Aena SME SA
MAD:AENA
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Aena SME SA
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Good day, and welcome to the Aena's First Quarter 2018 Results Presentation Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to María José Leal. Please go ahead.
Thank you. Good morning and welcome to Aena's first quarter results presentation 2018. The call will be led by Aena's Chairman, Mr. Jaime García-Legaz; our CFO, Mr. José Leo; and myself. At the end of the presentation, we will open the Q&A session. I will now give the floor to Mr. Jaime García-Legaz.
So good morning. I'm very delighted to be with you today. I'll comment on the key highlights and I'll try to be as brief as possible in order to let the Q&A session be as wide as possible. With regard to passenger traffic, we've been able to grow up to 53.2 million passengers that means an increase of 9.2%, and the increase at the Spanish airport network reached 9.7% an increase up to 49.9 million passengers. We have to bear in mind that the Easter calendar plays a role in this growth increase and figures. Last year, the Easter holidays took place in April. With regard to international traffic contribution, it dropped to 65.8% compared to the 67.2% in the first quarter of last year. Growth in international passengers stood at 7.4% and domestic traffic went up by 14.6%. Luton Airport is doing fairly well, 3.3 million passengers.Coming into the results, total consolidated revenue has increased to EUR 841.8 million, that is 6% growth compared to the first quarter of 2017. Commercial revenue accounted for 26.4%, a slight increase over the first quarter of 2017. And this commercial revenue grew by 7.5% to EUR 221.9 million. EBITDA for the period stood at EUR 364.2 million, that means represent a growth of 13.8%, compared to the first quarter of 2017. And the margin is now 43.3%, compared to the 40.3% registered in the first quarter of 2017, where there is an effect coming from the accruals of the local taxes for the full year and it's also explained by business seasonality. So consolidated attributable net profit came to EUR 111.1 million, that is a 37.4% increase compared to the first quarter of 2017.Moving to the cash flow figures, there's been a decrease in cash flow from operating activities of 12.1% to EUR 517.7 million. And it is basically affected by the corporate income tax refund that took place in the first quarter of 2017 relating to the financial year 2015. If we exclude this effect, then the cash flow from operating activities would have increased by 8.2%. Our accounting net financial debt has decreased to EUR 6,870.6 million and that includes Luton's net financial debt which amounts to EUR 412.5 million. So we have reduced the net financial debt ratio to EBITDA of Aena from 2.8x EBITDA in 2017 to 2.6x EBITDA as of the 31st of March, 2018. Investment paid in the first quarter of the year amounted to EUR 185.2 million, involving EUR 101.8 million more and that paid in the first quarter of last year.With regard to the regulatory framework on the 1st of March, 2018, the 2.22% reduction in airport charges, it was approved in the current DORA entered into force. And since the 1st of April, 2018, Aena keeps the current commercial incentive scheme for the DORA period, benefiting new routes, passenger growth on long-haul routes and fostering traffic at airport with lower passenger volumes and reducing the seasonality of airports which have a strong seasonal component. These are the key highlights of our figures, we'll move into business trends and traffic data.And I'll pass the floor [ in ] to José Leo.
Thank you. Good morning, everyone. Getting a little bit more into the detail of the traffic data this quarter, I think, clearly, the first headline here is the significant growth in domestic traffic versus growth in international traffic. This is the main trend that we can see this quarter. The 14.7% growth in the total domestic traffic is no doubt enhanced by the one particular element, which is the increase in the subsidies -- in the state subsidies to the inter-island traffic, affecting both the Canary Islands and the Balearic Islands traffic. The combination of those 2 traffics is growing by 30% year-on-year. Although the weight is relatively minor in the total, they represent around 13% of the total domestic traffic, clearly is having some energy if you like to the domestic traffic growth.The international traffic is growing at very good rate and it's growing very healthily, but we cannot hide the fact that the United Kingdom traffic for the first time is going down by 1.3%, between the comparing quarter 1, 2018, and quarter 1, 2017. This is not a big deal in terms of absolute numbers that decline represents around 90,000 passengers, but is something we need to follow-up. We need to closely monitor, that -- the drivers for that are difficult to identify, but is clear that the sterling keeps devaluating year-on-year. And also, we can observe significant recovery in alternative touristic destinations in the east Mediterranean area. I think, that's the main, if you like focusing on the main aspects of the traffic data performance this particular quarter. And of course, we can comment further as part of the Q&A.Moving onto the performance by business lines. I think, all the lines performed really well, on the back of the traffic performance, but also, I mean, keeping an eye on the costs side of the business we -- although there are pressures, and those pressures as we have discussed a number of times will -- some -- at some point in time have an impact, but we carry on being -- managing that cost base very, very effectively and very efficiently. As a result of that, margins are growing in all the areas. Looking at particular highlights, in terms of the aeronautical revenue, clearly the commercial incentives are -- they remain relatively low level as a result of the change in the scheme, in the approach that we took 1 year ago and we keep in place for this coming year as the Chairman mentioned before.Looking at the commercial activities, once again the margin is growing, being close to 69%. The business is performing well, but no doubt, part of that is on the back of the increase in the minimum guarantee rents arrangements that we have in place. And businesses like duty-free or car parks are being also affected in the first case by the fact that the growth is coming from the low cost side of the business. And also by the fact that in the particular case of the car parks, the particular situation this year when the Easter departures took place before the end of the month, and the returns took place after the end of the month, obviously is affecting that. Other than that, food and beverage, VIP services in general, they are performing really well and we can comment on that, once again as a result of the -- as part of the Q&A session.With regard to Luton. Luton is doing well. Clearly, the growth in traffic is not double-digit, that's part driven by the Monarch bankruptcy as well as by the fact that Ryanair decided to take away a couple of best aircraft there, but generally the Luton performance is really good. On a like-for-like basis, the EBITDA is growing close to 27% year-on-year.On Slide 8, I think, I have already mentioned Luton's performance. So I would only focus for a while on the commercial revenue side of the business. The Luton's commercial revenue grew by 16.7%, that's really good performance is clearly the pay-off of the changes we introduced in the commercial offering by opening new shops, by setting a new layout as part of the broader Curium Project, which is transforming the shape of the airport. And that will -- the final works are coming and the works will come to an end later on in the summer.And that's the end of my section and María José Leal will make some additional remarks on the income statement and the financial results. Thank you.
Thank you, Jose. As Jose mentioned, the financial results are very much in line with what you can expect given our traffic performance. If you look into total revenues, aeronautical revenue is very much impacted by the reduction of tariffs that has been applicable since March 1, 2018. And overall growth of commercial is affected by Easter and also by the contractual agreements and [ mix ] included in those agreements as well as traffic. Luton is performing extremely well, especially given that the commercial activity is almost now fully into force and we will see that as the year goes by. EBITDA margin has increased from 40.3% to 43.3%, that is a reflection of our cost efficiency measures that we still keep in place, even though as we have already advanced and we will see on the next chart. You are now seeing what we have been advancing for a few quarters and that is the increase in OpEx that we were expecting that is very much in line with the guidelines we have given, and as well, we did DORA estimate, we made public back in 2016 and 2017. Net profit goes up by almost [ 30% ] -- 37.5% and that is the result of the operational results and as well the performance, and all the adjustments we have done to toward [ that, the structure ] to reduce the finance expense. The deleveraging process of the company has been going into over the last years. And on the other side and on the contrary effect, income tax goes up as a result of the good results on the operational line.Looking into income statement. And most of this has already been shared with you, but I think, it's worth focusing on operating expenses -- excluding operating expenses. Luton expenses are going down as a result of a one-off impact that was recognized in 2017. And that is the cost associated with one of the agreements reached with the Luton airport employees to close the defined benefit pension plan, the impact of that was EUR 8 million. And excluding Luton, operating expenses go up by 1.7%, EUR 10.4 million. [ Supplies ], as a result of the agreement on air navigation services that were signed back in 2017, go down as expected. The staff costs are including some people incorporated late in 2017, and as well the estimate of the staff cost to salary increases to be increased in 2018 by 1%. Although, as you know, this is not set yet, as it will be [ now ] wherever is agreed for the public sector. Other operating expenses are increasing by 3.9%, EUR 11.6 million and it's mainly due to the new passengers with reduced mobility services, that the new contracts are already in place and that is impacting us by EUR 4 million. Security services, which is not yet included in the new contracts is going up by EUR 2.7 million, increase in some technical assistance services EUR 2.1 million. And as a result of the new management -- the new VIP management in process which is not being internally managed by Aena. And we are including new quality KPIs, this is increasing by EUR 1.8 million. There is not much more to note on OpEx and on financial expenses as we have already mentioned, the deleveraging process of the company is impacting these by reducing the finance expense by EUR 1.8 million. And there was also a one-off effect booked in 2017, and there was a provision of EUR 3.5 million that was disclosed in our accounts in 2017.And I think, there's not much more to note and we will now open the Q&A session.
[Operator Instructions] We will take our first question from Vittorio Carelli from Santander.
The first one is regarding to the K factor. According to the first quarter trend, it seems that probably the effect of the K factor will be higher, also in 2018 compared to 2017. And the traffic mix is as changing a little bit, can you confirm this? Regarding retail, it seems that due to the Easter effect, you are missing about EUR 6 million to EUR 7 million of revenues in car parks and probably also car rental. So assuming -- including these revenues, your spending per pax should be flat. Is this trend possible -- is possible to confirm this trend also for 2018? And the last but not least the -- what value you are missing still to decide whether to present the business plan to the investor community?
Okay. I would start with the first -- the third question. With regard to the strategic plan, it is almost finished. We are just in the last phase of consultations with different ministries in order to ensure full consensus of the public shareholder, but the technical work has already been accomplished. We have a clear idea of what the content of the strategic plan should be. And all the pillars that we have been working on will be there. That means that I can confirm that both aeronautical and commercial businesses will be part of our core business, but an important pillar would be real estate development. And of course, international M&A will have a defined strategy within the strategic plan. I would also confirm that another point would be the capital allocation and dividend policy with the clear guidance of -- on these 2 points that will be part of the strategic plan. The calendar is also in front of us, we expect the strategic plan to be approved by the Board of Directors in a meeting that will take place in the last week of May.
Okay. And presented in June.
Well. There is not a fixed date to present the strategic plan, but indeed we -- our intention is to make a public presentation of our strategic plan within the next 2 weeks or 3 weeks after the approval of this strategic plan.
Well. I will answer the question on the K factor. Well, I would rather not anticipate what the rest of the year might be. What I can share with you is the K factor impact in the first quarter, which is a positive one is concentration rather than dilution by EUR 11.4 million, that compares with EUR 17.8 million concentration in Q1 2017. The main reason for this quarter to play the opposite, let's say impact or effect is because the way the DORA sets the tariffs is on a calendar basis -- on a calendar year basis. But you may recall that the DORA ended up being approved late in February 2017. That gave rise to a situation whereby we are applying the tariff reduction from 1st March, a year to [ 31st March ] or 28th February, next year. So -- we have to distribute the impact of the decline that would correspond to the first 2 months of the year through or across the remaining 10 months. So the first 2 months are always accreting rather than diluting the yields. But clearly that -- the figures are showing that the concentration or the accretion in the first quarter of 2018 is substantially less than it was in 2017. And as you rightly said, Vittorio, the traffic mix is playing a significant part with the domestic traffic growing more than the international traffic that is not surprising. I hope that helps. Thank you.
Vittorio, looking into retail income per passenger. And if we only consider pure retail, duty-free, specialty shops, and food and beverage, these lines on a per passenger basis remain flattish in Q1. You're right to point out that the parking and the rental car business are diluting slightly the impact of these business lines on a per passenger basis. And until we close April, it's difficult to forecast what will be the result. But you're right to point out that we do expect [ EBITDA ] performance in April of both business lines affected by the Easter seasonality. You know, we don't provide guidance over the year, but if we look at pure retail which is flat in Q1 and you consider that, we still don't have full impact of the new food and beverage tenders as Barcelona is coming into force this month and May. And we expect Malaga to come into force by the end of this summer, that should be uplifting slightly the total revenues on that business line.
Our next question is from Nicolo Pessina from Mediobanca.
The first question is a follow-up on the K factor. I'm wondering, if it's possible to have a breakdown of the EUR 11.4 million impact in the first quarter of the year between the calendar effect and the traffic mix effect? Second question is on the incentive, I understand that the incentives from the DORA are confirmed. So would you expect in 2018, an impact broadly in line with the one we have seen in 2017 or there is any other element to drive a change. Last question on London Luton, you made clear, you were not interested in acquiring the 49% [ Luton sale by R&D+i ]. I'm wondering, if you would be interested in selling the -- your 51% at the same price, R&D+i has been able to close the deal on [ fixed rate ]? Thank you.
Thank you, Nicolo. I will address the third question. We analyzed the possibility of acquiring the 49% stake in Luton airport. The preemption right was there. We made our own figures, we hired the services of Banco Santander in an open tender. And there was a total coincidence that the value of that asset was below the preemption price that we should exert to our views, they were just -- which led us to make the decision, anonymous decision within the Board of Directors, not to go for the 49%. But we are a long-term strategy company, we invested in London Luton not purely because of the financials, but because we want to be there, and the concession we want to operate the airport. We want to change the way the airport was run, and we are proving to be successful. And in terms of traffic, in terms of EBITDA, in terms of revenues, in terms of everything. So there was a very clear sign coming from Aena, when we can come into airports, it is because we have a long-term view. It is not purely financial, it is not that we want to make a gain out of our investment in the short-term or in the medium-term. So it wouldn't be aligned into our strategy to sell a stake in Luton. In addition to that, we are working hard in order to extend the concession. We are working very closely with Luton government and with the Luton airport holding team. And we believe that there is still a lot of work to be done within Luton airport in order to make it an even more successful airport. And that is part of our commitment in the years to come. So I believe that it makes a lot of sense to stay within Luton, and to be able to make the successful story of Luton airport, once we arrived into the airport, an even more successful one.
Well. I will answer the other 2 questions. In terms of the K factor, I'm afraid, I think, the information we have provided is sufficiently good to work on it. So we are not planning to provide any more breakdown or detail. With regard to incentives, once again, I'm afraid, we don't give guidance, but it's clear that the incentive scheme we have in place now is definitely involving smaller figures that the previous one. And we don't expect any major shake-up, any major change in trends over the rest of the year. So that, you can take from that what the conclusion might be.
We will take our next question from Guillermo Fernández from Deutsche Bank.
Both of them are around the recently announced plans by the Ministry of Transport to develop both Madrid and Barcelona airports. Not only on the real estate but by expanding capacity, I wanted to have your view on how it could impact your CapEx plans both in the next DORA in the period 2022 to 2026, but also if there is a chance for the CapEx to be uplift in the current DORA?
Okay. I will start with the question. Thank you, Guillermo. Well, we expect to stick to the current DORA in terms of CapEx with regard to Madrid airport and Barcelona airport. We consider that no additional CapEx is required in order to cope with traffic demand growth in the years to come. But it is quite clear that starting in 2022, additional CapEx will be needed. So within the new DORA, definitely CapEx will be part of it. This has been part of the talks that we've had with the regulator though the announcement and the endorsement of both master plans Madrid and Barcelona by the Minister of Transport is a good sign of the commitment to these 2 airports in the future. We also believe that the investment at both airports will require -- will also mean that the EUR 450 million per year, the cap that is part of the current DORA will need to be amended because additional investment per annum will be required. And that has also been part of the conversations with the regulator and if you look closely into the figures of both master plans, Madrid and Barcelona, you will see that the EUR 1.5 billion investment for Madrid and EUR 1.5 billion investment in Barcelona together with Girona airport, which is a more complex development are parts of the public plans of Aena that have already been endorsed and supported by the Ministry.
And maybe just a follow-up on the real estate development plans. The figures in -- for example, yesterday's presentation by the Ministry were huge. He told about [ EUR 3 billion ] real estate development plan in Madrid. If you could clarify how much would be the expected equity investment by Aena or how much is the book value of the lands to be put there by Aena?
Yes. Before we move into your concrete question. I'd like to clarify that with regard to Barcelona, we are talking about a 20-year development. With regard to Madrid, it is a very long run development. The Ministry talked about 40 years, which is also the expected time to develop the full area. This is not our own conclusions, it's basically the result of the works done by Arup, which has been the consultancy firm that we hired for the real estate development plan in the case of Barcelona. And in the case of Madrid, it's been IDOM, an international consultancy firm, so it's basically technical work. So it's really long-term, if you look into the per annum figures, it might not be so big. In terms of the model, we are not intending and this is not part of our strategy. We are not intending to sell the land. Aena will continue to be the owner of the land. And [indiscernible] -- so that means that our idea is to bring investors into all these development and with the equity provided by investors and with the proper leveraging of the structures to be built then to do the investment and the development of both areas. We are also in the position to announce that we will hire 3 different companies in the next Board of Directors meeting. One of them will take care of the corporate structure that Aena will build in order to develop the real estate business. A second contract, all of them will be part of a public tender process will focus on the legal advice that Aena will hire for these design of the tenders that will develop all these business. And the third contract will have to do with the assessment of all the real estate assets that we own. This will also be done by a third firm because we don't want any conflict of interest between the firms that will do all this work for us. So these will mean that the process is ready to start and so that means that in the end of May, we will launch the 3 tenders to hire the 3 companies I mentioned before. Coming back to the figures in terms of book value of all these assets, I will pass the floor into -- to José Leo and María José, where both of them will probably provide a more accurate detail on all these figures.
Hello. Well the total book value of both Barcelona and Madrid airport land combines around EUR 450 million and that as the Chairman said will be developed in long run and it will take a couple of decades in the case of Barcelona, up to 40 years in the case of Madrid, so it is a long shot.
Next question is from Charles Maynadier from Kempen.
I have 2. The first one on security contracts. So we've seen recently in the Spanish press that [ Prosegur ] and Securitas don't want to participate in the tender for new security contracts at the big airports or larger airports, Madrid, Barcelona. And -- so the question is would you need to increase the prices you offered in case there is no participation in these tenders? Just trying to understand, what if there is potential risk that you need to increase these prices which you've communicated and that are part of the DORA OpEx increases? That's the first one. And then just last one on M&A, also seen in the Spanish press that you could be interested in the [ purchase ] of Japanese airports. And I think, the largest one coming up will be the network of 7 Japanese airports in northern part of the country and so could you confirm that this market on all these assets, specifically could be the first step in Aena's international expansion? And if so, could you give more color on why you think this is interesting market or assets and I understand that you can't really say much now but just try to -- so if you could just give bit more color.
Yes. Moving in to the first question. The Board of Directors met yesterday and granted the contracts on security. So most of them and certainly the largest part of all these package was granted to well-known security companies that are already present in our airports and that do a good work in terms of security. So you mentioned 2 concrete companies. Securitas is not part of our airports right now in terms of services. So this is not really new. They made the decision not to go for Spanish airports some time ago. And so there is not new in terms of companies. And we can say that all the companies that have been awarded the contracts in our airports, first-class security companies and there the outcome of all these tenders has been positive for the company. We have been able to allocate this contracts within the cost -- the expected cost of these contracts. There's only a small contract in the Canary Islands, that will be launched in the next few days, but this is not really a big contract in terms of the whole network. Both Madrid, Barcelona, Palma and Malaga, I mean the big airports are fully covered by first class security companies without an increase in the cost of these contracts compared to our expectations. So this has been more, maybe the noise in some media than part of a reality. And with regard to international M&A. Yes, we have been visiting Japan, we have been meeting with the Japanese authorities. We have also visited Hokkaido and we've met with local authorities, and as well as with some Japanese companies. And we have said that we would be interested in these package of 7 airports in Hokkaido, but only if we are able to be part of a consortium together with local companies. And if that is the case then that would be part of our -- or the next steps forward, but we were not willing to go to Japan and to particularly to Hokkaido on our own, standalone strategy is not what we have in mind. The reason why we believe that Japan is an interesting country for investment as Point #1, legal certainty, regulatory framework, which is #1, I mean, it's second to none in terms of international standards. And expected traffic growth, the Government of Japan is promoting tourism in the -- short, medium, long run. Tourism is doing extremely well. The number of visitors into Japan is growing double-digit several years in a row, and we believe that it would make sense for Aena to explore these investment opportunities in Japan.
We will take our next question from Andrew Lobbenberg from HSBC, London.
I was wondering, if you could talk to us a little bit about the trend performance on revenues in the commercial revenue side of the VIP business. And to what extent, is it getting revenues from long queues, and is that sustainable? And then you described, how you did the valuation work on Luton and found the preemption price too high relative to the valuation that you found for the business. Are you able -- are you able to, I don't know whether you can. Are you able to say, how your preemption price varies relative to the price at which the asset went to market?
Well. Andrew, I'm afraid, the answer to your second question is, no. And with regard to the first, María José will elaborate a little bit more. Thank you.
Thank you, Andrew. Thank you for noting out the improvement of VIP services, because it's a business line that even though until now was not too large, it's becoming larger, and as it happened with the parkings 2.5 years ago. The improvements simply relate to the change in management. In the past, this was managed by external parties that we [ had, this complete ] the concession to the third parties, who were selling the entrances on the parks for us. And now this is being managed internally by the Aena team. We have changed their pricing structure, the offers, how we approach the distribution channels. We are including as VIP services, the Fast Track, and another business lines and so [indiscernible] services, and the way we approach airlines. We will most likely in the future also changes slightly in segment, a little bit more the VIP lounges, and it's a project that we are very much excited in following up, given the good results it's coming up to, but it's got nothing to do with queues regarding security line, queues and so on. We are still complying with the KPIs establishing it around for -- there is no issue on that regarding in 2018. Thank you.
And we will take our next question from Arthur Truslove from Credit Suisse.
It looks like this year, if things continues to go as plan, then your net debt will continue to come down. If you don't buy anything and assuming that you continue to have a payout ratio of 80% of net income, is it reasonable to assume that it's possible, there'll be additional payouts to shareholders or indeed would you actually let the net debt continue to fall?
Well. The discussion over leveraging -- additional deleveraging and capital location payout would be part of our -- the Board of Directors meeting to take place in May. As I said before, we are completely conscious of the fact that deleveraging to a certain level, and if it's not combined with CapEx, international M&A or investment in real estate would start destroying value of the company. And we have that in mind in order to make our proposals to the Board of Directors. We -- the decision on the 80% payout was made, as we explained some time ago on purely rational terms. So we were able to bring this discussion into the Board of Directors meeting. And we have to bear in mind that the figures on leverage will decisively be depend on how far we want to go in terms of an international M&A, and on the final decision regarding CapEx in real estate plan. I think, it's maybe soon to make any statement on that, we can comment on how we see things, but the final decision and clear guidance on capital allocation leverage and payout will only come as part of our strategic plan to be approved in the next 3 weeks to 4 weeks.
[Operator Instructions] We will take our next question from Johannes Braun from MainFirst.
I have 3 questions. Firstly, on costs again, obviously, you warned us in previous calls about the cost inflation that would come in this year, but as you already said for Q1 inflation was actually pretty moderate with total OpEx almost flat. So just in terms of modeling and time, just wondering when the cost inflation actually come in, now that you have signed the security contracts also. Then secondly, can you confirm that once the corporate structure for the real estate and also the international business is set up, you intend to take a minority stake in these businesses as you bring external investors. And very lastly, in your report, you mentioned that a new contract at Barcelona for food and beverage will bring 30% more food and beverage revenues at Barcelona airport. Can you just tell us how big that contract is, so that we can get a feeling what the actual -- the actual impact is in terms of absolute numbers? Thank you.
Okay. I would take the first question. With regard to the real estate business, we -- I think, we need to wait for the consultancy to be made on this particular business. There is a very clear idea in mind, which is to segregate the real estate business from aeronautical and commercial. And our idea to be confirmed by the consultancy firm to be hired is to build a different company, which would run the real estate business on segregated basis. But then the concrete development of the different real estate classes, asset classes will be part of the work to be done by the company to be hired. So that means that it may happen that in some of the asset classes, we could be a majority investor. In some of the asset classes, we could be a minority investor. We don't have a predetermined position on whether we should be a majority or a minority investor in the different asset class vehicles that will run the real estate business. We would be able to provide a clear answer to this question once all these consultancy works will be finished. With regard to the international M&A structure, we feel that being a majority shareholder could be in some countries or under certain circumstances an obstacle for Aena to expand internationally. That's the reason why we are considering a new vehicle to do the international M&A in which the obstacles coming from certain governments that would be reluctant to let public owned company come in would disappear.
Well, with regard to the cost inflation, clearly, the numbers we are showing so far are not reflecting that and if you like indication that cost pressures will start ticking. I think, the first reason for that is some of the large contracts are still in the process of being renewed. The best example of that is the security contracts, which by far are the largest element of our cost base. And you know, these days, we are working on it. And that's the reason, in a way the process has delayed and the renewals of the contracts are taking place later than expected, but definitely the cost increases will take place. Once again, we always make the remark that that doesn't mean that on a per passenger basis the cost will go up necessarily. But in absolute terms, in through our P&L, you will see the operating cost figure going up. And when that effect will take place in full, we don't really know. It is difficult to say whether that will take place in 6 months from now or 9 months from now. But the indication we always gave is that for the large contracts for those that you can see third party services that you can see under the other operating cost caption. We expect the overall figure to go up on an annualized basis by close to 15%. We said that a number of times. Of course, looking at the whole operating costs figure that will be less than that because the staff cost and the air traffic service costs are not going to follow that pattern. But the whole operating cost figure on an annualized basis can perfectly well grow by high single-digit figure. I have also -- I should say, as well that that will be a one-off. We don't expect that to take place in years to come. That will happen once and then we will take care of the rest of the years, but that will happen because it's clear that the Aena's cost base and the Aena focus on cost efficiencies over the last years took us to a situation where we need to really refreshed or refurbished our third party supply, third party services cost bill to deliver the quality of service and the kind of experience we want our passengers to have. María José will deal with the third question, remaining one.
Thank you, Johannes. Looking at the food and beverage contract in Barcelona, the main purpose of that contract was to renew the offer adapted to new trends and increase and improve the quality of the service offered to passengers. There is an increase of space, which implies an increase in income. As you point out, our estimate, current estimate for 2018 of increase of revenues coming from that contract is around 30% and the value of the contract in 2017 was EUR 31 million.
As there are no further questions, I'd like to hand the call back to speakers for any closing remarks.
Okay, thank you. Thank you very much for attending the call. As always, we remain at your disposal for any further doubts you might have. Thank you.
That will conclude today's conference. Thank you for your participation, ladies and gentlemen. You may now disconnect.