Earnings Call: Q2 2021

Aug 3, 2021

Ladies and gentlemen, thank you for standing by. I'm Mai Ruby, your Chorus Call operator. Welcome and thank you for joining the conference call of Rapportaggie. 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. May I now hand over to your host today, Christoph Nanken, SVP, Head of Finance and IR. Go ahead. So thank you, Nairobi, and also a warm welcome from my side. Thank you for joining Fraport's call today. I With me at the table our CFO, Doctor. Matthias Dichang. And I would say, do not wait. Report again. The last time we spoke back in May, all of Europe was still in lockdown mode. The market reopening in the U. K. Was planned, but it was unclear if and when this will really happen. The traffic light system was an idea, but no idea was provided which states will be added to the so called green list And how the treatment with AMBA countries and fully vaccinated travelers will finally look like. Today, we are more advanced. Germany provided clear visibility on travel rules and differentiates in between high risk countries and virus variant countries. In addition to 3 colors, the U. K. Meanwhile found a new color. Amber Plus and fully vaccinated U. S. Citizens The result of those relief measures was a visible improvement from mid May onwards. Today, we are back in a more reasonable traffic area. In July, we handled about 2,800,000 passengers and most recently about 100,000 to 110,000 passengers per day 45 percent of the pre COVID numbers in Frankfurt. As much as we are encouraged by this trend, You also have to admit that the recovery is not as balanced as we wished it to be. Especially within the intercontinental market, We continue to be confronted with strict travel restrictions. While U. S. Citizens can travel to Europe, European non essential traffic into the U. S. Is still prohibited. Other key markets like China, Japan, Singapore Mainly materializes on short haul traffic and here especially on leisure routes. Hence, The number of short haul European destinations has meanwhile outgrown pre COVID levels. On the flip side, intercontinental routes are still Clearly below 2019 numbers. While some reintroductions are planned for September And October, it is unnecessary to say that we also face lower frequencies than before, that Services are often canceled and carried out with a clearly lower seat load factor than in 2019. Still, when compared to our situation 2.5 months ago, we are in a clearly better shape as you will also see later Comparable to the situation in Frankfurt, we are Seeing a clearly improving trend within our international portfolio as well. Especially our short haul driven investments in Greece And Antalya are seeing an accelerated traffic and financial momentum these days. Antalya standalone, For example, welcomed about 3,900,000 passengers in July or the same amount of passengers Heathrow Airport welcomed over the whole course of H1 2021. Greece is also showing a very strong recovery. The past week, which also saw many U. K. Travelers, was back at 76% of international traffic and 81% of domestic traffic. Bulgaria as a secondary touristic Destination Europe, meanwhile, has put UK on the red list and is therefore lacking the Turkish and Greek recovery behind. Despite continued strong travel restrictions for international traffic in our LatAm investments, Lima and Brazil Here, the domestic traffic is already matching the 2019 numbers or is even higher. International traffic in those investments remained below the levels of 2019 as Well, all in all, we continue to see whenever the markets are reopened and the possibilities to fly are restored and Looking back at the picture in the last 6 months, I'm now on Slide 5. As described before, all investments continue to be below the levels of 2019. Closest to 2019, we are getting in China and Russia, where our Q2 passenger numbers reached 90% to 95% of the 2019 record levels. Frankfurt traffic was still clearly down compared to 2019, but also down compared to H1 2020. Here, the first quarter traffic in 2020 We're still very much unimpacted by COVID-nineteen, running at about 11,000,000 passengers. As a result of the travel restrictions imposed in Q2 last year and the gradual market reopening in Q2 this year, The Q2 results 2021 clearly outperformed the 2020 numbers. When comparing with H1 2020, the comparable basis is still very adverse. And comparing with Q2 2020, the traffic performance this year was better, while it remained clearly below 2019. Before moving on to the financial performance in the past 6 months, allow me some business updates on The Chart 6 and 7 first. The Chart 6 shows you our progress on Frankfurt restructuring. While we already discussed good progress here during our Q1 earnings call, we can present you a very positive update today. End of Q2, we are a more than 4,000 employees leaner company in Frankfurt. We therefore did not just reach our target well ahead of time, but we also exceeded its target. And today, you can see on the chart 4,276 employees less. And today, we stand at about 4,400. So we continue to reduce our workflows. So the next step, we also discussed This with our Q1 results, we will continue to reduce our administrative workforce further. Here, there won't be a new program, but natural fluctuation and employee retirements will bring us to the next Those savings and administration will also be structural as we won't rehire administrative foreseeable. So even if we need to rehire some staff within some parts of the ground handling operations, we will remain more than 4,000 employees in a company in Frankfurt mid- to long term, this means on a sustainable basis. Turning to Slide 7. Here, you see the progress we recorded during the past quarter Regarding major COVID-nineteen compensations. In Germany, we meanwhile received As expected, the total amount is exactly €160,000,000 and is equally split in between payments By the local state of Hesse on one side and the federal state of Germany on the other side. While the cash inflow Our Q2 results. Prior to that, also the Greek state approved COVID-nineteen compensation measures to Worth noting here, while the German compensation will be a nonrefundable cash inflow to us, The Greek compensation will take place via no payment of concession charges from Fraport, Greece to the Greek Rapport AGH. So we are not discussing a cash inflow here, but the relief will take place while saving on cash outflows. In the first step, the fixed concession charges payable last year, this year, next year are canceled. Secondly, this year's variable concession charge to EBITDA is canceled as well. In case Frankfurt, Greece will fall short of pre COVID traffic levels this year, this will be We recorded an extraordinary effect of about €70,000,000 with our Q2 results. Please note here that we already anticipated this effect with our full year guidance as the compensation is backed By the concession contracts. For the German compensation, there's no underlying contract. So a goodwill from the government so that the €160,000,000 will be added to our full year guidance. How did those effects feed into our financial performance in the past 6 months? I'm now on Slide 8. You can see that we added a total of about €300,000,000 non traffic linked FX to our group total revenues. The overview of all effects can be found in the appendix of this Excluding for IFRIC 12 dropped by about €120,000,000 or 15%, On the flip side, our cost saving measures in Frankfurt, but also in international activities, were more than sufficient Euro cost savings compared to H1 2020 meant that EBITDA improved year over year Let me emphasis here that we are very pleased by this performance. Adding the non traffic linked effects of some €300,000,000 represented a strong H1 EBITDA of about 3.35 Led to a group result after minorities of some €15,000,000 a positive result, which is clearly beyond our expectations at the start of the year. The performance of the 2nd quarter standalone can be found on chart number 9. While revenue increased due to the traffic recovery by a strong 82% on an underlying basis, a few things are worth to mention here. Frankfurt cost savings remained broadly unchanged compared to the strict lockdown situation in Q2 20 20. Therefore, we were able to keep our cost savings on a very high level. Despite We even managed to record a positive underlying Frankfurt EBITDA in the area of €31,000,000 Despite handling only 4,000,000 passengers, respectively, only 45,000 passengers per day. So we clearly exceeded our guidance that we need about 4,500,000 passengers per month, respectively, 50,000 passengers per day sorry, 4,500,000 per quarter, respectively, 50,000 passengers per day to be EBITDA breakeven in Frankfurt, a very good achievement of our Frankfurt Brazil, Bulgaria and Ljubljana were largely closed in Q2 2020. The operational restart this year led to a slightly rising Q2 cost internationally. Still, we managed to achieve a clearly positive EBITDA also in international activities. As a result, the underlying EBITDA was positive at €62,000,000 So was the operational cash Chart number 10, you see our group cash flow and indebtedness situation. As you can remember from our Q1 results, our group cash flow and indebtedness situation this year is adversely impacted by severance Payments for Frankfurt staff. Here, we meanwhile cashed out more than €200,000,000 for people €220,000,000 cash out for severance payments in this year. Adjusted for this effect, our H1 operating cash flow It was mildly positive in the low double digit €1,000,000 area. Moreover, when bearing the negative Q1 operating cash Please note here that the Q2 cash flow statement does not factor in the €160,000,000 compensation payments In Germany, which we expect to fully record in the current quarter and also the proceeds we will see in Q3. As a result of the before mentioned effects, the operating cash flow situation is Clearly more encouraging than the reported figure suggests. The underlying cash flow, excluding for severance payments, The CapEx side, however, continues to be burdened by our Terminal 3 expansion project in Frankfurt. While Fraport Greece and Brazil, so the CapEx programs, meanwhile, stopped, Lima Airport has grown into this gap, so to As a result, the total CapEx bill remained broadly unchanged to the previous year, leading to a negative free cash flow of about €750,000,000 As mentioned before, you should not extrapolate this figure on a full year basis CapEx numbers. In total, we therefore describe our indebtedness situation as expected at the end of the second Our group liquidity and available cash reserves at the end of Q2 are shown on Chart number Despite the clearly negative free cash flow of €755,000,000 our group liquidity Besides the negative free cash flow, this amount also includes repayments that we made during H1 this year. The additional finance we assumed in the past 6 months of €2,400,000,000 The additional finance also meant that our all in cash reserves or firepower moved Up to more than €4,400,000,000 by end of Q2. Assuming our conservative business planning, the high cash reserves will clearly bridge us Move on to our segment performance in the 1st 6 months, starting with Aviation on Slide 12. As with our previous call, we provide you for all segments a comparison with 2020, But also with the pre COVID levels in 2019. In revenues, We added this year the impact from the securities settlement in the amount of some €58,000,000 in Q1. Adjusted for this effect, revenues in the period under review stood at 197,000,000 so 22% below the previous year level. Despite this revenue shortfall, we were able to achieve a flat underlying EBITDA compared to H1 20 Yes. We managed to save about €53,000,000 compared to H1 2020 Taking the security settlement and the EUR 160,000,000 state compensation into consideration meant an even Stronger financial performance of the segment when compared to 2019. At €140,000,000 reported in EBITDA exceeded the pre crisis level by some €18,000,000 Looking ahead, you also see it on the chart. We have meanwhile also handed in Yes. Due to the strong underperformance situation this year and which we continue to expect for the next year, We applied to raise the charges by on average 4.3% as Moving on to our Retail and Real Estate segment on Slide 13. Looking at the individual revenue streams, we are very pleased to see that our real estate subdivision is Back on the precrisis level. The result is even stronger, bearing in mind that Terminal 2 was closed Passenger volumes at €25,000,000 the shortfall stood at 76% When compared to H1 2019. Despite this clear reduction, The retail subdivision still performed better than the pure passenger development in Frankfurt, which was down by 81% against 2019. With the help of more stable revenue streams such as Advertising, but also due to an increased spending behavior of the remaining passengers. Our retail per passenger key performance indicator grew remarkably by 40% car rental companies. At €139,000,000 segment revenues all in all declined by 12% Thanks to the more stable revenue performance and a good cost reduction of 35%, We were able to realize a clearly positive EBITDA of €117,000,000 Just 6% short of 2020 despite the 47% drop in passengers. Frankfurt segment Ground Handling is shown on Slide 14. As with the other two segments, Revenues in ground handling were more resilient than the pure passenger development in Frankfurt. At €152,000,000 The segment revenues were down by only 16% compared to H1 2020 or 56 Key drivers for the better revenue performance were again charges, charges which are not directly linked to passenger numbers Such as maximum take off weight and movement related charges. Still, in absolute numbers, We lost revenues of about €30,000,000 against 2020. Remarkable, however, was a cost performance as we were able to save more than €40,000,000 compared to H1 2020. Thus, EBITDA improved against 2020 despite the passenger shortfall. At minus €50,000,000 however, it is needless to say that we can't be satisfied with the overall result of this segment. On Slide 15, you see the summary of our Frankfurt results during the past period. When compared to our operational expenses in past years, we are clearly seeing our restructuring progress. In total, we achieved cost savings in the amount of more than €230,000,000 or about 30% per month. This cost reduction was mainly driven by staff cost savings. Very important here is that we even exceeded our own target on behalf of the Frankfurt breakeven point. During the Q2, we recorded about €31,000,000 positive EBITDA in Frankfurt, excluding for the €160,000,000 state compensation. As this figure still includes some €30,000,000 profits from the German short time working instrument, we can tell you today That we are able to run Frankfurt Airport breakeven at about 4,000,000 passengers, respectively, 40 5,000 passengers per day or 22% to 23% of the 2019 On Slide 16, you see the financial performance of our major international holdings. The very positive message here is that despite the continued strong impact of the pandemic, all investments the group EBITDA in H1. Those results again prove the strong measures we are taking to minimize The International Activity Segment as a whole is shown on Slide 17, so including for the Frankfurt Services. You see That the revenues dropped by more than 50% against 2019 and more moderately by 12% against 20 Like this, we saved around €30,000,000 when compared to H1 2020 or about 47% The underlying EBITDA of €43,000,000 was some €11,000,000 higher when compared to 2020 Despite the lower revenue, including for the compensation measures in Frankfurt, Greece and the cancellation Having said this, ladies and gentlemen, I would like to conclude my presentation with our Outlook chart on Slide 18. We have meanwhile updated the outlook to include For the €160,000,000 compensation payments in or from Germany. As a consequence, We upgraded our EBITDA target to a level of €460,000,000 to €610,000,000 Simultaneously, we raised our EBIT outlook to positive from slightly negative before in case Of achieving the upper end, and this is most likely, of the new EBITDA guidance and the continued positive trend in Antalya, We even expect to be able to achieve a positive group result this year. This would be a nice result. Report AGHEA. With this, I would like to thank you for your attention, and I'm looking forward now to your of The first question is from the line of Christian Niedelschuss with UBS. Please go ahead. Raghu. Hi, thank you very much. Three questions, if I may. The first one, in your first half report, you're flagging prices of Building Materials Rising Globally. So do you see any risk to your CapEx estimates for the next couple of years in Sanford and Lima? Secondly, you have this $160,000,000 cash in compensation in Germany. Raghu. You're avoiding some cash out in Greece this year. Why isn't this translating into a change in the net debt guidance for FY 'twenty one? And the last one, you've mentioned the 4% 4.3% tariff increase. Aguer. Could you remind us what is the latest thinking in terms of offering tariff incentives for airlines into next year? Rager. And how should we think about that? Thank you. Yes. Thank you for your questions. First Topic, price risks in construction projects. We have 2 big CapEx programs, 1 here for Terminal example for T3, this was already done on a very high level and most of the contracts are in the meanwhile closed So that we do not expect a negative impact from the current situation in the construction market. And we also see this as a temporary phenomenon. But again, we don't see any or we don't expect any negative impact The runway construction, which is in the middle of the, let me say, of the project, so to say, We have already signed the EPC contract with a clear cost cap. So even if Prices for some parts, construction parts would go up. This will not impact us. With regards to the today not Problems that for some key materials like steel, etcetera, we have put in, so to say, Variable indices, so that is in principle an EPC contract. But later on in 2 years, we are looking and we have fixed the volumes. And in 2 years, and we look what will be the final prices for steel, for example, and this This is fully covered by contingencies, which are part of our official budget. So that To make the long story short, we do not expect any negative impact from rising prices in the construction At the beginning of the year, we said well, first of all, we fixed 2 things, the EBITDA contribution on one side and The CapEx on the other side, which at the end of the day will lead to negative free cash flow and this drives the increase of indebtedness. And in our last Q1 presentation. We said we expect an increase in the net debt by minimum €1,000,000,000 This was Chart number 26 from the Q1 presentation. And when we now look back on what has changed to our guidance, We stick to the EBITDA contribution to the EBITDA guidance, except the additional income proceeds of €160,000,000 And on the other side, CapEx is €60,000,000 And on the other side, CapEx is as or will be as expected in our guidance. So We will end up with a very nice EBITDA contribution, which helps us on the operational cash flow side. And therefore, that's what I put into my presentation. We are saying that we will end up with an increased indebtedness of €1,000,000,000 while in Q1, we said minimum €1,000,000,000 So this Not planned and not included in our not included €160,000,000 payment from the German So it's so to say, there is a positive impact in our net debt guidance of 6.5 €1,000,000,000 for this year. This is equivalent to the €160,000,000 payment from the German government, which will come We feel fine with the 4.3%. This is not a surprise. We always said in the last couple of not just months, in the last couple of quarters That as a reaction of this terrible COVID impact, we have to do something in a moderate way on the fee side. When we said it will be a single digit or middle single digit percentage increase, and now we delivered what we promised. This is for a period of 1 year. We generally, we are also we have been open and we are still open for long term contracts. But I think In the moment, nobody has a clear transparency what will happen in the next 2, 3, 4 years, so that The probability that after this year, now we are talking about 2022, onwards, The probability for long term fee agreement is relatively low. I do not expect this. So we are so I think we will continue with a year on year basis, which is so far good For the airlines as well as for us, because if you don't know what will happen in 2, 3 years, it's good to have Flexibility on both sides, but this will not change our clear strategy that for the next Couple of years, we are going to increase the fees again, and this is level 4%, 5%, maximum 6% on a year by year basis. And room for incentives, I do not see, because we had incentives before corona when We had a high level, a high number of passengers at Frankfurt Airport and we tried to attract even more despite an Because everybody, let me say, is blocked by travel restrictions and not by prices. We can see everywhere The price elasticity is not very high. The demand is given. And let me say, the stumbling block on the road Fees or prices, a stumbling block are still existing travel restrictions. And now we have a proven track record. The next question is from the line of Andrew Lobbenberg with HCBS. Please go ahead. Hi, there. Can I stay on the tariffs, please, and just ask for some Explanation of why you're so confident that it will be approved by the regulators? I can only imagine the reaction of Carsten, but you seem very confident. So where is that confidence coming from? Can I ask, in the context of Greece, we've got the sort of $160,000,000 or whatever it is Raghuir? Benefit that you're saying from the Greek government, but you're only booking a certain amount this year. Can you just explain what will get booked when In terms of the P and L. And then can I just ask for an update on Lima and the new First was tariff? Yes, of course, We are going through this regular process and we had the meeting behind us Where we have to present our intended fee increase to the airlines. Let me say, as expected, Of course, there are always these normal complaints, but I think the mood was relatively good. And what we also intensively Show to the airlines have been our progress on the cost side. And I think all of these guys Now we have a proven track record on the cost side, and I think this was really a benchmark in the market. And in combination with this, we always said, we are working on our cost side and we did and we are doing a lot of things, But this is not enough for an EBITDA recovery and the net income recovery and we have, let me say, a higher indebtedness Compared to this what we planned before, therefore, it's just it's a fair treatment if we also come in these difficult times with moderate fee increases. And I think this was accepted from the airlines. It was a fair discussion. Of course, different Interest, but I think it was the the mood was what was fair, and that's the reason why we are I have to confess a little bit complicated. First of all, we now based on the concession agreements, Let me say the difference of our original business case for Greece on one side And then the negative deviation from the business case driven by corona, which you can calculate because the government has our former our old business case Measured in EBITDA numbers and they say also now what we booked Paragraphs in the concession agreement. So this is the way how to define the 178,000,000. Now the compensation mechanism is as follows. We had to pay Fixed concession payments of €23,000,000 per annum for the year 2019, For the year 2020, for the year 2021 'twenty four. So we are talking about 4 installments, €23,000,000 and we are not going to pay any euro. So this is the first topic. So in total, if I make the calculation, we are talking about €70,000,000 €92,000,000 We save by these form fixed concession payments. Then there is a GAAP of 86,000,000 Remaining €86,000,000 and how is the mechanism to be compensated? And here, the way is as follows. Normally, we have to pay for our traffic driven, let me say, EBITDA this year, A variable EBITDA linked concession payment of 28% So now year by year, it's 28% of the EBITDA. And now it's agreed that And then we have to see whether if it is too high, then it is the low amount. If it is too low, then there will be a further compensation for this Final discrepancy of perhaps €5,000,000 €10,000,000 So but based on our planning, it must be an exact Compensation, but the final treatment of some millions will be handed then in the next year. So your question was how will it or how has it be to be booked. So based on IFRS, We have now in H1, we have booked an extraordinary income of 3 times €23,000,000 So for 'nineteen, 'twenty, 'twenty one, the fixed concession and payment. So this is a one off in H1. And there will be a further number. This is a 4th installment, so the remaining CHF 23,000,000 booked in December this year. So in our second half, there will come another extraordinary impact of €23,000,000 Then we have in total, as mentioned, this €92,000,000 and the rest you will not see as a positive element. It's not just normally we have to pay these variable concessions, which would be part of our material expenses. This you will not see. And this is the treatment in the P and L. And third question, I hope that this is explaining a little bit your question. And 3rd topic is Lima and the political situation. We have now the new President, Pedro Castillo, We are in Lima since 20 years. And in these 20 years, we have seen a lot of presidents. And it's not a joke saying that first of all, all the former presidents are either dead or in prison, but this is a little bit the history of Perot. This is one statement. The second is, you're wondering why I mentioned this. If you look back, we have seen presidents From the left side more from the left side, but you have also seen presidents from the right wing. But the phenomenon was always after Becoming President, being elected, that all of these guys, whether these are left wing or right wing guys, they later on in their When they have been in charge, they moved to the middle with their political program. And here we have the expectation as in the last 20 years that this will also happen with the new President. You have always in South America to differentiate between this what they are saying during their campaign and their election campaign, This is what they really do after becoming elected. So we are looking forward He will move to the middle. But regardless of this, we have an excellent contract. We showed a good performance regarding our airport. The Peruvians are very proud to have these airports because it's I don't know how often elected as the best airport in South America. So everybody is aware and proud of the performance. That's the reason why we do not expect some negative impact now from this The next question is from the line of Christian Kors from Warburg Research. Please go ahead. Yes, hello. Good afternoon. Thanks for taking my questions. 3 actually. First, now with having Terminal 2 back in operations, does this have any implications on the OpEx side? And if so, could you please Quantify also going forward. Secondly, the European Commission, I think, is considering a new slot ruling and airlines are opposing it. So what is your view on this issue and how this could impact Your airport operations. And lastly, ground handling, you said EBITDA is still negative. If I'm not mistaken, you have some More plans in the pipeline regarding your ground handling operations. So did you progress on this already? And can you maybe report AGH. So let's start in Frankfurt. In retail, regardless whether we have 20,000,000, 50,000,000 or 70,000,000 passengers, So we have reduced or we have this impact of minus 30% in the staff and there will be no recovery on the Staff side in Retail and Real Estate. In Aviation, you will see the same. All what we did is sustainable. So we reduced by 30% or we are going to reduce and this will be then flat also when the passenger numbers will go up again. So we just have some or we will see some increase again in ground handling, where on one side, we also did a significant reduction. It's clear when later on we are strongly recovering on the passenger side that in some parts we have to re engaged employees, but this is a limited number, first of all. And second, what we did is we Accelerated the structural improvement of our staff in ground handling. You know that we that about 50% Of the employees had old contracts on the AG level, while the other 50%, the younger ones, had new contracts with an average 30% Lower wages and the our program with the severance payments Focused primarily on these older employees with the old contracts, so that even if Here the number of employees is going up again. We have a structural advantage because these rehired workers Nevertheless, at the end of the day, what I also said during my presentation, we will see some personnel increase next fear in ground handling, but the overall number of more than 4,000 FTE liner company It's stable and robust because we continue on the admin side. And in my presentation, I said, As of today or in the presentation, you see the number 4,200, I think 67. Today, we are at 4,400. So You can really say month by month, the number goes up. And even there's some compensation on the ground handling Not now, but in next year, you will see a company which at the end of the day runs even 70,000,000 passengers, again, this was more than 4,000 employees less compared to 20 Your second question, the EU, the new EU slot regulation is fifty-fifty, 50%, this means they have to use minimum 50% of slot, otherwise they are going to lose it. Of course, you could read in the newspapers that the full service carriers complained. Yes. Low cost carriers appreciated this. It's no secret that we Try or have the intention to grow rapidly that they also have the chance to do it. And I think this 50% slots utilization topic now coming from the EU is a fair deal for all of us. And so we appreciate this. And again, ground handling, I think I told you something about recovery or not recovery of staff. We are so far confident When the traffic will come back, the EBITDA numbers will improve significantly. Why? Because first of all, we have we realized this personnel reduction. We have this Structural impact, so this is good. On the negative side, in the moment, we are and so far a little bit suffering as a compensation of these good elements By relatively high peaks. So peaks means not higher than before, but in some hours, we have a lot of traffic, while during other hours, The traffic is very low, which was not the fact in the past. And as an airport operator, you can't act Like, let me say, the McDonald's principle, where you let people work 2 hours and then you send them home for another 2 hours and then you call them back It's not possible. And that's the reason why we are so far a little bit suffering from this Extremely peak situation now, but this will improve significantly next year when, as expected, Passenger numbers will go up to about €40,000,000 And then we have not any longer these huge difference between the tails and the peaks During the day, this has then this collateral positive impact on ground handling that the productivity will go up significantly. And we see a further significantly positive improvement. Also, when we Look now, just in the month of June, so I have in front of me The segment result of ground handling just June where the traffic was better than in May or April, We showed an EBITDA of just minus €2,000,000 in June. And in average, we have been less than 50,000 because passenger numbers are clearly higher than in June that we are close to EBITDA breakeven in ground handling And with a little, yes, tailwind now in Q3, I think there is a chance The EBITDA could even be a positive or breakeven for Ground Handling in Q3 despite lower Rapera Guerre. The next question is from the line of Raffo Raguey, Dario Maglione from Spain DNP Paribas. Please go ahead. Hello. Good afternoon, everyone. Two questions from me. 1 on the dividend policy, how will the dividend policy evolve in the next 2 to 3 years? Second question, how much do you think business traffic in Frankfurt is such impaired First question, dividend policy. When can you or when do you expect Positive dividends again, a clear answer. This is linked to our indebtedness. So we are higher than planned before corona, of course, and now we have a strong indebtedness goes up. We are not going to pay any dividend because we have to take all our proceeds to control The net debt and to turn it into the positive direction so that we are able to reduce Positive free cash flow is expected, latest in 2024. And not before, we are not going to pay any dividends. And then we have really to see what is a final So traffic and traffic substitution by technology. So let me say, we have always to differentiate The two groups of passengers, the leisure traffic on one side and the business traffic on the other side. We just in these days, we see, for example, looking to Greece and looking to Turkey, Despite the fact that the corona numbers are going up, nevertheless, there are no really travel restrictions. You see a strong demand and increase of numbers. And in the presentation, when you look on charts, You see the latest trend. And when you look on these charts regarding Antalya and calendar week 30, We on the domestic side, we are back on the old numbers. And on the International side, we are just 27% below pre corona. And remember, we have corona numbers, high corona numbers everywhere In Turkey, I think this shows how strong the demand is coming from the tourism side. So that's we are absolutely convinced there will be no substitution. We will see full recovery compared to 2019 passenger numbers. And also when you look now on Greece, It's also calendar week 30. You can see on the domestic side, it's just Minus 19% compared to 2019 on the international side, minus 24%. And this is really It's really a very positive recovery. So to make the long story short, leisure traffic will come back When corona numbers are a little bit lower and primarily when travel restrictions are lifted, So a very positive, let me say, expectation from our side. On the other side, of course, we have Business traffic, which is not relevant for all our international assets, but is, of course, is relevant for Frankfurt Airport. Here, Just starting with effects and figures. In 2019, We had about 30% business traffic. This is equivalent to about 20,000,000 passengers from 70. In the moment, we have a very low number of business traffic. So the recovery is primarily generated from tourism and leisure. And so if we look on these two groups, We also, for Frankfurt, expect a full recovery on the leisure side for 2023, like And because the inbound increases, the outbound of Frankfurt, so to say. But on the business side, Here, we see not a full recovery and we see even a slower recovery. Don't ask me whether at the end of the day, it will be minus 10% or minus 30%, I don't know, or even minus 40%, nobody knows. But If you take minus 10% sustainable GAAP, then we are talking about €2,000,000 If you talk about 30%, which is a relatively conservative It would be a conservative assumption, then we talk about €6,000,000 sustainable loss. I think whether it's 10% or minus 10% or minus 30%, this will after 2023% will be compensated By the comeback of the normal growth rates on the leisure side, so that this fits to our conservative overall expectation that Frankfurt will be back on a €70,000,000 level We are more conservative. The airlines are a little bit more positive. Perhaps the truth will be in the middle, but we are always open for The next question is from the line of Johannes Braun from Stifel. Please go ahead. Yes. Thank you for taking my questions. I have three questions. Firstly, you mentioned that operating cash flow was Positive in Q2. And given that in Q3, you will have lower cash headwinds with the restructuring costs lower, Also CapEx being lower, EBITDA obviously being better on the better traffic performance. So what's the outlook for operating and also free cash flow for Q3, Then secondly on the fee increase, can you share more details about how it is structured? Because I think you mentioned that It is an average increase of 4.3%. So it seems that it's not 4.3% for every traffic segment. So some more details on the structure would be appreciated. And then lastly, on the job cuts, you said 4,000 sustainable. What does that mean for the OpEx savings, which you have quantified to be €500,000,000 for this year? How much of that will be sustainable? Thank you. Yes. First question, Mr. Braun, free cash flow. You asked for Q3. I would Reinterpret this for the second half because it's easier for me. So we let me say let's assume And this is very likely that the group EBITDA in H2 will be about €300,000,000 So this is more or less Equivalent to an cash inflow. We have no extraordinary negative or positive things In H2, today we don't see it. So we have EBITDA driven cash inflow of €300,000,000 We have also, on top of this, the €160,000,000 proceeds from the compensation of the German state. So in total, we are talking about roughly €460,000,000 cash inflow from this side. So on the other side, we have two elements which run against us. This is the CapEx program. Here you see we have to see what is the outflow. It can be €500,000,000 can be €550,000,000 So let me say, we'll be in this range for the second half for the whole group. So this goes against this €460,000,000 And then we have the last item. These are the cash net Interest payments, so the interest earnings, interest received and interest expenses, which is a cash out, Here, we expect about as a net interest outflow about minus €140,000,000 plusminus. So if you now make the calculation, €300,000,000 plus €160,000,000 minus €500,000,000 €550,000,000 For CapEx, minus €140,000,000 you see, let me say, the net debt increase in H2. And that's the reason why I say we have now 6.350 about Why we expect to increase have a further increase to about €6,500,000,000 So this is the calculation So regarding the fees, it's we have fee difference. First of all, it's very complicated because we there is no one fee. There is fee for the number of passengers, for the maximum takeoff weights, For the noise, for a lot of elements. So I think we have about 100 variables to come to one price for 1 aircraft. But the most relevant items are, as I mentioned, maximum takeoff weight, noise, number of passengers Yes, whether it's domestic flight, a continental flight and an intercontinental flight. There's It's a huge price differentiation between these three elements. And normally, you can say it's more or less a balanced Increase of 4.3% to all these variables, But we have some slightly differences in a way that the increase and I forgot the 4th item. So I said domestic, Continental and Intercontinental plus transfer traffic. So these are the 4 groups. And for all the 4 groups, You have different prices. The lowest price is in transfer, then the 2nd lowest is in domestic, then cond and then intercond. And here, we have, let me say, an increase that the transfer prices the increase in the transfer prices was the lowest one. For InterContin, it was the highest one. So a slightly differentiation, but all regarding all items, Price increases and an average a weighted average of 4.3%, but less on the transfer side and more on the intercom side. Because the price elasticity on the intercom side is the lowest one. Yes, job cuts, Our let me say, when we started our restructuring program, we had not the target To exactly reduce 4,000 or 4,400 full time equivalents, our target was The euro target, and we always said we want to have a personal cost level, which is €250,000,000 less than 2019 numbers. This was our original target, and then we translated this money target into a headcount But this was just a result. And your question is, what is the sustainable impact? We can say it's clearly minimum €250,000,000 less personnel expenses per annum Compared to the realized 2019 numbers here for the Frankfurt side. Can I just ask a follow-up on the fee question? We obviously, we discussed a lot reaction of Lufthansa on that fee increase. What we have not discussed yet so far is the reaction of the likes of Ryanair. Can you share some light on that? Let me say Ryanair is on the site. There's no special treatment for Ryanair. So it's As always, equal treatment. And we didn't get any I didn't receive any complaint from Ryanair. But also let me say my today's information is that Lufthansa will accept these Rauper Raguerre. The next question is from the line of Jose Ruias from Santander. Please go ahead. Just a couple of questions, again, on the tariff on the planned tariff increase at Frankfurt. The justification for the tariff increases is that according to your statements earlier, Frankfurt will continue to underperform its allowed return. Before COVID, that return was 6.4%, which if you multiply that by the RAB, you would come up with an allowed EBIT of 250. But since the COVID started, Frankfurt has secured structural cost savings in the region of €300,000,000 With that in mind, what is the level of allowed return you are aiming for? And what is the gap to the allowed EBIT that you believe the company would not attain if the tariffs were not raised? Thank you. Yes. The regulation, as you mentioned, is as follows. We on one side, we have Our regulated asset base times the official WACC and These two values multiplied give the maximum allowed EBIT number for the relevant fiscal year. The actual WACC is 7.3. 7.3. In the moment, 7.3. So 7.3x our actual WACC defines the maximum EBIT level. We are far away. And so far, we don't see any problem for the future. Of course, the EBIT will go up again with our strong expected EBITDA A recovery. Nevertheless, we don't see any risk to run against the ceiling because Induced by the relatively high investment amounts In the context of Terminal 3, the rep goes up year by year because each and every euro we spent for T3 goes into the rep. Also during the construction phase and construction period, so that we will Constraint or there will be no constraint on the regulatory side also when We look on the WACC went up now to more than 7% because the interest The risk what is the name? Interest risk free interest rate went up on one side and also the beta factor went up Significantly, we came from a beta factor of 0.5%, extremely low in the last couple of years. That's the reason why the WACC was so low. And now the beta factor went up, which we interpret and see as a normal. Of course, first of all, induced by the corona volatility, but it's also a move to a normal beta factor So that if you assume that the WACC increase will continue or let me say there's a Higher probability for increased WEX. The room for EBITDA The next question is from the line of Charles Meyenadeer from Kempen. Please go ahead. Just one question on my side. I'm just wondering if you've seen any interest Or if you have maybe been approached by any financial party looking to acquire stake in some of your international assets. And more generally, as you Pointed out before, Matthias, selling at a distressed price would make no sense. So assuming that the price is right, Would you consider selling a stake or part of your stake in some of your foreign holdings? Thank you. Yes, I think there's nothing new. And as I often mentioned, it doesn't make any sense to sell Assets in a situation where a lot of things are distressed. So there's no need to sell anything. And That's the reason why we always said we for these assets, which are not our strategic assets like minorities, St. Petersburg or Xian, in principle or in general, we are willing to sell if there's an investor offering a lot of money. So this is still given, but on the majority side, so regarding our assets, Which are fully consolidated. We are happy with our assets. You see in the numbers that we see a good EBITDA contribution that the recovery outside Frankfurt will be faster and stronger than in Frankfurt. This has to do With the passenger mix and the passenger structure, as I mentioned, leisure will recover much faster than business traffic. So I think it would be stupid to make a fire sale and there is no need. We see also What we did on the debt market, so in average, we for the new debt, we are going to pay 1.3% versus very cheap And we have full access to the debt market. So to make the long story short, there is There are no further questions at this time. I hand back to Mr. Nanker for closing comments. Okay. So thank you very much everybody for Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.