Aeroports de Paris SA (ADP) Earnings Call Transcript & Summary

Good morning. Welcome to the half yearly results of ADP for the first half of 2020. This meeting is recorded. We will give the floor to Mr. Augustin de Romanet. You have the floor, sir.

[Interpreted] Thank you. Good morning, ladies and gentlemen. Good morning, dear friends. Along with Philippe Pascal, who is the CFO of the company, we will share with you the presentation of our half yearly results for the first half of 2020 in the ADP Group. So in the first half, we had, as everybody knows, this impact, this huge impact of the lockdown that impacted heavily air traffic in April and May. We had between 2% and 3% of airplanes flying. In other words, an almost total shutdown of airports. Now overall, for the half year, traffic of the ADP Group went down by 57.5%, that is, on average, a little bit less than Paris Aéroport of 62.5% there. Given that impact, the group reacted in 2 ways. Firstly, health-wise, we had to protect our passengers and our employees. So we very quickly set up protocols for the cleaning, disinfection of the airport. We handed out hand sanitizers, masks and so on, and we can go into the details of that, if you like, so as to make sure that air transportation could take place smoothly and healthfully. Second reaction was an immediate reaction in terms of preserving our costs, containing our costs. So we instituted a savings plan to save EUR 385 million in the first half of this year. And as Pascal will tell you in a short while -- Philippe Pascal will tell you, we ended up the half year with a slightly positive EBITDA, thanks to the responsiveness of our teams, whom I would salute. We, as of mid-March, took a decision to close down Orly. The last flight was on the 30th of March there and it reopened on the 26th of June. And therefore, we used the possibility of furloughing short-time working, so as to preserve the financial status of the group. We also secured our cash situation by taking out borrowings of EUR 4 billion. Now in the first half of the year, we also had the possibility of convincing the French government that our ERA commitments would not be demurrable with respect to us. So we decided to terminate that contract, the ERA. In this state, decided to consider it was indeed terminated. And also, we asserted that the ERA #4, which we had filed for in April 2019 was no longer topical. So for the coming 2 years, the tariff setting will be done year-in, year-out in conjunction with the ART, our governing authority. And then another highlight, the last highlight I'd like to flag off for the first half is the completion of 2 acquisition transactions that were already initiated before the COVID impact, the purchase of the freehold of Almaty Airport in Kazakhstan by our Turkish subsidiary, TAV Airports, on the one hand; and secondly, the closing of the transaction with GMR airports. We've we purchased 49% of GMR Airports, and we finalized the second phase with a price reduction that we'll talk about in detail in a short while. So the metrics, facts and figures, you see here. The revenues, 1 -- more than EUR 1 billion, and -- more than EUR 2 billion in halves in the first half of this year compared to the first half of last year. And you see the EBITDA, which we managed to preserve in a certain way, thanks to the savings made now. The EUR 543 million net income attributable to the group is negative. That's because of current operating expenses and also impairments that were done that, in particular, had to do with Chile and Jordan, mainly Jordan and to a lesser extent Chile, that is. Now the impact of the crisis on the traffic you see on the graph in front of you now, the bar chart with the blue, which is international -- the group as a whole, in fact, actually, that's the blue. And then the other color is just Paris Aéroport. Now you see the decline in Paris Aéroport is quite a bit -- at least a little bit, let's say, greater than the full group picture. Now if you look at the first half of 2020 here, in total, will have had a huge drop in traffic compared to the first half of 2019. This is a major impact that we've never seen in the last 50 years. So in the second quarter of 2020, Groupe ADP was handed around only 5% of the 2019 traffic over the same period. So it might take us up to 2027 to get back to the level we had in 2019. The Schengen countries by 2023, perhaps. But internationally speaking, we have more uncertainties. So that's why the bracket is pretty large, in fact. It will be sometime between 2024 and 2027. So in order to stabilize the group's financial situation, as you know, we've shut down infrastructures in Charles de Gaulle. Out of 11 terminals, there are only 3 operating currently, 2AC on a residual basis, let's say, and 2 other ones. So we closed down T1; T3; 2E, door M (sic) [ gate M ] and door L (sic) [ gate L ]; 2BD; and terminal 2E -- 2C. In Orly, we reopened only Orly 3 on the 26th of June, Orly 4 on the 13th of July, and we think we'll operate with just those 2 terminals for most of 2020, even maybe into the start of 2021. So regarding our operating expenses, we would like to congratulate our teams for keeping a tight rein on the current operating expenses. The objective for the year is to prune down these expenses by EUR 550 million. So we have short-time working with the closure of a lot of tertiary activities. We closed down the head office, for example, people working on short-time in the main, and otherwise, people working from home. That's the situation. We have co-working spaces that have been set up in Orly and in Charles de Gaulle. And also in Paris, we have a small surface area available where the headquarters people can meet on an as-needed basis. Now we also stabilized financial situation of the group. Therefore, we were not indifferent to the fate of our different clients. We granted reductions in parking fees for the airplanes grounded. And we also exempted them from -- exempted many of our retail outlets from the first half of the year rents. And also the next part of the cost-cutting measures, we stopped using equipment that was not absolutely strictly necessary. The main and investments that we preserved as well, the major work that was 80% completed. However, if we try to suspend the works, it would have cost us more. There would have been penalties to be paid and so on. So the major piece of investment that were ongoing, we continued with the connection of the T1 satellites, also modernization going on in Orly 4 and so on. Those work sites will indeed continue and be completed at the end of this year or next year. But the investment spending for 2020 has nonetheless been pruned down by EUR 400 million worth. In these times of crisis, the ADP Group also was totally supportive of the public hospitals in Paris. We seconded staff members. There was the [ COVID ] program, which was tracing -- tracking and tracing contact cases, we made people available to help to do that job. We also made available tablets to patients who were isolated during the period. We took part in the EVASAN, evacuation -- medical evacuation process instituted by the Paris hospitals, bringing patients to the hospitals in the provinces. Also, we cooperated very closely with the regional health authorities in order to help to abate the problems. Now as of early April, our prime concern was indeed people's safety in airports. So we set up a common core of health-related measures for all of the ADP platforms, the cleaning and disinfection of our installations, hand sanitizers at all stages of the passenger journey, social distancing, physical distancing. Also, all of our employees were given massive and individual protection equipment. And we were among precursors in this kind of measure. And the European Aeronautical Safety Agency, the EASA, issued a charter for the health and safety of air passengers in Europe, which, of course, we're totally in compliance with. Now we decided to complete development operations initiated before the crisis, as I said. Firstly, Kazakhstan, we were involved in talks for the last several months regarding the freehold transaction for this airport. This is a larger -- of course, 6.4 million passengers transiting through it in 2019. It's very strategic in terms of connections because it's like Istanbul, via this hub, you can access 40% of planet Earth. And Kazakhstan is a driver of economic growth in the region, it stands for 60% of Central Asia's GDP. Also the GMR Airports transaction. 3 main airports, Delhi, Hyderabad in India and Cebu in the Philippines; with 3 airports also being developed at the moment, Heraklion, Goa and Bhogapuram in India. Now this is a partner group that provides us with 248 routes, enriching the routes we already have in the ADP Group, bringing us definitively into the first ranking airport groups in the world. So this possibility was obtained without sacrificing the financial interest of the ADP Group because we managed to negotiate for the second phase of the GMR transaction closed after the start of the COVID crisis. There would be a price reduction of EUR 126 million, which will be paid to the seller, only subject to certain performance conditions concerning the EBITDA in 3 phases: 2022, 2023 and 2024, so that our yield taking account -- will take account of the traffic reduction after the COVID crisis. So this is creating a sound partnership for us with TAV with 105 million passengers a year. We will here have a robust partner, ADP and GMR, together will be very strong, along with TAV, of course. You see the figures here on the screen. So we will, therefore, have a platform that will enable us to entertain high hopes for the coming years. I'll give the floor now to Philippe Pascal.

[Interpreted] Hello, everyone. From a financial point of view, this first half year was marked by 3 factors: the first of which is obviously a brutal reduction in our sales, then there is a massive savings -- cost savings plans, EUR 385 million gained. And the third, sort of various depreciations, which led us to depreciate a certain number of our positions and international concessions, first -- in the first rank, we have Jordan and Chile. If we move on to the main drivers in the group model, which is traffic. You see on Slide 12 that all of the platforms in the group were impacted by the COVID-19 crisis was the group traffic, which was -- stood at 42.8 million passengers in the first half year 2020, down 57.5% compared to 2019. Now there are 2 families of platforms. There are platforms that have, on an average, for the major capitals were down by roughly 55% to 65%. And the second family was a platform which is highly impacted by the tourist activity was down on the order of 75% to 85%. You can cite in that second family, Antalya, Bodrum, Gazipasa and Tunisia, obviously. If we focus in on Slide 13 on Paris Airport traffic, you can see the traffic was down 62.2%, quite homogeneous between CDG and Orly despite the closing of Orly. Though, the decrease in traffic is in the same order as the 3 main airports in Europe, London, minus 60.2%; Amsterdam, minus 63.5%; and Frankfurt, minus 63.8%. About main indicators in destinations, this is much more significant and too specific is North America, down 65%; and Asia Pacific, down 66.3%. If we look at all of the financial indicators of the group, starting with the sales on Slide 14, we can see a decrease -- general decrease proportionate to the weight of -- in sales and the group accounts in ADP with a massive decrease in the main assets, which are the Parisian ones, a decrease in sales of 662 -- EUR 678 million. Half of that is due to decrease in turnover from aeronautical activities and 1/4 of that is due to the sales of retail activities. And proportionately, we have this in other platforms in the group, in AIG and TAV Airports. TAV, there is something specific because it was a decrease in sales, it was quite significant in affiliates and group services, TAV OS, BTA and Havas. And EBITDA, this is down on the order of 94.8%. It is positive EUR 39 million, thanks notably to our cost-cutting program, EUR 385 million that I will get back to. These savings and this plan are applicable to all of the activities in the group, including DA (sic) [ SDA ]; Relay, including Jordan and TAV, which had recourse -- a massive recourse to massive cost-cutting efforts. When we focus in on these savings on Slide 15, we can see that savings in the Paris platform represented some -- significant decrease compared to 2019, down 23% in those expenditures; TAV, down 35%; AIG, down 49.5%. And this last percentage includes the decrease in the fees -- in concession fees that we do -- that are due to the Jordan platform, that would normally be paid to the concession holder, which is the Jordanian government. These changes in the cost structure can be explained by closing certain infrastructures, recall these outside services for some EUR 96 million, also a decrease in consumables for EUR 72 million and lastly, a reduction in staff expenses, which were mainly in Paris by setting up a partial activity and also in other platforms via measures adapted to the regulations in force in various countries. And some were -- had leave without pay. On Slide 16, we see the current operating results and net results attributable to the group. Now let's focus in here on the main shocks, which are depreciation in terms of the operating -- current operating income. There are 2 major effects: one was on Relay with a significant depreciation, which covers the amortization of the takeover for some EUR 50 million; and the depreciation of ADP International with a decrease of results from the company's consolidated under the equity method and depreciation of intangible assets and the Jordan concession for a very significant amount in the net results group share. You have other factors of negative nature and one positive factor. Now the negative factors were the new depreciation of goodwill for a certain number of -- for one concession. And the second negative factor was the depreciation of a -- as a shareholder position in Chile for EUR 79 million. In terms of the second effect, which is a positive effect, we took into account from an accounting point of view, a tax offset for EUR 66 million in Paris and a certain number of tax credits for AIG, but also for SDA, which -- all in all, this amounted to having a net result of minus EUR 543 million with the net result attributable to group, which is down by almost EUR 800 million compared to 2019. The net result is slightly more favorable than the current operating results given the deferred taxes that were realized. In the last slide, we're talking about the financial situation as of 30th of June. This is a snapshot of the 30th of June, and it does reflect a degradation of our net debt more -- almost EUR 6.5 billion. It takes into account on the top, you have the debt repayment schedule of bond issues, EUR 2.5 billion at the beginning of the crisis. And more recently, at the beginning of July, it was EUR 1.5 billion. So the net debt will continue to decrease in quality over this year because at this point, our cash position is significant. It's significant because we wanted to anticipate the refunding, refinancing of the payment terms in 2021. So the 2021 repayments are significant, even if we do benefit from the reimbursement by TAV of the intergroup loans in terms of ADP SA. If unfortunately, there were future difficulties, the fact of closing borders internationally or a new wave of this pandemic, the abundant cash position will be used to hold out whatever time is necessary until we get back to traffic -- normal traffic in 2021. So much for the financial side, and I'll hand over to our Director for his conclusion.

[Interpreted] Thank you, Philippe. A few slides about our forecast. You all observed that as things stand now, airport and transport is denigrating the Green Commerce, the ecologists, who's maybe a bit extreme. We have to -- obviously, we need to make an effort in terms of education. One wonders whether the fact that we have our own cost -- a CO2 reduction system, CORSIA, which is more stringent than COP21, is not an error. Because the public has the impression that we are not participating in a common effort for reducing CO2. And so these efforts are real. We are -- we wish to divide the emissions by 2025 into various airports in Orly, Charles de Gaulle, Ankara and Izmir. Zero net emissions in 2050 is what's targeted and zero emissions with compensation by 2030. We are working on improving connections, air-rail with air transport. We have an internal work area to make it possible to feed hydrogen into our planes by 2035 because we have planned on having those planes by then. And we have -- we are working on sustainable biofuel for aircraft. So the mobilization is total on the part of the group. The second factor in terms of our forecast. Now this is a period with no regulatory agreement in force. Now our objective, as you've understood, is to be extraordinarily ambitious about reducing overhead. And we gave a guidance on EBITDA, this is not to avoid pressure on increases in EBITDA. The increase in EBITDA was necessary because we had to get back to conditions that would make it possible to sign an ERA, a regulatory agreement. Signing that agreement means we commit for 5 years on a certain level of income and increase in traffic and a change in price. And the purpose of all of this is to have the group capital be properly employed and profitable. Today, we cannot sign an agreement because the increase in tariff would be totally out of sight and unacceptable by the company. We'd have to increase by several -- 10%, 20%, 30%. So to get back to a level that would make us possible to have a reasonable price increase and to have some visibility in our investments, which is essential in our business. Today, we are not going to be able to plan 1 -- more than 1 year in advance. And every year, we'll have to see the regulation authorities to talk about tariffs, given that our platform is very simply the platform that results from the adequation between the volume and the cost of the services. If you take 2021, we have seized the regulatory agreement 4 months before 2021, and we have suggested an increase in prices that will be as moderate as possible until we get a regulatory agreement back again. We think that we can get back to an ERA around 2023. With respect to our retail activities and commercial activities, even if in the first half year, we had an increase in sales per passenger plus 4%, [ EUR 19.8 ] in the average basket, but it's down now. First of all, because traffic is very strongly down and also some projects are not going to be opening up on time as planned, for example, the Terminal 1 satellite junction and also the traffic mix is deformed because fewer passengers on long-haul flights. And they are the most prohibitive. So we are attempting to keep our operational quality in our terminals that are open. We're also attempting to provide assistance to our joint ventures and our concession holders and more generally, our operators that are also in a very delicate situation. So what are the trends for 2021 and in middle term? First of all, for 2021, I do confirm our indications, which have -- which are in line with facts is that traffic should grow -- or I'm sorry, should decrease between 55% and 65% between April and December 2020. So that's minus 63% in 2020. To give you a spot figure, yesterday, the traffic in Paris was 27% of normal. So that means down 67%. And another spot figure, we're going to be improving week after week, but we are still in the same forecast. Now with respect to consolidated sales, it's still the same thing. It's between minus EUR 2 billion and minus EUR 2.5 billion in the middle term. Unless there's a second wave or even a third wave of the pandemic, we would be around [ 24% to 27% ]. With respect to our investments, we're going to be dividing those in half compared to what was planned in the ERA #4, the regulatory agreement #4. So we consider between EUR 500 million and EUR 600 million per year, both in regulated and unregulated with a very reduced amount of international growth because we'd know if we have the means to do highly structuring operations, such as GMR, for example. So we are giving a guidance for the -- making our group position more realist to have a ratio of gross debt to EBITDA up to 6-point (sic) [ 6x ] in '22. So make no mistake about it. This is not a guidance, which is not ambitious on EBITDA. On the contrary, we wish to reduce the EBITDA -- increase the EBITDA as much as possible, so as to reduce the ratio as much as possible to get back to the usual ratio in our business. Lastly, and I will conclude with this point, the month of September in 2020 will be devoted to social negotiations, which will be demanding but I believe they will be exemplary as well. Demanding since we have to make a choice between doing a very hard mandatory departure program, which would be justifiable given the context. But we've chosen to obtain the same savings that we would have had using that method -- with a collaborative method of co-construction with our trade unions, which would be using all resources available to us under the labor code since 2017, and notably, in the ordinances, the Macron ordinances, we have new tools. We have the collective performance tool, the collective regulation; the RCT (sic) [ RCC ], which is a voluntary departure program; and another decree that will be published soon for aid to partial activity over the long haul. So there are 3 -- through these 3 means of leverage, we're going to be working with our trade unions to accept a reduction in social advantages, probably a decrease in salary for a determined length of time. And if it's signed, this should make it possible for us to realize substantial savings for the upcoming months to call and to question all the structural mechanisms and the increases in expenditures for a long -- over the long haul. But with that, the company will be in a framework, which will make it possible for the company to get back to growth, a profitable growth in a very short time in a few years, in roughly 3 years. So with Philippe Pascal and Edward Arkwright, who is in the room; Edouard Marcus, who is the new Director, is also in the room to respond to the questions you may have.

[Operator Instructions] The first question is from Elodie Rall from JPMorgan.

[Interpreted] I hope that you can hear me because we had some problems on the line. My first question, I'd like to get back to the indebtment ratio and the guidance you gave between 6 and 7x in 2022. You said it would be -- you gave us some qualitative aspects of what you wanted to do. Do you think you could give us more quantitative figures about where you think the landing would be on net debt and EBITDA, given that the consensus is EUR 1.5 billion by 2022? Would you have any comments on that? My second question would be about your guidance in terms of midterm traffic in 2024, 2027, that's a very huge number of years. If you take 2027 as a possibility, it's more bearish, obviously, than what you're hearing elsewhere in the -- amongst your competitors. So what -- why would you think you'd be back to the same level as 2019 levels in -- by 2027? And the last question, if I may allow myself, about the tariffs. Do you think that you'll be able to request for an increase in tariff, that's not too ambitious, but it will be an increase of tariffs in next year? And do you think sincerely that the airlines will be able to accept an increase in tariffs given their conditions therein?

[Interpreted] Thank you. I'm going to ask Philippe Pascal to respond to you.

[Interpreted] Elodie, about the first question about the net debt over EBITDA. Just to say that, first of all, we issued this guidance because it's not necessarily to give indications about EBITDA or about net debt, but to bear testimony to the fact that we have an objective, we have a priority. Secondly, the priority and the sensitivity of the ratio is linked to investments rather than to EBITDA. As our Director said, even if in that sensitivity of EBITDA with a denominator and not the numerator would be of secondary importance. Nonetheless, it would still remain a significant and strong area. So that's why -- that's the way you need to understand what was said. If we wanted to issue EBITDA guidance and give you figures, we would have done it. If we haven't done it, it's because at this point in time, we don't have -- we're not sufficiently comfortable. We have some internal forecasts, but they're not stabilized to consider that we could actually give such information to the market. So this guidance is a testimony to -- our wish is to be as selective as possible and as rigorous as possible in the employment of our funding, such -- so as to limit as much as possible, the amount of our net debt, while still optimizing as much as possible, the EBITDA. About the second point about the guidance, you have to see the way in which we are seeking to model traffic. We are doing this -- we have domestic flights, Schengen and international. So as to domestic flights, as our Director said, we are anticipating a return very quickly. This is actually happening already, and this will continue despite the possible closing of some lines -- of some slots. We don't think that these are going to be highly impacting. About Schengen, the Schengen will be coming back rather quickly and probably more strongly than the trends to date. But this obviously will be happening as Augustin said, by 2021, 2022 or at the worst, 2023, but be that as it may, we do not anticipate any difficulties in this particular Schengen area. We are heading more towards a return by 2020, summer 2020 as a medium point. The difficulties we have is to model the return to international traffic for several reasons already because the return of international traffic has 3 points of leverage. The first of which is the trust that passengers had in their ability to travel. And also in terms of the health crisis, but also in terms of the possibility that passengers may be able -- where the governmental decisions of opening and closing of borders, how that will play on those decisions. And the second factor, which is a bit more important than the first factor, even though they're important is the logic underlying the demand. We know that there's an economic crisis. We know that on average, the purchasing power, the standard of living is being affected. And under such conditions, we also know that companies will be more rigorous in terms of business trips, and we're likely to have a demand which is strongly affected. Notably, first of all, in international traffic. This can cover as well the whole -- the demand also depends on marginal changes in social behavior with respect to air transport. And the third factor is another -- of great importance. Airlines, that has to do with airlines and the recentering of these companies in a certain number of lines, in the most profitable lines and the consequences they draw about their fleet of planes. If they get rid and if they sell off or if they stop renting a certain number of aircraft, if they have a reduced fleet mechanically, before we get back to normal traffic as in 2019, we'll have to wait until the airlines build up their financial solidity to get -- to bring back up their fleets to the numbers they need. If it was possible to modelize this now -- but this is all important. So in the guidance of international traffic, it is the international factor between '24 and '27. And if we are more optimistic about 2024, and we're reasonably optimistic in 2025 and we consider that the fragility will remain for some of our airlines still, it's more by 2027 that we would get back to full international traffic. So this is incremental in volume terms, not necessarily the biggest volume, it may be 75% to 80% traffic by 2023 or 2024. However, the 10% additional or 15% additional will take time, and that's what explains this guidance. And regarding the tariffs, as explained by Augustin de Romanet, the tariff policy currently hasn't been decided on yet. Mechanically, we'll have a technical and legal space for tariff increases. Now the question would be raised and the decision will be taken in September or October next. In the light of the changes in the context with [ a pan ] because it keeps on changing every week. So at this stage, the response given to you is indeed a technical answer, and we'll see how it pans out economically after the summertime.

[Interpreted] Thank you, Philippe. Are there other questions for Mr. de Romanet?

Yes, sir. There is another question. We have Mr. Jean-Christophe Lefèvre-Moulenq from CIC.

[Interpreted] Your line is open, sir. Tell the operator, would you like to ask your question, Mr. Lefèvre? Or Will I give the floor to somebody else for their question?

Seemingly, there's a problem for the gentlemen with his telephone line. [Operator Instructions] We have Morgan Stanley, who's next in line for a question.

[Interpreted] Yes. A few questions, please. Firstly, on costs. The efforts you've been putting in on operating expenses, EUR 550 million for 2020, EUR 200 million for Paris Aéroport. Now the EUR 200 million, if we look at what's going to happen in 2021, 2022, what are you going to preserve? Some of these cost drops are because of drop in activity temporarily, and that won't go on forever. So on the retail outlets, obviously, the second quarter isn't very representative. But what can you tell us about the status of expenditure? I mean what's working well? In July, now you've got a little bit more hindsight in Charles de Gaulle and in Orly, there's more traffic and retail-wise, what is faring better than -- I mean some retail outlets might be faring better than others. And also, I'd like to know about the food and beverage contracts, the food courts. Are you going to renew the contracts there?

[Interpreted] Thank you, Nicolas. Philippe, perhaps you'd like to answer, Philippe Pascal.

[Interpreted] On the cost reduction, yes, indeed, the half yearly results show EUR 385 million drop and EUR 550 million is the figure we would have for the full year in 2020 as a full year. Now this drop in cost, maybe we'll achieve more than EUR 550 million for the full year, we'll see. It's not twice EUR 385 million, however. But hopefully, business will pick up and activity will pick up. And therefore, operations will develop at pace. And of course, the operating expenses connected with these operations will, of course, be incurred. So a large portion of these expenses are connected with the closure of the terminals. Closure of the terminals, which will be continued in the coming few months or even in the coming few years. Resumption of traffic will govern that. I mean some terminals might remain closed until the start of 2022. So there will be a longer-term effect there. And these mechanical cost reductions will continue to prevail in a certain way for a while. These mechanical drops are because we don't have to clean the premises anymore. We don't have to subcontract for security agents, that kind of thing, also drop in maintenance costs because there's plants and equipment that is not operating, also costs connected with drops in consumable purchases in the terminals. Now the other answer I can give you on the structural cost as opposed to cyclical cost drops, well, it's the payroll element, I'd like to talk about now. Obviously, the lockdown, the total stoppage meant that we use short-time working arrangements in a massive way because of the drop in our activity. That goes beyond just a drop in activity because of the closure of the infrastructure. This drop in activity also can concern other activities of our group, in particular, engineering operations and real estate operations. So we know that the drop in that activity level will have a long-term effect, economically speaking. So we want to engage in social dialogue with the social partners, we'll be asking our trade union partners to agree to long-term short-time working arrangements or part-time working arrangements. That would enable us to maintain people in jobs on a part-time basis. So that employees would be interchangeable in a certain way, up to 60% of their time for at least 2 years. Sorry, for -- at the most, sorry corrections, at the most 2 years. So potentially, we're talking about a long-ish period of time. The third answer to your question on the structural cost reductions, the third part of the answer is hard to give you because, yes, we do expect to have the structural cost drop. Also, when we reopen the terminals, we won't open them in the same way they were closed. We hope to optimize and make for operational efficiencies, of course. The crisis has also shown us that we can be a bit more nimble, more sparing and more thrifty, whilst providing operational excellence at the same time in our services. So structurally, we're going to try and bring down our cost base. It will be necessary, especially in order to help the company to come back to a stronger financial status, better financial health. So the important point is that this structural drop in costs, which is also subjected to social dialogue, of course. That's why, at this point, we're not giving you a lot of visibility because we will be engaging in social dialogue with our trade union organizations and our social partners so as to come to terms with what we will need in terms of our business model, economic and social model in the future. So I cannot answer that question here and now. Now regarding the retail activities, what's working well, what's not working so well and so on with the traffic we've had up to now. What we can say at this point in time is that we are currently engaging in the whole optimization process, so as to optimize our retail areas, working on our OpEx structure in a fairly far-reaching manner. We're also redefining our business model so as to make it as robust as possible and so as to align it with the needs of this crisis. Now the objective here is, of course, to stabilize as best we can the model we have right now, whilst making substantial efforts regarding the operating conditions we have in these retail outlets, also optimizing, operationally speaking, engaging in far-reaching operational efficiencies, so as to maintain, in so far as possible, our fees with respect to the different concessions we have. These items require us to observe a key factor, which is that we've got to make sure that these stores that are open and the ones that remain open can have a certain amount of footfall of passenger traffic and customer traffic that will be sufficient for them to get back to their own financial health that they had previously. So that would presuppose operational arrangements and whole staggering of the reopening of the terminals that would fully meet the needs of the airlines, the demands of the airlines that were our clients, but also in a way that would be relevant so as to guarantee the operational efficiency and financial efficiency of our retailers. Then on these retail outlets, we can see that the reopening of the retail outlets is proving to work well. When stores reopen, the passenger traffic is there and people go into the stores and purchase. So people are actively purchasing. Now that's holding its own. The passengers passing through are actually purchasing in quite a substantial way. So we hope to prune down our CapEx, as we said. But we've got to finalize the infrastructure developments that are going on at the moment, as we said earlier, but we do want to limit our CapEx as much as we can. Our commercial joint ventures, their CapEx must be contained as well, of course, as our development CapEx. So hopefully, that answers -- those responses answer your different questions.

[Interpreted] Well, could I just go back to the costs again? Could you be a bit more precise, please? If I turn the question around differently. Regarding the traffic at 80% of the level you had in 2019, what would be the EBITDA margin on a levelized basis -- on a run rate basis with optimized costs and so on?

[Interpreted] At this stage, we prefer not to answer that question. The modeling of the EBITDA is a complex matter. Our objective is to make as many savings as we can. As you've seen in the first half already where we managed to a EUR 385 million of savings by mobilizing all of the levers we had to hand in France and internationally. So it's early days yet to give you an EBITDA margin objective. And then the EBITDA margin, given the group's model, you note as well as I do, I'm sure. You know what's most strategic and what's more relative of an importance that you know. So that's all I can say. I'm sorry for not being able to answer you really at this point.

[Interpreted] Okay. Last question, if I may, regarding Elodie's question on the levers you have and 2022 and so on. Now if we -- I know you don't want to extrapolate the EBITDA. But if you look at the net debt position, your guidance on CapEx for 2020 and '21 and '22, the amount of net debt is fairly -- the amount of confidence about the amount of net debt is fairly high, about EUR 7 billion. So a lot of confidence about the net EUR 7 billion. So how can you talk about gearing at 6 to 7x on that basis? You seem to apply 20%, 30% debt and given what you said about the EBITDA, I mean 6 to 7x seems to be a bit high and the debt being EUR 7 billion, it doesn't make sense to me.

[Interpreted] Well, careful about the denominator and the numerator. Regarding the numerator, the net debt is the group level. This comprises not just CapEx as we disclosed in Paris, but also CapEx and physical investments, CapEx internationally in other airports that are integrated, that are subject to full consolidation in the accounts. So in other words, we would be talking here about the CapEx in TAV. They're in the equation, too. Also, we issued EUR 4 billion. We made an issuance of EUR 4 billion. EUR 4 billion can be found in the net debt at some point in time. So your -- let me be fairly blunt, your figure of EUR 7 billion is really undervalued, underestimated.

We will now take a question from RBC.

[Interpreted] On CapEx as well, in 2020, the reduction of EUR 400 million. Can you confirm it on the basis of EUR 1.2 billion? And also for 2021, '22, were you -- [ EUR 500 million, EUR 600 million ], was it just Paris or was it international as well? And what's the comparative that you used? The second question I have has to do with the savings you've been making in OpEx. You had an increase up to EUR 550 million of savings for this year. Could you go further than the EUR 550 million mark? Will it be more in the following years as well? And another question -- third question has to do with the fact that you mentioned the consensus of EUR 250 million. And you talked about EUR 200 million to EUR 300 million, could you tell us if you agree with the consensus figure of EUR 250 million?

[Interpreted] Thank you. On the CapEx, the drop of EUR 400 million concerns only Paris, CapEx for the Paris facilities. So drop from them of EUR 1.2 billion in terms of regulated, nonregulated CapEx for the Paris airports and total investments in Paris of EUR 800 million worth. The other CapEx, especially CapEx this year for international facilities, GMR EUR 1.2 billion or TAV, Kazakhstan and so on. Via these entities, so we're signing, but not closing it, of course, for one of these deals. They're not comprised in the information we gave you. That's the first question. So the choice was made to pursue a certain piece of CapEx for several reasons. First one is the fact that we were -- we've almost reached the end of some of them, and if you stopped working on the work sites, which is nearly completed, it costs you more than if you pursue and complete such works. Also in the stacking up for the reopening of the terminals, we -- so we needed to have some building blocks, some capacity so as to be able to open them, so as to close other ones you see. And therefore, optimize our work sites and the costs during the next year, in particular, 2021 and 2022 at the start of the year. So that's another reason. And the third reason is that we don't wish to curb the resumption of traffic in any way through lack of capacity. It's indeed our bond and duty as an airport operator to make facilities available when they're needed. So that's on the CapEx. On the OpEx, well EUR 385 million savings done, we announced EUR 550 million for the full year. If we can do more, we'll do more, of course. Now that's our objective, indeed. And it remains an ambitious objective because we think that the recovery of traffic will be fairly substantial for different airlines, for different destinations that when we reopen, even though we've got a very precise standard there, which might require us to temporarily deoptimize, if I dare say so, the operational efficiencies on some terminals. So we've got to be mindful of that, too. And the third question, we won't give you the different point of view. But for 2020 for revenues and EBITDA, everything is in line with the consensus as we saw on a half yearly basis. On the operating income from ordinary activities and the net income, well, we've done impairments on Jordan and Chile. As we said, in the second half of the year, we'll be doing impairment tests again. And we might accelerate or not the impairments in respect of those 2 main assets. Also, we've got [ LDA ] impairments to be totally comprehensive. But the difficulty will be -- well, we just don't know, you see, if the tourist traffic will resume. And for TAV, Tunisia is important, of course, and Antalya, and we'll have to see what the dynamic is there in towards traffic. And as a function of that, we'll have to do impairments. And you can't anticipate that right now. The markets probably anticipate that. But we don't know what's going to happen. We probably have to renegotiate certain items with the different authorities internationally, international authorities governing those airports, that might give us a kind of a lease of life and limit the impairments we might have to do. But it's early days yet, we just don't know at this point.

[Interpreted] With respect to the current context, are you comfortable with respect to those expectations?

[Interpreted] About what consensus? I didn't -- I think I answered about sales and EBITDA. I think I answered that about the net operating income that we hadn't modeled all of that, the operating income. The model adapts every week and every month. We give you figures when they're stable.

[Interpreted] We have a question answered -- asked by English speakers.

[Audio Gap] from Arthur Truslove of Crédit Suisse.

Just sort of following up on from your -- I think the questions that have been asked already on tariffs. So you mentioned that you think that tariffs are likely to rise moderately next year. And I guess how likely do you think Air France KLM will be able to absorb these increases in the context of the large amounts of state aid that they will need to repay?

Please, as far as we [Audio Gap] and the line is of bad quality. Could you please repeat your question very, very slowly? Thank you.

So just sort to repeat that question then. You mentioned that [indiscernible]

[Interpreted] We did not hear the last question, unfortunately. The microphone must have been cut off. I'm not sure. We'll take another question, waiting for that person to come back. I think we have another question that will be asked. If you could just wait for a couple of seconds.

[ Ruxandra Haradau-Doser ] of Kepler Cheuvreux.