Morning, and welcome to Corporacion America Airport's Third Quarter 2020 Earnings Conference Call. A slide presentation accompanies today's webcast and is available at the Investors section of Corporacion America Airport's Investor Relations website at http:investors.corporacionamericaairports.com. As a reminder, all participants will be in listen only mode. There will be an opportunity to ask questions at the end of the presentation. As a reminder, this call is being recorded.
At this time, I would like to turn the call over to Gimena Albanese of Investor Relations. Go ahead.
Thank you. Good morning, everyone, and thank you for joining us today. Speaking during today's call will be Martin O'Requan, our Chief Executive Officer. Also with us today are Ron Francos, our Chief Financial Officer and Jorge Herruda, Head of Finance and M and A. All will be available for the Q and A session.
Before we proceed, I would like to make the following Safe Harbor statement. Today's call will contain forward looking statements and are referred 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 rule IAS 29 can be found in our earnings report.
Now, let me turn the call over to our CEO, Martin Eunachian.
Thank you, Gimena. Hello, everyone, and welcome to today's call. Results this quarter remain impacted by the ongoing effects of the global COVID-nineteen pandemic, which resulted in travel restrictions and lower passenger demand. However, we experienced a sequential improvement in overall performance mainly driven by improved traffic trends in our key markets Italy and Brazil. By contrast, in Argentina, travel bans to foreigners and lower local demand in international traffic, along with strict restrictions to domestic travel throughout the quarter resulted in limited traffic.
More recently, the government delacked some restrictions as the summer season approached. I will expand on these trends in more detail shortly. Over the past 6 months, we have made significant strides working simultaneously on several fronts to mitigate the severe impact of this health crisis. To begin with, I am very proud of how our teams have reacted rapidly to these unprecedented challenges to ensure the health and safety of employees and passengers across our operations. Upholding high safety standards is of paramount importance for us with several of our main airports already receiving independent health certifications.
We exceeded the cost reduction goals that we established for the 2nd Q3 of this year. This allowed us to lower our cash operating costs, excluding concession fees by 48% compared to the same period last year. Importantly, our operations in Argentina, Uruguay, Ecuador and Armenia achieved operating cash breakeven levels in the quarter. On the debt front, we refinance an important portion of our principal and interest payments and remain focused on strengthening our financial position. We have also been working with regulatory bodies and governments across our concessions to obtain compensation for the impact of this crisis and I will discuss updates for the quarter shortly.
Now a quick overview of our Q3 2020 results. Passenger traffic in the quarter was down nearly 89% year on year impacted by the pandemic. That was up 5 times from the Q2 2020 levels. This was further supported by better performance in commercial revenues along with sustained recovery in cargo activity. Revenues ex IFRIC 12 were down 76% year on year, but improved 45% when compared to the Q2 this year.
Despite exceeding our cost reduction targets, adjusted EBITDA excluding a non cash impairment was a loss of $19,000,000 This was a sequential improvement from a loss of $33,000,000 in the prior quarter. Nonetheless, significantly below the $125,000,000 adjusted EBITDA dollars to $253,000,000 from $230,000,000 in the 2nd quarter underpinned by additional financing obtained in the quarter and our strong focus on costs. Cash and cash equivalents at September 30 stood at $180,000,000 with T bills and term deposits of $73,000,000 I will discuss our balance sheet position in more detail shortly. More details on our Q3 2020 results can be found in our earnings report filed yesterday and in the exhibits of this presentation, both of which are available on our website. On Slide 4, we provide an update on travel restrictions imposed by the different governments across our countries of operations to contain the spread of the virus.
By country, Argentina was the most negatively impacted reflecting strict travel bans. Domestic commercial operations restarted last month, restricted to essential workers or for specific work or health related reasons. International flights are still operated under the special regime. Starting November, borders reopened to citizens from neighboring countries and entering with certain requirements. In Italy, commercial operations restarted the 1st week of June with restrictions for travelers coming from certain countries.
Traffic trends improved during the summer season, although with COVID cases recently picking up, countries across Europe are now establishing new lockdowns and travel events to contain the virus. While Uruguay resulted air travel in the 1st week of July, borders remain close to non resident foreigners and will remain closed during the summer season with certain exemptions and requirements upon entry. In Brazil, passenger traffic has been improving constantly since June, and we expect to see continued recovery. Brasilia Airport has become the 2nd largest domestic hub in the country, up from holding the 3rd position authorities. In Armenia, restrictions on the entity of foreigners were lifted in mid September, although meeting some requirements upon end.
Finally, commercial operations in Ecuador restarted at the beginning of June, although certain requirements apply. Overall, the situation remains quite volatile as co owners worldwide adjust travel bans based on the evolution of the sanitary situation and travel remains quite weak. On Page 5, we show preliminary monthly passenger traffic and cargo trends since April. After hitting a low in April, traffic has shown a gradual monthly recovery trend that started last June with traffic in October down nearly 81% from the 98% drop in April. This slight improvement was driven mainly by Italy with restarted commercial operations early June and by Brazil where we have been seeing sequential improvements since May.
And while commercial operations have also reopened in Uruguay, Ecuador and EMEA, passenger remains low. In terms of cargo trends, we continue to see slight improvements in June with October posting a 40% year on year drop in cargo compared to the 56% drop experienced in April. Despite these positive trends, we maintain a conservative outlook given the sustained uncertainty. Please turn to Page 6. Since the start of COVID-nineteen, we have taken decisive actions executing on the strategic initiatives established as the beginning of the crisis.
Starting with expenses, the success in cutting costs across the organization allowed us to achieve a linear structure despite our largely fixed cost base and reduced cash operating costs by 48%, above our 43 year on year reduction target. This follows a 51% reduction obtained in the Q2. These figures exclude concession fees and construction costs. Costs also benefited from the currency depreciation against the U. S.
Dollar in our main countries of operations, which more than offset higher costs in certain areas, such as maintenance and payroll as we restarted operations in some markets. While we expect to continue benefiting from a streamlined cost structure in the coming quarters, we also expect to see some increases in those operating cost lines as traffic continues to recover and government assistance programs are gradually reduced or discontinued. Next, moving on to near term negotiations with regulators and government support given these unprecedented crisis. In Argentina, the government extended its assistance to cover a portion of August, September October salaries, which accounted for a monthly relief of approximately $900,000 This assistance could be further extended for the remainder of 2020. At the same time, in Brazil, we applied for the refinancing 50% of the annual concession fee payment due this December.
Also remember that last quarter we obtained the €20,000,000 government grant in Italy to be spread over a 2 year period. Conversations with the regulators in Uruguay and Ecuador to renegotiate concession fee payments remain ongoing. Finally, in terms of the longer term review of the concession agreements in Brazil and Ecuador, which contemplate force majeure clauses. We are in advanced stage to obtain economic compensation for the impact of COVID-nineteen in 2020 on our Brasilia and Natalia Air Force and are in the early stages of this process for 2021. In addition, we are advancing in the process of obtaining economic re equilibrium of the Guayaquil Airport Concession.
While in Argentina and Uruguay, we continue in conversations to review the concession contracts to compensate for the significant impact of this pandemic. Next, moving on to our balance sheet and liquidity on Slide 7. We closed the quarter with $180,000,000 in cash and equivalents and $73,000,000 in treasury bills and time deposits. Total liquidity increased to $253,000,000 at the end of September compared to $230,000,000 as of the end of last June, benefiting from additional financing obtained in the quarter and our strong focus on cost reductions. Along these lines, our efforts to reduce cash burn allowed us to reach operating cash flow, breakeven levels in our largest market, Argentina, as well as in Uruguay, Ecuador and Armenia.
In terms of financings, last August, we successfully closed a $40,000,000 linked local bond at the 0% interest rate with a 2 year maturity in Argentina. In addition, early November, we obtained an €85,000,000 loan from a pool of financial institutions with a 6 year term and a 2 year grace period. The loan is guaranteed by the Italian Public Export Trade Insurance Agency. In Brazil, we obtained an additional 6 month deferral on principal interest payments for the debt at Brasilia and Natal Air Force. As a result of the new financings obtained in the quarter, total debt increased by 5% sequentially or $56,000,000 to $1,200,000,000 but was down $11,000,000 from the year end 2019 levels.
Note, all of our debt is held at the subsidiary level. So while net debt levels increased slightly sequentially, lower profitability since the start of COVID-nineteen significantly impacted our net debt to last 12 months adjusted EBITDA ratio. As a result, the ratio which excludes the impact of non cash impairments increased to 7.4 times from 5.3 times in the Q2 and 2.9 times in the Q1. The remainder, we are not subject to debt covenants at the consolidated level. Earlier in the year, we renegotiated the debt maintenance covenants for debt held in our subsidiaries in Argentina and Uruguay until November 2021.
Finally, subsequent to quarter end in Italy, we have obtained a waiver for the debt leverage ratio covenant in connection with the €60,000,000 notes due 2024 for the periods ending June December 2020. I'm very proud of the significant achievements we have made to protect our financial position in a very short period of time. We continue to work closely with the financial community across our operations to manage our debt maturities in the challenging year ahead. Turning to Slide 8. As I mentioned in our last call, we have adopted our airport network to meet the new health and safety requirements to limit the risk of infection.
Moreover, Ezeiza Airport in Argentina along with our airports in Brasilia, Guayaquil and Galapagos are already among the 100 airports worldwide and have obtained ACI's recently launched airport health accreditation, elevating health standards in phase of COVID-nineteen. We are also working towards completing ACX certification for Montevideo Airport in Uruguay. In addition, our airports in Greece and Florence were the first in Italy to receive independent certification of health protocols. All our airports have been operating under these same strict health protocols that were developed in conjunction with the aviation industry, regulators and infectious disease experts to ensure the maximum health standards across our airport network. Upholding the strict safety standards is crucial in regaining customer confidence to travel by air and support the continuity of operations.
Now to wrap up, turn to Slide 9. Since the initial signs of the crisis begun, we immediately put an action plan in place and have been executing against it, while continuing to monitor the evolving situation in all of the markets we serve. Our teams are working tirelessly, and I want to thank all of my colleagues for the continued efforts as we navigate this challenging environment continue on the path of achieving the goals we established in the Q1 of this year. While traffic remains heavily impacted by the pandemic, we have seen sequential improvements since May, mainly led by Brazil that continues to recover and supported by higher activity in Italy during the summer. We maintain a cautious outlook for the near term as we monitor the new outbreaks in Europe, while we expect to see improved performance in Latin America over the summer holidays.
Longer term, our visibility remains low. Sustained recovery is subject to consumers gaining confidence on the health protocols have been established by the air travel industry worldwide, progressively lifting of government restrictions, the widespread availability of vaccines and overall improved economic conditions. We are now ready to take questions. Operator, please open the line for questions.
Our first question is from Roberta Marciani from Citibank. Go ahead.
Hi, good morning. I'm sorry if you already talked about that. I had some connectivity issues here. But I'd like to know what are your expectations for the Argentina airport And how is the time frame of the 4th major discussions in other concessions such as Brazil? And also, if I may ask another one, I'd like to know if you anticipate further cost reductions such as maybe adjustments in your workforce and etcetera?
Thank you.
Hello, Roberto. This is Martin. Thank you for your question and your interest. Regarding the discussions with the different governments and the Argentina one, as we said earlier, we continue having and engaging the regulator regarding the pandemic and the for this crisis. Once we have a clear information or an event, we will keep the market informed as soon as that happens.
But so far, we are continuing with The same thing happens in the rest of the countries where we're having very similar discussions regarding each of the concession frameworks that we have. And regarding your second question on cost reductions, they were basically all over our cost structure. We have some restrictions in different countries regarding how we can handle employees. But in places where there are no such restrictions, we have made adjustments to our payroll size and headcount. And in others, we have taken different measures across our cost of the company in terms of OpEx contracts and everything you can think of.
We are using different methodologies in different countries to come up with the most aggressive cost reductions possible. Thank you very much.
Okay. Thank you.
Our next question is from Osmar Camilo from Goldman Sachs. Go ahead.
Hi, good morning. Thank you for taking my question. Very quickly on your negotiations with regulators across the board, What are your expectations regarding CapEx and tariffs, especially in Argentina? And my second question would be, how are you seeing local capital markets liquidity in Argentina? If you need to access local markets, how easy do you think you could raise cash there?
Thank you.
Smar, thank you for your questions. First of all, the discussions with the regulators, most of our concessions have the usual parameters we can use to compensate or create or recover economic equilibrium, be them CapEx adjustments, tariffs, length of the concession and concession fee. Those are the main levers we can pull to create or to regain economic equilibrium. And at this time, I think depending on the different structures and frameworks of the concessions we own, all of them are into discussions. But as I said before, there are still discussions.
Once we have a concrete agreement, we will go back and inform the marketing investors as soon as we can. In terms of local market liquidity in Argentina, as you can imagine, it's fairly volatile given the macro conditions and the pandemic situation in Argentina. But as you saw in August, we were able to access the market with $40,000,000 note that was for 0% interest. So again, the conditions of the market are fairly volatile, but so far we've been able to access it and we keep monitoring it very closely to understand what opportunities do we have in terms of access to liquidity there. Thank you very much.
Thank you.
Our next question is from Peter Boley from Bank of America. Go ahead.
Good morning, Martin and Raul, Jorge. Thank you for your time and taking I have 2 focused on Argentina. Given the significant progress on cost rationalization, can you share any color on how much you expect these costs to persist or these cost cuts to persist as volume ramps up in 2021? And my second question is if you could share any update on the negotiation of the syndicated bank loans given the Central Bank's new foreign exchange restrictions? Thank you.
Hello, Peter. Thank you for your question again. As I mentioned before, the opportunity brought by the pandemic into going very, very deep into our cost structure to gain efficiencies and cost. We think that is going to last going out of the pandemic. In what size or how much of it will last is difficult to say now as we are adjusting very fast to the opening of the new traffic and we understand what is required operationally in terms of the new health measures and so on.
But personally, I can tell you that the way that this pandemic hit us and the fact that we had to stop operations gave us the time that we usually did not have to go very, very deep into the analysis of our costs and the renegotiation with many suppliers. And also we were able to adopt very interesting methodologies to go into this analysis and cost cuts. So, personally, I expect a linear company going out of the pandemic. How much compared to pre pandemic levels? It's very difficult to say right now.
But I'm sure that the teams have used this time as much as they could and that we will see the profits from that in the future very shortly. But it's very difficult to put a number on it as of today with the amount of uncertainty that we have going into the future. I will pass on to Jorge Aruda to answer your second question regarding the syndicate loans in Argentina.
Thank you, Martin. Hi, this is George. In connection with your second question, regarding the new rule issued by the Central Bank of Argentina last September, In connection with the syndicated well, let me start with the bond. In connection with the bond on November 1, we were able to pay the interest due and payable or the debt service due and payable under the portion of the bonds that have not participated in the exchange. We were not the way our debt service works in the bond didn't fit exactly the new rules.
However, we obtain an authorization from the Central Bank to make that payment. And we are working with the Central Bank in connection with the February payment for the syndicated loan. So we do not see an issue. There's only one portion that of the syndicated loan that would have to be paid outside Argentina, because part of it is payable locally, although denominated in U. S.
Dollars. And currently, we expect that these restrictions would not be extended beyond the period that they have determined in the first in the rule that they were issued in September. So in summary, it's under control for us.
Thank you very much.
At this time, we have no questions. So we'll conclude our question and answer session. I would like to turn the conference back over to Martin Eulnikian for closing remarks. Go ahead.
I'd like to thank everybody for joining us today. We really appreciate your interest in our company and we look forward to providing updates on our business initiatives as they become available. In the meantime, the team remains available to answer any questions that you may have. Thanks everybody. Bye bye.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.