Getlink SE (GET) Earnings Call Transcript & Summary

Good morning, everyone. With us today, Jacques Gounon, Chairman of the Board; Yann Leriche, Chief Executive Officer; Geraldine, Chief Financial Officer; and Virginie Rousseau, Capital Markets Director. I hand over to Jacques.

Thank you, Sofie. Good morning, ladies and gentlemen. It's always a pleasure to comment our '23 results, which is not too difficult today. You have seen that we are in line with the consensus. We are announcing an EBITDA which is close to EUR 1 billion. So I think it's something which is at least historical results and exceptional results. This is, of course -- and Yann will explain, Geraldine will explain. This is related to the very strong results we got from ElecLink. ElecLink, it is the first year where we have a full exercise -- full results. Of course, we are still discovering this specific growing electricity market. And of course, we had a strong benefit from the energy crisis. This will be commented later. What is important, of course, is that we have now a serious real pile of cash. And the best use of this cash, of course, is to serve dividends, and we will propose at the next AGM on the 7th of May, an increase of 10% of the dividend up to EUR 0.55 per share. I would like to apologize for the '23 guidance, which is, of course, [ 10 ] below both consensus and the results, EUR 979 million because we are always cautious. Once again, I repeat that it is the first year of full completion of the ElecLink operations. So we are very -- we were very cautious. We are used to be very cautious, to be very conservative. And I think we are in the same mood for '24. Yann will comment the guidance, but we do prefer to announce something which is more reasonable due to the change in the electricity market, which is really the driver of the change we are proposing, keeping in mind that we prefer to deliver and to promise. So all in all, I must say that for this year, where we will celebrate the 30th anniversary of the opening of the channel, we have some outstanding results. And I do think that you will share our optimism for the future. Yann, the floor is yours.

Thank you, Jacques. Good morning, everyone. I'm pleased to be here with you today, along with our team that was presented. And so I will speak our 2023 full year results, which are the best ever for Getlink. So I will start by explaining how we are able to achieve this performance, then Geraldine will present the detailed financial results, and I will finish with the outlook. I am on Page 4. In 2023, we reached an EBITDA of EUR 979 million, the highest level ever achieved by the group. This unprecedented performance was obtained, thanks to the exceptional contribution from ElecLink, but also by the strong resilience of Eurotunnel and Europorte in a challenging market environment. To achieve these results, we stuck to our strategy, providing attractive services to our customers in all our businesses and capturing their willingness to pay. To be able to continue on this successful path in 2023, we also worked hard to prepare our group for the future. This means reinforcing our competitive advantages, for example, by implementing an efficient plan for EES in order to stretch the channel crossing time gap with the ferries or by unlocking high-speed passenger rail services from London to European Capital to increase tunnel usage. Our main 2023 figures are on Page 5. Our EBITDA reached EUR 979 million in 2023, representing an 11% increase compared to the 2022 level. The main EBITDA growth driver was ElecLink, which was operational for the whole of 2023 compared with just 7 months in 2022 as operations started at the end of May of that year. In 2023, ElecLink generated an EBITDA of EUR 368 million after deducting EUR 156 million provision for the profit sharing mechanism. We will come back on the PSM later on today. EUR 582 million were generated by Eurotunnel and EUR 29 million by Europorte. This record EBITDA translated into an outstanding cash generation with free cash flow after debt service reaching EUR 638 million. On Page 6, you can see Eurotunnel's traffic. In 2023, our truck shuttle volumes were under pressure, mostly because of the intense competition from ferry companies. Two of them are deviating from the social models applicable in France and in the U.K. and hence, reducing their staff costs by approximately 60%. Despite that, we confirm our market leader status on the Short Straits. Our LeShuttle pax traffic was up 6% versus 2022 with a market share of 58% above pre-crisis levels. Eurostar performed very well in 2023. Traffic is back close to historical levels with 10.7 million passengers transported up 29% compared to 2022. We will now go into more detail about the main highlights and our main initiatives in each of our segments. So let's start with our passenger shuttle business on Slide 7. As you know, our passenger shuttle traffic remains below pre-crisis. However, our mix of customers has changed with the drop in daytrip and overnight tickets, while longer stay tickets are already 3% above 2019 level. To better serve those customers, we have needs which in certain areas are different from what they were before. We continued to enhance our service offerings with the full rebrand of our commercial service, a new booking app and the refresh of our U.K. passenger terminal buildings. This had a direct impact on our net promoter score, which improved nicely in 2023 from 34 to 41. Slide 8. As you know, our truck shuttle business has evolved in adverse context in 2023, with competition having reached a peak. Indeed, in 2023, because of our high accelerate -- because of our high electricity costs, we had to charge our customers the high EVA, while the low oil price was favorable to ferries. This penalizing energy mix in 2023 was not offset by the carbon tax, which only became applicable in the maritime sector on January 1, 2024. In addition, whilst antisocial dumping laws were voted both in France and in the U.K. in 2023, we are still waiting for them to come into force. This means that these 2 laws have not yet brought a level playing field back to the cross-channel market. In this context, we continue to fight to strengthen our competitive advantages. We want to be always faster, safer, greener, more reliable and improve the services we offer to our customers, whether hauliers or our truck drivers. Like for pax shuttles, this work had a direct impact on our NPS, which improved by 20 points in 2023, a great achievement, so from 23 to 43. On Slide 9, you can see that our shuttle yield increased by 5% in 2023. This is mainly driven by the increase of our energy surcharge for our truck customers that we call EVA, but is also underpinned by our successful and ever more efficient marketing strategy. Slide 10. Yield optimization was absolutely key to limit the impact of inflation. In 2023, inflation remained high, with Eurotunnel energy charges at a record level. In this context, we also continued our strict cost discipline, for instance, by accelerating our action plan to improve our energy efficiency. Page 11. 2023 was a remarkable year for our [ railway ] business, remarkable in terms of traffic performance at plus 29%, but also in terms of new flows with the announcements of new players willing to launch new high-speed rail service between London and Continental Europe. These projects confirm the high potential for growth of the cross-Channel passenger rail market. I will come back to this later on. Moving now to ElecLink on Page 12. In 2023, ElecLink continued to post an outstanding operating performance with an impressive availability of the asset above 98%. ElecLink benefited last year from a very favorable electricity market, which enabled the group to reach EUR 558 million sales and EUR 368 million EBITDA after having booked EUR 156 million provision for the profit sharing mechanism. We continue to discuss the application of this profit sharing mechanism with the authorities, and Geraldine Perichon, our CFO, will provide you with more details on this provision in a minute. Page 13. Europorte posted a 9% revenue growth in 2022 with an EBITDA flat at EUR 29 million, penalized by energy cost and many strikes at SNCF Reseau, the French rail network operator. Page 14. 2023 was a remarkable year in terms of financial performance, but also a year during which we continue to invest in our future. We spent EUR 159 million on CapEx with 2 major programs. Our passenger shuttle refurbishment, a structuring program that will last several years and which serve multiple objectives: lowering our maintenance cost, increasing capacities, but also improving our customer experience. The second main 2023 CapEx programs is related to EES, the European Entry Exit System to preserve our traffic fluidity, we are investing in our terminals to create a dedicated EES zone. We also built digital twins of our terminals to model the EES impact and ensure that we preserve our throughput and the quality of service for our customers. Our ambition is to turn EES into an opportunity to increase our competitive edge versus the ferries. Slide 15. Before leaving the floor to Geraldine on financial results, I will finish with our ESG performance. In '23, we reduced our greenhouse gas emission by 10.5% compared with 2022, confirming the group's trajectory towards achieving a minus 30% reduction in its emissions in 2025 compared to '19. Our alignment with European Taxonomy remains at a record high of 93% of our sales. On the social front, we are also improving our metrics with 28% of the top 3 management levels being women, exceeding our target of 25%. This clearly reflects the impact of initiatives implemented on the ground and relayed through management to promote gender equal access to technical careers. On -- so next page, on ESG, we are not satisfied with just being good performance, we also want to share a few convictions. This one -- this was one of the objectives of the creation of the decarbonized margin last year, linking financial and climate performance. The decarbonized margin is the EBITDA margin, including a new charge, still virtual at this stage corresponding to a carbon bill should we have to pay for CO2 emissions. In 2023, even with the carbon cost at EUR 201 per tonne, our decarbonized margin would only be 3% lower than our actual EBITDA. This pioneering indicator generated a lot of positive reactions. For example, it is now mentioned in the 2024 edition of the Vernimmen, which is a leading academic finance book in finance. I will stop here for the first part, and now Geraldine Perichon will present our financial results. Geraldine?

Thank you, Yann. Now let's talk about financial performance, starting with Eurotunnel on Page 18. Revenues are up by 8%, thanks in particular to the 26% growth on our railway network segment. EBITDA is slightly down by 1%, reflecting the inflation pressure on our costs that we are detailing on Slide 19. As already mentioned by Yann, inflation was still strong in '23. Our energy build increased by EUR 57 million in '23, nearly doubling compared to the '22 figure. As a reminder, we buy most of our energy in advance. The rest of our costs were also under inflation pressure, adding an extra EUR 23 million. We remain focused on discipline to mitigate that pressure. We actively piloted our electricity value adjustment, which is our energy cost pass-through mechanism for trucks. We also enhanced our yield management strategy and above all, remained focused on our productivity measures and cost management. Moving to ElecLink on Page 20. ElecLink for its first full years of operations benefited from exceptional market conditions. Revenues reached EUR 558 million and EBITDA, EUR 368 million. This number includes the profit sharing provision. This provision has been as expected at each year-end reassessed to reflect the latest market conditions. On Page 21, you can see that Europorte has demonstrated its resilience in 2023 with a stable EBITDA at EUR 29 million despite the impact of the SNCF strikes in H1 and also in energy inflation. On a consolidated basis, Page 22, our total revenue stands at EUR 1.8 billion, up by 14% compared to last year. EBITDA reached EUR 979 million, up by 11%, while EBIT is up by 9% at EUR 728 million. The net consolidated result grows by 30% at EUR 326 million, taxes are up by EUR 73 million and that reflects ElecLink profitability, while net finance costs are significantly down, as explained on the next page. The EUR 87 million decrease in our net finance cost is mainly driven by a lower level of inflation on the index-linked tranches of the Eurotunnel debt. There is also the impact of the higher income generated by our cash management. The remarkable EBITDA generation translated into an outstanding free cash flow level, reaching EUR 638 million after debt service and that includes a EUR 76 million debt repayment, as you can see on Page 24. You will notice that our operating cash flow is EUR 90 million down compared to last year. This is related to the ElecLink working capital requirement change, with a commercial launch in May '22 and successful long-term '23 capacity auctions closed in 2022 and partially cashed in at that time, ElecLink benefited last year from a strong cash inflow, and that results in [ 2023 ] in a mechanical decrease in the default income change. Our net CapEx in '23 reached EUR 144 million for the group, and this comes after a EUR 21 million public subsidy received at the end of 2023. This was for Brexit-related expenses and, in particular, to finance our EES CapEx. On Page 25, you can see that the group continues its strong cash generation because after the dividend paid in June 2023 of EUR 271 million, our net debt is down by 7% at EUR 3.6 million. Our cash position remains particularly strong, reaching a record level of EUR 1.6 billion. That's all for 2023 numbers back to Yann for the outlook.

Thank you, Geraldine. I will now continue this presentation with the outlook. I am on Page 27. In 2024, the cross market -- the cross-Channel market will remain very competitive, including now on the pax segment until the antisocial dumping laws enter into force, which should happen before the summer even if I want to stay cautious about the date. Against this backdrop, we'll continue to reinforce our competitiveness, pursuing our operational excellence program, systematically attacking our cost base being very agile in our marketing actions and deploying our CapEx plans. In 2024, we will also continue to enhance our customer offerings. We have launched several initiatives, both for our passengers and our truck customers. We are, for example, developing several new partnerships with hotels, car brands and so on. We are also continuing to deploy our yield management strategy for both our truck and pax. On trucks, we are adopting a more sophisticated approach to pricing. On pax, we are entering into Phase II of our -- its strategy with further segmentation, but also by unbundling our offer to provide more flexibility to our customers. Page 28. As mentioned on the previous page, our LeShuttle market is currently very competitive. However, our fundamentals remain very strong. We have a unique value proposition as we are very differentiated from our competitors, efficient and growing. We will also benefit in the coming months and years from several very positive developments. We already spoke about the willingness of our government to stop social dumping on the Short Straits. There is also the international terminal in Amsterdam station, which will accommodate more traffic after its refurbishment. I will come back to it. The EES implementation that will manage better than our competitors and the EU ETS applicable to the ferries, which will penalize their cost structure. Actually, it started on January 1, 40% of their emissions in Europe and will increase to 100% of the emission in 2 years. ElecLink, now on Slide 29. Since the start of its operation in May 2022, electricity market conditions have been exceptional. As expected, the market is currently normalizing. The positive news is that the electricity prices are currently normalizing at a level which is above our initial investment case, which forecasted a normative EBITDA at EUR 80 million per year, as communicated during our 2018 Capital Markets Day. As of February 18, so last week, we sold 71% of the 2024 cable capacity at an average clearing price of EUR 31 per megawatt hour. With the addition of the capacity market income, we have already secured a revenue of EUR 292 million. Slide 30. 2024 is also an important year for our passenger high-speed rail business. Since its opening in 2018, the London and Southern high-speed line has been a great success with very strong demand. However, the development of this traffic has been capped by the boarding capacity constraints at Amsterdam Station and is currently limited to 250 persons per train. The good news is that the rebuild of Amsterdam international terminal will start mid-2024 for 6 months. Direct service from Amsterdam to London will be closed, but then when it reopens, this refurbishment will unlock the full potential of this line, which is estimated at 3 million passengers per year, which is 2 million additional passengers compared to 2023. Slide 31. Looking a bit beyond 2024, there is a great potential for new high-speed rail destinations through the tunnel. The market share on that [ rail ] can take from aviation obviously depends on journey time. The studies were recently carried out proved that Germany and Switzerland can each capture 2 million passengers. We have worked hard to transform this opportunity into real services and the real business. We have done this by reducing the time to market by 50% for all rail undertakings willing to develop these services. We achieved that by simplifying and simplifying access to the tunnel with the relevant authorities by working with rolling stock manufacturers to integrate the tunnel standards into their product design by working with the other infrastructure managers in the U.K., in France, in Belgium, in the Netherlands, in Germany and in Switzerland to work on the network and stations. This work plus the financial aid that we propose to rail operators with our program called ETICA makes us very confident that the passenger high-speed traffic will increase in the tunnel, connecting London to Paris, Brussels, Amsterdam and also new destinations. Slide 32. Coming back to 2024, we are expecting an EBITDA of between EUR 780 million and EUR 830 million, the normalization of the ElecLink contribution will lead, as expected, to normalization of the group's results, which will, however, remain well above our historical results. Our group fundamentals are very solid, and we are well positioned to capture the forthcoming economic and social evolutions. This confidence in our future [ helps ] us to propose to our AGM a 10% increase in our dividend to bring it to EUR 0.55. 2024 is also an anniversary year. The group is turning 30 years old on May 6. In 1994, we were pioneers. In 2024, our assets remains unique and harbors more potential than ever. We have many opportunities to celebrate that over the year ahead. But for now, we will take your questions. Thank you.

[Operator Instructions] Your first question comes from Cristian Nedelcu at UBS.

The first one on the truck shuttle. You reduced the peak days from around 90 to 25 in 2024. This is suggesting to me that you're trying to use a bit your yields to counter the market share losses. So I guess my question is, how should we think about your shuttle yield in 2024? The second one, it's on the car shuttle. The ferry operators have announced capacity sharing on cars will be fully implemented from the summer. Do you believe that, that could lead to a decrease in your market share on cars as a consequence? And the last one, again, coming to the truck shuttle. We have these new rules and checks on U.K. imports for meat and plants that are implemented already from the end of January and then in April. Can you tell us what percentage of your truck volumes are in this segment? And how do you think about potential headwinds to volumes here?

Okay. So I will take your question in the order you asked them. So first on trucks. Yes, you're correct, we reduced our peak days. As I mentioned, during the presentation, we want to be even more tactical in the way we manage our prices. And clearly, the peak days is a way to do a yield management and in the context that you know with tough competition, it was a requirement to be even better than what we were in the past, and we continue to invest heavily in our capabilities regarding yield management to be at the forefront of what is achievable. One key element is that we don't try to optimize yield, I mean, meaning we don't try to have the highest lead possible, and we don't try to have the highest volume possible. We try to optimize yield and volume and actually to be more precise, we try to optimize, to find the best optimum for yield, volumes and cost because sometimes, even if you optimize yield and volume, you might have to put more resources to operate trying to add capacity, which in the end is not optimal. So if we did that change, it is clearly because we saw that it was better for us. The optimum between yield, volume and cost was better with that change and will continue in 2024 based on the market conditions, which are evolving to always refine our marketing approach to be always as efficient as we can. You mentioned then the cars shuttle and the -- what the ferries are doing, they want to replicate what they did on the freight market on the pax. It has been announced. We have seen that. It's not into application anymore. I will be very cautious in what I said because you know that the French antitrust authorities are working on the case. So as a good practice, we don't comment a case which is in front of such an authority. I encourage you to ask them directly what they think of that agreement and you might learn a lot. Then our -- yes, the new checks for the SPS product. So we don't communicate, as you know, also what kind of good do we transport. So I will not give you the full detail. But what is for sure is that those new checks will be a new formalities that our customers will have to undertake. As for Brexit in the pax, we help them, we support them a lot. It was already at that time, a differentiating service that we offer that some of our competitors are not offering. We had them to get prepared. You might have seen that we do not have yet the full information about how the physical checks as of April will be managed. It has been announced the date has been confirmed, but we still don't know exactly how it will be managed and how much it is going to cost, which is the point that we track carefully and we discuss, as you can imagine, a lot with the [ duty ] authorities to ensure that, that additional cost will be as limited as possible to ensure that the trade will not suffer from it.

Your next question comes from Elodie Rall of JPMorgan.

My first question is on guidance. That range that you provided, if we take the uplift from the provision on ElecLink, which is around EUR 15 million, I computed, back out that the guidance for your now EBITDA at the midpoint is around EUR 580 million. So basically, broadly flat versus what you've delivered in '23. So it sounds overly conservative given, I guess, we should expect cost to decrease and you talked about your deal strategy? And I know you're cautious, but also why putting a cap at the same time on this guidance again, given as you said last year, your guidance proved conservative? So that's my first question, please. Second question is actually on energy and labor costs at Eurotunnel as well. Just to confirm, indeed, that we should expect lower energy costs? And to get your view on how we should think about cost generally for '24, if you have actually hedged portions of electricity cost and if you negotiated further salary increases for the year and what we could expect for labor cost in '24?

Okay. I will take the first one on the guidance. Yes, we announced today EUR 780 million to EUR 830 million, so a EUR 50 million range. Why do we have that range this year? It's because as I mentioned during the presentation on the outlook section, the price war has started on the Short Straits for the pax, which was not that much the case so far. And that will evolve positively at some point when the antisocial dumping regulation are going to enter into force. But here, I want to be very cautious on that precise date. Will it happen before or after the summer, that will be a key trigger for this year, and we lobby and we push, and we are quite successful so far because in the 2 countries, both in France and in the U.K. to have basically 1 year after March 2022 when P&O during the same day, they fired all their staff, their 800 seafarers by conference call, so which triggered a lot of emotion, including at political level. That plus our clearly, actions enable to have 1 year after 2 new laws, both in France and in the U.K. I mean it's a remarkable time, usually takes years to have new regulation in our countries. But after these key achievements, now we are waiting for the decree in France and it's equivalent in the U.K. They are announced for the coming weeks and months, hopefully before the summer, not sure 100%. So that's why you want to stay cautious and not to give you a number, which is too optimistic and then not being able to deliver on it. Geraldine, please go into the details about the energy costs.

Yes. So regarding energy, yes, we are still buying mostly 1 year in advance our electricity. We retain some exposure to the spot, but most of it is both well in advance. So what does it mean for 2024? It means that we should see a decrease compared to 2023, indeed, but you will have seen that prices have been and still are above pre-crisis level. Therefore, we expect a level between '22 and '23 numbers for 2024. Regarding the rest of the cost, again, we are not going to go into too much details, but you know that we have a social policy that is steady and that works to maintain the purchasing power of our employees. So we continue on our usual policy on that front. The inflation level has been lower at the end of 2023 compared to the year before, of course, so the cost increase will follow that curve as well.

Your next question comes from Nicolo Pessina of Mediobanca.

The first one on the ElecLink profit sharing provisions. We see a lower level compared to 2022 at 31% of revenues. So I'm wondering if this is your new best estimate going forward? And maybe if you can give us an update on the talks with the regulators for this profit-sharing mechanism? Second question, a follow-up on the energy cost. Maybe you can provide us an indication of which portion is hedged for '24, '25? Or which portion is [ supplied by ] the RN tariff? And finally, if I may have an update on the EVA. This was cut, if I remember well, last summer, but I may have lost track. I'm wondering if it's still in place and what we should expect in 2024, whether at some point, it will be fully eliminated?

Geraldine?

Okay. So regarding the ElecLink profit sharing mechanism, as I was saying before, we update this number every year looking at the full stock of the provision because we are computing basically based on long-term assumptions and other parameters, the anticipated level of contribution over the life of the assets. So that's why there was a slight decrease in the percentage of that overall contribution in the total stock of the provision. Regarding energy cost, I'm not going to give you all the details on the different types of buying that we can make. I'm just going to say that RN represented more than half of our buying electricity so far. We are still significantly hedged as well on the rest of the electricity consumption, but we retain a part exposed to the spot. The EVA was indeed decreased last summer because we got some anticipated good news on some subsidies that we transferred to the EVA evolution. It's also important for our clients to see that we indeed pass through energy evolution in one way or the other as well. So that's how we decreased the level of EVA last year. Right now, the EVA is lower than what we had in 2023, but it's still there because we are still well above in terms of energy cost, the pre-crisis level, and this is what we communicate and what we work with our truck clients in a very transparent manner.

Your next question comes from Sven Edelfelt at ODDO.

Yes. So 2 for me. Firstly, you -- your cash situation is very sound even after paying dividend. So can you perhaps tell us if there has been any discussion regarding a potential buyback at Board level? And what are your thoughts about the potential ElecLink 2? That would be my first question. And then the second one would be about the profit sharing. When do you expect to cash out the money? And can you update us on the negotiation, please?

Okay. So first point, yes, our cash in hand is quite sound. We do not plan currently to buy back some of our shares. It has been discussed and decided so at this stage, at Board level. ElecLink 2, yes, you've seen that ElecLink 1 is a success. So we are actively working in that field. We are in France, for example, there are only 2 TSOs and RTE and ourselves. So this is something that puts us in a very positive position on the transmission, energy market. And so we'll continue to work on it. And yes, ElecLink 2 and other services that we could develop in the energy market is something that we work on. Nothing more to say at this stage, but hopefully we'll be able to discuss more this kind of topic during the year. PSM, we do not have today a final agreement with the authorities. Not that we are not willing to finalize the open point. Basically, it should have been done already last year, but they are not in a hurry to finalize that discussion because they have a lot on their plate and obviously, it's not their first priority. And for the moment, we don't pay them cash, we don't owe them cash. So they don't see that as something urgent. So that's why on that one, we continue with our own assumption and calculate, and we discuss that with our auditors to set the PSM at a level, which seems to us the best reflecting what we would have to share in the future. At this stage, I can't say more. We push. I hope that this year, 2024 will be the year with a final agreement with them because, obviously, it will be better for everyone to have more visibility on this, but here also working with authorities. I don't want to comment on any date, just commit on our efforts, which are very active, but we are not the only one to decide.

Your next question comes from Eric Lemarie of CIC.

Yes. I got 2 actually. The first on the Slide #31, you mentioned this potential from new destination. So you explained the 2 million additional passenger for Germany, but you don't give any explanation from the 2 million for Switzerland. Maybe you can share with us how you obtain this figures? And maybe you can tell us when you think we can expect this new destination to be implemented. And you mentioned as well some potential new operator, new high-speed rail operator in the channel. When do you think this new operator can start working with you? And I got a second question. You mentioned this Exit Entry System to be implemented in October. And you mentioned you have probably started to work on it. And I was wondering what should be the impact at the end of the day of this EES on your business, on your results in 2024?

Okay. So Page 31, indeed, we are working on those 2 destinations. And I will make you a short answer, you can find a lot of information about that, more detailed than what I'm going to say here on our website. We had organized a press conference in December of last year, so 2 months ago. We had a full deck about it, and you will find a lot of information, and then should you have additional questions, please do not hesitate to contact Virginie, I'm sure she will be happy to further inform you. So what do we do? Basically, the first element is to calculate what is the market potential, the market size. And to do that because there are already services. So you are mentioning Switzerland. So here, for example, we take the Swiss destinations, the Swiss stations. And we look what is the current traffic between the main cities in Switzerland and the U.K. mostly towards London. And then what we know is that depending on the duration of the trip between, let's say, London and Zurich, we know that if the train last more than 4 hours, for example, we are going to capture a ballpark more than 50% of market share. If it is above 4 hours, it will be lower than 50%. And there is a nice curve that we have not put in those charts. But again, that you will find in the slide deck, which is on our website that will show you the potential of each cities basically depending on the trip, duration from London to those cities. So we start with that, the existing market. We know that by adding options or by adding train to airlines, we will increase the market size. We took a very conservative approach of plus 20% of induced passengers. If you look at what happened recently, for example, in both Italy and in Spain, you will see that it is very conservative. And based on that, we calculate the market potential for rail, and that's how we end with 2 million passenger potential for Switzerland. The date. So it's not us who should answer that question. It's whether Eurostar, the legacy operator, or new entrants. Those new entrants, 2 of them have declared that they want to enter the London to Europe markets. One of them -- so the 2 of them are Heuro, It's a company from the Netherlands, and the other one is Evolyn, which is based in Spain. And you know that Evolyn is owned by the Cosmen family, which the main shareholder of National Express, now called Mobico, so they are experts in that business. The express that they wanted to start those international rail services and that they wanted to expand the destinations and also announced last year that they were willing to start as of 2025. My personal opinion is that 2025 is probably a bit ambitious. Nevertheless, clearly, it will not last 10 years based on the work that we have done, which is a real one. Today, if you want to buy your high-speed train from Alstom, I mentioned Alstom because Evolyn said that they wanted to work with Alstom, but there are others. We have done the work ourselves with Alstom and others to ensure that if they are designed, they are already made to the right decision to have rolling stock available to go without, almost no modification in the tunnel. This is a great advantage because as you know, when the design is ready to go in the tunnel, it's -- the cost of those adaptations are very limited. If you adapt the train after its production, the adaptation costs are very high. So that's why all of this makes us very optimistic that in a few years, and I remain on purpose a bit vague because again, we are not those new entrants. We are just supporting and enabling those new rail services to happen quite fast, but it should be a matter of a few years and much less than 10 because as we have communicated, we have reduced the time to market from 10 years to 5 years, and Evolyn, for example, has already started. So they have less than 5 years in front of them to get ready to operate. Then EES. Yes, so EES is a new control. For all -- so third-party passenger -- so third-country passenger. So basically, all travelers that are not from the Schengen zone, when they will enter and leave the Schengen zone, they will have to have -- to go through new checks, new biometric checks. We could spend a lot of time on it. The first time you cross, you will have both facial recognition and fingerprints to be given. And then after when you will become a subsequent traveler for the next 3 years, it will be only 1 of the 2 biometrics, checks or fingerprints. This clearly will add some complexity to the border crossing, and we have decided, as we did for Brexit to turn that, those new controls into a competitive advantage. So that's why we are very mobilized. We have invested. And so it will take a bit more time to cross the channel on our terminals. We have calculated that per car, depending on the number of passengers and so on, it will add 5 to 7 minutes to cross, okay? So if you compare that with our 35 minutes of being in our train plus with the formalities on the 2 ends, you cross in 1 hour or a bit more. It's not a massive change, and we have developed some innovation that we don't disclose for the moment. But we are very confident that we'll do it better than our competitors and hence, be much more attractive. Some of them are not really ready. We are ready. We have even done full modeling, as I said, of our terminals, thanks to a lot of IT new calculations. So that one, we are very confident that it's a positive news for Eurotunnel compared to its competitors.

Your next question comes from Marcin Wojtal at Bank of America.

So firstly, could you provide a quick update on where we are in terms of CapEx that is related to the refurbishment and upgrade of your shuttle train fleet, how much CapEx there is left? And when do you think you will finalize all these upgrades, please? And secondly, well, I just want to follow up on some of the previous questions on Eurotunnel operating expenses in 2024. So I understand that there will be savings in electricity. But overall, do you expect operating expenses to be up or down in 2024 in Eurotunnel?

Okay, Geraldine?

Okay. So regarding CapEx, we have started, I mean, since the 2022 main programs and, in particular, the [ mid-life 1 ], we are working on the first shuttle refurbishment. This program is going to last couple of years, as you all know, because as you know, we have 9 trains. So of course, we schedule their refurbishment very closely. And we -- and this is why year-on-year, there might be differences in the planning of that program. But overall, we are happy with the way this program is unfolding, and we are anxious to get them done as soon as we can because, of course, in terms of quality of service, reliability and capacity upgrade that would be a great achievement. Regarding the rest of the cost, yes, we expect to see the electricity cost to decrease in 2024 for Eurotunnel. For the rest, we are constantly working to try to contain and do some productivity measures. Nonetheless, even if the inflation has receded compared to 2023, we are still in an environment with elevated level of inflation, especially on salaries. As you know, we have 1/3 of our staff costs that are in the U.K. and 2/3 in France. In both countries, inflation is still higher than what we had in the past and the long-term target of the central banks. So that will be an increase as well on that front that we are trying to partially compensate with productivity measures elsewhere.

Your next question comes from Nicolas Mora at Morgan Stanley.

First, can we come back on the -- some -- the new price war in car shuttle? How -- I mean, a year ago, we started talking about the truck price war. Now we're talking about cars. I mean how bad is it in terms of the basically the price cuts offered by [ Irish ferries ], P&O and so on, beyond just offering free goods to customers? On pricing again and looking at trucks, where do you think the price gap is today between the shuttle and the ferry? That will be second one. Third one on yield management for cars, you're talking about switching to Phase 2. What is it? I mean what does it entail in terms of your ability to -- well, further push prices higher? And last one on OpEx and sorry, Geraldine, to come back to it. So in '23, we had EUR 14 million of savings from certificates on electricity costs. Will this come back again in '24? And on the rest of costs, where do you see, I mean, beyond wages, we understand well, where do you see the ability to deliver a bit of [ profitability ]? Where are costs going to be contained and grow below inflation?