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

Good morning, ladies and gentlemen, the ADP 2021 Half Year Results. [Operator Instructions] And now I'll give the floor to Mr. Augustin de Romanet, CEO, for today's conference. Please, sir.

[Interpreted] Ladies and gentlemen, hello. With Philippe Pascal, we'll be presenting results for the first half of 2021. It was a volatile half year once again, a bit more dynamic in airports outside of Paris, as you can see on the slide. In blue, we can see traffic outside of Paris. You can see the blue curve is continuous, translates into second Indian wave that led to a sharp decline in April and a sharp pickup in May, June. Though traffic outside of Paris reached 30% versus 2019, down by 26%, it was sharper in Paris at minus 45% as compared to the first half of 2021 and 20.7% of the half year level in 2019. So the first half was a bit chaotic, let's say, or cash were more difficult than ever before. The airline companies' forecasts were really upheld. And given the difficult circumstances, we try to take many steps for clients and for economic profitability that we described to you. So our revenue is down by 15.3%, EBITDA is positive, but Philippe Pascal will explain the realities. Organically, it was slightly negative. And the positive figures are due to nonreproducible effects. I would also say that our operating income from ordinary activities declined, but not as much as last year, and operational income is negative by EUR 172 million. The first source of satisfaction is that the quality of services. You know that in our business, when you reach 4, you can start to look at yourself in the mirror. During the crisis, 3.95 quality of service, we have the wait time at the -- for the police is what it is, and I will need to comment on that. We know that it is volatile and increasing. So that's a great source of satisfaction. During the crisis, therefore, we thought, first foremost, of passengers for health reasons to restrict the limit waiting times and working with the state services. So it had positive impact on passenger traffic. Let me take one example. You know that China accepted no passengers, if they did not have a double test in the originating airport arriving in China. So someone coming from Africa and transiting to Paris had to do a double test in Paris, the same if they came from London or Frankfurt. So we were the first in Europe to use our experience with the partners we work with to set up a test for 500 passengers coming from China every day that enabled us to make the Paris hub the best hub for connecting with China. Moving on to the next slide. You can see that we continue to work on promoting brand loyalty by adjusting our terminals, upon request, and opening up enough terminals to make passengers satisfied. Not all terminals. If we had let all terminals open, it would have led to negative effects. Heating, air conditioning, high taxes would ensue from that and stores would be closed. A store in an airport in -- under the circumstances cannot be profitable. So in some terminals, we managed to maintain a certain level of retail business. So we were very agile in opening up Terminal 2, that was far more modern. And it is totally renovated. That's what you find on the next page. You can see that we are agile in opening and shutting down terminals. We shut down several terminals. We opened up 2B and D. And the savings linked to the shutdown of infrastructures in Paris reached about EUR 50 million for the first half only. A few comments about 2B and 2D, that's the new terminals we haven't presented yet. 77,000 square meters and 5,200 meters of additional retail services. It has 2 statuses. It can receive long-haul flights and medium-haul flights. And it was done for a good part of May and June. In May, we decided to open up 2A for registrations. And we realized that we also needed to put planes in contact with this terminal. So in this first half, priority was given to passengers. And we are very committed with opening up the terminals, and I must also say a few words about the employment situation. At the end of the first half that was the 30th of July, we reached an agreement with 2 trade unions to change employment contracts and to reduce ADP compensation, remuneration until we return to traffic -- to normal traffic. There was solidarity. The company and the trade unions accepted to opt for solidarity by reducing pay for each and every one of us. We avoided several hundreds of dismissals. So 1,150 employees will be leaving the company on a voluntary basis. The company will seek to reemploy them as far as possible, 450 to be reemployed in the coming years. We also decided to slightly reduce pay by 5% maximum in 2021, 2022 and 4% maximum in 2023. As of the 1st of January 2024, we are committed to see to it that everyone returns to the level of pay in 2019. And if people refuse, we will replace them, of course. So the first half, so a lot of energy deployed by the company to reduce costs, to enhance the quality of service and to be agile in opening and shutting down terminals, a lot of efforts have to be made by the teams and also solidarity since we set up something that was unique in a state-owned company and quite unique amongst any companies with solidarity with employees. Philippe Pascal will now tell us about the financial statements.

[Interpreted] I will start with the first driver, traffic. On Slide 9, we have all the figures for platforms directly and indirectly held by ADP Group. You can note that the group traffic is down by 26.6% as compared to the first half of last year. The first half were a half of -- this half year period was not impacted by COVID on the 1st of January to end of March. Traffic was also impacted by a sharper decline in Paris, minus 45.7%, as compared to the first half of 2020. All in all, when you look at the details for all the figures on the group's platforms, we can note that they reflect organic ways that are quite different around the world with different sequences of the pandemic and the recovery that is differentiated, fast recovery in Asia, relatively fast in the Middle East and in Turkey and far slower in a certain number of mature countries. And yet there's no hard set rules. Antalya, for example, traffic rose by plus 70% due to the massive return of Russian and German traffic. Other airports for tourism like Mauritius, well, there's almost 0 impact with the first impact. For Paris traffic, Parisian platforms are doing better than their peers, Madrid, Frankfurt, Amsterdam and London, with a percentage of traffic of 20.5% compared to 2019. And yet, despite the distortions with Orly, we had good traffic. It came back quickly due to domestic flights, European flights and also French overseas territories. In recent days, French overseas territory is slowing down a bit due to the health situation. What's noteworthy on this slide is to look through the correspondent rate that is quite significant due to a hub that is doing well with an interesting percentage of 27.5%, but 58.5% was filled up because airline companies are maintaining opening up a certain number of place or destinations to occupy market shares even though it's hard for them to fill up the planes at that period. Before moving on to the Slide 11 and looking at the figures in detail, I must say that there are 4 major highlights in this first half and that should be put in mind to properly understand. First of all, the base effects with respect to 2020 and 2 factors that are one-off. The first 2 base effects, the first one I mentioned before, is that in the first half of 2020, there was no pandemic, no COVID-19. In the second quarter of 2020, we had a certain number of impairments for large amounts, especially for international global assets. These 2 factors are mirrored in the financial statements for the first half of 2021 with the crisis -- the health crisis, that is, that impacted the entire first half of 2021 and the lack of an additional impairment in 2021 as compared to what was done in 2020. The 2 other factors are one-offs. On the one hand, good opportunities on the real estate market where we took open full ownership, and we'll be working on that in the coming weeks to take over certain buildings for Paris platforms, leading to a positive impact on our EBITDA, it's about EUR 117 million in Paris. And secondly, major effort in financial restructuring at the international level. We have expanded a certain number of our concessions, and we're now working on financial restructuring of the debt on some of our platforms. I'm referring to good news on restructuring the financial debt of TAV in Tunisia, leading to a favorable impact of over EUR 100 million in the financial results. Bearing in mind these 4 important factors, we can move on to EBITDA and net revenue. You can see that our revenue was impacted negatively for SDA and Relay given less than dynamic operations in traffic and the shutdown of retail. But AIG's revenue was stable as compared to the first half of 2020 with a decline in airport dues linked to an increase in nonrental fees. For TAV, revenue is up as compared to 2020 mainly due to the scope effect with the integration of Almaty Airport generating EUR 19 million in addition. You can see that without this revenue, Almaty's -- or TAV's overall revenue would be declining. For EBITDA, all of EBITDA is rising due to the fact of keeping costs under good control. SDA and Relay, EBITDA is positive, although its revenue was positively impacted -- no, its revenue was declining, rather, as compared to the first half. AIG and TAV made major efforts in keeping expenses under control, thanks to furlough and TAV with EUR 31 million in additional EBITDA. And despite the Almaty effect -- the Almaty effect has been a positive effect on EBITDA. Paris alone has EBITDA that is rising due to good financial opportunities and one-off effects. By taking over some buildings, as I pointed out, [ with proper maintenance ], EUR 117 million impact on EBITDA and less write-backs of reversal of provisions in the first half of 2021. So the overall EBITDA for the group would have been slightly negative by about EUR 105 million versus EUR 155 million. On this chart for current operating income and net revenue, we can see the base effect with an impairment of activities in the first half of 2020. This did not lead to any new provisions in 2021 in large amounts. So net income was positively impacted in addition to the base effect by the restructuring of the Tunisian debt for just over EUR 100 million net. The last slide there is on cash flow. Cash flow that is still secure, thanks to EUR 4 billion in bond issues in 2020. For the first -- last month of 2020, cash flow was stable due to our plan for financial stabilization. But during '21, cash flow will decline significantly by about EUR 1 billion over the year. You can see the first effect in the first quarter. This is due to a continued investment policy and because traffic is below the 35% level with respect to overhead costs, 35% of traffic in 2019, and due to repayments -- bond repayments in 2021. Despite this decline in available cash flow, the situation is still under control and we can still cope with unexpected events in the future. That's it for the financial data, and I'll give the floor to Augustin de Romanet.

[Interpreted] Thank you very much, Philippe. So just a few words now to -- for the outlook concerning the future. We still have 3 main preoccupations. The first is our customers, quality of services and the way in which you are welcomed at the airports also with other people at the borders, officers, et cetera. So it is even more delicate for us to provide guarantee for this satisfaction. The second element is to provide efforts to control our assets abroad and in Paris, and this requires the redeployment of activities in Chile, India, Jordan and countries that we weren't able to visit as much as we would have liked during the crisis, the pandemic. We started again in Dubai. We have a partnership with India. And we worked on our industrial partnership since, as you know, it's an important part of our corporation. And our third priority is the recovery of our Parisian activities. The slide, I think it's Page 15, you have the first items there of the recovery, relaying on 6 activities, the optimization of operations, investments in terms of our real estate assets. First, the optimization of operations. So it is about finding a balance between preserving our competencies, going back to activities and the sanitary situation as well and being agile and reobtaining performances. By 2023, we want to progressively reopen our different infrastructures, and they will all be reopened except for Terminal 2C, which will have a construction work to reach the European standards, number 3 standards. So the traffic will go back to the levels of 2019 by 2027, but probably not before 2024, '25. So what about the cost? I talked to the cost structure. I talked about the realization of structural savings. It is at the origins of 2/3 of the savings, structural savings, EUR 150 million per year that we hope to cash in this -- with the -- there are measures to -- taken to reduce cost base at ADP and improve the OpExes also and our duty free, namely. The recovery of Parisian activities also requires investments. So on the same chart, you can see, on Slide 15, we need to maintain our investments for maintenance, as I've said. And at the same time, we must preserve, keep all the investments for green and smart airports. And at the same time, we must take into account the fact that we have no visibility on our tariffs on the -- and we must preserve our treasury, our cash flow. So this led us to decrease our investments, and they were of -- they will be reduced between EUR 50 million saved in 2021 and 2022 and between 60 -- EUR 650 million to EUR 750 million per year in 2023 and 2024. This is confirmed more than ever. Now there's a lot of telework going on. So there's still a lot of demand for cargo. And in Orly, as you know, it's close to the Grand Paris Express and the center of Paris. This will contribute to this development. Our strategy of recovery -- for recovery, our real estate strategy has -- of AOT. For the retail sector, more than ever, we have the ambition to develop in Paris and internationally, what has been experimented in the 2E hall K, emblematic of the global vision to have 60 -- it represents EUR 60 per passenger, and we still want to provide a better offer, more adapted offer as we -- as in Orly for domestic flights or Charles de Gaulle for international flights. This last pillar of the restructuring plan is the recovery of regulated activities. As you know, we have positive revenues. In 2022, we will have and that's we're aiming at. And it will be all about finding a right balance between the tariffs that do create an exposure and the new conversions towards better security. So this is done in good intelligence with the transport regulation and the stakeholders while increasing these -- adjusting these tariffs. The group remains totally mobilized to create value and to be ready at any time to grasp the recovery that is taking place. As I said numerous times, in periods of crisis, we underestimate the size of the -- and importance of the crisis. And this is why since March 2020, we, the Board, decided to borrow money because we know that the opening of the markets, we didn't think they could happen. We weren't surprised by the long-lasting crisis. We have been ready since March 2020. We knew it would last for a long time, and it was probably longer than what many anticipated. In March 2020, we've explained that things would go very well in 2021, but we saw [ what the ] situation was. And we could believe that things will be all right in November 2022. But the recovery, when it happens, has a tendency to be underestimated. When there's a crisis, we underestimate the crisis and then we underestimate the recovery. So now more than ever, we are determined to be mobilized, fully mobilized on retail, on the quality provided. And it is not because we are determined to go and fight for what we want, but we mustn't -- be careful to the guidance. And in terms of traffic, for our forecast, we are -- our guidance is down by [ 5 points ]. And for -- in Paris Aéroport, we're going to 35 to -- of the -- the ratio of EBITDA, we're decreasing our average for it from 15% to 20%. And our investments, I will give you the figure, between EUR 500 million and EUR 550 million and EUR 650 million (sic) [ EUR 650 million and EUR 750 million ] in '23, '24. We are maintaining our objective of EBITDA ratio, 6x to 7x by the end of 2022. And in terms of traffic, we hope to return to the 2019 level by 2024, 2027: in '23, 75%; and in 2024, 90% of the 2019 traffic. During this crisis, the reassertion of our engagements for the environment are more than ever topical and for all of our airports and ADP are the objectives to reach carbon neutrality by 2030 with an aim of net 0 emissions by 2050 at the latest. And yes, for 2050, our objective is that for all the airports of the -- airport of the group have net 0 emissions. We have a strong program to help us reach these net objectives. We also underline by the importance of biodiversity with the initiative on the protection of biodiversity, Act4Nature International, and other initiatives that I could mention, if you like. Paris-CDG and Zagreb joined to answer to a call for a green airport. In February '21, we had for tender -- a call for projects for Airbus to look at the -- sorry, we signed a partnership with Air Liquide and Airbus to study the reception conditions for hydrogen aircraft. And we had also a call for interest to select 11 projects out of 124 that will help develop the value chain of hydrogen in airports. This is what I am able to tell you. And now we are at your disposal for any questions you might have.

[Interpreted] [Operator Instructions] First question comes from Mr. Jean-Christophe Lefèvre. [Interpreted] The next question from Mrs. Rousseau.

[Interpreted] First question about the air traffic. We saw the improvement in May and June. Could you give us indications on the dynamics in July for the moment that you might have? And second question about the CapExes. I saw your new program. We see an increase of the level of CapExes in '23, '24. Could you give us some elements concerning what you are going to do additionally to that -- maybe compensations for what you haven't done before? And otherwise, what is plan in terms of environmental CapEx in the budgets that you mentioned? Mr. Romanet, you mentioned the adaptation of our infrastructures for the welcome of electric planes. Are there already elements in the CapEx programs that are mentioned? And if it's not the case, what could that represent in terms of investments? And lastly, about your agreement with Schiphol, I saw that you have renounced to this agreement. What are the consequences, please?

[Interpreted] Perhaps I will ask -- I will answer to the Schiphol question. We decided that the agreement wouldn't be renewed. So therefore, it was terminated on the beginning of November -- on the 30th of November, sorry. So we put in place a process for the different participations for -- on 18 months. And this would get placed to the disposal first by Schiphol of ADP. And then on the base of the price, the disposal price, Schiphol -- ADP would sell its shares to Schiphol. And it's a commonly agreed separation. Our economic models are quite different. And therefore, we agreed to find good profit from this alliance that we had for 12 years, and now it was time to part and to each become autonomous again. So this was for Schiphol. And maybe Philippe will answer to the question on green and air traffic.

[Interpreted] Yes. For traffic, the dynamics in July is in compliance. In line with our trajectory, we indeed had a slow recovery but a true recovery of the traffic to reach 50% beginning of August. Today, we are at 49% -- 43 point -- so we are on the right tracks, and it's like the expected traffic is by 50% compared to that of 2019. So it's these 50% compared to 2019 that give an average point of 35%. So the question, which consists in knowing and understanding whether our traffic will be between 30%, 40% and at what level it will be, we'll know more in September, October when the change is made towards the -- okay. So for the CapEx, the main explanation, the motive for the increase of the CapExes, these are regulated and nonregulated in Paris. The main motivation which explains this increase in 2024 is due to 2 elements. The first is the compliance of our baggage sorting to realize the examining of these, the baggage compartments, in compliance with the number 3. And these had been delayed for 2024. The compliance, it's a mandatory compliance, and so this has been done. And on the nonregulated perimeter taken [ in site ] by the airport. This is the first point. The second point is a certain number of heavy maintenance measures for the aeronautics, which must be done every 8 to 10 years, depending on the [ tracks on the trails ]. And in 2022 -- '23, the runways, I'm sorry. So we will prepare our infrastructures before the full back to normal of the situation. And for the investments and the green aspects, at this stage for green for the 2021 CapEx through 2024, they are not only translated by a change of an adaptation of our modalities. And there are -- it is not any different from the previous investments or volume of investments that we had of the specific CapExes in line with the environment. So these are elements that we are studying. The -- there could be overcosts. But for the investment as it is presented at this stage, they are not significant. So this is about traffic and CapExes.

The next question comes from the line of Ruxandra Haradau-Doser from Kepler.

Yes. [Audio Gap]

Ruxandra, could I please check your audio as you are -- you cannot be heard?

Yes. Sorry. Can you hear me now?

Yes. Please go ahead.

Okay. Sorry for this. So first, on traffic. Looking at the second half of the year, do you assume in your new guidance that August will be a peak traffic month? Or do you -- and then traffic later in the year will stabilize below the level of August? Or do you expect sequentially improving traffic trends relative to 2019 until the end of the year? And do you see signs of recovery of city tourism in Europe at this stage? And if not, do you expect this to happen later this year? Or is it something to be expected next year? Second, on costs. So in addition to the voluntary departure scheme, you mentioned some new personnel cost savings today. Just to make sure I understand correctly, you agree with labor unions on a change in remuneration terms of 4% to 5% over the next years. However, each employee still needs to approve a change of his employment contract. What is the flexibility of the employees to accept or reject this change in remuneration? And what would be consequences if they reject these changes? And to which extent are the structural cost savings of EUR 100 million to EUR 150 million that you mentioned today sustainable post-COVID since you indicated that employees' remuneration will return to current levels at the beginning of 2024? And third, considering the traffic recovery that you expect over the next year, when do you expect to return to dividend payment?

[indiscernible]?

[ Yes ].

[Interpreted] It's like we're on -- we heard you as if you were on the moon. And on top of the bad sound, we heard the French translation. So we only heard about 15% of what you said, but Philippe Pascal is very brave and he will try to answer your questions. And then you will tell us if we have answered your questions from what we have understood in bits and pieces. You have the floor, Philippe.

[Interpreted] Well, there were two questions, I believe. One, on the recovery of traffic in the second half and the -- another question on costs. Starting with costs. The goal is to clearly sort out the notion of economics versus what's business due to the business environment and what's structured in Paris. Starting with structural savings. The figures given, EUR 100 million to EUR 150 million, are savings that will continue after the crisis and when we -- when traffic recovers entirely. Savings basically are due to 2 things. First of all, the nonreplacement of a certain number of departures or the 700 departures that will not be replaced at ADP SA and additional savings on payroll due to the changes in some provisions in the employment contracts. That's the first part regarding payroll, covering about 2/3 of our efforts. And the second point relates to savings in terms of procurement, procurements in the sense of buying at a lower cost and also buying less. All of these savings for ADP SA structurally, including when traffic recovers entirely, would amount to EUR 100 million to EUR 150 million in savings. In addition to that, we have structural events at group level preparing for TAV as well as the -- our other provision subsidiaries in the group. You know that our engineering operations, once the European BU in engineering, is shut down. Regarding specific matters related to employment, yes, to provisions. The first, we have a collective amicable termination agreement signed by all trade unions. The departure of 150 (sic) [ 1,150 ] people, of which 700 will not be replaced. And as Augustin said, we will be gradually recruiting 1,550 people, depending on how traffic recovers. Secondly, we have the employment contract adaptation plan with a drop in pay based on the business environment. And that means that employees will accept individually a wage drop. If employees reject that wage drop, this will start a procedure, we will try to have them redeployed. And if that is not possible, they will be dismissed for economic -- on economic grounds in 2022. The company has pledged to replace all departures linked to the employment contract adaptation plan. So these are one-shot savings from a financial perspective only. When you say that remuneration in 2019 will return to its same level as in -- well, by 2024 at the latest, that means that between 2019 and 2024, we will have generated structural savings. That's for the savings plans. In addition to the structural savings plans, we have one-off saving plans, which are mainly linked to the shutdown of infrastructures or to the decline in traffic in general leading to less subcontracting. And as a result, in addition to the savings in 2021, 2022 and the following years, we will see a positive impact on our expenses. The second question relates to traffic in the second half. We're talking about 50% of traffic in 2019. So 50%, that's a percentage which will be linked to the traditional drop in traffic in autumn. You know that traffic is far more dynamic in July, August for ADP. With the end of the season, that's quite long in September. As of October, November, we have a decline in traffic before it picks up again in December. So 50% of that base in 2019 is modeled in our traffic equation. Now based on forecasts and information obtained from airline companies, it is on that basis that we have recorded these figures. So that was my attempt to reply to your question, which we did not understand.

I have a third question with respect to the dividend policy. Could you maybe give us an update? And given the traffic trajectory that you expect over the next years, when do you expect to return to dividend payments?

[Interpreted] Listen, we have no reason, as it stands today, to believe that our dividend policy should change. As we speak today, there will probably be no positive results in 2021, no positive revenue. So there will be no need to address the issue of dividend in 2022. But once we return to profitability, I believe that our shareholders were very much in favor of -- about the 60% that we had before. And my forecasts are based on that figure.

The next question comes from the line of Cristian Nedelcu from UBS.

The first one is on the OpEx in the first half of this year. Despite the fact that the traffic is lower than the second half of 2020, your OpEx is higher. Could you talk a bit about the moving parts? The second question. You had this EUR 117 million positive in real estate that you flagged. Did you know about this in your budgeting exercise at the beginning of the year? Or if you didn't, why didn't this increase your EBITDA guidance for the full year? So is anything else deteriorating versus your initial plans? And the last one, if I may. Looking at net debt, I think you're roughly at around EUR 8 billion at the 30th of June. What are your expectations for the full year? I think you talk about potentially EUR 80 million financing for some of your subsidiaries. Could you talk about other moving parts in the second half?

[Interpreted] So three questions. About OpEx in the first half, what we -- the guidance we gave last year and also when we announced our annual results, we knew how to make our expenses variable up to 35% of traffic the equivalent in 2019. When we fall below 35% of traffic, we had a certain number of fixed costs that could not be reduced. That is what took place in the first half of 2021. You can see that traffic on average in Paris is below 35%. Due to the rigidity of our costs, this is what we noted. At the same time, a certain number of exogenous factors were less favorable. For example, the fact that the state took charge of a portion of furlough. So all of that was anticipated in our budget. To reply to your second question on real estate, real estate was in our budget, maybe not at the level of EUR 117 million, but to a large extent, it was there to -- it was anticipated in the EBITDA margin, as disclosed, between 18% and 23%. Now the revision of this EBITDA margin is not linked to new operations, but it is due to the expected decline in traffic and a cautious guidance. On the AOTs, you should bear in mind the mechanism. ADP, for some 10 years now, has granted construction leases that we call AOT in certain legal system, but [indiscernible] construction leases, from an accounting perspective, has granted leases on land that led to the construction of buildings that were owned by the lessee at the end of the construction because the lease -- the lessee could -- was obliged to destroy it unless ADP wanted to take it over. Our strategy was announced 2 years ago at the Investors' Day, and there is a specific slide stipulating potential gains expected from these AOTs. This strategy -- so to try to recover as far as possible the different property for them to be re-leased, it was assessed on a case-by-case basis to see if taking over these buildings would be compatible with our new layout at the airport or if the buildings could be re-leased. Most of the AOTs that are being negotiated today has -- have led ADP Group to be leased to the lessee who built, erected the building. So it's a good opportunity, opportunity to renew things in coming years. So that has been able to tell you exactly year by year, half year by half year what amounts will be generated in terms of gains or improvements in EBITDA or when these AOTs will be finalized. Once again, that is negotiated on a case-by-case basis. So that's what we had to say about AOTs. About cash injections, what we can tell you is that we confirmed our goal in terms of net financial debt at the end of 2022. We did not give any transition point for the net financial debt at the end of 2021 because the situation is too volatile, in our opinion. But at this stage, we believe that we can reach the target. This is why we confirm it in our guidance despite a certain number of factors, the decline in debt that was reported in the slides or our CapEx strategy where we gave most of the group's CapEx by giving you the CapEx for Paris. Of course, there will be reinvestments, potential reinjections at the international level, but they are not -- that will not lead to significant changes in the net debt-to-EBITDA ratio. But it could be interesting because new cash injections could enable us to reduce the overall cost of debt on a certain number of international platforms. So these are factors that we looked into the first half. So exceptional profitability. In terms of financial results due to the restructuring of the Tunisian debt, a lot of work was done by TAV. And that ultimately led to a certain number of lenders abandoning, relinquishing a part of the Tunisian debt, say, exceptional conflicts. So this is what you'd like to keep confidential for the time being since most of them are still being negotiated.

Could I please add? That EUR 117 million in real estate, does that -- is that cash also? Or is it just an accounting -- has an only an accounting character?

[Interpreted] It's an accounting where we recognize in our accounts the values given to a part of future flows linked to the final destination of the building and the residual lifetime of the building, but it's just an accounting effect and not a cash effect.

The next question comes from the line of Dario Maglione from Exane BNP Paribas.

Two questions. What -- on retail spend per pax, the target pre-COVID was for EUR 25.5 per passenger in 2021. How do you think spend per pax will evolve in the next 3 or 4 years? Any impact of Chinese passengers not traveling to Europe or changing purchasing behavior for luxury products? Second question on your joint venture with partner, Lagardère, for retail. Are there any discussions to reduce rent and -- yes, for SDA and Relay?

[Interpreted] To answer your first question on revenue per passenger, there's no public target. You spoke about the figures for the first half. As we link to the half year revenue, it's -- we are talking about the level of revenue per passenger in Paris. You must bear in mind, though, 2 important factors: bringing down revenue per passenger; and secondly, pushing up passenger revenue. What lowest revenue is due to the traffic mix. We can clearly see that the recovery of traffic will take place on domestic and European flights, first of all, before a strong recovery of international traffic. This is the main reason why the trend is for SPP to decline. That is offset by a certain number of important initiatives taken, thanks to work and strategic guidance for several years now, in particular, changing the product mix per se with a move towards fashion and luxury items. In particular, in the flagship, we have the laboratory at Terminal 2E perfectly in line with revenue per passenger, reaching about EUR 58 per passenger in the first half. This is a hospitality model, first of all, and also a commercial retail model based on luxury. And this is what will be deployed gradually in all the group's [ GMR ] infrastructures. So with these 2 things, we can state that revenue per passenger in 2021 will be higher than in 2019, before the COVID crisis, despite the dilutive aspects linked to the gradual return to a traffic mix with the balance between European domestic traffic and international traffic. Your second question. I think I understood that you're asking about our work with Lagardère. We have a JV called SDA with Lagardère. For the time being, we are very much focused on improving SDA's operating performance. It was hard hit by COVID. And we are working with Lagardère to improve the performance of -- SDA's operating performance.

The next question comes from the line of Marcin Wojtal from Bank of America.

Yes. On your Economic Regulation Agreement, the ERA, my question is, do you still expect to have a new 5-year Economic Regulation Agreement from 2023? Or could this be delayed further?

[Interpreted] So in terms of economic regulation, so a point on the current situation. Indeed, we terminated the 2016-2020 contract, and we stopped negotiations for the next regulation economic contract planned at the time for 2021 and 2025. When we want to put in place an economic regulation contract, there is a very formal procedure which takes a long time. And this takes about 2 years' time. So this is the first point. To prepare for this negotiation that will last 2 years, internally, it takes a big year to divine -- define the investment plan and define our [indiscernible] in terms of service quality, define our trajectory for OpEx and for the regulated perimeter, define our strategy and for our tariffs and the structure of our aeronautic taxes. 3 years of preparation for an economic contract that can last up to 5 years. So in order to establish this economic balance, this equilibrium, we need to have an 8-year visibility for traffic, for the composition of the traffic, for the needs of the capacity that in -- this traffic induces and for our investment plan and our tariffs. With an absence of visibility for the 8 future years, it is impossible to conclude a regulation economic contract. Currently, the situation has provided the visibility that is necessary. If we start from the principle that we need 8-year visibility, in which we have it in 2022, it means we cannot have an economic regulation contract before 2025, at this earliest. So we need a year of preparation and 2 years of negotiations. So if we have no visibility by 2022, this means -- and we don't have it in 2023, there will be a contract only after that. So -- but I prefer repeating it as such. So at this stage, what I can say is that an economic regulation contract is, first of all, a formal commitment for investment by the ADP Group. And it seems unreasonable to take such an engagement or a commitment for such a long period. And would it be -- just by regard to our shareholders, we cannot take this commitment by -- without having the right visibility.

[Interpreted] [Operator Instructions]

[Interpreted] Since I see no further question, I want to thank you all for being here during this call. And if we look at the statistics I -- with the people I meet, 62% of people are leaving for Greece, so I see. I wish you a really good flight and good experience in our airports. And please, if you have other questions, you can write me an e-mail, and I will answer shortly. Thank you very much and have a good... [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]