazil, it's 1/3 and in Lima, we already through because we have, let me say, in the first two quarters, the EBITDA was relatively so high that even if we now continue with or would continue what we do not expect with zero number of passengers, we would see a positive EBITDA for the full year so as a rough number, let me say, in the international portfolio, one-third with some deviations down or up and in Frankfurt, it's roughly 60,000 per day times 365 so it's also, again, you can say it's coincidence. 1/3, 30% of the 2019 passenger numbers would lead to an EBITDA break-even at Frankfurt.
Again, what I said in my presentation for the third quarter. Now we expect the international activities positive EBITDA numbers consolidated. And for the Frankfurt site, including the three segments, there should be also break-even or even a positive EBITDA contribution, always depending, of course, now from the ongoing future passenger performance.
Thank you.
You're welcome.
The next question is from Cristian Nedelcu of UBS. Please go ahead.
Hi. Thank you very much for taking my questions. Brief, if I may. The first one, you've raised the bond recently, the EUR 800 million bond at 1.6%-2.1% interest rates. These rates are slightly higher than the 0.8% that you raised a few months ago. Could you elaborate a little bit on that? Is it becoming a bit more expensive to get incremental debt?
Also in that regard, how are you thinking in terms of adequate levels of cash going forward? Is your target to continue to issue debt over the next quarters? Secondly, if we take a conservative scenario, let's say in 2022, 2023, the traffic in Frankfurt and globally remains at 50% of 2019 levels, what other ways or what other means of raising money are on the table? Would you consider an equity issue at that stage, or is that not really an option considering your larger shareholder? Would you consider potentially selling assets, or could you give us a bit of color there? The last one, if I may, please, in terms of Frankfurt retail spend per passenger. I know you were tracking in the past how tourists from different countries were spending each quarter.
Now, based on July data, can you tell us, is the intercontinental passenger still spending sort of the usual four times the European one, or is it lower spend in the context of social distancing?
You're ready with your question?
Yes, yes. That was my question.
Okay. Thank you very much. It was a bunch of questions. You started with the bond issue, and your question was why the interest rates, what we now have to pay, are higher than compared to our commercial notes and bilateral loans, what we did before, whether this is a general trend towards higher interest rates. So the clear answer is no. We are talking here about two different markets. When we look on the bond market, we are talking about international investors which are rating-triggered, and we are an unrated company. So this is today's situation. It's a clear disadvantage.
Nevertheless, we came with a bond issue also to open this second channel of financing instruments, and when you look on the market for Schuldschein, which is a typical German market, domestic market, where the investors are primarily German savings and loans, German banks, it's a different market. The German investors, they know us very well. They know the shareholder background that more than 50% is owned by Federal State of Hesse and the city of Frankfurt. So this implicit state guarantee, which is a strong support here in Germany, has not the, let me say, the value for international investors who not really understand this implicit guarantee which we have, and second differentiation is that when you invest as a German bank into a Schuldschein, the accounting treatment is different.
So far, when you have a Schuldschein in your balance sheet, there is no need for mark-to-market valuation. So there's no risk that when interest rates go up, the value of your note goes down in the balance sheet. So it's a totally different market. There's no arbitrage between the two markets. And due to the fact that we are not rated, we always have, always as in the past when we came with our first issue in 2009, we have to pay more on this market. We have been fully aware of this, but again, we tried to open this market as a second source. That's the reason why we also accepted higher interest rates. When we go back next time also to the Schuldschein market, again, you will see lower interest rates.
So also cash burn, I think before Q2 or in March when we have been before this or when we saw corona is coming and we have to accept more or less a total lockdown situation, we made a quick calculation that the cash burn, considering all the cost-reducing measures, will be at a level of about EUR 150 million per month. So the negative thing is that is a very high amount. The good thing is our calculation was absolutely precise. We ended up with EUR 457 million cash burn or increase in indebtedness in three months. So this was a very precise calculation. This is now also the basis for looking forward. And now we see two elements. On one side, the ramp-up as expected on the passenger level, very slow, also as expected, but it's going up again.
And now the first step was in July when all these travel or some of these travel restrictions have been lifted. We now see a second step now up from August or since this weekend when, for example, in Frankfurt now we are going up to 60,000 passengers before it was always 50,000 or nearly 50,000. So now, as expected, we are ramping up step by step. This brings us more revenue proceeds. On the other side, we are continuing to work on the cost level. I think we made success in Q2. And now we are working on, let me say, the further instruments like a second step in bringing down the CapEx program. I think a big step we made telling you that year by year now we are reducing on a sustainable basis the CapEx in Frankfurt on a level of EUR 150 million.
And now we have initiated again a working group looking whether there is additional headroom for further reduction. So we are coming from the cost side and the CapEx side again to realize more. We see more proceeds from the revenue side. And this will now reduce the cash burn, let me say, in the future quarters. The question is, when do we think to achieve, let me say, cash flow break-even again? It's clear this will not happen in 2021. But from our press releases and announcement that we are now benefiting from the instrument of short-time work, but this is just a temporary instrument. So we are now preparing our measures to substitute in the future short-time work by the measures to reduce the workforce. We said up to 4,000 employees have to leave the company. I think the measures are also clearly known.
So we are talking about voluntary severance payments program, which we will launch in the next couple of weeks. We are talking about partial retirement. We are talking about early retirement. And last but not least, we are also thinking about operational layoffs. So these are the modules, which all along will lead to a reduced workforce up to 4,000 employees, regardless how the recovery of passenger numbers will be. So also when, as scheduled in the next two or three years, we have a recovery up to - 50%, - 20% in 2022, 2023, then we will operate our company with a significantly reduced number of employees. And therefore, we have a relaxation also on the cash flow side. And this combination reduced CapEx, reduced personnel expenses, also sustainably reduced material expense reductions.
This will lead to a situation that, as of today, I would say in 2022, there could be a free cash flow break-even again. Third question was, what is the performance of Frankfurt retail spending per passenger? Yeah. In my presentation, I told you that what we since 10 years told the market, we reached more than EUR 4. It was exactly EUR 4.36 in H1, an all-time high, but it's not a joke, but these are real numbers, but I also told you that this came from the application of the minimum annual guarantees, but even if we would adjust these numbers by the MAG, the spend per pax, despite the fact that most of the shops have been closed, we reached nearly EUR 3.80, so this is a relatively good number, and so we are happy to see this number.
But don't ask me why the number is so high. Perhaps people now have so much time to eat and drink. And I don't know. It's too early to have a precise analysis. Also having in mind, we don't see Chinese passengers at our airport. So the normal prospects for these high spending numbers are not there. Nevertheless, we have good numbers. And perhaps this has to do with corona and all the old metrics are changed now. But as a matter of fact, we see these good numbers. And also when we look back into Q1, Q1 was more or less not spoiled from corona. We just had a retail spend per pax of EUR 3.61. This was significantly higher than the Q1 number of 2019, where we saw EUR 3.46.
So it seems to be that there's a general trend perhaps to spend more for F& B. And I think the problems of the people are not looking at the last euro. I think they have other problems in the moment. Perhaps the spending behavior is a little bit more relaxed than in the past. But again, there's no detailed precise analysis what are the reason for the relatively comfortable high spend per passenger numbers. Looking forward, I would say that as of today, we expect a continuation of these high numbers, not above EUR 4. But we see now that it should go on with a number even adjusted by the minimum annual guarantee, which is close to EUR 4. But now we have to see what will happen in Q3 and Q4.
Thank you very much.
The next question is from Jenny Ping of Citi.
Please go ahead.
Hi. Thank you. A couple of questions, please. Just following on from the last question in terms of the retail per pax and the MAG that you referred to, can you give us a bit of visibility as to the duration of those MAG? You've given us a hint of the size, but any commentary around whether retailers are now asking for renegotiations would also be helpful. And then secondly, in terms of the FraAlliance JV that you've now set up with Lufthansa, are you able to quantify what is the target benefit from this, or is it just more a PR exercise? And following on from that, what sort of conversation are you actually having with Lufthansa in terms of tariffs as we look out into the coming couple of years?
Then the very last question, just in terms of the three to four thousand headcount reduction, can you talk a little bit about the cost associated with these headcount reductions to achieve the cost saving? Thanks.
Yeah. Thank you for the questions. First question was on the situation with our retailers. First of all, you can imagine that more or less each and everybody came to us and tried to renegotiate the MAG. So because it's a very difficult situation for all of us, for us as a landlord, but also for the tenants. So we said a contract is a contract, pacta sunt servanda. So more or less all of the tenants paid the MAG. But we are fully, or we have been fully aware that this could be just a solution for some months.
So if the lockdown would have been continued also in Q3, it was clear that we had to renegotiate. But now we see traffic is ramping up. Shop after shop now is opening again. And this is relaxing the situation because when they open again, they can make revenues. And due to the fact that the MAG is relatively low, and so the threshold, I think the situation now in Q3 is changing in so far that they are making again revenue and that we switch over to the old regime where they pay a percentage of the revenue. So with other words, I think now the negotiation about adjusting the MAGs is now ending because traffic is coming back, shops are opening again, and revenues also coming back. So I think this is good information for all of us. Second, the JV with Lufthansa.
I think on Slide 14 in the presentation, we have shown all the ingredients of this JV, so you asked whether there is a quantified benefit or target benefit. This is not the case. I think there was a difficult relationship between Lufthansa and us, and now we are happy that this is gone. We are back on the table, and we are now sitting together, working together, looking where could be now win-win situation, especially in these difficult corona times, and in the moment, it's a shell, so inside the shell, we have two managing directors, one from us and one from Lufthansa. Now we try to fill up these JV with activities, which really creates benefits for both of us, but there's no quantification of, let me say, potential benefits. Now we have tried to start this JV and to look whether something could be productive for both.
Third questions, headcount. It's difficult because, as I mentioned, in the moment, we are designing the program. But I would say if you see the target up to 4,000 employees, it's a lot of people. And therefore, there is a willingness from our side also to accelerate this with money which are spending for this program, which we have to do. And everything, or it's our clear target to reserve all the requested money in the balance sheet in this year in the form of provisions for the programs. And I would say, yeah, it's EUR 100 million, I think is a good number, could be even a little bit more to have a quick reaction of this program that already in 2021, we see a significant impact from the program in our P&L, and especially in the item personnel expenses.
Thanks. Sorry.
Can I just follow up on conversations with Lufthansa about tariffs as we look forward?
Tariffs. There are no conversations with Lufthansa with regards to tariffs because we have already forwarded the new tariff scheme, which is identical with the old to the regulator. So what is on the table of the regulator is a scheme with the same fee level than in 2020, with the exception that all the incentives have been skipped. So we are not willing to pay incentives in a situation where we come from zero traffic. And with regards to the future, we also signal to the market that there's just room for higher fees and not lower fees because we have a fixed cost business. Nevertheless, we showed that we were able to reduce cost items.
But when we run the airport in the next couple of years with numbers which are clearly below 2019 levels, so with regards to the fees, they should be higher and not lower. But in the moment, there are no discussions with Lufthansa about fees.
Thank you very much.
Welcome.
The next question is from Stéphanie D'Ath of RBC. Please go ahead.
Hi. And thank you for answering my question. The first one is following up on the commentary you just made on the potential EUR 100 million cost savings from headcounts. If I remember well, in your first quarter results, you mentioned that staff cost savings were up to EUR 30 million per month. And you also said earlier that you were expecting to save up to EUR 200 million staff costs per year.
So I guess the difference comes from the fact that the EUR 30 million per month include the temporary measures linked to the coronavirus complete lockdown because that would have been EUR 360 million per year, I guess. But as you ramp up and staff get back to work, is the EUR 200 million you mentioned earlier kind of the highest number you could reach? And then where is the difference coming from then if the EUR 100 million of headcount reduction to get to the EUR 200 million, I guess?
My second question is regarding traffic. So you said a new normal in 2022, 2023 of between 50 million and 60 million passengers. If we compare it to the 71 million from last year, could you maybe explain where you don't expect traffic recovery and how long you would expect it to take to get back to the 2019 levels?
Then finally, on the improvement on the cash and EBITDA, would it be fair to say that you expect Q3 in terms of EBITDA to be better than Q2 and Q4 to be better than Q3? And looking more on the medium-long term, you mentioned, I believe, this EUR 1 billion CapEx saving over seven years. But you mentioned also earlier that you were doing some work to do additional CapEx savings. So are those already included in the 1 billion over the next seven years? Thank you.
Thank you for your questions. First question was regarding all these issues of personnel and personnel reductions. So I think we have to be careful not to mix the elements. So in the moment, we brought down the personnel expenses here at the site of Frankfurt down by a little bit more than EUR 30 million per month, primarily by short-time work.
This is one. Again, a little bit more than EUR 30 million per month here in the three segments. A driver is short-time work. This is one number. The second number is what we are doing to or what we have to pay now as provisions to realize the reductions of up to 4,000 employees up from 2021. We are now, now means in Q3 or Q4, we built provisions of, let's say, roughly EUR 100 million, could even be a little bit more, for these instruments like early partial retirement, early retirement, voluntary severance payments, and provisions for operational layoffs. This is in the balance sheet. Then, of course, we are benefiting year- by- year. Let me say this, because let me say the mix and the allocation of the instruments is not finally done. We have to see when does it work.
So when do we see the impacts? Of course, a lot of things we should already see in 2021. But it's a clear target that end of 2022, let me say, most of the 4,000 people should be laid off. And so the question is, what is the new lower sustainable level of personnel expenses? And of course, it depends how many people we have from the administration side with a higher annual salary or, let me say, OpEx guys, which are lower paid. But as of today, I would say the sustainable annual reduction of our personnel cost level here at the site Frankfurt will be, I would say, yeah, EUR 250 million lower compared to 2019 levels. Thank you. Could be more, could be less, but my expectations should be even a little bit more. So this covers now all these, let me say, personnel items. Traffic.
So we said we had this lockdown more or less in Q2. Now we are ramping up. So we have some scenarios. One is that we now, we go up. If you look today at the Frankfurt numbers, we are, yeah, what do we have now? -75%, roughly. And if this trend continues up to December, end of the year, we expect -60%, a range between -60% and -70%. Then let me say we look forward. And then up from 2021, 2022, we have a ramp up, as you mentioned, to this new normal 60 million, roughly 60 million passengers in 2022 or 2023, depending on the ramp up of the recovery. And this then is a new normal, which is a little bit lower than the 2019 numbers. Why is a new normal lower?
Because we say we expect more or less full recovery on the leisure side. But we expect not 100% recovery on the business side because now the people, let me say, the controllers, they are bringing down the travel budgets. We know or we have learned that Microsoft Teams is working. So the necessity to meet other people is reduced. So with other words, we do not expect a full recovery of the businessmen in this time span. And from this new normal, again, about 60 million in 2022, 2023, then again, we expect a normal annual growth like in the past in a range, let's say, 2%-3%. This is today's expectation. I wouldn't say it's a crystal ball, but it's our best guess. And perhaps in four months, we have a different view. Third question.
I'm sorry.
Just so that kind of implies a 15% lower traffic overall number. So is that all coming from business? Can you remind us that your mix of leisure against business?
Yes. Again, this expectation or this guidance is just for Frankfurt, where we have in the past, we had a relatively higher share of business traffic. It's about 35% share of business traffic. And this will show an underperformance or recovery, which is not 100% correlated to the recovery of the leisure traffic. It's just Frankfurt. So you can say that's the reason why we have a disadvantage due to our mixed customer base. When we look on our international activities, where we have more or less a pure leisure traffic, here we assume a much faster recovery.
In other words, when you go ahead, when we're thinking about P&L in one or two years, 2021, 2022, the old allocation of financial contributions that 60% came from Frankfurt EBITDA-wise and 40% from international activity, this will change. It can be that in 2021, the EBITDA contribution from our international portfolio is higher compared to Frankfurt because they do not have business traffic. And here, especially for summer 2021, we expect a much better and faster recovery compared to Frankfurt. Again, reason is the lagging behind of recovery of business traffic. Third question, EBITDA. I said what we expect now for Q3 is that in Frankfurt, as of today, I would say EBITDA break-even will be given in Q3. When we look on the international activities, here, I would say it's not an expectation. It's more a conviction that EBITDA is clearly positive in Q3.
Based on numbers, for example, when you look at Greece and all the other ones and how they ramp up, we expect clear positive EBITDA numbers. So that all in all, the group EBITDA will be positive again in Q3 and also in Q4. But then, of course, a switch in Q4 in these high-season airports or airport groups like Greece and so on, EBITDA will go down as in the past. This has nothing to do with corona. But then on the other side, as of today, we expect this ongoing ramp up at Frankfurt Airport. And then we have the compensation on higher contributions from Frankfurt. So then the Frankfurt EBITDA is driving the group P&L and not the international assets like now in Q3.
Thank you.
Sorry, just to come back a bit on the last part of that question, which was related to CapEx and the EUR one billion saving you intend to do in the next seven years. Could there be upside to that based on the fact you said earlier you still had a team working on bringing CapEx further down?
What do you see with upside in a way that the CapEx will go up again or upside in that they have higher potential to reduce it?
Reduce budget.
Yeah, let me say, I think first of all, let me say the two good information, and this is not new, is that Greece is absolutely in line with our expectations on time and in the budget. So end of the year, latest in Q1, now we have just three airports which have to be fixed. Corfu is now already done.
And so the latest airport which is fixed is Thessaloniki with the opening of the new second terminal. So again, in Q1, Thessaloniki will be the new terminal will be opened and Greece is done. And the same applies for Brazil. So that in 2021 and also the following years, you don't hear about CapEx from these two countries. So the remaining CapEx programs are Lima. In Lima, in this month, in August, we restart the construction of the runway because here we are obliged to do it. And this is one thing. Of course, this is a burden for CapEx. But on the other side also, we clearly said we are going to delay the construction, the start of the construction of the new midfield terminal. Here we are in good discussions with the government in Lima.
I'm relatively optimistic that we were able to delay this terminal in the future in a time period where this is not any longer a burden for us. So then I come back to Frankfurt. To Frankfurt is twofold. On one side, the Terminal 3. Here we delayed the opening, which is also relaxing the cash outflow on an annual basis. In total, it's the same.
And second, what I said, let me say during our Q1 conversation, we said that in the first step, we achieved a reduction of EUR 150 million on the maintenance CapEx here for Frankfurt. So in EUR 150 million per year times seven, so roughly EUR one billion in the next seven years. And now we are sitting together and trying to elaborate whether we can even increase this EUR 150 million target. So the EUR 150 million is through because this is based on projects which we canceled.
Now we are looking for further headroom in a second wave, in a second step with regards to maintenance CapEx for Frankfurt. In other words, the CapEx peak you will see despite the already realized reductions in 2020. In 2021, CapEx will be lower than 2020, and in 2022 will be lower than in 2021. Year by year, now it's going down.
Thank you very much.
Welcome.
The next question is from Johannes Braun of MainFirst. Please go ahead.
Yes. Hi. Thanks for taking my question. I think I have two or three. Firstly, on retail, you previously said that you expect improvement there, but you also obviously expect traffic volumes to remain 50-20% lower by 2023, as you said. You also expect to change passenger structure. Corporate travel and long-haul travel probably lower, while short-haul leisure should fully recover.
Isn't there a negative mix effect in that for retail sales per passenger? And then secondly, just a clarification, you mentioned you expect 30%-40% of pre-COVID-19 passenger levels. Just not sure whether this was for H2 or for the full year. And then also, can you probably say what your expectation is for next year? Yeah. And that's it. That's it for me.
First question, the passenger mix will change. So as you mentioned, what you said, less businessmen, more in favor of leisure traffic. But as of today, we do not think that this will be a general disadvantage because when you look at what have been the big spenders or high spenders in the past, we are talking or we talked about Chinese passengers, Vietnamese passengers, Russians. And these have not been the business guys.
When I said less businessmen, we are talking primarily also about Germans, which will go to reduce their traveling behavior. But the German businessmen, they have not been the big spenders. So to make the long story short, by the change of the passenger structure as of today, we do not expect, let me say, spoiled spend per pax numbers. So because, let me say, the positive contribution of the Chinese when they will come back, and we are convinced that if and when the corona numbers in Europe are going down, the Chinese will come back. These are the dominating passengers. They bring the high revenues. What was the second question, Mr. Braun?
Just clarification on your because you said you expect 30%-40% of pre-COVID-19 passenger levels. And I was not sure whether it's for H2 or for H3.
End of 2020.
The question is, are we talking about the minus numbers or the plus numbers? Today, let's express in a way. Today, but during the lockdown, we had - 95% to - 98%. So then, let me say, last month, we had - 80%. And in August, we expect - 75%. And let me say, in December this year, we expect a range between - 70% to - 60% or + 30% or + 40%.
And any expectation for the next year?
2021 is really difficult. As of today, it is not a I would say 50%. But again, it's my best guess as of today, depending from corona numbers and the performance.
Thank you.
Welcome.
As a reminder, if you wish to ask a question, please press star and one on your telephone keypad. The next question is from Elodie Rall of J.P. Morgan. Please go ahead.
Hi. Thanks for taking my question. I have maybe a couple remaining. Just to come back maybe on traffic guidance. You said you expect around 2%-3% maybe after the 2022 or 2023 level that you expect to be already 15%-20% below 2019. If I'm not mistaken, that assumes a recovery taking place basically at the end of the decade by 2030. Is that your correct expectation? That's my first question. My second question is on Terminal 3. Would you expect any additional cost linked to the delayed opening? And if not, why not consider delaying the opening of T3 even later than 2024 or 2025, then given your expectation for full traffic recovery? And my last question maybe on real estate revenues. We haven't discussed that a lot in this call. They have been resilient so far.
Should we expect that to continue, or do you expect some pressure? And maybe can you give us some understanding whether the P&L and the cash flow will be similar on this division? Thank you.
Welcome. Last question is very simple to answer. In real estate, we have long-term contracts, and we are continuing with the contract. So we don't see any downside risk on the real estate side. So what you see now in the P&L, you will also see in the next couple of quarters and years. And how long are the contracts? It depends when we sign the contracts. But I would say the average duration is even more than five years. Some are expiring. But again, the demand is given. Even if a contract is expiring, we are not willing to go down with the prices.
There's no necessity because, let me say, in real estate, we are talking about, in most cases, about cargo business. Cargo business is running very well. So the forwarding companies, they make money. And so they are not in this desperate situation like the airlines. So that's the reason why from their side is not so much pressure like on the side from the retailers and the airliners. So again, no downside risk on the real estate side. Traffic guidance. Of course, let me say from a mathematical perspective, full recovery, if you take my numbers, yeah, I didn't use Excel, but it can be that it would be 2030. But frankly spoken, in the moment, if everything is moving, I think perhaps in three years, the world is different. But I think what is our responsibility? We have corona now. It's a difficult situation.
And on one side, we are not happy to have corona, but now we have to live with corona. And one advantage is that we do our homework, which you cannot do in good times. So we have to prepare our ship or our airport now for a conservative scenario. If and when at the end of the day we have in three years full recovery, I would be happy. But we cannot, let me say, continue with our business on the basis of hope. And that's the reason why now everybody in the market is conservative. You have to be conservative because otherwise, you would gamble with your company. And we are doing conservatively. It's also okay because then we are back in a financial balance. And if it would be better, fine, we are happy.
But nobody seriously can tell you what will be the traffic in two, three, or four years. You have so many question marks. But I think good management is character. Cross Terminal 3. So you said, does it make sense even to have a longer delay? So in principle, you have two things which, if you stretch the construction time when you minimize the construction time. Normally, the longer you construct, the more expensive a building will be. So the delaying, theoretically, is always not in favor of us. But in the moment, or if you look back in the last two, three years, the construction market was characterized by an excess demand. So the construction prices in the last three years went up like hell. And this was a clear disadvantage of us.
Now, by delaying the construction a little bit, we create an advantage in so far that you can really see now, month by month, the construction prices are going down, and now we have two elements: a negative element to extend the construction time and the positive element because 50% of the outstanding works are not today fixed, so waiting for this is creating chances to realize lower prices. Now we have really to make a fine-tuning between these two elements and to find this sweet spot where the higher cost by delaying will be overcompensated by more attractive prices for the outstanding parts of the construction, and as of today, I would say with the new inauguration date, we feel very comfortable.
Whether at the end of the day, it's one year quicker, no, not quicker, but perhaps it will be exactly at that point of time or perhaps even one year longer. We have to see. We make the calculation internally. We are really testing the market. How is the price level for construction units developing? And that's how we manage this issue in the moment to exactly find this optimal price for us in relation to the inauguration date.
Okay. And just your best guess about the overall budget now for Terminal 3 exactly?
EUR 4 billion. EUR 4 billion.
Still EUR 4 billion. Okay.
There's no change. There's no change. Let me say, one effect we will definitely see this is that these, let me say, the allocation of the rest of the EUR 4 billion because a huge part is already spent, is now allocated for more years.
So the annual burden is lower by delaying or slowing down the construction process.
Okay. Thanks very much.
Welcome.
The next question is from Arthur Truslove of Credit Suisse. Please go ahead.
Hi. Thanks very much for taking my question. So question one - three questions if I may. So question one, just on the cost cuts from a labor perspective, obviously, you've talked about EUR 200 million out of the business on a sustainable basis. How does that develop as traffic increases going forward? And also, are you expecting to take any cost out from a non-labor perspective? And how much do you expect that to be in both Frankfurt and indeed outside of Frankfurt as well? Secondly, in terms of maintenance CapEx, clearly, you're talking about significantly lower numbers than you were talking about previously.
Are you able to give any color on what capability you may miss out on as a result of that? And then finally, just on the minimum annual guarantees again, obviously, we all heard from one of your competitors last week about how it was likely to be difficult to ensure that they receive minimum annual guarantees for terminals that were closed. Is that something that's likely to be a problem for you or not? Thank you.
Thank you for the que stion. First of all, OpEx. I think the numbers are now very transparent. And you asked, what is a dependency from traffic? Clear answer is, regardless of what will happen on the traffic side, we are going for this program.
There's just one scenario, let me say, possible that if corona would come back, let me say, second or third or fourth wave, which would, again, lead to a total lockdown, then we have to consider whether this 4,000 is enough. But we are going for this up to 4,000 reduction. So this is what we are going to do regardless of how the recovery is. There's just one theoretical scenario. If everything is going down or going bust, then, of course, we have to rethink whether this is the right and appropriate target. So maintenance capex, what is the philosophy? I think when you look on the technical situation of our existing infrastructure, so I talk about T1 and T2, when you look back in the last couple of years, we invested about EUR 300 billion per annum in this existing infrastructure. This is a lot of money.
And to bring up the quality of the infrastructure, to reduce the number of things which have to be fixed. And now you can say after these years where we invested a lot of money, the quality of the existing infrastructure is very good. That's the reason why our consideration is we have very good existing infrastructure. And now we are using a philosophy in a way that when something goes out of order, we have to repair it. But we are not investing additional things in improving quality, etc. So it's a pure replacement of things which are out of order. And of course, we have to fulfill all legal things and what is requested we are doing, but not more. So a pure approach to run the infrastructure as it is now.
That's, let me say, the lever to bring down also in a second step the maintenance levels to a minimum, which is not spoiling the infrastructure. We keep it in the current situation, but on the other side, not more. There's no room for any fancy things. That's the reason why this is a pure approach for the next couple of years. Not for eternity. This is clear, but for the next couple of years. Third question, the MAG. Yes, it's difficult to protect the MAG, as I mentioned. The pressure from the retailers is huge. But yeah, we withstood. We had a wall. We created a wall. Now, again, we are looking forward because day by day, the passenger numbers are going up again in T1. You can say shop after shop is now opening again.
And this is relaxing the whole relationship between us and the retailers. And we have just one open issue in Terminal 2 where we really have a problem. But T2 is not the shopping paradise. When you look at the total square meters of this terminal in relation to retail, so it's not the retail one which we have in our portfolio. And now we have to survive the next couple of months because end of the day, we assume we have to reopen Terminal 2 again. Of course, this depends from the ramp-up. But in the moment, it seems to be it runs good, the ramp-up. And so we have to open again. And then also this last and final part of the infrastructure is opened again. And then the situation with the retailers also in Terminal 2 will be then relaxed.
So, what is it? I just received here the number. The MAG in Q2 was about seven million EUR. This is a relatively low number. Of course, for the retailer itself, it can be decisive to survive or not to survive. But let me say for us, of course, we are looking for each and every euro. But again, we think in Q3, everything is going in the right direction.
Sorry, just one thing I may have missed in your response. Just in terms of cost takeout outside of labor in Frankfurt, was there anything there as well?
I think we have now this good track record of Q2 where we brought down the material expenses to the absolute minimum. So you can say the bad information is we don't see further headroom to reduce it in the second step.
But on the other side, we have the clear conviction and also commitment that when we look ahead, when now the traffic is ramping up again, we are not willing to correlate again directly the development of the material expenses with the passenger numbers. So we try to keep it on this level which we have now. Of course, there are some items which have to go up. But in total, there's a ratchet effect in a way that the new normal of our material expense base will be significantly lower than before.
Thank you.
The next question is from Charles Maynadier of Kempen. Please go ahead.
Hi. Good afternoon. I just have two questions left on Greece. So you're getting quite a big step up in tariffs post CapEx completion. So will that still go through this year if you could confirm that?
Do you have any opposition from airlines against these tariff increases? And then more generally on the international portfolio, were there any incremental regulatory developments triggered by COVID-19 that we are not aware of and admitted on the positive side, such as any sort of traffic protection mechanism that you could benefit from? And that's it.
First of all, Greece, yes, I can agree. So as of today, 11 airports are fixed. So the last one was Corfu. And now three of the 14 will be fixed now in the next couple of months. And the last one will be, as I mentioned, Thessaloniki end of this year or latest in Q1 2021. And for these already fixed airports, we have already increased the fees per departing passenger to a level of EUR 18.50.
And let me say, in the first month of this year, you didn't see anything because the number of passengers was nearly close to zero. But now you see, when you look also here on slide number 15 in the presentation, you can see that in the calendar or in the last two calendar weeks. So the daily passenger numbers at our airports in Greece have been higher than in Frankfurt. So in calendar week 31, we welcomed nearly 500,000 passengers in one week. So from this, I dream here in Frankfurt. And this is then always times EUR 18, not for all of them, but for the 11 airports which are fixed, it's times EUR 18.50. And this now helps us in Q3.
That's the reason why you will see a good EBITDA number in Q3 from Greece, but not just from Greece, also from most of the other airports in our portfolio. And as I said, departing passengers, EUR 18 per departing passenger. So this is in line what we all there's no impact from corona on this situation. But what we are doing is that we are in discussion more or less with all or most of the governments in which our airports are located. I already told you that we are discussing the issue to delay the terminal with the Peruvian government. We have addressed force majeure to the government in Greece. We are in good discussions. So we discuss in Greece. We discuss in Brazil to achieve the so-called financial equilibrium, which is part of the concession agreement. And we have to see so this will last some months.
We have to see what we can realize based on these discussions. So there's just an upside potential for us. But today, we don't address anything because we have to see whether they are willing. But all of these discussions in the moment are very friendly. But friendly is one thing. At the end of the day, it's relevant whether we get something on the table or not. But we have addressed all the issues, and we have to see what will be the outcome. But this would come on top, and we have nothing included in our expectations.
Thank you. Maybe one follow-up also on the international portfolio. On the financing side, is there any risk of breaching covenants this year?
Yeah. There could be a covenants issue in Greece with the so-called reserve accounts with the international banks.
So we have to see whether there's a breach of the covenants or whether we can go for a waiver. And with regard to this, we are also in good discussions with the refinancing banks. And I would say there's a good probability that we will get a waiver. And therefore, there's no need to inject additional equity into Greece. So I'm very optimistic that we will find a good solution with the banks. All right. Thank you very much. Because it's just temporary negative phenomenon. And that's the reason why we are optimistic. And the project itself, it's a very solid and good project.
Thanks.
Welcome. The next question is from Christian Cohrs of Warbu rg Research. Please go ahead.
Yes. Hi. Thanks for taking my question. Just maybe first on the clarification one.
Based on the EUR 250 million sustainable annual cost reduction you envisaged for 2022, if we add that to your expectation that passenger numbers will be roughly at 60 million, that does actually so if I've done my math correct, and maybe you might confirm it, that should actually mean that for the Frankfurt-based division, you expect then that profits in 2022 for Frankfurt should be more or less back at pre-crisis levels. Is that correct? Secondly, before the good old pre-COVID-19 days, you said that you will not touch airport charges before the inauguration of Terminal 3. Now, this is postponed to 2025, maybe 2024, so is an increase in airport charges in 2022 or before the inauguration of Terminal 3 a n option? I mean, you haven't earned a fair and adequate return on your assets in the pre-crisis year.
You're not going to earn it this year or next year, so I think you have all arguments what stops you to ask for more money, and then thirdly, more a strategic question. It seems that the eras of the super wide-bodied 747, A380, you name it, are coming to an end. Does this actually question your hub status, your positioning as a hub, and how do you see it, and what do you think also that you mentioned the intermodal connectivity of Frankfurt Airport? You think you will remain a hub, but the characteristics will simply change. Maybe you can shed some light on that. Thank you.
Yeah. First question, financial scenario 2022, so in total, we have four theoretical levels. What we do not can influence is the number of passengers, so we just can work with some assumptions or hypotheses.
But again, we said - 15%,-20% in 2022, 2023. So this is, let me say, on the revenue side. As you mentioned, in the old world, we said old world excess utilization of the airports, 70 million plus passengers, what we expected for the next couple of years. Now, it's gone. And in combination with this, we said we are not going for higher fees. Now, the world is different. And we clearly said we have to go for higher fees. So in which and what extent, this is open. But the direction of the fees must go up and not go down in the next couple of years. So with clear words before Terminal 3. This is one, but this is the smallest level. The other three levers we have directly in our hands. One thing is CapEx down.
I think I elaborated what we are doing to bring it down. And the other two levers are material expenses. With other words, a continuation of this very low level which we have today, also in the next couple of years. And the third level, as you mentioned, these are the intended personnel expenses. So 4,000 employees less. And therefore, EUR 250 million up to EUR 300 million less personnel expenses compared to 2019.
This combination, a significant reduction of personnel expenses, a sustainable solid reduction of material expenses, sustainable CapEx reduction, plus higher fees. These are the four items, the four levers to bring us back to a financial equilibrium in 2022. And financial equilibrium means free cash flow, which is about zero. So this is our program, and we are working on this. The other question, yeah, with regards to, let me say, the wide-bodies 747, 777, or A380.
So, in the moment, it's not an issue because everybody has grounded these fantastic aircraft because you cannot run them with a seat load of 80%-85% in the moment. But again, this is in the moment. Now, they are flying 777s. They are flying A330s. Because in the moment, nobody is able to fill up an A380 with a seat load of 85%. And as long as this is given, they will be grounded. This can change again. So I never would say never again. But in the moment, they're flying with smaller aircraft. But this has no influence on the hub functionality of Frankfurt because if you look now, even, of course, they have a 777 or an Airbus A330. But even to fill up these aircraft, you can't do it in a regional airport.
So you still have to use this hub and spoke system to use a feeder traffic even to fill up a smaller long-haul aircraft. And that's the reason why so far we are confident that the hub functionality will continue. So this is not the end of the hubs. And when you look back in Q2, where intercontinental traffic still happened, it was Frankfurt. We had in Europe the highest connectivity. Why? Because we are in the middle of Germany and have this huge catchment area. And we have, let me say, a good airport partner like Lufthansa who is able to utilize a network to fill up intercontinental aircrafts. So that's the reason. Again, the hub functionality is also in the future a given and a guarantee for us that our future is secured.
Okay. Thank you very much.
Welcome.
The next question is from Andrew Lobbenberg of HSBC.
Please go ahead.
Hello. Hi there. I do want to ask about handling, actually. When you're looking at such a reduction in traffic and a reduction in headcount on your side, is there any prospect that you can get the EU to reconsider the requirement for competitive handling markets? And equally, in this environment with traffic and headcount coming down, I mean, is it right or sensible that you persist in being the handling op erator?
Let me say, due to the corona crisis, we don't see any reason why there should be a change of the situation in ground handling. At Frankfurt Airport, we have two concessions. One we have, one has a friendly competitor. And I think I interpret your question in a way that you are asking whether there's room for a third concession.
No, I was rather thinking in the other way, whether there's room for only one, or whether you could justify only having one, or whether it's an opportunity for you to exit. So let me divide this question into the two parts.
First of all, we do not believe that there will be room for a third concession. We also do not think that we never will go back to one because then this would create a monopoly, and the EU is not willing to accept monopolies. And the second part of your question, or the second question, whether this is a chance for us to separate ground handling, clear answer. Even if this would be a consideration, you have to see how many you see what we have to pay now to reduce. This will be a three-digit million amount for payment packages.
We have thousands of people in ground handling, and this would be very expensive. At the end of the day, we just do what creates value for the company. Winding up ground handling doesn't make sense. It wouldn't be an economically feasible consideration. We look ahead, and we try again. What we are doing is we have to fix ground handling, that's for sure, with a clear target to bring it back into the black. This is our task. This is also our ambition, and we do all to reach it. You can say that corona gives us also the power now to regain or to gain efficiency in a way that, let me say, after these programs, also ground handling is benefiting from these programs we are now initiating. Clear target.
At the end of the day, all the segments must be profitable, and we are working that they will be profitable.
Okay. Thank you.
Welcome.
A final reminder, if you wish to ask a question, please press star and one on your telephone keypad. The next question is from Nicolas Mora of Morgan Stanley. Please go ahead.
Yes. Good afternoon. Just a few quick ones. First one, I joined the call a bit late, but did you confirm the new raise guidance on net debt of EUR 5.5 billion? I was just wondering if this includes the compensation payments for layoffs of EUR 100 million-EUR 110 million you mentioned. Second one on Lima, I was a bit surprised to see zero EBITDA in Q2 with zero traffic. Is there room then to create EBITDA out of thin air in the third quarter as well? And to last point, one on retail.
Just, I mean, my colleagues were talking about the MAGs and the pushback against the MAGs. I was more focused on the pushback against the overall level of concession fees, not just the MAGs. Is there one as well? Is there room with 10%-15% traffic lower than 2019 by 2022 to just overwhelmingly reconsider the level of your concession fees? And very last one, you talked about tariffs. You want tariff increases in aviation. I think you said by 2022. But I mean, historically, you never had large tariff increases not related to opening of major infrastructure. I mean, how will airlines swallow that in a post-COVID world where they're still struggling?
Thank you for the question. First of all, provisions. So I said three-digit million amount, which we are going to build. And here you have to see.
I already mentioned the programs: partial retirement, early retirement, voluntary severance payments, and provisions for operational layoffs. So if you go through, for example, for me, for us, the most important level of instruments will be voluntary severance payments. We build a provision, perhaps already in Q3. But the target is to spend the money then in Q4. So you see both. You will see most probably provisions in Q3 in combination with cash out in Q4. So part of this total provision will be used or spent in Q4. The other provision is a carry forward into 2021, the provisions for the partial and early retirement, and also for potential or theoretical operational layoffs. Because our target is to realize as many as possible reductions via voluntary severance payments and these partial early retirements.
If this would not be sufficient, then, of course, we have to use the instrument of operational layoffs. The target is to do as much as possible with the first three mentioned instruments. You will see the provisions in Q3 and Q4. You will see some cash out in this year. We hope that it is as much as possible. Why? Because this is a good signal because the first lever, which we are using, the voluntary severance payments, are very successful. Then we spend the money now, and we see the direct reduction of personnel expenses already in the beginning of 2021. The rest is a provision then when we have to use it for example, partial retirement over the next two, three years.
Okay.
And if I may just say, on the split of these cost reductions, I mean, your two large pockets of staff are aviation, and so you've got more than 6,000 people, and then ground handling more than 9,000. I mean, is it a split over these lines? It's a way to.
Of course, it will be a split. But now we are what I already said, we are now starting the negotiation with the unions or the labor representatives. And we have to see what is the outcome of these negotiations. Again, the target is to do as much as possible with voluntary severance payments in the beginning. But at the end of the day, you need a double voluntary behavior of the people. So we have to agree, and the employees or the individuals have to agree. Then we are fine, and we can fix it.
If not, at the end of the day, if nobody is willing to accept these programs, then we have to switch over to the final program or to the final lever, which means operational layoffs. This is not our target, but it's, you can say, ultima ratio, so to say, if the first three elements are not working or not 100% working, so at the end of the day, we have these four instruments. This is the theoretical number of instruments we have. We have a clear target, but at the end of the day, you have to have the unions or the labor representatives, and you have to have the employees, and we have to convince them to sign the contracts. This is, let me say, housekeeping and homework of our management teams to make the discussions. These are not very relaxing and amusing discussions.
It's clear, but we have to do it now, and then we have to see what is the outcome. Okay. What was Lima? Yeah, Lima. I said the break even in Lima is fine, and everything depends now from the ramp-up. The domestic traffic is open again. When I look now on what the management team in Lima is expecting, we had in 2019, we realized 23.6 million passengers there. As of today, the projection for the full year 2020 is roughly seven million passengers, and so this means -7 0%. This is in so far okay that we expect positive EBITDA for the full year. This is your question regarding Lima. You asked the concession fees. I told you it was not easy to defend the MAGs, but I said we have been relatively robust, and now it's improving.
But on the other side, now to use this to increase the concessions, this would be an absolutely unfair treatment of the retailers. I think both of us, we went through a very difficult time. We have to survive. They have to survive. And now to misuse, let me say, in a recovery, this would not be fair. And we, again, sandwiched from both sides. Tariffs with the airlines. First of all, we have a clear regulatory approach, and we have the RAB. We have the WACC. And if you look now, the numbers are in the segment aviation. They are clearly red, but it's a deep red. And to discuss about profitability in this segment is like a joke.
So, in other words, there's a clear headroom to go for higher fees so that from a regulatory point of view, there isn't any hurdle or stumbling block on the road. On the other side, if you ask how do the airlines will comment this, the answer is clear. I never have seen that the airlines give an applause when you are going for higher fees. I think this is part of the business. They're always complaining about fees. Even if fees would be zero, then there would be complaints. But again, this is part of our challenge.
Okay. But I mean, one of your competitors, to name it, so ADP, stated the same thing. You are entitled to large tariff increases just based on regulation, but this is not a satisfactory outcome or a realistic outcome.
And again, you have all justification to push for tariff increases linked to infrastructure opening with T3 delayed. I mean, either the low-cost pier or the major T3, you are basically taking away some of that opportunity.
Let me say, no, the approach is totally different. In the past, we said, let me say, the story pre-Corona was we have a high utilization or excess utilization of the infrastructure. We talk about 70 million and more passengers. We had, let me say, quality levels which haven't been. Think about the waiting times at the security lines. So that's the reason why we said we cannot increase in a difficult operational situation for the airlines, also for us. We cannot increase. We had a relatively high return on assets. We talked about EUR 1.2 billion EBITDA for the group. Everything was fine.
And so we clearly said we keep the fees flat as long as the airlines bring us growth of 2% until the opening of Terminal 3. This was the rationale and the reasoning for going for higher fees with the beginning of the inauguration. Now we have a new scenario. We have a new world. Everything was a lockdown. Our numbers are deeply red. We are not talking about any longer on return on assets. We have return on assets with a wrong minus before the number. And that's the reason why it's clear. We have an expensive infrastructure. We invested billions of euros in this infrastructure in favor of the airlines. Now it's tough luck. We have Corona. And so there is a clear reason to go for higher fees, like our colleagues in Paris.
And as I said, you will see higher fees in a moderate way in the future because this is without any alternative.
Okay. Thank you very much.
Welcome.
And there are no more questions at this time. I hand back to the presenters for closing comments.
So thank you, everybody, for being part of this call. If you have later other questions, please call us in the IR team. And I wish you all the best for the rest of the summer. Thank you.
Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.