Good morning, and welcome to Corporación América Airports' third quarter 2020 earnings conference call. A slide presentation accompanies today's webcast and is available at the investor section of Corporación América Airports' investor relations website at http://investors.corporacionamericaairports.com. As a reminder, all participants will be in listen-only mode. There'll 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 Albanesi of Investor Relations. 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. Also with us today are Raúl Francos, our Chief Financial Officer, and Jorge Arruda, Head of Finance and M&A. All will be available for the Q&A session. 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 Rule IAS 29 can be found in our earnings report. Let me turn the call over to our CEO, Martín Eurnekian.
Thank you, Gimena. Hello, everyone, and welcome to today's call. Results this quarter remain impacted by the ongoing effects of the global COVID-19 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 relaxed some restrictions as the summer season approached. I will expand on these trends in more detail shortly. Over the past six 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 second and third quarter 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 refinanced 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 third quarter 2020 results. Passenger traffic in the quarter was down nearly 89% year-on-year impacted by the pandemic. Was up five times from the second quarter 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 second quarter of this year. Despite exceeding our cost reduction targets, adjusted EBITDA, excluding a non-cash impairment, was a loss of $19 million. This was a sequential improvement from a loss of $33 million in the prior quarter.
Nonetheless, significantly below the $125 million adjusted EBITDA reported in the same quarter last year, excluding a bad debt charge of $23 million. Total liquidity at the quarter end increased to $253 million from $230 million in the second 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 million, with T-bills and time deposits of $73 million. I will discuss our balance sheet position in more detail shortly. More details on our third quarter 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 four, 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 first 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 bans to contain the virus.
While Uruguay restarted air travel the first week of July, borders remain closed 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 second largest domestic hub in the country, up from holding the third position historically. In Armenia, restrictions on the entry of foreigners were lifted in mid-September, although meeting some requirements upon entry. Finally, commercial operations in Ecuador restarted at the beginning of June, although certain requirements apply. Overall, the situation remains quite volatile as governments worldwide adjust travel bans based on the evolution of the sanitary situation, and travel remains quite weak. On page five, 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, which restarted commercial operations early June, by Brazil, where we have been seeing sequential improvements since May. While commercial operations have also reopened in Uruguay, Ecuador, and Armenia, passenger demand remains low. In terms of cargo trends, we continue to see slight improvements since June, with October posting a 40% year-on-year drop in cargo compared to the 56% drop experienced in April. Despite this positive trend, we maintain a conservative outlook given the sustained uncertainty. Please turn to page six. Since the start of COVID-19, we have taken decisive actions executing on the strategic initiatives established at the beginning of the crisis. Starting with expenses.
The success in cutting costs across the organization allowed us to achieve a leaner structure despite our largely fixed cost base and reduce cash operating costs by 48%, above our 43% year-on-year reduction target. This follows a 51% reduction obtained in the second quarter. 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 this unprecedented crisis.
In Argentina, the government extended its assistance to cover a portion of August, September, and 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 of 50% of the annual concession fee payment due this December. Remember that last quarter we obtained a EUR 20 million government grant in Italy to be spread over a two-year period. Conversations with the regulators in Uruguay and Ecuador to renegotiate concession fee payments remain ongoing. In terms of the longer-term review of the concession agreement in Brazil and Ecuador, which contemplate force majeure clauses, we are in advanced stage to obtain economic compensation for the impact of COVID-19 in 2020 on our Brasilia and Natal airports, and are in the early stages of this process for 2021.
We are advancing in the process of obtaining economic reequilibrium of the Guayaquil Airport concession. In Italy, in August, the regulator granted a two-year extension to all airport concessions in the country, while in Argentina and Uruguay, we continue in conversations to review the concession contracts to compensate for the significant impact of this pandemic. Moving on to our balance sheet and liquidity on slide seven. We closed the quarter with $180 million in cash and equivalents and $73 million in treasury bills and time deposits. Total liquidity increased to $253 million at the end of September, compared to $230 million 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 financing, last August, we successfully closed a $40 million linked local bond at a 0% interest rate with a two-year maturity in Argentina. In addition, early November, we obtained an EUR 85 million loan from a pool of financial institutions with a six-year term and a two-year grace period. The loan is guaranteed by the Italian Public Export Trade Insurance Agency. In Brazil, we obtained an additional six-month deferral on principal and interest payments for the debt at Brasilia and Natal airports. As a result of the new financings obtained in the quarter, total debt increased by 5% sequentially or $56 million to $1.2 billion, but was down $11 million 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-19 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 second quarter and 2.9 times in the first quarter. A reminder, we are not subject to debt covenants at the consolidated level. Earlier in the year, we renegotiated the debt maintenance covenant 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 EUR 60 million notes due 2024 for the periods ending June and December 2020.
I am 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 eight. As I mentioned in our last call, we have adapted 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 that have obtained ACI's recently launched Airport Health Accreditation, elevating health standards in face of COVID-19. We are also working towards completing ACI's certification for Montevideo Airport in Uruguay. In addition, our airports in Pisa 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 these 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 nine. With 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 and continue on the path of achieving the goals we established in the first quarter 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. A sustained recovery is subject to consumers gaining confidence on the health protocols that 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.
We will now begin the question-and-answer session. If you would like to ask a question, please press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing a key. To withdraw your question, press star then two. We ask that you limit yourself to one question and one follow-up. You may reenter the queue for additional questions. At this time, we will pause momentarily to assemble our roster. Our first question is from Roberta Versiani 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 expansion, and how is the timeframe for the force majeure discussions in other concessions such as Brazil? 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, et cetera. Thank you.
Hello, Roberta. This is Martín. 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 review of the concession to find ideas and ways to compensate for this crisis. Once we have clear information or an event, we will keep the market informed as soon as that happens, but so far, we are continuing with the discussion. 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. 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. 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? 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.
Osmar, thank you for your questions. 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. At this time, I think, depending on the different structures and frameworks of the concessions we own, all of them are into the discussions. As I said before, they are still discussions. Once we have a concrete agreement, we will go back and inform the market and 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.
As you saw in August, we were able to access the market with a $40 million note that was for 0% interest. 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 Bowley from Bank of America. Go ahead.
Good morning, Martín, Raúl, Jorge. Thank you for your time and taking my questions. I have two focused on Argentina. Given the significant progress on cost rationalization, can you share any color on how much you expect these cost cuts to persist as volume ramps up in 2021? 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 costs, we think that it's going to last going out of the pandemic. 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. Personally, I can tell you that the way that this pandemic hit us and the fact that we had to stop operations gave us time that we usually did not have to go very, very deep into the analysis of our costs and the renegotiation with many suppliers.
Also we were able to adopt very interesting methodologies to go into this analysis and cost cuts. Personally, I expect a leaner company going out of the pandemic. How much compared to pre-pandemic levels, it's very difficult to say right now. 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 surely. 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 Arruda to answer your second question regarding the syndicate loans in Argentina.
Thank you, Martín. Hi, this is Jorge. In connection with your second question regarding the new rule issued by the Central Bank of Argentina last September. Well, let me start with the bond. In connection with the bond, on November 1st, 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. The way our debt service works in the bond didn't fit exactly the new rules. We obtained an authorization from the Central Bank to make that payment. We are working with the Central Bank in connection with the February payment for the syndicated loan. We do not see an issue.
There's only one portion 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. Currently, we expect that these restrictions would not be extended beyond the period that they have determined in the rule that was issued in September. In summary, it's under control for us.
Thank you very much.
Again, if you have a question, please press star then one. At this time, we have no questions. We'll conclude our question-and-answer session. I would like to turn the conference back over to Martín Eurnekian 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.