Fraport AG Frankfurt Airport Services Worldwide
XETRA:FRA
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
44.02
56.8
|
| Price Target |
|
We'll email you a reminder when the closing price reaches EUR.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Fraport AG Frankfurt Airport Services Worldwide
You don't have any saved screeners yet
Ladies and gentlemen, thank you for standing by. I'm Stuart, your Chorus Call operator. Welcome, and thank you for joining the conference call of Fraport AG. [Operator Instructions]May I now hand you over to your host today, Christoph Nanke, SVP, Head of Finance and IR. Please go ahead.
Thank you, Stuart. Also a warm welcome from my side. With me in the room, and this is not obvious these days, I have Dr. Matthias Zieschang, our CFO. He will guide you through the presentation, and then there will be time for your questions. So let's start.
Yes. Thank you, Christoph. Good afternoon, ladies and gentlemen. And also a warm welcome this afternoon and to our Q1 presentation here from Frankfurt.Unfortunately, today, we are looking at a quarter, which is not comparable to what we ever have seen before. The coronavirus pandemic affects global aviation to an unprecedented extent. Today, we see a decline in traffic beyond 90% of the numbers we saw last year. Therefore, keep in mind that when we are talking about the first quarter of 2020, it was just the beginning of the crisis and is not fully reflecting the consequences of the travel restrictions we have been facing since then.With this, I would like to start my presentation on Slide 4. Driven by the significant declines in March, we see on the revenue side, a decline of 18% or 13% when adjusted for revenues related to CapEx at our international airports according to IFRIC 12. To counter the negative traffic and revenue performances, we have introduced the hiring freeze and the adjustment of shift plans already in February. However, one of the most powerful instruments during this crisis, the application of short-time work has only started end of March, so that the effect of the countermeasures until end of March is relatively limited, resulting in a decline of the EBITDA level of 36%.Due to D&A and interest rates on 2019 levels for the first time since our IPO, we realized a negative group result in the first quarter at minus EUR 29 million and a negative EPS of minus EUR 0.31.On Slide #5, I would like to continue with some more details about our segments' financials. The traffic performance of minus 25% in Frankfurt also left its marks in the 3 Frankfurt segments. It becomes clear at first sight that all revenue streams, except for real estate revenues and all operational results were declining. Still, what is also apparent is that not all revenue streams are declining in the same magnitude as traffic performance. Some revenues, especially within the Aviation and Ground Handling segments, are not only passenger related but also linked to aircraft movements and maximum takeoff weights, which did not decline at the same magnitude as passenger figures.As mentioned before, we see stable revenues from real estate, and this is what we also expect to continue on the basis of fixed rent contracts for the remaining year as long as the tenants are able to pay.On the other hand, retail revenues heavily suffered from the traffic decline despite realizing an increase in revenue per passenger of 4.3% over Q1 2019 to now EUR 3.61.Taking a look at the EBITDA development of the Frankfurt segments, it becomes evident that especially in our operating divisions, Aviation and Ground Handling, we have not been able yet to steer against the revenue decline as much as it is needed to minimize losses due to the time lag of the effects of the countermeasures.In our international business, you see that the revenue decline was not as sharp as in the Frankfurt segments, but still significant. All our group companies are developing plans to counteract the negative effects from the coronavirus pandemic, which have become more visible over the past weeks. On the back of our preliminary financials for April, it is clear that Q2 is getting even more challenging than Q1. But we are now able to make full use of our introduced countermeasures, which will lead to a better cost performance in the upcoming weeks and months. I will give you more details on possible savings later in my presentation.Besides the operational countermeasures, we are predominantly focusing on cash management these days, which also includes financing measures.On Slide 6 of my presentation, you find the development of our group liquidity starting from year-end 2019. As reported with our full year financials, we had a liquidity position of about EUR 1.7 billion as of December 31, 2019.Over the first months of 2020, we have successfully signed new financing contracts with banks in the amount of EUR 875 million at an average rate of 0.8%, predominantly through bilateral agreements. Like this, on March 31, we closed our balance sheet with cash and cash equivalents in the amount of EUR 1.3 billion and unused credit lines of nearly EUR 900 million, totaling up to more than EUR 2.2 billion. In Frankfurt alone, we have access to more than EUR 1.4 billion, and also our international group companies are well equipped with cash at this point in time.In the meantime, until today, we were able to secure another EUR 350 million. So that without reflecting the free cash flow in April, our current cash position stands at more than EUR 2.5 billion. It is clear that we are not stopping our financing activities here, but already today, with such a strong balance sheet and the continued access to the capital markets, we are confident that we can steer the company through this crisis without the need for any state-aid loans.Having said this, on the next slide, so Slide #7, you find an update on our group cash flow in Q1 and our current net debt situation. Starting with the operational performance, it is not a surprise that our operational cash flow decreased on the back of the traffic declines and even more if adjusted for working capital changes. Already with our full year 2019 presentation, we informed you that we will continue all our ongoing investment programs in Frankfurt regarding Terminal 3, in Greece, in Lima and in Brazil. For these 4 programs together, we spent more than EUR 180 million in Q1. On top of that, we spent EUR 80 million primarily for maintenance CapEx programs in Frankfurt, which had already been contracted prior to the crisis. All in all, our group free cash flow, therefore, was clearly negative and amounted to minus EUR 196 million. Our net debt as of March 31, thus, was about EUR 4.3 billion, an increase of 4% over Q1 2019.Moving on from the financial developments to the market environment on Slide 9. Here, you see the situation we are currently facing and some of the headlines describing how Aviation worldwide was coming down almost to 0.Starting at our home base, you know Frankfurt Airport is a gateway to the world. This is currently no longer valid. 96% of all travel destinations or countries have either closed their borders completely or introduced massive travel restrictions. Still, we have to keep Frankfurt Airport open as a crucial infrastructure for Germany, also to guarantee the supply chain from abroad.As in the past, Frankfurt Airport remains the most important cargo hub in Europe and is, these days, by far the busiest airport compared to other European airports, also, obviously, at a very low level, of only a bit more than 200 movements per day. This is why we had to react, and currently do not use Terminal 2 and parts of Terminal 1 for passenger operations and also temporarily have closed 2 out of the 4 runways to reduce operational costs.In addition to that, since the end of March, we have 80% of our staff in Frankfurt on a short-time work, which means that they are working at reduced hours of up to 100%.Looking abroad to our international group airports. The biggest restrictions we are seeing in Slovenija and Peru, where we have been obliged to close our capital airports temporarily since mid of March. At all other airports, we see material travel restrictions, especially impacting international traffic. In Antalya, for example, also domestic travel has now been stopped. Many airports are only operating on emergency flight plans, providing for a minimum service to guarantee supplier. It is interesting to look, however, at Xi'an in China, where traffic slowly started to recover after a decline of 87% year-over-year in February. We are observing a slight recovery here, which leads me to my next slide, so #10.The group traffic numbers show you the traffic performances in March and the year-to-date numbers for all our group airports. Looking at accumulated figures in the middle of the table, it becomes clear that the impact from the coronavirus was still limited in Q1 compared to what we are seeing these days and over the past weeks. Our airports, we are still operating on more or less normal levels in January and February, except for Xi'an, which was hit by the virus earlier.Looking at the March figures separately in the left column, we see already more significant declines all over the portfolio. Based on the information that I gave you on my previous slide and looking at the preliminary passenger data for Frankfurt in April of minus 97%, it is pretty clear that we have not reached the floor yet, and we will see further declines in April for the whole group, which will probably continue into May and most of June.Based on our current assumption, we expect traffic to restart somewhere in June, July, mainly depending on the lifting of global travel restrictions. Certainly, we are open to implement necessary operational measures to bring up passenger numbers again and have already started preparatory works. We discuss here science for social distancing announcement, mass or flexible staffing to allow for the necessary distance, et cetera. However, in the end, it will be a political decision to open up the borders and to allow for air travel again. For this reason, it is impossible for us to predict the traffic development for the full year 2020, but we will definitely see an enormous decline over the 2019 record numbers that we saw in most of our group airports.Negative traffic performances across the group in Q1 and the foreseeable negative performance in the year ahead brings me to my next topic, our cash management. On Slide 11, you see the main areas we focus on. Firstly, our minimum revenue position. So the main drivers for our revenue and which share is not correlated to traffic itself. Secondly, our OpEx position, how is it split and what cost items can we influence. And thirdly, our CapEx program and how can we reduce the cash drag here.Let me now start with our revenue position in Frankfurt. You can see on Chart 12 that most of the revenues we generate in Frankfurt are linked to the effective traffic development. Out of the total revenues of more than EUR 2.2 billion, only a minor share of some 10% is derived from long-term rental contracts within our retail and real estate division. The positive performance of cargo certainly is welcomed by the airlines. For us, the profit contribution from cargo, however, is hardly visible.Revenue from security service, which we continue to see are, however, balanced with cost more or less the same amount. And therefore, we don't need to focus on this item in terms of revenues and costs. So revenues in Frankfurt are clearly dominated by the traffic performance. Still, it is worth noting that among these traffic-driven revenue streams, not all of them are linked to passenger development only, but especially Ground Handling and infrastructure revenues are driven by movements and maximum takeoff weights.The same picture we prepared for our international holdings. Out of the EUR 1.4 billion of revenues, we first must deduct the IFRIC 12 effect which is balanced with cost in the same amount. So the underlying revenue figure that is relevant for EBITDA is about EUR 1 billion. Here, as with our Frankfurt operations, a clear majority of revenues is linked to the traffic performances across our group airports. Only a minor share of less than 10% is derived from fixed rental contracts.For your models, when you assume a possible revenue reduction, certainly some airports have a bigger share in our revenues, while other airports have a smaller impact on revenues. For example, Fraport Greece recorded revenues per passenger of about EUR 10 in the past year, while Lima Airport generated about EUR 15 per passenger; and Brazil, only generated about EUR 6. So a percentage drop in passengers in Lima has a clearly bigger impact on group revenue than, for example, in Brazil.To assess a possible cash burn, you find a more detailed look at our group OpEx on Slide #14. Here, we split the OpEx in between Frankfurt OpEx, IFRIC 12 OpEx, variable concession charges and residual OpEx in international activities. While IFRIC 12 OpEx remains without any impact on EBITDA, the revenue-linked concession charges will develop in line with the reduced traffic volumes and all the revenue generated in our international portfolio, respectively. So focal points of activities are Frankfurt OpEx and the underlying OpEx in international activities. While Frankfurt OpEx represents almost 2/3 of the group OpEx, the underlying OpEx in international activities amounts to only roughly EUR 330 million or 20% of Frankfurt OpEx. This imbalance clearly is a result of the deep value chain we are having in Frankfurt, so the high number of self-managed operations and services. This kind of operations we usually do not have in our international portfolio. So Frankfurt OpEx and the reduction of this OpEx is key to reduce the operational cash drag in the group.On Slide 15, you find the measures we have currently taken to reduce this item. Starting point of the activities is the staff cost item, which in total, represents about EUR 1.1 billion, as shown on Slide 14. On Slide 15, we reduced the number by roughly EUR 200 million, which is a pass-through element from rendering security and other services that are fully refinanced by revenue in the same amount. So we started EUR 900 million of underlying staff cost in Frankfurt that we focus on and that we need to reduce. The biggest lever we are having here to reduce this item temporarily is the mean of short-time work, which we already discussed in March, together with our full year presentation.The total number of Frankfurt staff under short-time work amounts to 80% these days. As you can see on the chart, people that are sent on short-time work can have reduced workload of 10% to up to 100%. The blended average rate of staff on short-time work is between 50% to 60%. With this staff, the German state will step in and pay up to 67% of the net salaries. To get the necessary approval from the workers' council for this measure, which is necessary to apply for short-time work, we decided to go for supplementary payments, which equals, on average, about 15% of the net salaries in addition to the state payment. Financially, the reduction of staff costs will be roughly 40% based on the average short-time work these days.Regarding cost of materials, the situation is slightly different. As a result of closing down airport infrastructure, so Terminal 2 and 2 runways, we expect to save temporarily up to 20% to 25%.In total, we thus expect to reduce the operational cash drag from EUR 120 million per month to about EUR 80 million in the months of April and May. Please bear in mind here that the savings will be different once the traffic is set to restart in June, July, and we will gradually ramp up the infrastructure and staff again.A more detailed breakdown of our international OpEx can be found on Slide 16. Here, you see what I already highlighted before. On the one side, international OpEx only represents a minor amount of about EUR 330 million per annum. Or if I just focus on the lowest OpEx quarters and off-seasons, international OpEx amounts to about EUR 60 million in a single quarter. Translating this number into monthly figures, the lowest OpEx quarter represents only about EUR 20 million on a monthly basis. This figure compares to the EUR 120 million to EUR 130 million for Frankfurt OpEx that we discussed before.By all these cost-saving measures, we expect a further reduction of up to 25% here as possible. This figure seems low when compared to the expected savings in Frankfurt, but please bear in mind that the value chain in international activities is way shorter, and we usually don't have the mean of short-time work in international activities, so we need to make staff redundant. As a result, we expect to reduce the OpEx in international activities to a level of about EUR 15 million per month during this period of very low traffic. Adding this number to the before-mentioned EUR 70 million in Frankfurt, brings us to a group OpEx of about EUR 85 million per month.Moving on to CapEx as a pillar of cash streams out of the company. On Chart 17, you will find our updated CapEx outlook. Where do we steer against? You see that we have reduced the CapEx outlook for Frankfurt by some EUR 200 million versus our initial planning. While the reduction in CapEx for T3 was unintended and came as a result of the slowdown of the construction side due to missing workers from Eastern Europe, the savings on other CapEx is a result of countermeasures that we initiated. Whereas in Q1 and Q2, the CapEx amount and other CapEx will still reflect the contracts that we signed in the past couple of months. You will see reduced cash outflows in the second half of the year.Basically, we have put all investments that are not needed from a 100% operational view under review. This clear CapEx focus, we will also continue so that we do not expect to see the high level of about EUR 350 million that we guided for at the beginning of the year to materialize in the upcoming years either. Changes we also made to the planning in Lima. While the new runway is still on track to be constructed, we have also put the terminal construction under review.In Lima, we do not have a clear visibility on the airline landscape and the path of recovery post corona. This and the temporary shutdown of the construction site will lead to reduced cash outflows of about EUR 100 million this year compared to the previous planning, so that the new CapEx figure for Lima stands between EUR 100 million and EUR 200 million. Brazil and Greece continue as planned. However, you are also aware of the sharp devaluation of the Brazilian real, most recently. The devaluation will lead to lower euro amounts, which is why we also reduced the CapEx guidance here for Brazil.In total, we therefore expect to cash out between EUR 1 billion and maximum EUR 1.2 billion for CapEx plus a capitalization of borrowing costs and fixed concession charges. On average, this is about EUR 100 million cash outflows for CapEx on the group level per month.Summing up the before-mentioned figures, we faced about EUR 100 million cash outflows for CapEx and EUR 95 million operational expenses per month. The sum needs to be reduced by some EUR 30 million of revenues we expect from Frankfurt due to fixed rental contracts and the lower business operations and about EUR 10 million from international activities. So we expect an operational cash burn, including CapEx of about EUR 150 million per month these days for the group. What do we need to bear in mind in addition? On top of the operational cash flow, we also have to consider the repayment of loans.On Chart 18, you can find our repayment scheme. As shown on Slide 6, we already paid back some EUR 150 million bank loans in the first quarter, which leaves us with some EUR 360 million repayments for the remainder of the year. Here, an amount of some EUR 230 million stands in connection with the repayment of revolving credit facilities, which reduces our reported cash and cash equivalents, but increases the amount of unused credit lines again. So no reduction of the total liquidity position of the group. Scheduled repayments of mid- to long-term debt, therefore, will amount to some EUR 130 million in the year ahead. Even in a worst-case scenario, the reduced traffic remains at a level of minus 90% or even more for the rest of the year, which we do not expect. We burn some EUR 150 million of cash per month for the upcoming 3 quarters.Based on these assumptions without any additional financing, our liquidity would still last clearly into the next year. This shows that we have a very comfortable cash situation.Coming to my last slide for the day -- today, the group outlook. The outlook these days is unchanged. Still, there's no visibility to guide you for a precise traffic and financial performance. However, as described before, we highlighted you the components in our P&L that are linked to traffic in Frankfurt and international activities. On OpEx, we have just started to implement the short-time work, and we expect to see some more long-term savings here. For the time being, we continue to see sharp traffic and earnings reductions across the group. For Frankfurt, we also provided you the guidance of EUR 10 to EUR 14 per loss passenger on EBITDA. For our very seasonal leisure airports in Europe, we still expect to see some traffic during the quarter Q3 in this year because this is a holiday quarter. Clearly, we will be in a better position to provide you a more detailed outlook with our Q2 results. And we will also have the first results of our OpEx countermeasures. From today's perspective, however, we expect to see a negative group result and negative EPS for the full year.So thank you for your attention so far, and we are happy to hear your questions now.
[Operator Instructions] The first question is from the line of Ruxandra Haradau-Doser from Kepler Cheuvreux.
Three questions, please. First, do you see opportunities in the current environment for some sustainable medium-term cost savings at Frankfurt Airport?Second, given the current situation, do you consider some medium-term adjustments of your CapEx plans?And third, could you please give us the share of leisure traffic and overall traffic at Frankfurt Airport and for the group?
Yes. Thank you for the questions. We'll start out with the sustainable cost savings and medium CapEx program. All those items are linked together. So let's start with CapEx. We told you in the presentation that we are going to reduce the CapEx at Frankfurt down by minus EUR 150 million. And this is not just a short-term reduction announcement, we went through to the long-term CapEx plan. And based on real projects, which have been in the pipeline the next couple of years, we really have drilled down this program, and what is already decided also in the Management Board is that year-by-year, you will see this reduction of nearly EUR 150 million, so that you can -- for the next couple of years, can expect a new CapEx level for maintenance cap. So all CapEx without or except Terminal 3 on a level of maximum up to between EUR 200 million and EUR 250 million per annum. So this brings us support on the cash flow side.On the OpEx side, of course, first task is to bring it down to the new normal level of passengers, what we will see in the next couple of years. So nobody knows how the recovery will be. Whether we talk about reformation or a U or hockey stick, nobody knows. But we have to be prepared that up from '20 and then also '21 when we see the new normal baseline on traffic numbers that our, let me say, cost base is, yes, is fitting the level of revenues, and this is our responsibility. And here, we have prepared different scenarios.And third question with regards to leisure we have in Frankfurt, yes, it's -- I would say, the question then how do you differentiate the, let me say, the passengers, you have businessmen on one side, and then on the other side, if you define all the rest as leisure or you -- do you make a difference between ethnical traffic and pure leisure traffic. So it's always difficult, what is the definition? So if you take all the businessmen, we have 35% business traffic at Frankfurt and then 65% leisure and ethnical traffic. I think the differentiation and so far is important because when you look at the recovery or the speed of recovery, we expect that the ethnical traffic is the first traffic, which will recover. So first, ethnical traffic; second, leisure; and third, business traffic. So an increase in all our other destinations is totally different. So if you take the pure holiday airports together, Greece, Antalya, Bulgaria, so we talk about 90% leisure traffic. And the rest is domestic traffic, and domestic traffic means, more or less, ethnical traffic. If you take the average in the group without Frankfurt, so the percentage of leisure is about 80%, except traffic. So far, the answers.
Next question is from the line of Elodie Rall from JPMorgan.
So first of all, just to follow up from the previous question on CapEx. I was just wondering if you can give us a bit of your view of rational thinking about why maintaining the building of Terminal 3, given that you actually don't expect traffic to recover back to 2019 levels for quite a few years? So that's my first question.And second question on domestic flights. I mean, in France, we've seen some comments from the government looking to potentially ban flights, short-haul flights that would have an alternative train routes under 2.5 hours. They are citing CO2 reasons. Is this something that you worry could happen in Germany as well?And then last question on the monthly OpEx savings. You've talked about EUR 30 million plus EUR 10 million plus EUR 20 million in the slide, but then you're concluding -- concluded about EUR 75 million, I think, per month, if I'm not mistaken. So I was just wondering what I've missed there. And overall, if you could give us the monthly cash burn rate that you see at Frankfurt?
Thank you for the questions. First topic was Terminal 3. So we always said and we are saying, we continue the construction of Terminal 3, so we make full pressure on the speed, because it's a very complex project. And if you are now going to stop it or to delay it, we are creating a disaster. So that's the reason why we -- with full speed, we continue, let me say, we make good progress. We don't see a risk of cost overrun on the opposite, could be because if you look now in the construction market, which was totally overheated in the last 2, 3 years, now overnight, you have more or less a new situation that the pipeline of projects is going down. And it could be and there are first signals in the market that the construction price level is going down because demand is also significantly overnight has been significantly reduced. So the only thing which is on the time line running against us is the availability of craftsmen because on big construction sites like we have here in Frankfurt, you can say 80% to 90% of the workers came especially from East European countries, and due to this coronavirus restriction to travel from countries into Germany and vice versa, so a significant number of workers are not able to come to Germany or to leave Germany. So this is some stumbling block on the road now. And we have to see whether this has some impact on the time line. But this is one issue. Again, we do all to continue and to have pressure on it so that we can inaugurate this terminal end of '23. So -- and also, with other works, '23 means so you can use this terminal up from '24. So we are talking 4 years ahead of us. And nobody knows how the recovery will be and in which formation V, U, W or hockey stick or whatever it could be or L, even an L. So -- but everybody expects there will be a recovery. But I think to have 4 years ahead of us, this gives us a lot of comfort that when this huge infrastructure is ready, we can use it, and there's also demand to use it. So I don't worry about this issue with regards to Terminal 3.Second question regarding domestic flights. I think if you listen to the press and the discussions before corona, everybody was talking about CO2. In the moment, there is no discussion about this issue. Everybody is focusing on employment rates, on number of employees or unemployment rates. I think the whole discussion will change a little bit. Of course, CO2 will not disappear, but I do not see now a new situation that there will be pressure on domestic flights to stop them or cancel them. I think in the moment, everybody would be happy to see, again, aircrafts because this brings a lot of people into work. And now I think also the whole political focus in the moment has changed a little bit away from ecological things, which still are very important. But now the focus is on the economy and the collateral damages of coronavirus and so everybody now hopes that this will come up again, this segment of the industry, because a lot of people are living from Aviation industry. And so in the moment, everybody hopes that the numbers goes up and not that we are going to give a ban on domestic flights, et cetera. So I don't see any threat in this direction.With regards to OpEx savings, we hope to give you a clear view. So let me bring the numbers together. We have OpEx in Frankfurt before the crisis as well at the international airports and after our countermeasures. So in Frankfurt, our OpEx was, before corona, at a level of EUR 120 million per month, EUR 120 million OpEx per month before corona, and now by reducing primarily by short-time work and bringing down material expenses, we expect now a level of EUR 80 million. So EUR 120 million before corona, EUR 80 million after corona. On the international side, where the value chain is not so deep or long, we had before EUR 20 million. And here, we see a reduction of EUR 5 million, so down to EUR 15 million. If you now add these 2 numbers together, before corona, Frankfurt, EUR 120 million; international, EUR 20 million; in total, EUR 140 million. Now, at Frankfurt, EUR 80 million; in the international business, EUR 15 million; makes together EUR 95 million. So the total difference of OpEx was EUR 140 million before and now a level of around EUR 95 million.
Okay. That's really clear. And then can you give us an idea of the monthly cash burn overall?
Yes. Sure. If you now -- so again, have in mind the numbers, OpEx is EUR 95 million. On the group level now, Frankfurt and international, then you have to add on the outflow side, the average CapEx per month. Here, we now assume roughly EUR 100 million. So the total cash outflow is EUR 100 million for CapEx, EUR 95 million for OpEx. And now the question mark is what will be the revenue number? And on this worst-case scenario, which we now assume minus EUR 95 million everywhere, we see a revenue base of EUR 30 million at Frankfurt and EUR 10 million outside. So on the group level, roughly EUR 40 million, really as a rock bottom number. So we have cash-out, EUR 190 million, EUR 195 million. We have cash-in, minimum EUR 40 million. And this makes a difference of roughly EUR 150 million cash burn per month, including all items as a worst-case scenario in 1 month.So in a theoretical world that coronavirus would continue forever, you can say every month, EUR 150 million cash burn, and you see our reserves without any additional financing activities, and you can simply calculate how long we can survive. And let me say, the good thing is, I think the duration of our liquidity reserves without any additional financial activities is very long. So perhaps we are last man standing in this industry if minus EUR 95 million would continue. So when we are dead, all the others are dead before us.
And then maybe to that EUR 150 million, you add also the financing cost monthly, right?
It's -- everything is included.
In the EUR 150 million?
Yes, yes, yes.
But I thought it was CapEx, OpEx and revenue?
In the CapEx, you have also the capitalized interest because a big share of our monthly interest expenses is capitalized. So it's part of the CapEx. Based on IFRS accounting, we are forced to capitalize this interest payment. So we have a difference between interest, which we show in the P&L, and on the other side, the interest, which also is in cash outflow, but it's treated as CapEx. So we talk about EUR 5 million per month, which is -- which you can see in the P&L as interest expenses.
Next question is from the line of Cristian Nedelcu from UBS.
A few, if I may. Firstly, could you give us a rough range of your expectations for net debt at the end of this year?Secondly, if we take a scenario of net debt-to-EBITDA moving above 6 turns on normalized earnings going forward, could you tell us what are the options on the table? What are the options available there? Would you be able to stay at these types of leverage for several years? Would you need to recapitalize the business? Would you consider equity issuance or selling stakes in some of your international assets at a certain moment? Any comment there?And the last one, if I may, on retail spend per passenger, you have -- your disclosure in the past has been very useful on the high spender tourists, but could you give us a ballpark number, what is the retail spend per passenger for long-haul passengers versus short-haul passengers or any type of estimate and color there, please?
Yes, thank you for the questions. First topic was, as far as I remember, what will be the net debt at the end of the year? So it's a little bit -- on one side, I told you the cash burn in a worst-case scenario. So we have to see -- this is not what we expect, it's just a hypothetical calculation, what would happen if nothing will change. In reality, everybody now expects that up from June, July, the markets will open again step by step. So some of the border restrictions will be lifted. And so that -- then the recovery will start in this June, July period also due to the fact that especially countries in the southern hemisphere of Europe, which are dependent from summer holidays and then from this touristic industry, they have a strong interest to open again. But at the end of the day, this is a big question mark. How fast can we recover? Which is not up to us, which really is linked to political decisions from a lot of countries. And this is the unknown parameter in all the calculations. So we just internally can make scenarios what will happen if and when and assuming a very slow recovery. So some recovery up from June, July, but a ramp-up, which is not really steep. We -- and of course, then you have some impact on the revenue side. So we see, let me say, the net debt of the group, I would say, EUR 5.3 billion, EUR 5.4 billion. This is as of today. Perhaps, the best guess assuming some ramp-up from June, July in regarding air traffic.You mentioned also the key financial ratios, net debt-to-EBITDA. I think in the moment, to look on these parameters, it doesn't make any sense because we are in the deepest crisis ever. And I think with regards to all industries and companies or most of the companies are now suffering. And now we have really to look when you look on the credit worthiness of the company, what is the long-term prospect? Do you have a healthy business? In a normal scenario, can you come back? Yes or no? I think these are the questions. And also when you can see, we have now a proven track record in the middle of the corona crisis. We went to the capital markets, and we realized nearly EUR 1 billion for 0.8%, and this has -- is not because we have fantastic key financial figures. All of them are really down. The reason is that the people and the capital market believes that we -- in the long term, we have still a healthy business, that there will be a recovery. Nobody knows exactly when, but the recovery will come on one side. And second, also, we are a critical infrastructure. We are the #1 airport in Germany. We are key for the export industry. When you look now where the cargo traffic realized, in Frankfurt, we are full of cargo freighters more than in normal situation to bypass all these broken supply chains, and that's the reason that now lenders look on Fraport also the shareholder background. And this gives comfort to the investors, not the destroyed financial parameters in the moment. So we have to see. If you look on 2020 and even already on 2021, it's for sure that in 2021, we are not back on track on the 2019 levels, this is for 100% sure. And so we have to see how far or how fast we are ramping up, and always to have in mind who are our shareholders and what is the crucial infrastructure and what is system relevant in Germany, this gives comfort and that's the reason why we have such a good reputation in the market reflected in 0.8% interest burden for EUR 1 million collected now in the last month. So -- but in the long run, of course, we have to readjust our business or business model in so far that even in 1 or 2 years when we recover, but not back on -- not be back on 2019 levels with regards to passenger numbers. We have restructured and readjusted our business model in a way that even with a lower number of passengers, then we have, again, positive financial numbers. This is our target on this challenge we are working. And I think we have good solutions on our desks, and we are starting with -- to work on these items.The third question, retail spend. Yes, as a rule of thumb, we always say that the spending behavior of long-haul traffic is about 4x higher than on short-haul. It's a very general rule of thumb. It depends then what kind of carrier, what destinations behind, also on short-haul routes, is it low cost, is not low cost, but in average, you can say more or less 4x more on intercontinental flights compared to continental flights. So far, the answers.
May I have a quick one on Lima terminal CapEx, I think that's around EUR 1 billion there that was in the plan in the past. How should we think about the time line of that CapEx being spent?
It's a good question. So first of all, in Lima, we have been in so far in a very comfortable situation that we started already with the construction works, but just with earth works with regards to the runway. So this, we totally stopped. So everything on the construction side in Lima in the moment is on hold. And this is also so far good for us because I can say it's coincidence. We have been in the final stage to negotiate the EPC contract for the runway, but there was no final contract. So we could stop it without any financial collateral damage. So everything is stopped now. We will continue in the second quarter of this year, again, with the runway because we need the runway. It's totally exhausted in normal times. And so we have a delay on the runway side.With regards to the terminal, we are still in the planning phase. Normally, the beginning of the construction would have been, I would say, middle of next year. But now we have to see how will also be the recovery in Lima. And depending from the answer of this question, we have some flexibility to delay. So it can be that we, as planned, will start in summer '21. It also can be that we say we are waiting for another year. It's really up to the, let me say, the speed of the recovery in Peru. So it's good to have this flexibility with regards to the terminal because as you mentioned, when you take the total CapEx amount of EUR 1.5 billion, roughly EUR 500 million is reserved for the runway. And again, we need the runway and EUR 1 billion for the terminal. And let me say, having a flexibility to delay this terminal construction for 1 year, even 2 years, we have to see whether it makes sense or if we really need it or don't need it or can delay it. This is an option which we have, and we have no pressure to decide now.
The next question is from the line of Stephanie D'Ath from RBC.
The first one is on government support. Could you please specify whether after the confinement measures are over, the support will continue until potentially the end of the year?Secondly, could you please explain the frequency of your discussion with the local authorities and the government when it comes to looking at reopening the airports? And is the responsibility of potentially testing the passenger more on the airline and on you? And have you done any progress there? Heathrow earlier announced they were doing some progress on checking of the safety of passengers. And then related to that, I guess your discussions with Lufthansa and how you see they can remain the biggest airline for the airport?And then finally, on regulation, you were underearning your regulators work to some extent and decided not to increase tariffs. It would be, I guess, not the best backdrop to decide to now start increasing tariffs. But how would you make it possible to actually reach eventually that work you are supposed to earn?
Yes. Thank you. This was a bunch of questions.First, as far as I remember, was state aid, so in the moment, we didn't get any state aid. And also we didn't apply for state aid. The only thing what we put on the table or brought to the discussion is that we still have Frankfurt airport open. This costs some money. And despite the fact that we have less than 10,000 passengers per day. So from an economic perspective, it would make sense to close the airport. But we are forced to keep the airport open. And therefore, we calculated the cost requirements which are necessary to run this airport on a daily basis. And we -- not just we, all the airports in Germany, were also forced to keep the airports open. They calculated all together their cost items. And now there is a discussion between us, us means the airports on one side, and the politicians, whether there will be some compensation for this service. Whether we, at the end of the day, will get something for this or not, don't ask me. But it's on the table. We discuss about it, and we have to see whether we will get something. It's an upside potential, no downside risk. So then I think it was a question reopening. So we are -- we have to say, we are still open. The airports, which are closed in the moment is Ljubljana in Slovenia, is Lima in Peru and Antalya in Turkey. So we don't know when they are going to open. I would guess that Turkey itself, they have a strong interest to open again because summer season is in front of the door. And prerequisite to run in holiday season, is in summer season, is to have an open airport. That's the reason. The same applies more or less for Slovenia and also for Peru, as the Lima Capital Airport is a key infrastructure. So that's the reason why we assume that very shortly, the airports will open again. But again, this is a political decision. And in the moment, the -- how decisions are made on the political level is not very transparent for all of us. Then was check in and yes, no check in security process and progress. I think in the past, everybody talked about productivity at security lines. In the moment, we have to see this issue with social distance. If you're now off-line, you can see what will happen as the security line. So productivity is very low because you have to keep this distance from the other passengers, and this is slowing down the speed to bring the people through the security line. We have to see how long all these measures will continue. So in the moment, it's clear that the productivity or the future productivity at security lines will be lower than before coronavirus by these requirements from the bureaucracy. So Lufthansa, yes. Yesterday, there was the annual meeting, and you could listen to the speech of the CEO, and how far the progress is with regards to the talks between Lufthansa and, let me say, politicians. So based on this information, which we could read in the newspaper, we assume now in the next couple of days that they will come together. And they have finalized the package how to help Lufthansa and in which form. So -- but we don't have any additional or new information. But we assume in the next couple of days, the problem will be solved. This would also be, I think, a good signal, not just for the shareholders, but also for the capital markets. And for everybody in this market then to have a clear new basis, a situation where the state is in will give a strong support to the biggest airline system, relevant airline of Germany. And I think this -- for all of us, also for us, will be a strong and good signal when everything then is -- will be fixed. With regard to the tariffs, one thing is for sure, we -- what we will do with the tariffs in '21, this is too early. But one thing is for sure, we will not continue with our incentive program because to incentivize growth coming from minus 95%, this doesn't make any sense. So we always came with this program, and we have been on a very high level and wanted to become even on a higher level. Now starting from more or less zero and to incentivize action and ramp up, this would be ridiculous. So we will come with the old level or perhaps with a higher level, nobody knows. This is something we're discussing. But one thing is for sure, you will not see an incentive program in '21. Yes, I think...
And just following up on the frequency of your discussions with government, I guess, especially, as you mentioned on one of your slides, currently, non European citizens are not allowed to fly to Germany. And there are currently measures in place, et cetera. To which extent are you at the table for the discussion? And are you quickly aware of the rapidly changing environment, I guess, there? In order to understand a bit better when I meant reopening the airport, I meant kind of reopening so that everyone can fly or transfer within your airports?
Let me say, we don't have any information which you don't have. And the politicians, they are not informing us in advance. So we really get the informations from the newspapers like you, how Germany is going to open everything or not and also in the other countries. So again, I -- what we see now, this is a big concerns if the summer season is zero, this would be a disaster for all these countries like Greece, Turkey, Italy, Spain, benefiting significantly with regards to their GDP growth from the tourism industry. So -- I think everybody in these countries is absolutely aware that this is a key now, and they try to do all to save just, let me say, some percentage of this original traffic because otherwise, all these touristic industries have a very crucial problem. And that's the reason why we -- and to protect something or to support something of this touristic traffic. And during the summer, we have more or less to open now step-by-step because otherwise, the time is too short and that's the reason why we assume that yes, up from, let's say middle of June, markets will -- or the restrictions will be lifted step by step. So then people really can start to travel to Turkey, to Greece again to the islands. And that's our, let me say, best guess in the moment. But again, it's not up to us. And I think the travel warning itself, doesn't have any impact to have a travel warning or not a travel warning. Key is that it is allowed to fly as long as it's not allowed. So you can talk about travel warnings. I think this is, for me, not the key. The key is restrictions.
And I also wanted -- please to follow-up on my first question when I meant government support, I was thinking about the government program that pays 60% of salary of employees at the kind of technical unemployment. When you...
You mean the short time work?
Yes, the short time work.
In Germany. But this is not a special treatment of us. This is let me say...
No, no, no. I know it's across Germany, but did they specify how long this program would be in place because there is a question mark, whether or when, let's say the countries start flying, that they stop paying...
Yes, it's a good question. The normal length in the past has been 12 months, but now it's under a discussion to extend this up to 24 months in Germany. The 12 month is a law. And now it's under discussion for extension for up to 24 months.
Next question is from the line of Arthur Truslove from Crédit Suisse.
Arthur Truslove from Crédit Suisse. So just a few from me. So first, very quickly on Xi'an. I just wonder whether you could give an update in terms of what the latest traffic trends that you are seeing there look like. The second thing I was interested in was just if you could give us a little bit more color in terms of what measures you're taking and what collaboration you're doing with other airports in Europe to make it safe for people to travel and indeed, to give people confidence that it will be safe to travel. And I guess, thirdly, are you thinking of taking any sort of legal action against government for the lockdowns that are in place?
Just a minute. Yes, Xi'an, in the moment -- you know, the coronavirus started in China, so we had already in February, more or less a shutdown in Xi'an, where we -- in Europe, we just had these minus 90%, minus 95% passenger reductions end of March and up from beginning of April. So Xi'an is a little bit, I wouldn't say, a showcase for recovery because you cannot compare China with Europe. But in February, they were down also to nearly minus 90%. And currently, they are up to minus 65%. So a relatively good recovery in the last, for 6 weeks. But again, if you ask me, can this also happen here? I would say, yes, it can, but nobody knows whether this is really a showcase also for Europe. But we have also received some information, for example, about the utilization rates of hotels. And here, we got some data that in the moment, also, for example, in Xi'an, the utilization rate of hotels would be back at a level of minus 30%, minus -- maximum minus 40% compared to pre-coronavirus times. This would be a good indication that recovery could be relatively fast. But again, this is China, and we have really to see what will be the experience here in Europe. But again, your question, in the moment, Xi'an is currently at minus 65%. So next question, what was it?
The measures and collaboration with other airports to make passengers more confident?
Yes, confidence of passengers. I think we are doing a lot of things. So first, once the social distance is secured, there's mask obligations. The airlines have shown and explained that in these filters in the aircraft, the air is absolutely clean. So if you look into and also hygiene measures inside the airports are given and foreseeable everywhere. So we don't hear from the current passengers input. And let me say, the normal passengers, any threat that it could be dangerous to fly. I think the people are waiting again that they can fly. So the willingness is given. We don't see -- let me say the threat that most of the people are not any longer willing to fly. And so far, we -- the airports did all the things which are necessary. All things are prepared: the social distance, mask requirements, hygienic measures, et cetera. So that we feel comfortable on what we hear also from the passengers which still are flying, that they also feel very secured and comfortable inside the aircraft and also inside the terminals. So no complaints, and they don't worry about this issue, yes. And...
Question of legal actions against government?
From our side?
Yes.
No, we don't have any -- of course, we have in -- let me say, in the concession contracts, we have in some of them, we have force majeure clauses. We try to use it. We have also, in South America, so-called economic equilibrium which must be secured and now we say it's distorted. And we are in discussions with the governments in the relevant countries focusing on these clauses, force majeure on one side, economic equilibrium on the other side, whether the legal base is -- we have to see whether there is a legal base or not. Could be an upside potential, but we cannot today say that based on this, we see a good probability to get something from the government. We try to do our best to use the legal arguments which we have. Whether they are striking or not, we have to see.
And sorry, just one follow-up on that. On your comment on Xi'an. The -- correct me if I'm wrong, but the minus 65% figure was -- I mean, that's the level that you saw in March, give or take. And in terms of what you've seen in April, have things sort of continued to improve or actually, has it sort of stalled at around the minus 65% level?
It's more or less -- it's more or less the same. So we can't see really an improvement in April. We think the May will be perhaps a new month where it could be decisive for the further ramp up. We have to see. But in April, we can't see -- really see a trend, let me say, going up from minus 65.
Next question is from the line of Johannes Braun from MainFirst.
I have two. Firstly, you talked about a trend to recovery in June. I was wondering, do you expect that there will be health checks for passengers or other prechecks before they board the planes? And if that's the case, who will pay the costs that this might involve? And then secondly, again, on Terminal 3, I understand that this project is probably hard to stop. But if there is indeed a sustainable lower traffic level in Frankfurt due to, for example, Lufthansa cutting its fleet by 100 aircraft, how can you rightsize your infrastructure then? Because, I guess, if they are 10% to 15% fewer passengers after the crisis, you will probably not need the full airport infrastructure you're currently planning with. So would there be some flexibility to do something with Terminal 2 or even Terminal 1? Or what's the flexibility to adjust to a new normal after the crisis?
Mr. Braun, first topic you have, checks. So in the moment, we don't hear -- or there is no requirement to initiate some health checks. The question is how should they work and also your question if we should take off the cost of items is absolutely open. We -- at the end of the day, I think everybody is a fair aware that, let me say, the aviation industry must work again and having too much restrictions, this more or less would make it impossible to fly again. And I think, as I mentioned, some social distancing, hygienic measures, et cetera, all these things are important. They are already in place. And we are prepared even to do more. But to start with health checks, I think this -- I don't think that this would be the right thing. And in the moment, we don't hear though some bring the topic into the discussion with temperature measures, but then you have a lot of question marks how this should be realized. But again, there is some discussion. One topic which is really discussed is temperature measurements. But I don't think this is a useful tool to contain, let me say, this corona threat. I think all the things which are already in place, this is really a good package of measures to avoid this risk of becoming affected from corona. With Terminal 3, again, we are talking about 2024 when passengers can use this terminal. This is a long time ahead of us. That's the reason why, in the moment, I feel absolutely comfortable. So -- but your question, nevertheless, there should be an answer. In this case, that even in 2024, we would have enough passengers to fill up all our 3 terminals. Of course, we have the flexibility like now in the situation where Terminal 2 is totally closed. So in this scenario that we have, I don't know, 65 million passengers in 2024, which we do not expect. Then of course, we can say we open Terminal 3, and we close temporarily Terminal 2. So we bring down the OpEx. We have still this capacity in place as a reserve terminal later on, we can reopen again this. And let me say the cost level to shut down Terminal 2, for example, for 2, 3 years is absolutely low. This would be one answer also, for example, the C/D part of Terminal 1 could be closed overnight like now. And so we have this flexibility with parts of the existing terminals to scale down capacity even after the inaugurating of Terminal 3 to have an adjustment on the OpEx side. So this -- we are able to do this. We have also these scenarios, but we think that this is not necessary then though in 4 years or in 5 years to go in this direction. But even if this was still on a low level, we, as I mentioned in my explanation or presentation, we have so much flexibility on the OpEx side that we can follow on the OpEx side, the revenue stream.
Next question is from the line of Michael Kuhn from Societe Generale.
A couple of follow-ups from my side. Sorry, once again, back to the restart of a bigger flight operation in Frankfurt. I mean, crucial for Lufthansa's and for your model is a decent connectivity at a hub. So a, let's say, gradual restart is pretty tricky. From today's point of view, what kind of ramp up pattern do you see and at which point do you think you will have a decent long-haul connectivity again and, let's say, connectivity that makes your and Lufthansa's hub work again? Then secondly, on financing. You mentioned in the presentation, you secured another EUR 350 million after Q1. Was that at similar conditions as the money secured in the first quarter? And do you plan to raise further money over the upcoming months to, let's say, increase your financial buffer even further? And then last not least, you mentioned the stable rental income that you get. Have you been approached by any trade partners so far with regards to renegotiations? So for example, from duty-free companies or anything like that? So is there any pressure to adjust contract terms maybe?
Thank you for the question. Starting with the last issues. I would say every day, partners are approaching us with regards to our contracts. But we always say, look at our business model. We have a lot of cost items. We have just 10% on the revenue side, so we have no headroom to be flexible, and the answer has parked us on the run now. And in the moment, it works. So clear answer from us with regards to these attempts from partners. The questions with regarding to financing. So these EUR 350 million is more or less on the same level. So this is also expression of our creditworthiness which we still have in the market. Is it intended to go for additional financings in the next couple of time? Yes, because it's our clear strategy, you have to go for money when you have money; when you don't have money, it's too late. So that's the reason why we will continuously be on the capital markets to even to raise more money. First bunch of question with regards to network carriers, Lufthansa connectivity. We still -- this is very perhaps surprising. If you look now on the flight pattern in Frankfurt, we don't have really passengers just below. We are less than 10,000 passengers per day. But when you look on the flights, we have still international flights, perhaps no passengers inside or just a reduced number. But we have still flights to North America, to Canada, to the U.S.A. We are flying to China, Japan, Middle East, so we have an interesting -- to São Paulo. So we have still a lot of flights. So when you look on the -- on one side, on the passenger numbers, or the reduction of the passengers, on the maximum take-off weight on the movements. So you have a mismatch now between these -- normally, this -- everything goes more or less parallel or balanced. And now we have minus 95% passengers. Roughly, we have minus 85% movements, and we have minus 75% maximum take-off weight. So this is an expression that a lot of aircrafts are still -- we have still 200 movements per day. If you compare the European airports, so Paris, London Heathrow, Amsterdam and Frankfurt with regards to the number of movements. We are, in the moment, #1 in Europe. So we -- today, we have the highest connectivity in Europe, much more than the other big hubs in Europe, which in so far is good when the ramp-up will start again, because then it's key to have still a network in place, which is in the moment already given at Frankfurt. And some days ago, Lufthansa announced the new network of flight schedule post coronavirus working the first step up from, I think, 15th of or 13th or 15th of May. And then the next step-up from June. And there are still a lot of now interesting flights in this new flight schedule, so that you can see that Lufthansa already now tries to prepare the start for the ramp-up. And to prepare the start means you have to have already a network in place. And when you also look now where is Lufthansa doing their -- still their existing international flights, all of these flights are out of Frankfurt. And if you compare this with our friendly competitor in Munich, you don't see this international traffic. So this is, let me say, the starting position for the recovery at Frankfurt airport, we think, is good. And Lufthansa now is already doing the first steps to restart again. And remember, when I said to secure just some percentages of the old touristic traffic, which you normally see up from July, August, you have a network still in place, up from June because otherwise, it's too late to have a recovery for parts of the touristic traffic in July and August. So everybody is going in this direction. Could be good -- or it sounds good. And now we are waiting that the restrictions will be lifted that you can fly to, I don't know, Island of Crete or Corfu or Antalya, we would be happy if you would go or make this decision. And so in favor of the airlines and in favor of the airports.
And maybe just one follow-up on those current intercont flights. Do you have any idea on the passenger load factor of those? Or is a major component for those flights the belly cargo?
No, let me say, the seat load factor is extremely low. So with other words, you can't make any money with these flights, but we assume that the airlines are still flying. One thing you mentioned. This is cargo in the belly. This could be an argument, but we are convinced that this is not enough to compensate the OpEx to fly these routes. But I think it's relatively simple that these airlines still fly. Singapore still flies, so Singapore Airlines from Frankfurt to Singapore, et cetera, Air Canada. So if everything starts again, that they are the first in place and being the first movers could be perhaps a good argument later on to gain overproportionately market share in the recovery phase. So seat load factor in the moment, I'm looking at the statistics, it's about, yes, close to 20% is the seat load factor at the moment. So at 20% of cost, you cannot cover your OpEx, that's for sure.
Next question is from the line of Adrian Pehl from Commerzbank.
A couple of questions. Looking into the future, starting with what can you do. First one is what can you do to support your 60% customer Lufthansa actually in Frankfurt from a longer-term perspective, how can you help them actually so that your business is also positively affected, at least for the measures that you implement? And the second one is actually, market share wise. I mean, you have been talking about you're stopping the incentive program. I mean, I can understand pretty well from the design as it is today, that it does not make probably that much sense. But on the other hand, there have to be some incentives, I think, to make sure you're gaining market share from that situation at the moment. I can hardly imagine you're staying passive and just looking and watching the situation. And thirdly, linked a little bit to your question has been asked before, but I want to rephrase it also with what can you do actually to improve the attractiveness of the 3 terminals, given likely underutilization, probably not for each of them on an isolated basis, but combined, when Terminal 3 is also up and running. Is there any plans that you have in a drawer to boost the attractiveness? And then a question linked to potential write-downs. As far as I can remember you already took a write-down on the Xi'an value. And I was wondering if we see the threat of potential write-downs of other participation values as well. And vice versa to that, is there a chance actually that you may write-up the value of Xi'an again in the future? And what is the prerequisite for that?
First question, the part of Lufthansa, I think the best support is to have a well equipped and proper airport. And I think we have such an airport, and we have the capacity. We always do a lot of things in favor of Lufthansa that the operation is excellent. In the moment, there are some very exclusive treatments because big facilities, big infrastructure, et cetera. Everything is fine, and we are doing all this in favor of the customers. So I think this is our support. But if you mean financial support, of course, I think in a situation where you have a cash burn rate, talking about financial support of customers would be the wrong way to fix your business. So with other words, we offer good services, good quality, good infrastructure, and I think this is sufficient for the customers, is even for the biggest one. Incentive program, again, we got a lot of criticism when we started the incentive program, having so many passengers and on top of this to install incentive program. But the reason was to say, yes, we are on a high level and to get more in a fixed cost model, this brings us additional financial contributions. Therefore, we can share these additional proceeds with the customer. But we are in the deepest recession ever and starting from 5% passenger level now to give money to the airlines, this doesn't make any sense. This is really then really a cash burn. And again, if you look on the matrix which we have, the airlines in average pay us roughly EUR 10 -- between EUR 10 and EUR 11 per passenger. Even if you would give them 10% discount in this moment when everything opens again the people decides and wish to fly or not to fly. To give EUR 1 per passenger, this is absolutely without any impact on the business. I think the considerations the customers and the airlines at the moment have, they are planning on how to fix and readjust your business model and now to talk about some sense for incentives, this is would be the wrong discussion, perhaps in some years again, but not now. And again, I mentioned there is a seat load factor of 20%. So in the moment, everybody is burning money. We are burning money. The airlines are burning money and then to move incentives from the left to the right side or vice versa, this is really -- this is not wise. So...
Sorry, maybe I should rephrase it in the sense of it was actually meant longer term, i.e. probably in a, more or less like a post corona world or, let's say, as of 2021 when we have a more decent level of travel. Short term, you're absolutely right, makes no sense. I fully agree.
And okay. Then I think this is not a mismatch. And what I've said is now relevant for 2021, what -- how the world will look like in '22, '23, nobody knows. But again, in the moment, for 2020, we don't pay any incentives because growth is negative. And in '21, we will not continue with our incentive program. This is -- in the moment, this is a decision and what will happen in the years later on, we really have to see. It depends from the speed of the recovery. To improve attractiveness, I think the best element or the best lever to improve attractivity is our Terminal 3. In 2024, when T3 is open, I think we have a fantastic state-of-the-art product. The lounging customers will be happy to go in. And for example, we already received, especially from the Middle East carriers, very positive comments. They are willing to come in to be -- become the lounging customers. The reason is that, for example, they are not satisfied with the lounge situation in Terminal 2 because we don't have enough space to give them the square meters they need to offer their high-value customers. And they want to see new lounge landscapes in Terminal 3 of thousands of square meters. And we can offer them all these things, and that's the reason why they are happy to move into such a brilliant product. And this is our way to improve attractivity for the customers going into T3. And when you look on Terminal 1, where Lufthansa and the Star Lines is the main customer, we improved the quality here because then there is more room, more capacity also to grow. And the density or perhaps even the overutilization then of Terminal 1 is over. So this is really a win-win for this one going into Terminal 3. Also for these customers staying also in the long run in Terminal 1. And we tried to convince our customers by service and quality levels and infrastructure. And I think this is our answer, which we will give to the customers. And impairment tests, fourth question. Of course, we are obliged quarter-by-quarter to make impairment tests. The auditors are requesting these calculations from us. But you know when you talk about infrastructure, we have not an impairment test like other industries, where you have a detailed calculation for the first 5 years and then you are working with some eternity values. In our models, we are really calculating year-by-year, the numbers for the next 30 years, knowing that everything what we assume today in the year 25, up from now is wrong. But this is the answer of infrastructure because it's a long-term model. And we -- on one side, when we have now in the first couple of years a reduced revenue stream, we have answers on the other side, like reduction of intended CapEx, also adjustment of OpEx. So we have certain levers to answer the reduced revenue levels and always looking that the impairment tests are still positive, and I can tell you that we, in the moment, we did it because we were talking about Q1 numbers. And so impairment test goes over the life cycle of an infrastructure asset. And today, I can really see, we don't see any threat by impairments. And also with regards to Xi'an in the moment, we don't see anything that there is a need to make a write-off of these assets, because we have so many levers which we can use to adjust our business models.
Next question is from the line of Christian Cohrs from Warburg Research.
Just 2 questions left for me. First of all, presumably some airlines will go bust. Also, it's possible that some of your tenants in Frankfurt, the shop owners or the shop operators will go bust. So it's actually bad debt. Is this an issue for you? And have you installed any measures to monitor your trades receivables? That's part number one. Number two, in Q1, you actually did not receive any dividends from your activities abroad. I think last year, it was EUR 38 million in the first quarter. For the full year, it was EUR 100 million. So will you receive any dividend, at all, from your external activities?
First question, of course, in such a situation, there's always a threat that one of your customers will go bust. This is a normal, let me say, situation. In the moment, we don't have any information about this, but this can happen. On the other side, our exposure isn't so far reduced because all the tenants are not just the tenants, but are our customers. They have, let me say, the way of paying the money is on a decay basis. So our risk is with regards to real estate tenants, it's 1 month. And on the other side, it's just 10 days. So even in this unlikely case or the potential case that one is going bust, our risk position is in the case of real estate, 30 days. In all other cases, 10 days. So and this is in so far, a very limited amount of money. But in the moment, knock on wood, everybody is paying. And we have to see whether this will continue or not. Dividends, we -- also during my presentation, we -- let me say, the focus, of course, was here at Frankfurt Airport. We also have to secure the liquidity situation of all our airports in the portfolio. And we -- when we talk about the liquidity, you can also see that the liquidity is well allocated everywhere. And we have the clear philosophy that first of all, the assets outside Frankfurt should secure their own financing. So we are not acting like a financial investor with minimized equity and very reduced shareholder loans. So they had relatively a comfortable situation with regards to the equity portion, also a comfortable situation with the current liquidity situation. So that we, as of today, even in this relatively long continuation of very negative traffic scenario, they can survive from a liquidity perspective on their own based on their own means. And -- but also one additional, let me say, support, which we did is saying that in this moment, we do not collect dividends from the subsidiaries, not to take out liquidity which later on then we have to pay back again in the form of shareholder loans. So in 2020, you will not see really dividend payments from the subsidiaries to the AG, as a package to support them.
Next question is from the line of Marcin Wojtal from Bank of America.
Just some follow-ups. So first, in your opening comments, you said that ethnic travel should recover first ahead of business and leisure. Can you clarify a little bit? What do you mean by that? What percentage of your traffic is in that segment? And does it relate mostly to short-haul European or more long haul? And second question is on your aviation business. I would be interested to know what percentage of revenue for Frankfurt is actually from intercontinental traffic for aviation or perhaps to put it differently, what would be the multiplier of revenue per passenger, intercontinental versus Europe-to-Europe?
Thank you for the questions. Ethnical travel versus touristic travel versus business travel. So what do we mean with ethnic travel? These are -- we focus -- we define this as, first of all, workers, let me say, working in Germany, coming from Romania, Ukrainian, White Russia, et cetera, Baltic countries, et cetera, and in both directions. Also, let me say traffic generated by visiting relatives. This is the definition of ethnic travel, and this is very robust with regards to, let me say, coronavirus, et cetera. And that's the reason, if for example, if you are a craftsman and then you earn your money in Germany, you have a strong interest as soon as possible to come back from Romania to Germany to go back to your construction site, for example, like our T3 site. So that's the reason, also and based on our experience from the past that this is a very robust segment of air travel and will be the first one to recover. Tourist, this is everybody going to Greece or Antalya or Spain, et cetera. And here you can see that the motivation is clear and a little bit, is this a hope that now after this shutdown, where you are a prisoner at your home, that after 2 months staying at home and looking Netflix that now you have the wish to fly perhaps for one week to Antalya, have some fun despite corona. And that's the reason why we think in the second wave, this will happen and bring recovery rates. On the business travel and business recovery, we are so far a little bit reluctant and very conservative because in the moment, you can see you have -- yes, the dominance of the controllers in the company and travel expenses are one item which is firstly attacked. And everything is down and everybody is now identifying that also without any travel actions, you can make your business. And I think this will be transformed, translated and transferred also in the time after corona. So that we think there will be also -- or could be a sustainable shift and tectonical shift of this traveling behavior of businessmen. So that we think, yes, also with regard to this element, an item, there will be a recovery, but a very slow recovery. So first wave, first step, ethnical traffic; second touristic travel; third business travel. Of course, the ethnic travel is primarily on the Continent, so Eastern Europe, Southern part of Europe or North Africa, et cetera, Turkey. But also some ethnic travel patterns to intercontinental destinations. For example, people from Greece visiting their relatives in Canada flying from Athens to Frankfurt from Frankfurt to Toronto or to Ontario. With regards to the charges, there's a price differentiation, whether you fly intercont, cont, or transfer. And the -- here, we collect the money based on the departing passengers. So the incoming passengers doesn't pay anything. Therefore, the departing ones pay twice. And the amount for intercont or the fees for intercont passengers departing is EUR 24. For continental passengers is EUR 18, and transfer traffic is, you can say, the cheapest traffic with EUR 12. So yes, again, and let me say the -- most of the ethnic travelers are flying on continental routes.
Next question comes from Andrew Lobbenberg from HSBC.
Very quickly, as Lufthansa looks to rebuild its flying, and comes to a target that is materially smaller than it was, at least initially. How do you convince them to continue to add back in Frankfurt disproportionately rather than your friends down in Munich, because we're going to be dividing up a smaller pie in terms of their fleet. That will do.
Frankly spoken, we cannot convince Lufthansa. I think they have a plan. We hope this plan is more or less in favor of us. But if they have a plan, they have a plan. So this is an independent company. And I think they know what they are doing. And I think the information is in the market, the reduction of the fleet of 100 aircraft. Of course, we hope that this was overproportionately in favor of Frankfurt. A little bit, let me say, a strong signal is that in the moment, they are operating just out of Frankfurt with regards to intercontinental flights, not from other hubs which they have in their portfolio. I think this is a strong argument. And also, they know what they're doing. But we cannot influence Lufthansa. And even with -- if you mention incentive programs, if you give them a euro or not per additional passenger, I think this is not -- of course, everybody would take this as an add-on. But with this, you cannot influence a decision to fly or not to fly.
We have a follow-up question from the line of Arthur Truslove from Crédit Suisse.
Just one follow-up from me. I just wonder whether you could talk in a little bit more detail about your sort of working assumptions in respect of how Continental and intercontinental traffic might come back. I mean obviously, you said you expect continental to come back earlier. But for example, in the third -- towards the end of the third quarter, what sort of percentage of the prior year figures for airline capacity are you currently expecting to see?
Again, I think this is -- we -- first of all, we have to say, we cannot influence traffic. So first of all, prerequisite for recovery is that all the restrictions will be lifted. With given restrictions, you cannot fly. And you cannot influence something or you cannot overcome these restrictions. The first thing, they must be lifted. And then we have to see how the natural demand will work. I think, of course, there will be a recovery. But from which continent or to which continent, you will see, let me say, the first wave or the first move, I don't know. I'm personally convinced, as I mentioned, we will see the first reaction with regards to European ethnical, well, based on ethnical travel, a clear focus on European continental flights. And I think there will be the first reaction after abolishing all these restrictions on flying that the North and middle European people wanted to spend, despite corona, some days or weeks in some southern countries. And so we will see some traffic going to Greece, Antalya, Southern part of Italy, et cetera or Spain. But how much this will be really -- I don't know, nobody knows this. This is absolutely a crystal ball or black box.
Another question from the line of Charles Maynadier from Kempen.
Just very small one on the dividend for 2020. And so based on your policy of earnings -- retail earnings, could we still expect you to pay anything this year, knowing that you expect negative EPS?
I think we -- let me say, with regards to the dividend for 2019, we said there's nothing. What we are going to pay in '21 for '20, don't ask me now. It depends from the recovery, but frankly spoken, having in mind that the recovery can be very slow, I would say the probability that there will be no dividend is relatively higher, to bring it on the point.
Okay. And then maybe on more generally in the medium-term and knowing that the leverage...
In the medium term, now it's our strong interest to come back, to recover, to have strong financial figures again, high EBITDA numbers and positive net income. This is -- we do all to come back to readjust our business, to fix our business model even on a lower number of passengers and also having in mind that we want to pay dividends again. But now we are in a brutal cash burn phase. And I think this was clearly that when we saw that coronavirus led to minus 90%, 95% passenger reduction, which some weeks before, we thought it's absolutely impossible, that then overnight, we said we are not going to spend EUR 185 million dividends, on the other side going to the capital markets, raising new money to finance the cash burn. I think this was clear that we went into this direction. And now we have really to see what will be the free cash flow in '21 and also the level of net income. And then we have to see whether we pay or pay not and what is also our indebtedness at that point of time in the financial covenants or the financial indicators. But again, I would say, as of today, all what we know now from a potential recovery, the probability for paying dividend is very low in '21 for '20.
There are no further questions at this time. And I would like to hand back to Christoph Nanke for closing comments. Please go ahead.
Okay. So thank you all for participating. If you have any further questions later on the next days, please give us a call. For the moment, stay healthy. And see you soon, hopefully. Thank you. Bye.