Good morning, and welcome to Corporación América Airports fourth quarter 2021 earnings conference call. A slide presentation accompanies today's webcast and is available in the investor section of the Corporación América Airports investor relations website. As a reminder, all participants will be in listen-only mode. There will be an opportunity for question and answers at the end of the presentation. At this time, I would like to turn the call over to Patricio Iñaki Esnaola, Head of Investor Relations. Please go ahead.
Thank you. Good morning, everyone, and thank you for joining us today. Speaking during today's call will be Martín Eurnekian, our Chief Executive Officer, and Jorge Arruda, our Chief Financial Officer. Before we proceed, I would like to make the following Safe Harbor statement. Today's call will contain forward-looking statements, and I refer you to the forward-looking statements section of our earnings release and recent filings with the SEC. We assume no obligation to update or revise any forward-looking statements to reflect new or changed events or circumstances. Note that for comparison purposes and for a better understanding of the underlying performance in our presentation today, we will be discussing results excluding hyperinflation accounting in Argentina, which became effective in July 2018. Additional information in connection with the application of IAS 29 can be found in our earnings report.
Now, let me turn the call over to our CEO, Martín Eurnekian.
Thank you, Iñaki. Hello, everyone, and welcome to our fourth quarter 2021 earnings call. Our performance this quarter underscores the multiple initiatives we have been undertaking since the onset of the pandemic. Today, we have a linear cost structure, a strengthened financial position, and have made important advances in further enhancing the equity value of our business. We continue to see a recovery in passenger traffic throughout our operations, reflecting an overall relaxation of traffic restrictions and consequently, higher travel demand. Over 13 million people traveled across our airports during the fourth quarter, with traffic levels at just over 63% of the 21 million passengers served in the fourth quarter of 2019. This also was a significant sequential improvement compared to the 46% of pre-pandemic levels reached in the third quarter of 2021.
Higher traffic also brought about a strong recovery in commercial revenues, reaching 90% of the fourth quarter of 2019 levels. As a result, revenues ex IFRIC 12 nearly doubled year-on-year to $200 million, reaching close to 70% of fourth quarter 2019 revenues, up from the 55% of pre-pandemic levels achieved in the prior quarter. We also delivered substantially higher profitability in the quarter with comparable adjusted EBITDA of $92 million, doubling the levels reported in the fourth quarter of 2020. In addition to improved top-line performance and a linear cost structure following the cost reduction initiatives implemented over the past two years, results benefited from a $26 million compensation related to the re-equilibrium of the Brasília Airport, which is a testament of the intrinsic strength and value of our concession.
Note, this applies for the full year of 2021 and was only recorded this quarter. We also accounted for a EUR 9.5 million euro or the equivalent of $10.9 million government grant in Italy. On the balance sheet front, during the quarter, we refinanced a combined amount of $425 million in Argentina and Uruguay to strengthen the company's liquidity position and improve the debt profile. We also obtained new funding for more than $350 million in these two countries, including the $174 million that we just raised last February. Jorge will go over these advances in more detail shortly. Turning to slide four. During the fourth quarter, travel restrictions were relaxed across all our markets of operations, which is reflected by the green boxes on this page.
Only some requirements remain in place, such as antigen or PCR tests and vaccination certificates. Now, turn to slide five for a deeper look at passenger traffic performance. As anticipated, traffic continued to recover, with October, November, and December gradually improving to 58%, 65%, and 67% of the respective months of 2019, as we show on the left chart. Armenia and Brazil led the recovery, reaching 90% and 82% of fourth quarter of 2019 levels, respectively. Also note that traffic in Armenia was slightly above 2019 levels each of the first two months of 2022. In Ecuador, traffic continued to improve, reaching 76% of pre-pandemic levels, with routes to the U.S. and Panama above those in 2019 for several months now.
Passenger traffic in Italy reached over 60% of pre-pandemic levels, posting a strong sequential improvement despite experiencing some impact from the emergence of the Omicron variant in December. Finally, traffic in Argentina and Uruguay, which endured through long government-imposed travel restrictions, stood at 53% and 50% of fourth quarter 2019 levels, respectively. Traffic, however, posted a significant sequential improvement reflecting the reopening of borders at the start of November. Looking at traffic performance in the first two months of 2022, we saw a slight slowdown in January reflecting the impact of Omicron, with the recovery resuming in February. In Brazil, for example, some airlines were forced to cancel a number of flights due to positive COVID cases within their crew. Turning to slide six, cargo operations continued to perform well, reaching 80% of fourth quarter 2019 levels.
While growth was driven by all countries of operations, we saw strong contributions from Argentina, Brazil and Uruguay, which together accounted for over 80% of cargo activity. Italy and Uruguay also stand out with cargo activity above fourth quarter of 2019 levels. I will now hand off the call to Jorge, who will review our financial results. Please, Jorge, go ahead.
Thank you, Martín, and good day, everyone. Starting with our top line on slide seven, total revenues ex IFRIC 12 continued a steady recovery, reaching 70% of pre-pandemic levels in the fourth quarter of 2021. Aeronautical revenues increased over one and a half times year-on-year, mainly driven by higher passenger use fees, which more than tripled, reflecting improved operations across all segments, particularly in Argentina, Armenia and Italy. Commercial revenues grew 66% year-on-year and reached over 90% of 2019 levels, with strong contributions from Argentina and Armenia. Notably, cargo revenues increased by 23% versus 2019, mainly driven by tariff adjustments in Argentina. Now turning to profitability on slide eight. In addition to sustained revenue growth, we continued to benefit from a leaner operation reflecting the cost reduction plan implemented at the beginning of the pandemic.
When compared to 2019, cash operating costs and expenses declined this quarter by 26%. Remember, this excludes concession fees and construction costs. As we anticipated in previous quarters, we expect to see some increases in certain cost lines as our operations gradually return to pre-pandemic levels. At the same time, we also expect to benefit from a more efficient cost structure. Now moving down to the P&L, we achieved comparable adjusted EBITDA of $91 million, up from $44 million recorded in the same quarter last year, and is likely below pre-pandemic levels. Importantly, this quarter we achieved positive adjusted EBITDA in all countries of operation. In Brazil, adjusted EBITDA benefit from the $26 million economic compensation received in connection with the re-equilibrium of the Brazilian concession for the full year of 2021. That was recorded in the fourth quarter.
Results in Italy were also positively impacted by the EUR 9.5 million grant, also accounted in the fourth quarter, 2021. Now turning to slide nine. We continue to achieve significant milestones in the process of obtaining economic equilibrium of our concession agreements. Following the successful negotiations in Argentina, Italy and Brazil that we executed during the first year of the pandemic, in 2021 we advanced in the following fronts. As noted earlier, in Brazil we obtained a $26 million compensation in connection with the economic re-equilibrium of the Brazilian concession from the impact of COVID-19 in 2021.
In Argentina, following the 12% increase in international tariffs that took place in March 2021, we recently obtained a 215% increase in domestic tariffs from ARS 195 to ARS 614, effective March 1st, 2022. This also includes the commitment to adjust the domestic tariffs over time to a reference value equivalent to $5. In Ecuador, last July, we successfully completed the economic re-equilibrium process to compensate the impact of the COVID-19 for the Guayaquil concession, which among other things, included a two-year extension of the concession term and a reduction in the concession fee.
In Uruguay, in November, we signed an agreement with the government to amend the existing Puerta del Sur concession, which included the extension of the concession term for an additional 20-year period from November 2033 to November 2053, the addition of six regional airports and a CapEx plan of $67 million to be deployed by 2028. Finally, in Italy, in August 2021, we cashed in a EUR 10 million grant to compensate for the COVID-19 impact in 2020. More recently, in December, we accounted for an additional amount of EUR 9.5 million euros in government support. Turning to slide 10. Following the successful execution of the debt refinance in 2020, during 2021 we completed a series of transactions that further strengthened our balance sheet. Starting with Argentina.
In September 2021, AA2000 successfully placed $30.5 million dollar-linked bond in the local market at an annual interest rate of 4% and a two-year maturity. In November, we completed the exchange offer of a portion of the Series 2017, 2020 notes with the issuance of $209 million Series 2021 notes due 2031. We also raised $126 million in new money. Also in November, we refinanced $95 million in bank loans, extending the final maturity of these loans until November 2024 from February 2023, with a 15-month grace period. More recently, last February, we successfully completed a local offering of $174 million dollar-linked notes in two tranches.
$138 million with an annual interest rate of 5.5% and a five-year grace period, and quarterly amortizations will start in May 2027, and $36 million with an interest rate of 2% maturing in February 2025. Proceeds from this offering will be used to fund infrastructure works within the national airport system and to redeem a portion of the preferred shares equivalent to $100 million in accordance with the terms of the executive decree, which provided for the 10-year extension of the AA2000 concession agreement. Note that the amounts redeemed under the preferred shares will be counted towards our CapEx obligations under such concession agreement.
In Uruguay last November, we completed the exchange offer and issued $246 million of 6.875% senior secured notes due 2034 in exchange of the series 2050 and series 2020 notes with a grace period until May 2025. We also raised $52.9 million of new money with the issuance of additional notes due 2034 under the same terms. Moving on to total indebtedness and liquidity on slide 11. We ended the quarter with a total liquidity position of $451 million, while total debt stood at $1.4 billion. Our net debt to last 12 months adjusted EBITDA ratio remains above historical levels, but improving quarter-over-quarter, reflecting the recovery in adjusted EBITDA. Net debt has remained fairly stable over the past quarters.
All our subsidiaries remain in compliance with their debt covenants, and remember that CAAP itself has no direct indebtedness. As a result of all the liability management initiatives executed over the last 24 months, we were able to improve our debt maturity profile, which allowed us to strengthen our balance sheet and liquidity position, as well as comply with our mandatory CapEx program. Notably, we delivered five consecutive quarters of positive operating cash flow across most of our segments, underscoring our financial discipline. I will now hand back the call to Martín, who will present our closing remarks on slide 12.
Looking ahead, we expect to see a sustained recovery in passenger traffic trends driven by pent-up demand and lower travel restrictions. While we observed a slowdown in passenger traffic in early 2022 on the back of concerns about the Omicron variant, we already saw signs of improvement. In the near term, we are closely monitoring the impact of Omicron and remain vigilant of the geopolitical environment in Europe and its potential impacts. In the meantime, we remain fully committed to advancing in our action plan, which has proven to deliver solid results even while passenger traffic levels have not fully recovered yet. This includes, first, finalizing the economic re-equilibrium processes in Brazil and Armenia to fully restore the equity value of our business. Second, terminating the Natal Airport concession and collecting the corresponding indemnification payment.
Third, preserving liquidity and further strengthening our balance sheet remains a key priority for us, as reflected in the ongoing debt management initiatives that have demonstrated our financial discipline and improved our debt profile. Fourth, we will continue to maintain a strict control of our cost structure to benefit from the efficiencies and operating leverage we have built over the past two years as travel demand resumes. In addition to advancing our action plan, we are also actively developing additional value creation opportunities and expanding capabilities. For example, given the small nature of the Peruvian operations and lack of long-term sustained growth prospects, last December, we exited our 50/50 joint venture in that country. This is part of our long-term strategic plan that seeks to concentrate efforts and resources toward the core and relevant assets in regions with long-term meaningful growth opportunities.
Recall that our Peruvian operations were not consolidated in CAAP results. We have consolidated our real estate master plan in our Brasília Airport. This year, three large-scale real estate projects will begin construction, calling for a total investment of approximately BRL 700 million. This investment will be funded by our operating partners. These projects, which are expected to be delivered in phases starting towards the end of 2023, with full completion scheduled for the first half of 2024, comprise a 250+ stores lifestyle center, as well as an entertainment center and logistics complex. This initiative will bring additional non-aeronautical revenues to Inframérica and will contribute to tourism and the local economy. In addition, we have established a multidisciplinary team composed by employees and best-in-class partners focused on urban air mobility, a new concept of air transportation based on electric vertical takeoff and landing.
I am pleased to announce that we have recently signed a memorandum of understanding with MRAR and MOUs with several other strategic partners with the purpose of analyzing and designing a business model in the mobility ecosystem to service and support the entry of eVTOL in Europe and South America, particularly in some major cities in Italy, Argentina, and Uruguay. On the ESG front, we published our inaugural sustainability report mid last year. Building on our commitment to sustainability, in November, we signed the World Economic Forum's Clean Skies for Tomorrow 2030 ambition statement that aims to accelerate the supply and use of sustainable aviation fuel technologies to reach 10% of global jet aviation fuel supply by 2030. This is an important first step in our long-term plan to lower carbon emissions and our impact on the planet.
In closing, I would like to take this opportunity to thank all of our stakeholders for their continued support. With this, I would like to thank you for your participation. We are now ready to answer your questions. Operator, please open the lines for questions.
Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question that is star followed by one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question, and we kindly request that you ask one question and one follow-up. Our first question today comes from Alejandro Demichelis from Nau Securities. Alejandro, please go ahead. Your line is now open.
Good morning, guys. Thank you very much for taking my questions. One question, one follow-up. First question is how are you seeing the recovery in traffic in Argentina, particularly thinking about some loss of connectivity in both, in the domestic market and also in the market abroad? Then as a follow-up, with that kind of traffic, how are you thinking about cash flows, CapEx for this year or next year, particularly thinking about the redemption of the preferred shares in AA2000?
Thank you, Alejandro. This is Martín here. Regarding traffic in Argentina, we are seeing a continued recovery since the major restrictions that Argentina had for such a long time. So far in international traffic, we are close to 50% of pre-pandemic levels and in domestic going closer to 80% of pre-pandemic levels. We see those trends continue in 2022 and hopefully 2023 to go back to pre-pandemic level. How fast are we going to get there will depend on a lot of things, on a lot of decisions by different airlines regarding the connectivity question that you ask.
We see a sustained interest and sustained announcements by airlines that are discussing with us slots and airport availability to come back and restore service to Argentina. Yes, we see a sustained recovery to go back to pre-pandemic levels. That would be the answer. Of course, there are always challenges to the airline environment, but so far we see a continuous recovery. Regarding cash flows, maybe Jorge can jump in there.
With the recent restructuring or exchange of the bonds that we had in Argentina and the new issues that we made, the company is ready to face all of its obligations in terms of CapEx, preferred share redemptions and debt obligations as well. We are very happy about the work that the company and the financial team has done to strengthen the company's cash flow and cash.
Now, we're fairly confident that we can say that we can face all of the challenges ahead of us and continue with the CapEx program and the preferred shares redemption, which, according to our contract, the preferred share redemption counts as a CapEx obligation. Because the money that we will pay for the redemption of the shares will go to trust funds that will then be used to do CapEx in the airport. All of that goes into the completion of our obligation in the concession agreement.
Okay.
Thank you, Martín. As a follow-up, I think we have completed our financial plan, which was designed roughly a year ago. Take into consideration that last year, late last year, in the fourth quarter, we have completed an exchange offer, extending the maturity of the then existing bonds, and we have borrowed additional $126 million as part of the overall transactions we have done in the fourth quarter. In addition, in the first quarter, you know, a couple of weeks ago, we have completed the new borrowings of $175 million, approximately in two notes, dollar-linked, placed in the local market. They were public offerings, so you may have seen that.
138 million Class C notes, 7.5% interest rate, 10-year tenor, fully amortizing, five-year grace, with 24 for the amortizations and $36 million Class C notes, 2% interest rate, and three-year bullet maturity. We ended the year AA2000 end of the year with roughly $180 million. There is this additional funding plus cash flow plus some bits and pieces that we have raised or anticipated in terms of revenues. We are pretty much fully funded for the CapEx obligation of $406 million. Your question regarding the preferred shares, yeah, we will be very soon redeeming $100 million preferred shares.
This amount, as it was presented during our script, is gonna count towards the $406 million CapEx program. It will be used in CapEx, but through the trust mechanism. If there's any pending question or doubt, please let me know.
Okay. That's great. As a kinda quick follow-up, kind of actually two follow-up. The first one is: How are your discussions with regulator after this regarding the rebalancing of the contract? Because obviously your passenger flow has been a bit weaker. Now we are kind of, you know, into this flexibility on the CapEx with the preferred shares. So maybe you can give us some insight on that. Then second part, kind of added to that: How is the situation regarding the payments from Aerolíneas Argentinas into AA 2000, please?
Well, the discussions with the regulator are long and complex. We are coming out of a crisis. We have to wait and see the next revisions of the regulatory accounts to understand how that will evolve and how we are going to set up the discussions with the regulators. Regarding the Aerolíneas Argentinas situation, so far we are in good standing in terms of collection with them, although we are always very aware of their financial situation and trying to understand their financial health and their ability to pay their accounts.
Okay. Thank you very much.
Thank you. As a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad. The next question today comes from Bruno Amorim from Goldman Sachs. Bruno, please go ahead. Your line is now open.
Hi. Good morning, everybody. Thank you for taking my question. I have a couple of questions here which are related to each other. The first one is: Do you think it's reasonable to assume that, you know, to the extent that traffic continues to recover at this, the current pace, next year in 2023, EBITDA should be able to cover CapEx financial expenses, and there could be even some, you know, slightly positive free cash flow generation? And if that's the case, you know, what should we expect from next year onwards? You know, does the company intend to start paying dividends once that happens, or do you have any expected estimation for the positive free cash flow?
You know, regardless if it's happening from next year or 2024 onwards, do you intend to, you know, to pay dividends or would you be looking for new investment opportunities? Also related to that, you know, what are the most likely opportunities would you be looking for? Would those be airports globally? Any specific assets you would be considering? Thank you very much.
Okay. Bruno, thank you very much. Yeah, I think we are on a consolidated basis we expect to be cash flow positive. In terms of the free cash flow into the holding company, I think for the next couple of years, we will preserve the liquidity within the company and start looking more aggressively into new acquisitions. In terms of geographies, we don't have any preference. The trend is to look at Latin America, and by Latin America, it includes the Caribbean, given our presence, and Italy and Eastern Europe in general. We are looking at Africa as well.
We have to be careful on the regulatory environment, generally speaking, but Africa is a huge continent, and you know, there are good countries and bad countries. Yeah. The answer to your question is that we will start primarily with the free cash flow into CapEx, primarily looking more aggressive into acquisitions.
Thank you very much.
Thank you. As a reminder, if you would like to ask a question, please press star followed by one on your telephone keypad. There are no additional questions waiting at this time, so I'd like to pass the call over to Martín Eurnekian for closing remarks. Please go ahead.
I would like to thank everybody for joining us today. Thank you for your interest in the company, and all the team remains at your disposal to answer any questions you might have. I hope to see you on our next earnings call. Thank you very much.
That concludes today's conference call. Thank you very much for your participation. You may now disconnect your lines.