Earnings Transcript for ANYYY - Q2 Fiscal Year 2024

Operator: Thank you for standing by. My name is Dee, and I will be your conference operator today. At this time, I would like to welcome everyone to the Aena's First Half 2024 Results Presentation. All lines have been placed on mute to prevent any background noise. After the speaker’s remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. I would not like to turn the call over to Carlos Gallego, Head of Investor Relations. Please go ahead.

Carlos Gallego: Good afternoon everybody, and welcome to our first half 2024 results presentation. This is Carlos Gallego speaking, Head of IR. It's a real pleasure being with all of you today. Our Chairman and Chief Executive Officer, Maurici Lucena will host the call together with Ignacio Castejón, CFO and myself. We are going to cover some of the main topics explained in this results presentation that is already available on our website and on the CNMV website, and we will finish with a Q&A session. Without any further ado, I give the floor to Maurici Lucena. Thank you.

Maurici Lucena: Thank you very much, Carlos. Good afternoon, ladies and gentlemen and thank you for joining us to go through our first half 2024 results presentation. As usual, I will start commenting the highlights of the financial results, and then I will give the floor to Ignacio Castejón, our CFO and at the end as Carlos Gallego mentioned there will be a Q&A session. I will start with traffic. Aena Group globally traffic increased year-on-year by 10.5%, up to 172.7 million passengers. And in Spain, in the Spanish network, the increase was I would say very considerable, 11.4%, reaching 144.2 million passengers. If I moved to the UK, London Luton Airport traffic grew year-on-year by 3.2%. In Brazil, our let's say first concession what we call ANB ENAIRE its traffic grew by 9.5%. And our second concession around Congonhas, around the airport of Sao Paulo, BOAB with its 11 airports grew the first half of the year grew by 6.1%, if we compare it to the same period of 2023. Let me now please briefly comment on the impact of the very impressive disruption caused by the IT outage of -- well that took place, the 19th of July. As you know, I think that the Spanish airports, we could clearly say that performed in relative terms pretty well. I would even say that they performed in relative terms excellently. Our Spanish airports remain fully operational, although, of course some activities during that day performed slower than usual. But at the end of the day, we had, let's say, only of course it's in relative terms 400 flights canceled out of more than 8,000. I must say that these 400 canceled flights most of them were canceled because of the disruption that the outage cost on the airlines. So all-in-all it was a really impressive event. But I'm a CEO of the company. I would say I'm very satisfied of our response because I think that operationally our response was very robust and fast. Okay. Now I will move if you allow me to the financials. You know that in the first half of 2024, total revenue grew by 17.7%, aeronautical revenue increased by 16.4%, commercial revenue by 17.4%, real estate revenue by 18% and international activity by 25.6%. And on the side of costs, total operating expenses grew in the first half of the year 3.2% which is not bad at all taking into account, impressive increase of our activity. So in total the EBITDA for the period came at €1.6 billion. And this means that our EBITDA margin stood at 56.6%. The net profit in the first half of the year increased by 33.1% reaching a total €0.8 billion. Okay. Now I move to commercial activity. In the commercial activity, we have witnessed a robust growth trend. And this robust growth trend I think that it simply continues the trend that let's say started back in 2022 and it continued in 2023. And fortunately it has even increased in the current year. Total sales grew by 13.4% year-on-year, thanks to mainly of course the traffic strength; secondly, the increased spending by EU and UK passengers; and thirdly, due to the introduction of new brands and concepts that are performing very, very well. In addition, as you know we continued our process of renewing the commercial offer. And I would say that the new contracts awarded have resulted in. I don't know, if we could, again, call them impressive, but not very short of impressive in any way. And I will give you some figures that demonstrate how strong our commercial perspectives are considered by the market. The minimum annual guaranteed rents of the contracts awarded in specialty shops exceeds by 21%. This minimum annual warranty rents of 2023 in 2024 in the current year and by 35% in the next year in 2025. And if I consider the food and beverage new contracts awarded, this year. These increases are 21%, if we consider 2024 compared to 2023. And 45%, as I repeat it, 45% if we compare the rents in 2025 with the rents in 2023. Now I will refer briefly to our 2025 tariff proposal. Yesterday, the Board of Directors approved the tariff proposal applicable from March 1 2025 at €10.4 per passenger. And this represents an increase of 0.54% compared to the current tariffs. And I clearly do not foresee any reason by which this proposal could be modified. In other words, I think that this 0.54% tariff increase will be the one that will effectively take place in March next year. If I now move to Brazil, I would like simply to underline that – you know that on the last quarter of 2023, we took full control over the 11 airports included in our second Brazilian concession, what we call BOAB. And in the first half of 2024, the EBITDA contribution of this new concession was €50.4 million, which implies an EBITDA margin above 55%. Now I move to dividends. You know that on May 7, the company paid a gross dividend of €7.66 per share. And this will be – this would be the end of my presentation in ordinary times, but I would like to add a very brief qualitative assessment regarding the announcement that yesterday was made by two political parties, Esquerra Republicana de Catalunya on the one hand and the Partit dels Socialistes de Catalunya the Catalan Socialist party on the other. This agreement mentions the airports that are owned by Aena in Catalonia. And I would like simply to convey at the present time three messages which I hope that are very clear. The first message I would like to convey concerning this agreement is that Aena had noticed yesterday during the Board of Directors meeting of the leak of this agreement and the Board of Directors agreed in real time, it agreed, what was later communicated to the market which is the following. Aena is going to carry out a very detailed monitoring of the development and the potential effects that this agreement may have on the company. My second message is the following one. For the above-mentioned purpose, we are going to have the support of the best legal experts which are going to be hired in the next few days. And thirdly, my third message is probably the most important one. The company will undoubtedly defend its interests and you know that in my period of more than six years as Chairman and CEO of the company, I have shown that this defense of the interests of the company has always been my main driver and the company's main driver. In other words, I think that we have shown in my more than six years period as Chairman and CEO of the company that the defense of the interests of the company will be the unique and the only principle that will guide our future actions in this regard. So, having said that, and of course we will have time to analyze this and other issues during the Q&A period, I now end my presentation and give the floor to Ignacio Castejón, Aena's CFO.

Ignacio Castejón: Thank you. Thank you very much, Maurici. Hello, everyone. This is Ignacio. I will go through some details related to traffic, revenues, cash regeneration and international footprint of Aena and after that we will start the Q&A as explained by the Chairman. Let me start with the updated traffic forecast that the company published some weeks ago. We revised our traffic forecast to 306.7 million passengers. That is a year-on-year increase of 8.3% compared to the previous forecast of 3.8%. Basically, the main drivers for that decision were the traffic performance for the first months of the year, the improved economic conditions and our views on what was happening from a traffic standpoint and what we think might happen in the following months. With respect to performance so far, if we look at the Spanish network we have seen a double-digit year-on-year growth as you have seen through these months with international traffic growing at 13.5%. If we look at our main markets market shares and growth rates are very similar to the growth that we have seen previously. And I would like just to highlight the impressive growth coming from our main airlines. Ryanair growing at 10.3%, Iberia expressed 10.5% and easyJet 13.3%. So significant growth coming from our main airline customers. I'll move to commercial revenues. If we look deeper into our commercial revenues, first, I would like to emphasize that total commercial revenue growth was 17.4% year-on-year. We reached €889.2 million at the end of this half -- at the end of this semester. In passenger terms we reached €6.2 per pax in this first semester. That would compare to €5.9 in the first semester of the previous year. If we exclude the straight lining and other adjustments of our commercial revenues the growth was 14% year-on-year. These revenues as you know are composed of two main elements

Operator: Thank you. We will now begin the question-and-answer session [Operator Instructions] And your first question comes from the line of Cristian Nedelcu from UBS. Please go ahead.

Cristian Nedelcu: Hi. Thank you very much. Can I ask you maybe the first one on this political agreement last night. Is the separation of Barcelona airport outside of Aena network a realistic possibility at this stage? And maybe just to clarify I think Barcelona is around 18% of your traffic in Spain. Is the EBITDA from Barcelona significantly more than 18% or not? The second one is on traffic in Spain. So we've seen a more cautious message from several airlines on ticket prices over the last weeks. Just zooming in on the last three weeks or so, when you look at your load factors or when you look at airline capacity revisions, is there any sign that demand is actually softening volumes are actually softening going forward versus what you thought a month ago. So that's maybe my second one. The last one, if you allow me, you've explained earlier the rents per passenger, the reason why they were down a bit year-over-year in the second quarter. Do you think part of the reason could be also that the European consumer is under pressure and consumer spending is under pressure, and that might be part of the reason of the weakness? And especially as you go forward, looking into the second half, do you believe the rent per passenger can start growing again, you have the benefits from the renovation on duty-free, I guess, several other moving parts there, but any comments that you could offer. Thank you.

Maurici Lucena: Thank you. This is Maurici Lucena. I will answer -- the -- your first question, and I will try to also answer the second one. Okay. Regarding the political agreement, I think that -- well, it's not that I think it's clearly the text of the agreement as you can clearly read and you can clearly now -- you can prove by reading it. It does not at any moment, say anything on ownership or separation of airports. It does not say that all. This is crystal clear. And that is why I said, that at the present time what the company Aena, has the duty to do is to carefully follow the potential development of this of the framework, of this agreement. But I would kindly ask you that, we do not speculate with concepts or words that detects, does not clearly include. And I think that this is very important. At no place, this text says anything on ownership or section of airports, and this is a fact. This – simultaneously, this is compatible with the fact that of course, the agreement does not have a univocal development. That is why, we are going to analyze it in detail with all of the vast resources of Aena and we will also -- we will hire, the support of the best legal experts, because this is our duty. And this is what I can say, so far. And on the other hand, regarding the financial tiers of different airports, within the Aena network you know that, we do not disclose airports separated. And it is not only because we are let's say very, very careful. It is also because our model -- the network model of Aina contained in the law that regulates our functioning it has a very strong operational and financial implications. And as you know we function financially and operationally as a network. So, this is an additional important reason why in our view it does not make sense to separate and disclose individual financial information. I don't know if the CFO or Carlos Gallego would like to add to this second question anything. If it's not the case, the CFO, Nacho Ignacio will answer the other questions you conveyed to us. Thanks.

Ignacio Castejón: Thank you very much Maurici. Hi Cristian. I think there are two questions left with respect to the first one. We haven't witnessed -- we haven't witnessed that kind of a reaction from other airlines apart from the one I think you were referring. Having said that we see that they are they keep operating according to our plans that those are the plans that we took into account to revise upwards our traffic guidance for this year. With respect to load factors, the answer is the same. We are not seeing a weakness in -- we are not seeing the load factors weakening these weeks. With respect to your question on commercial performance from a sales standpoint looking at the different retail business lines of the company, we are not seeing sales getting lighter. Sales are still performing very strongly in all those business lines. I think I was trying to refer in my remarks to duty-free with sales going up by 15 specialty shops 18 F&B 13. So we are seeing double-digit growth in terms of sales. What you perhaps have seen is that variable rents -- fixed and variable rent sorry in some of our business lines have performed less strongly than in previous quarters. There are some reasons for that. You know the one on duty-free basically we are hopefully all the construction activities will be done shortly and we'll be able to have the full offer there available to our passengers. Two we are adding more products to the duty-free offer. Those products are a bit lower on the price point and that could also be diluting a bit the duty free the variable rents coming from that business line on a per tax basis. With respect to other business lines, we have had some accounting adjustments affecting shops and F&B. That have also contributed a bit negatively. And that's why you perhaps are seeing lighter growth. But we are not seeing a material change in the trend of consumption coming from the passengers going through our facilities. Thank you very much Christian. We will move to the next question.

Operator: Our next question comes from the line of Luis [indiscernible] from Kepler. Please go ahead.

Unidentified Analyst: Good afternoon and thanks a lot for the time and probably answering my questions. I have two if I may. The first one is I'm aware that there's no segregation proposal within the agreement that we're discussing. But given what has been said in the agreement or what I think is [indiscernible] is all about how easy would it be to change the regulatory framework just to allow the input of regional authorities in the regulatory process? How close is the framework and how malleable is it? And then the second one is regarding electricity. What is the progress on the energy hedging front? If I recall correctly you were working on a PPA. What have you been able to achieve on this front?

Maurici Lucena: This is Maurici Lucena. Well, I said it before, I must insist on that. I will not -- and the company will not enter the very complex terrain of speculations. I think it would be not wise to do that. I think that the text says what it says and nothing else. And that is why I insist on that -- on the obvious. The agreement does not have a univocal development. So the duty of the company is to close -- to very closely monitorize what it will -- the next steps let's say. And what is more important you know that in the last, more than six years as Chairman and CEO, I think that we have never vacillated in defending what we interpret are Aena's interest and the protection of our shareholders. This is let's say a must and we will and I will not move from this assumption. This is my only guide, this is the only guide of the company. And we will just wait and see and we will react depending on the specific developments. But again, it is important today that we do not include in the text of agreement what it does not say because this I think introduces a perturbation in what at the present time must be the in my view the interpretation of the potential impact of any future development in the company in Aena. Thank you.

Ignacio Castejón: This is Ignacio speaking. On your second question with respect to our strategy on energy, as you know we have some short-term hedges for this year already in place. That's around 50% of our consumption in total. Thanks to those short-term hedges at fixed price that we give to our suppliers for around one-third. And you are aware that we are planning to implement some kind of PPA for the medium to long term. That RFP has already been launched. We should be receiving proposals from different market players in the following weeks. And it's our intention if those proposals are satisfactory to try to have that PPA closed before year-end. That's what we are trying to do. Thank you.

Unidentified Analyst: Are you talking about the PPA?

Ignacio Castejón : Yes, that's correct. We can move to the next question, operator.

Operator: Our next question comes from the line of Graham Hunt from Jefferies. Please go ahead.

Graham Hunt: Thank you for allowing me questions. Just two from me. Maybe on a slightly different political topic I wondered if I could get your thoughts on the impact of some of the protests that we've seen in Spain in recent months around tourism volumes particularly in the Spanish Islands, which is very important for you. How do you see Aena's role in managing the growth of tourist volumes for longer-term? And then on a shorter-term question just were there any delays or exceptional costs associated with the recent flooding and heavy range in Palma airport? Thank you.

Maurici Lucena : Okay. I will take the first question. The one regarding tourism and what we call in Spain or some call in Spain tourismphobia. Well, I think that the role of Aena is just to state very clearly that firstly when you look carefully to the Spanish economic history, you can clearly conclude that since the decade of the 1950s, well tourism has been decisive in the economic and social development of our country. You know that currently the relative weight of tourism within the Spanish economy is 13%, 14% and growing. So I think that the great importance of the tourism activity in Spain is completely assumed, and I would say, valued by the Spanish citizens, in general, and the Spanish authorities. And on the other hand, there are specifically many territories in which tourism is a lot more important than this 13%, 14% on average relative weight that I mentioned. If you for example think about the Canary Islands, the Balearic Islands, there the weight is much higher. So I think that this will remain so. And tourism will be in general valued in the future as well. And our role as airport owners and operators is try to accommodate the future trends of the tourism flows, and passenger flows in what depends on us and this will continue to be our function. Thank you.

Ignacio Castejón : Thank you, Maurici. Hi, Graham this is Ignacio speaking. On your second question, the answer is there is no material or significant impact on a cost standpoint related to the range in Mallorca. Thank you.

Maurici Lucena: Operator, we can move to the next question.

Operator: Our next question comes from the line of Elodie Rall from JPMorgan. Please go ahead.

Q – Elodie Rall: Hi. Good afternoon. Thanks for taking my questions. So the first one is, on the tariff agreement that you've announced of 0.5% increase. If you could give us a bit of color of the drivers behind this agreement. The second one, is on M&A. You're looking – obviously, we saw Aena bidding here and there within the UK. So it'd be helpful, if you could give us a bit of color on the pipelines and where you see Aena ending up the year with that? And lastly, if I may come back to this political uncertainty around Catalonia. It'd be helpful, if you could just lay out to us, what the agreement says exactly, because people outside of Spain, we don't really have much visibility or understanding. So is it just a really negative thing? Can it be offset by other things? What are the scenarios or what's the worst case? Thank you.

Maurici Lucena: This is Maurici Lucena, again. I will take two questions, the last one and the second one. I will start with the M&A. I'm completely aware that it must be frustrating for you, our usual answer when you asked for our hypothetical interest in certain airports, because we always, but we cannot do another thing. We always respond. Aena is the largest airport company in the world. So we analyze every potential M&A operation or almost, every potential M&A operation in the world. I think that you could extend this statement to what we put call the usual suspects. Many of them are our competitors. But I mean when I of course, respecting the legal obligations, when I talk with my colleagues that the CEOs of the largest airport operators in the world, I think that it's always the same. Whenever there's an international opportunity, I suspect that we all analyze it and what could be different is let's say, the depth of this analysis. And this also applies to the case you mentioned in the UK. I think that it's exactly, -- well I think no. I know, it's exactly the same answer, I gave to the previous operation, which was Edinburgh, I'm almost convinced that, it will be the same answer I will give in the future to any other international opportunity that could come. And I really apologize, because I can say no other. On the other hand going back to the political agreement. Now, I will joke a little bit. Of course, we could read aloud what the text says. I think this makes no sense. This is why I say I'm just kidding. But the text says, what it says nothing else. That is why I clearly said that, it does not say anything on and this is very important it does not say anything at all on ownership separation of airports. But the text, I think that it's clear that it admits, let's say various developments, if there's a development because there are many big ifs before potential development could take place. So that is why I go back again to our DOT, which I repeated but I will insist on that the agreement does not have a univocal development. And this is why we are going to analyze it in detail, whatever the potential development is and not only with our internal best Aena resources, but also for the specificity of the issue with the support of the best legal experts which are going to be hired in the next few days.

Ignacio Castejón: Hi, Elodie. This is Ignacio. I think you raised a question related to the 2025 Aena tariffs. Basically, just to confirm to you that the board approved yesterday the tariff proposal applicable for the next year that is amounting to €10.40. That's an increase of 0.54% that -- the increase is I would say 99.9% explained by the index. The index was already confirmed -- the index calculation sorry it was already confirmed by the CNMC, I believe back in May at the end of May. And the evolution of the index compared to the previous year is explained because of the performance mainly of energy prices. As you know, the index is tailor-made index that takes into account around nine items of our cost structure staff navigation security et cetera. Some of those items are going up others are going down and the one that is going down it's not really impacting the calculation of the index for the tariff of 2025 is energy prices. That's why we have that 0.54%. The tariff for this year has not included any COVID-related matters. I hope that addressed your question, Edolie. Operator, we can move to the next question. Thank you.

Operator: Our next question comes from the line of Sathish Sivakumar from Citigroup. Please ask your question.

Sathish Sivakumar: Thank you, again. I got two questions here. If I look at your cost items the security cost per pax is actually up around 6% and basically seen a spike in quarter two. How should we think about the evolution of this cost as you go into quarter three and quarter four? And also what is the driver that has actually seen an increase of 6%? And then the second one is around the -- just going back to the capacity comments just now today as we were talking about cutting capacity into winter. Are you seeing any initial discussions from airlines talking about taking capacity or optimizing it as you go in to the winter schedule? Thank you.

Ignacio Castejón: Thank you, Sathish. This is Ignacio. I'll address your questions. With respect to winter capacity, no change to our guidance so far. So we took into account the information that we had at the moment in time that we updated our case our forecast for this year that took place in June. And so far that's the guidance for this year. With respect to your first question I think was related to cost on security costs if I understood you well. And basically what we have -- you know that new contracts were signed by the company some months ago. And what you are seeing is basically in our P&L the consequences of those new contracts. And we are having cost increases in absolute terms and also because of the new regulation training potentially new staff joining those companies and more people because of the increase in activity plus also some construction works in order to have the new machines for screening purposes. That's resulting into cost increases in security. With respect to a specific guidance for next quarter and the quarter after that one, we don't like that guidance as you know. I think we would stick to the kind of EBITDA margin that we said at the moment in kind of the strategic plan sorry back in March with respect to how we see the next years. Thank you, Sathish. We can move to the next question.

Operator: Our next question comes from the line of Andrew Lobbenberg from Barclays. Please go ahead.

Andrew Lobbenberg: Hi, there. Thanks for your fine answer on M&A. You look at everything. I understand that. But will your enthusiasm to look at external assets be constrained in any way by the diversion of resources management resources potentially financial uncertainty relating to the current political situation will there be any interplay between the politics and your external M&A? And then the next question, and again forgive, me it's going to reflect my great ignorance of the political process in Spain. But the agreement that's been announced relates to Catalonia I think. But were anything to proceed in terms of actions? Would that require passing in the Spanish federal parliament? Would that require passing in the Catalan parliament? Would it require in both? What would be the political step for anything to actually happen? I appreciate you don't want to speculate but can you just help us understand from a small island here how the politics works going forward?

Maurici Lucena: This is Maurici Lucena, again. Regarding the first question I will be crystal clear. Nothing of -- there's no novelty concerning the basic aspects of the company and its strategic objectives. No change at all. So nothing that has recently happened, including yesterday publication of this agreement and nothing else will change our strategy and this includes M&A. So not at all this -- the publication, the leak of the agreement yesterday will affect our M&A stages, our M&A decisions, not at all. And concerning your second question, I think that I will not be of much help, because this is why I have insisted and as you can deduce when I have many times said that the agreement does not have a univocal development, I mean I have thought a little while what the best words to describe the position of the company are. And I think univocal means univocal. And we are seeing that the agreement does not have a univocal development. And this includes the aspects you mentioned. We cannot know so far. And that's why we have to wait and see. And our obligation is to be ready to very fastly have a position of whatever developments if these developments take place, which is a thing that we don't know as I said if these developments take place, which we cannot assure.

Andrew Lobbenberg: Thank you.

Carlos Gallego: Thank you, operator. We can move to the next question.

Operator: Our next question comes from the line of Dario Maglione from BNP Paribas. Please ask your question.

Dario Maglione: Hi, good afternoon. Three questions for me. The first one, sorry, to go back to this political agreement. I mean, political noise is not something new. There was a discussion already a year ago last summer about potentially spinning off the airports in Catalonia. So why in your view, the Board took new actions yesterday, following the leak of the political agreement? Is this agreement really increasing the risk for Aena? And if so why in your view? Second question is on the commercial revenue in particular specific shops where the fixed and variable rent passages in Q2 was down around 2% year-on-year. Why the drop? Third question on other operating expenses, which were up almost 17% year-on-year in Q2 after a good Q1. Why there was such a large increase? And does this increase include the €15 million provision for the GS7 that you mentioned above? Thank you.

Maurici Lucena: This is Maurici Lucena, again. Well, concerning your first question, I would like to explain our yesterday's reaction in plain words. I think that, no member of the Board of Directors of Aena including myself is impulsive. So taking into account what we knew, we analyzed it carefully, coldly. And we reacted and of course with my leadership in this issue as best as we consider appropriate. So this is what I can say. I mean, yesterday Aena's yesterday response was after a careful reflection was the best one I and the Board considered.

Ignacio Castejón: Thank you, Maurici. Hi, Dario, this is Ignacio, speaking. I think your second question was related to the performance of -- in the business line of SAS. Let me start just highlighting that SAS, that category from a sale standpoint, if I remember well, the growth in sales was around 18%, one-eight. So from a performance, consumers, passengers we don't have any concerns. If we look at our sales per pass, average transaction value or number of transactions that category is performing well. What has happened on the revenue side is that because of the straight lining the multi-linear straight lining last year we had a positive adjustment and this year that's new. Two, last year, we have some extraordinary revenues there. And this year we haven't, had any. And also we had an adjustment, a negative adjustment because of some minimum annual guaranteed rents that result into a negative adjustment in this year. So it's not something related to performance so far more to extraordinary movement last year and some negative adjustments. If you look at sales, the performance is very satisfactory and if you look at what the commercial team is doing in the terminals, they are adding space new concepts and so far so good. I think your third question Dario, was related to cost that Aena level. I want to think and other operating expenses, because you refer to a provision that I explained in my remarks. That provision is part of the other category. It's a legal provision. And it's basically because we are anticipating in one -- in court proceedings that we are having in one specific category that the result of those core proceedings could be against the company. And therefore we decided to mark for that provision of €14.8 million is two there have been other movements going up. We are seeing cost increases in insurance. We are seeing cost increase in some of our contracts -- most of our contracts that we are renewing for similar scopes are resulting into cost increases. That's something that we have shared with you in the past and what has happened this month this quarter sorry is exactly that that the result of those new contracts is being seen more in the P&L, than in the previous quarter because of some extraordinary movements and also because of the more traffic intense activity that we have because of the second quarter nature. That would be my answer Dario. If that’s okay, we can move to the next question. I am happy to follow-up later on. Thank you.

Operator: Our next question comes from the line of José Arroyas from Santander. Please go ahead.

José Arroyas: Thank you. Good afternoon. José Manuel Arroyas from Santander. Three questions. The first one is for the Chairman for Maurici, please. I must admit I was a bit surprised with the final last night and I understand that your responses so far have been holistic in nature about the whole agreement. But I wanted to understand and ask you, if there is not anything positive in the agreement. I mean specifically by this I mean I bet that there is an agreement to transform Barcelona into a hub airport. And my understanding would be that that would be a good news for Aena more CapEx, better airport. So that would be my first question. And my second question is on the regulated CapEx for Aena in DORA3. In March, you told that that the regulated CapEx should be around at least €5million. But we are seeing several airports reaching the nominal passenger capacity. And I wanted to ask you give at least €5 million CapEx that need to be upgraded, given how strong your CapEx is performing. And if you can please remind us on when the [indiscernible] will it start next year. And lastly I'm sorry, if this is just a matter of nuance but I wanted to ask you about M&A in a different way. We are seeing some M&A transactions in Europe being completed at very high multiples in some cases up to three times higher than Aena's on multiples. And I wanted to hear from you, if this is a good environment for Aena to deploy capital. Thank you very much.

Maurici Lucena: This is Maurici Lucena. Regarding the first question, yes, I understand completely your angle. You're right that we have so far concentrated on the – using the wording of or the words of a former Chairman of the Federal Reserve the unknowns. We are – we have been concentrated on the unknowns. It is true that the last government of Catalonia opposed with its political position the expansion of the Barcelona airport. We don't know so far what the new government will do because we still – we do not have so far a new President of Catalonia. This future President of Catalonia has not appointed its team. So we don't know. We don't know who will be the next President of Catalonia and her team. So what is true is that we come from a very let's say solid no to the expansion of Barcelona and this cannot worsen anymore. So in the future, it's a matter of how you calculate the probabilities. But of course, the – let's say, the average of the newest scenario for the expansion of Barcelona is at least just using statistics and mathematics. It's of course, on average in the forecast, a little bit better at least and this is true. This is true. This is I guess what you were asking. Thank you.

Ignacio Castejón: Jose with respect to your second question, this is Ignacio speaking. We are not changing the information that we provided to the market on CapEx for DORA 3. That was an estimate, an estimate at a rough order of estimate for DORA 3 at that moment in time. That's how we explained it. We are in the middle of DORA 2. Of course, we are working. We are prioritizing the different CapEx programs. The team will be working in the second part of the year and consultation will start next year. So there is no change with respect to that information provided back in March Jose Manuel. With respect to your question on M&A and multiples in the private market. I think the result of any transaction that Aena could be involved, a hypothetical transaction it will be -- will always be subject to the necessary return that the board and that we understand the shareholders will demand. So the multiple will be an output with respect to the potential valuation that Aena could entertain about any potential target. Thank you.

Operator: Our next question comes from the line of Fernando Lafuente with Alantra. Please go ahead.

Fernando Lafuente: Hello. Good morning to everyone. Just a follow-up for the Chairman on the M&A side. And if I look at the portfolio of the companies that Aena has acquired in the last few years, it's normally companies in which the company maintains a controlling stake and that can be operated by Aena. I understand that you look to every single opportunity in the market. But just to confirm, if you decide to buy something, it's important that you control it and that you are the one operating the assets, right? Then the second one is on the traffic guidance. If I look at the H2 with this 8.3% growth estimate, basically what the guidance assuming it's a slowdown traffic, basically during and after summer. And my question is what would be the reason for this slowdown? It's basically a more tougher comparable base in 2023. Hence, we are going or we are trending to more normalized growth rates or is there anything different or special that we should consider? And lastly, it's on OpEx. If I look at the evolution of the other OpEx in your P&L, the trends in Q1 and Q2, it's basically flattish compared to previous year with probably these increases in security and these new contracts being offset by energy. I'm not asking for a specific guidance, but what should be the trends to consider during the second half of the year and probably also looking into 2025? Thank you so much.

Ignacio Castejón: Thank you, Fernando. This is Ignacio speaking. With respect to your first question on M&A. What we have always stated as part of our strategic plan is that Aena as an airport operator believes there are transactions operations in which we can have a significant stake therefore controlling the stakes make more sense, because our situations in which we can influence the management, we can return the surplus, we can transform the assets, and that's something that is in -- that's something important for the company. Also from a sizing standpoint, consolidation, et cetera, we prefer investing in airports that we control and that can become part of our group, also from that financial standpoint. With respect to your question on OpEx and other operating expenses, sorry, Fernando. I think the trends that all of you are seeing, most of the items of that cost category related to our normal activities, maintenance security, CRM, et cetera, that kind of trend is the one that, I think, we should expect new contracts have been signed, and that trend taking into account the increase in traffic is something that we believe is what is likely to happen. That's why we said in the first quarter and what we have tried to say today, new contracts and activity and that's resulting into those cost increases of partially mitigated, as you were stating by energy prices, but also negatively affected, because of that provision that I was explaining earlier. With respect to traffic, I think, your first interpretation is correct. It's what we don't see anything special. It's basically the potential softening, because of the very high traffic growth that we have seen in the previous months. We have ahead of us the months, the busiest months of the year, and being able to have double-digit growth in those months would be something really, I would say, really challenging really difficult, very highly hypothetical, and that would be my reaction Fernando. Happy to follow-up later on, but I'd like move to the next question. Thank you.

Operator: Our next question comes from the line of Victor Acitores with Bernstein. Please go ahead.

Victor Acitores : Hi, Ignacio and Maurici. Good afternoon. I have two quick questions on Catalonia. The first one is to understand the big picture not regarding Aena, but on the big picture is that talking about this organic low [indiscernible], I think that the government needs for approval of the 176 seats in the parliament, okay? Is that correct? Because taking into consideration that Vox and PP going to vote against that means that you need juniors to in order to vote in favor to pass through. This is the first one. And the second is that your view on your timing you mentioned several times wait and see. What is the timing for the government to be through and when this government is going to be formed?

Maurici Lucena : This is Maurici Lucena. Concerning your first question, unfortunately, I'm not in a position to answer this question. I might just remind you all that this is the financial results presentation of Aena. So I will not opine on issues that do not have a direct link with Aena. I would in that case commit a professional mistake that, of course, I will at any cost avoid. On the other hand the second question just -- yes, yes. Sorry, the timing. I was so much concentrated on the first question that I forgot the second one. Now I have recuperated it. Okay. Yes, I can -- I will not be of much help. This is why I said before that the potential development of the framework of the agreement has many ifs, many ifs. So, I'm -- again, I do not feel comfortable to elaborate any forecast on a timetable, because I'm not able to do this even if I wanted to. So, I'm sorry, because I cannot help you.

Carlos Gallego: Thank you, Victor. Operator, can we move to the next question please?

Operator: Our next question comes from the line of Marcin Wojtal from Bank of America. Please go ahead.

Marcin Wojtal: Yes. Thank you for taking my questions. Firstly, a couple of technical questions. Could I please ask you about the real estate? I appreciate it's a small business, but it's growing double-digit. What is actually driving this? Have you actually developed any new properties, because that business is substantially above pre-COVID? Second is on your CapEx. I think it was €460 million in H1. It looks to me quite high actually. What do you expect in the full year? Could it be closer to €1 billion? And lastly, if I can also follow-up on Catalonia if you allow me. Could you talk a little bit about the relationship that you have had with the government of Catalonia over the last years and decades? What is their vision for airports for the role of tourist environmental issues, long haul versus short haul? Would you -- obviously we know the story about expansion of Barcelona Airport that has not been progressing very much. But is your impression that they have a different vision for the role of airports than perhaps the government in Madrid? And I appreciate, it's different governments which are changing all the time. But if you could provide some high-level comments on that it would be highly appreciated.

Maurici Lucena: Well, I will take your last question. Again, it's -- it would be a mistake that we speculated on what Catalonia as a whole seems about an issue. I think that at present the important thing is that there has not been yet elected a new President of Catalonia. When he or she is elected, this person will appoint a new government, and then -- but not before then we will know what Catalonia through its new government thinks about many issues. So far what -- the only thing that we can clearly see, as Aena is that we consider along with the Spanish government and this is very important that it was the best thing to do to expand the Barcelona Airport. This was the proposal of Aena. This was simultaneously the proposal of the Spanish government. The Catalan government that is coming to an end considered it, the other way. They didn't want the expansion of Barcelona. So that is why, I said that simply applying a good mathematics to the forecast, the average forecast scenario is at least a little bit better for us, concerning the expansion of the Barcelona airport. And I can say, nothing else.

Ignacio Castejón: Thank you, Maurici. Hi, Marcin. This is Ignacio speaking. I'll try to address your last few questions, on CapEx. I see what – perhaps, we haven't been that clearly, better CapEx figure for the total group. So, it's not only Aena. So it's a consolidated CapEx figure for Luton, Brazil and the whole Spanish network. With respect to your second question. Sorry, that was the third. On real estate, the company has been very busy signing many new contracts. Cargo is increasing materially, and we have been signing contracts with logistics companies such as DHL, AGFS, ground for handling DHL in Barcelona, sorry DHL in Alicante, all that is resulting into increases versus previous year in the real estate line, that is explained in that increase. Also we are leasing handling -- sorry ramp facilities to the handling operators, because of the new contract. So, the result of that is new activity, new contracts, contracts materially higher than the previous ones and that would be the reason behind the increase that you are seeing in real estate.

Operator: Our next question comes from the line of Nicolas Mora with Morgan Stanley. Please go ahead.

Q – Nicolas Mora: Yes. good afternoon, gentlemen. I'm going to leave Catalonia on the side, for now. But two quick ones, one on retail and one on tariffs. On retail, can you just update us on what's the share of the network or the store network, which is already fully renovated on the duty-free side and what kind of sales uplift you're seeing on the new stores? And number two on tariffs, I had in mind, you were still under earning due to traffic mix variations and you were due for compensation in 2025. So is there a reason why you're not getting paid for that time is distortion in that year in particular with the €0.05 per pax increase? And I will leave it there.

Ignacio Castejón: Thank you, Nicolas. This is Ignacio speaking. I'm not sure -- I'm not 100% sure that I understood your two questions, well. I'll try to address them but feel free to interrupt me, if I'm not addressing them. With respect to your second question, I think the dilution that you are seeing in these first six months of 2024, will be recovered according to the end of the interim regime in 2026. So that's basically, what the regulation establishes for the dilution or on the other side the accretion according to the applicable law. The reasons are, as you were referring to mainly related to traffic mix growth in different airports, et cetera. So that's also part of what has happened in Aena in previous years. It's something a bit of structural from our side.

Q – Nicolas Mora: But Ignacio you were due for €94 million dilution?

Ignacio Castejón: Sorry, I couldn't hear you, Nicolas.

Nicolas Mora: You were due for €94 million catch-up on tariff dilution from 2023 to '25.

Ignacio Castejón: Yes, but we cannot recover -- sorry, now I understood your question further to your comment Nicolas. We cannot recover that dilution in 2025.

Nicolas Mora: Okay.

Ignacio Castejón: That's what is not part of the tariff that we are discussing earlier in the meeting. Because adding that dilution to the tariff of this year, we would go above the cap that is applicable according to interim regime. With respect to your first question on duty free, I didn't get your point on the stores.

Nicolas Mora: On the stores. So yes, the new [indiscernible] contract gives them 12 months to refurbish the stores which were really lacking investments. So you've been undergoing a fair amount of disruption. So I was wondering, if you were -- if you're seeing the first stores coming on stream and the kind of sales uplift results you were getting from the refurbished stores.

Ignacio Castejón: Yes. Construction activities as you were pointing out from a contractual standpoint should be done before the end of October. They are on track and most of them will be even finished during the summer season. And that will allow us to have more surface or the retail operators will have more surface, more products and a better product mix with products with a higher price point that will allow us to have hopefully a higher range from that. That's why we have been operating -- those contracts have been operating sorry [indiscernible] range for these first six months because of that basically we haven't been able to trigger the variable range because of that situation. Okay. Thank you, Nicolas. Happy to follow-up later on

Ignacio Castejón: I think that was the last question operator in our list. So I think we could put an end to this results presentation for the first six months. And thank you very much to all of you from the Chairman and CEO, the team and myself. And a happy summer break for all of those that are leaving for that. Thank you very much. Bye.

Operator: Ladies and gentlemen, this concludes today's call. Thank you all for joining. You may now disconnect.